Bihar State Electricity Board … vs M/S Iceberg Industries Ltd. And … on 27 April, 2020


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Supreme Court of India

Bihar State Electricity Board … vs M/S Iceberg Industries Ltd. And … on 27 April, 2020

Author: Deepak Gupta

Bench: Deepak Gupta, Aniruddha Bose

                                                                 1

                                       REPORTABLE
            IN THE SUPREME COURT OF INDIA
             CIVIL APPELLATE JURISDICTION

           CIVIL APPEAL NOS. 7649-7651 of 2019


BIHAR STATE ELECTRICITY
BOARD ETC.                                ...APPELLANT(S)

                            VERSUS


M/S ICEBERG INDUSTRIES LTD.
AND OTHERS ETC.             ...RESPONDENT(S)

                          JUDGMENT

ANIRUDDHA BOSE, J.

These appeals are directed against a judgment of a Division

Bench of the Patna High Court affirming in substance the decision

of the learned Single Judge in disposing of three writ petitions in

disputes arising out of obligation of the first respondent to pay

certain sum categorised as Annual Minimum Guarantee (AMG)

and certain other charges to the Bihar State Electricity Board. The

appellant was the Board. The complaint of the first respondent,
2

Iceberg Industries Ltd. (the company) over disconnection of their

supply which they argued to be illegal was sustained by the Single

Judge and it was also held by the First Court that the said company

was not liable to pay AMG and certain other charges as per Board’s

computation. The judgment of the Division Bench was delivered

on 7th February 2013. The company had entered into an agreement

for supply of electricity with the appellant Board for contract

demand of 1,000 KVA on 16th April 2004. This was for supply of

high-tension electricity connection for setting up of a brewery.

Supply to the company was energised on 06.05.2005. The dispute

involved in the three writ petitions giving rise to these appeals

originated from a bill for Rs. 27,11,814/- dated 17th April 2006.

This was raised by the appellant towards AMG and was payable by

06.05.2006. The company did not make payment thereof within the

prescribed date. Three disconnection notices, dated 15th May, and

26th May and 29th June 2006 on account of default in payment of

AMG as also energy charges were issued by the Board.

The company on 29th July 2006 made a representation
3

for liquidating their dues on account of AMG in ten monthly

instalments citing certain business related difficulties. Part

payment of the dues to the extent of Rs. 14,71,952/- was made.

Next disconnection notice under Section 56 of the Electricity Act,

2003 (the Act) was sent to the company dated 23rd August 2006 for

a sum of Rs. 33,38,572/- for non-payment of AMG as also on

account of Delayed Payment Surcharge (DPS). Another bill was

raised on 1st September 2006, the due date for which was 20th

September 2006. The bill amount was Rs. 37,00,923/- and the bill

heads were AMG, DPS as also energy charges. Supply to the

company, however, was disconnected on 6th September 2006.

There is some doubt as to whether such disconnection took place

on 6th September or 8th September, but this variation is of little

significance so far these appeals are concerned.

2. The factual background of the three petitions would appear

from the recordal made in the following passages of the judgment

under appeal:

4

“Subsequently a fresh bill was raised on
1.9.2006 which included arrears of AMG and
DPS under the bill dated 17.4.2006 also for a
total of Rs.37,00,923/- along with current
charges. The due date for payment was
20.9.2006. The Board disconnected supply
on 6.9.2006 pursuant to the notice for
disconnection dated 23.8.2006. The Board
thereafter acted on the representation dated
26.8.2006 and granted facility of instalments.
An agreement was signed between the parties
on 11.4.2007 for payment of AMG and DPS
in instalments. The connection was restored
7 months later on 16.4.2007. It is not in
dispute that payments under the bill dated
17.4.2006 has then been made as agreed.

A fresh bill was thereafter raised by the
Board on 4.5.2007 for Rs.70,23,149/- as the
minimum guarantee charge/base charge for
the disconnected period of 1.11.2006 to
30.4.2007, along with AMG charge for the
financial year 2006-07 (which also included
charges for the disconnected periods of
August, September, October 2006) of
Rs.18,02,582/-. The total bills thus raised
was for Rs.88,389,528/-. A fresh
disconnection notice for non-payment of the
same was issued on 22.5.2007. The industry
moved the Forum under the Act. By order
dated 12.2.2008 the Forum held the industry
liable to pay minimum charges up to
November 2006. The minimum charges from
December 2006 to April 2007 were held to
be bad. The Industry, to the extent it was
5

aggrieved by the order, questioned it in
CWJC 4637 of 2008. The latter part of the
order was not challenged by the Board.

On 19.3.2008, a fresh disconnection notice
was served for non-payment of Rs.1.33
Crores inclusive of AMG and DPS for the
period December 2006 to April 2007
disallowed by the Forum. The Board also
refused to accept current consumption
charges. Based on a demand contrary to the
order of the Forum, the Board disconnected
electric supply for the second time on
2.4.2008.

After it had disobeyed the order dated
12.2.2008 of the Forum CWJC 7314 of 2008
was filed by the Board on 5.5.2008
questioning the same. The writ petition did
not disclose that the Board had already
disobeyed the order and disconnected supply
without raising fresh revised bills. No prayer
for interim stay of the order of the Forum was
made in the Writ Petition.

Pursuant to an interim deposit of 35 Lacs
directed on 15.5.2008 in CWJC 4637 of
2008, electric supply was restored on
24.5.2008. A fresh bill was again raised on
22.5.2009 for Rs.1.47 Crores along with
notice for disconnection. It included AMG
and DPS for the period disallowed by the
Forum. It also included AMG and DPS
charges for the subsequent disconnection
from 2.4.2008 to 23.5.08. The industry
6

challenged the same again before the Forum.
The demand was stayed by the Forum on
12.6.2009. Without challenging the order of
the Forum, the Board in complete disregard
refused to accept even current payments,
showed arrears of Rs.1.82 crores and
disconnected supply of the Industry again on
7.8.2009. CWJC 9742 of 2009 was preferred
against the same by the Industry. Rs.80 Lacs
was deposited pursuant to the order of the
Court, and electric supply was restored on
1.12.2009. The industry therefore also
questioned AMG and DPS charge for the
disconnection period from 7.8.2009 to
30.11.2009. Further payment of Rs.40 Lacs
has been made pursuant to interim directions
in the present Appeals.”

3. The Single Judge found the act of disconnection without

considering the request for instalments was unwarranted. It was

held that such default on the part of the company did not constitute

“neglect to pay” as contemplated in Section 56 of the 2003 Act.

The fresh bill, which was raised on 1st September 2006 showed the

due date of payment to be 20th September 2006. Disconnection was

however made on 6th September 2006 on the basis of earlier notice

of 23rd August 2006. This was held to be unjustified. The demands
7

raised thereafter contrary to the order of the Forum constituted

under Section 42(5) of the Act was also held to be illegal by the

Single Judge.

4. The Appeal Bench, inter, alia, found:-

“The bill dated 19.3.2008 which included the
AMG and DPS for the period 1.11.2006 to
3.4.2007 contrary to the order of the Forum
being illegal, the Industry was under no
obligation to pay the same. The subsequent
disconnection on 2.4.2008 automatically
becomes illegal. Surprisingly, the officials of
the Board persisted in defying the order of
the Forum in the bill dated 22.5 2009 by
again including AMG and DPS for the period
of disconnection disallowed by the Forum
and reiterating the subsequent illegal bill also
for the period of illegal disconnection from
2.4.2008 to 23.5.2008. The petitioner
challenged this bill before the Forum again
which stayed disconnection on 12.6.2009.

The authoritarianism of the Board persisted
in flagrant disobedience and supply again
disconnected on 7.8.2009 leading to
institution of CWJC 9742 of 2009. The
supply was restored on 1.12.2009 upon
payment of Rs.80 Lacs under orders of the
Court. The disconnection from 7.8.2009 to
30.11.2009, needs no further discussion to be
held illegal. We are constrained to observe
that this second occasion when the officials
8

of the Board acted in gross defiance of the
orders of the statutory authority is indicated
of dangerous executive thinking. We expect
the officials of the Board to understand their
folly and act prudently, take action against
the officers concerned so that in future such
administrative adventurism is not attempted.
In fairness to the Board, we must deal with
CWJC 7314 of 2008 filed by it against the
order of the Forum. It does not appear from
the impugned Judgement that any
substantive challenge was laid out to it except
that the Board did not agree with the same.
Even before us no substantive challenge has
been laid out why the order of the Forum was
wrong. The only ground urged before us was
that the order of the Forum was contrary to
the agreement signed between the parties for
an H.T. connection. It was the foremost duty
of the Board to either comply the order of the
Forum and then challenge it or alternately
challenge the order immediately and seek
stay of the order. Its conduct has been found
grossly wanting on both aspects. An evasive
and purposefully vague statement was made
in paragraph 9 of disconnection. No details
of the date was stated or that it had already
disobeyed the order before filing the Writ
petition. If the Board was seeking the
protection of the law against the statutory
quasi-judicial order, it had to first respect the
law. A person falling foul of the law cannot
seek the shelter of the law to perpetuate
disobedience. The writ petition filed by the
9

Board was therefore fit to be dismissed on
this ground also.

The case of (Southco) (supra) relied upon by
the Board has no application to the present
case. The words “revenue focus” was used in
context of unauthorised use of electricity.
Similarly Kesoram Industries (supra) related
to construction of a taxing statute. Likewise
Raymond (supra) and Green Industries
(supra) did not relate to the obligation for
payment of Minimum Guarantee Charges for
the period of illegal disconnection by the
Board.

Affirming the reasoning and findings of the
Writ Court, we hold that the initial
disconnection itself being illegal, the Board
does not have the authority to charge any
AMG and DPS not only for that period but
also for each and every subsequent period of
illegal disconnection also, because it failed to
revise the bills. The directions given by the
Writ Court in the penultimate paragraph of
the judgment calls for no interference.”

5. Before us three issues emerge, which we need to address. The

first one is whether the company could have invoked the Redressal

Forum’s jurisdiction over the dispute pertaining to AMG and DPS

including the question of disconnection in terms of Section 56 of

the Act. The second issue is as to whether, after receiving a
10

representation seeking instalment payment, supply to consumer

could be disconnected without dealing with such representation.

The third issue is as to whether AMG was payable by the company

for the entire period during which supply to the consumer remain

disconnected.

6. The company’s request for grant of instalments to liquidate

their dues was ultimately accepted by the Board and to that effect

an agreement was executed between Company and the Board for

liquidation of the outstanding dues of Rs. 37,09,027/- in ten

instalments. This agreement is dated 11th April 2007. A copy of this

agreement has been made Annexure R11 to the counter-affidavit

of the Company. On payment of the first instalment, supply line of

the company was energised on 16th April, 2007. Another bill dated

04.05.2007 was sent to the company for Minimum Monthly Base

charges for the period between 1st December 2006 and 30th April

2007, AMG charges for the year 2006-2007 and total amount

demanded under this bill was for Rs. 88,389,528/-. The next notice

under Section 56 of the Act was issued on 22.05.2007 as the
11

company did not make payment of the bill dated 4th May, 2007.

The Company thereafter approached the Consumer Grievances

Redressal Forum questioning legality of the notice dated 4th May

2007. Their application was registered as Case no. 108 of 2007 and

initially the demand was stayed by the Forum. In the final order

dated 12th February 2008, the Forum gave its finding in the

following terms:-

1. The disconnection of the electric line of the Petitioner on
08.09.2006 is being held “legal”

2. The date of disconnection of “08.09.2006” has been found as
notice for determination of the agreement.

3. The Petitioner/consumer is liable for payment of Energy Bill
of AMG Charge for September’ 2006 & October’ 2006 and
monthly Minimum Base Charge of November’ 2006 i.e. for
three months from the month of disconnection of the line.

4. As per Board’s Notification no-477 dated 29.10.2002 and
letter No. 793 dated 22.10.2013-both issued in the signature
of Secretary, Bihar State Electricity Board, Patna; the
reconnection done on 16.04.2007 by accepting of amount of
1st instalment with disconnection & Reconnection Charge has
been decided as clear violation of the Board’s directives, as
the electric line of the Petitioner remained disconnected from
08.09.2006 to 15.04.2007 i.e. more than six months period.
12

5. Any request made by the Petitioner for availing/providing
electric power should have been treated, as the case of New
Applicant and reconnection done is found as improper.

6. The charging of Monthly Minimum Base charge from
December’ 2006 to March’2007 is decided as illegal and
liable for withdrawal, as the connection was given in the
Month of April’ 2007.

7. If the Petitioner is found fit to avail the benefit of exemption,
necessary suitable and appropriate action may be taken to
allow the benefit of exemption from payment of Monthly
Minimum Base Charge as per Industrial Policy Resolution’
2006.

7. Supply to the Company was disconnected again on 2nd April

2008. Both the appellant and the respondent company had assailed

the order of the forum invoking the Constitutional Writ jurisdiction

of the Patna High Court. The company’s writ petition, registered

as CWJC 4637 of 2008 challenged that part of the order in which

disconnection of electricity on 8th September 2006 was held to be

legal. The Board’s writ petition was registered as CWJC 7314 of

2018. In this writ petition, the Board questioned the jurisdiction of

the Redressal Forum to adjudicate the dispute on the ground that

the company was not using the electricity for their own use. They
13

also wanted invalidation of the Forum’s order by which the energy

bill dated 4th May 2007 was quashed.

In the first writ petition filed by the company (CWJC 4637 of

2008), by an interim order, the High Court had directed deposit of

sum of Rs.35 lacs for the purpose of reenergising supply and this

amount, we are apprised, was deposited by them. The supply line

was also restored on 24.5.2008. But between 2nd April 2008 and

24th May 2008, the company’s electricity stood disconnected.

Thereafter, demands were made on different dates under several

heads including arrears, DPS and a fresh notice of disconnection

under Section 56 of the 2003 Act was issued on 22nd May 2009.

The company again approached the Forum against a bill dated

5th June 2009 for a sum of Rs.1,63,15,452/-. The Forum had stayed

the demand and passed an order restraining the Board from

disconnecting supply of the respondent no.1. But on 7th August,

2009, again supply to the company was disconnected, which

prompted filing of the third writ petition by the company, which

was registered as CWJC 9742 of 2009. An interim order was issued
14

in that writ petition requiring them to deposit a sum of Rs.40 lacs

within a week after which the power supply was to be restored to

be followed by further deposit of a sum of Rs.40 lacs by 6th

November 2009. This interim order was passed on 15th October

2009. The said sum was deposited and supply was restored.

Ultimately, the learned Single Judge disposed of all the three writ

petitions by a common judgment and order passed on 29.4.2010

with the following directions and observations: –

“(1) The Board would have to delete from the
demands being made as against the
petitioner amounts in relation to the period
of disconnections, because, as shown
above, each disconnection was illegal,
wrongful and the petitioner cannot be made
to pay for the period of such wrongful
disconnections.

(2) The bills and the liability of the petitioner
would have to be re-caste from the very
initial period, deleting charges aforesaid,
giving due credit to payment made in
between & then final amount has to be
worked out.

(3) The final amount being worked out for
which the period of one month is granted
to the Board, the Board would serve the bill
15

giving the full details in respect thereof,
deleting the charges as indicated above.

(4) As this Court has found that the amounts as
claimed were incorrectly claimed, then the
bills being revised would not contain
delayed payment charges for balance due
in view of Division Bench judgment of this
Court in the case of M/s Gaya Roller Flour
Mills Private Ltd. Vs. Bihar State
Electricity Board since reported in 1995(2)
PLJR 715.

(5) Petitioner by one of the interlocutory
applications has prayed that he is entitled
to exemption under the Industrial Policy
2006 of the Government. That dispute is
pending before the Industries Development
Commissioner. The petitioner would have
liberty to pursue the matter before that
authority.”

8. We shall first address the question as to whether the Forum

under Section 42(5) of the 2003 Act had the jurisdiction to entertain

and determine the company’s application. We must point out here

that before the Appeal Bench the counsel for the Board had

acknowledged Forum’s jurisdiction to adjudicate the dispute raised

before it. This appears from the recordal of submission of the
16

counsel for the Board before the Appeal Bench as it appears in the

judgment under appeal:-

“…….Before us, Counsel for the Board fairly
acknowledged that the Forum had jurisdiction to
adjudicate the dispute……”

9. But even if we proceed on the basis that concession on law

made before a judicial forum against whose decision we are

hearing these appeals would not bind a party to such concession,

we do not find anything in law which barred the Redressal Forum

from adjudicating the dispute. Section 42(5) of the 2003 Act lays

down:

“42. Duties of distribution licensees and open
access.- (1) xxx xxx
(2) xxx xxx xxx
(3) xxx xxx xxx
(4) xxx xxx xxx
(5) Every distribution licensee shall, within
six months from the appointed date or date of grant
of licence, whichever is earlier, establish a forum
for redressal of grievances of the consumers in
accordance with the guidelines as may be
specified by the State Commission.”
17

10. The term ‘consumer’ has been defined in Section 2(15) of the

2003 Act in the following terms:-

“2(15) “consumer” means any person who is
supplied with electricity for his own use by a
licensee or the Government or by any other person
engaged in the business of supplying electricity to
the public under this Act or any other law for the
time being in force and includes any person whose
premises are for the time being connected for the
purpose of receiving electricity with the works of a
licensee, the Government or such other person, as
the case may be;”

11. The respondent company fits this description. A case was

sought to be made out that since the company was a high-tension

commercial consumer, they could not apply to the Forum. On this

count, definition of consumer as specified in clause 2 (1) (g) of the

Consumer Grievance Redressal Forum and Electricity

Ombudsmen Regulation, 2006 was sought to be relied upon. This

clause specifies:-

2 (1) (g):- ‘Consumer’ means any person
who is supplied with electricity for his own
use by a licensee and includes any person
whose premises are connected for the
purpose of receiving electricity with the
works of a licensee or a person whose
18

electricity supply is disconnected by a
licensee or the person who has applied for
connection for receiving electricity from a
licensee, as the case may be.

But we do not find any reason to denude the company of its

locus to approach the forum. The object of use of electricity may

be to produce items for sale, but use or consumption of electricity

by them was for their own factory.

12. Next comes the question as to whether it was permissible on

the part of the Board to disconnect the supply of the company in

spite of the order of stay granted by the Forum. We have

reproduced the passage from the judgment of the Division Bench

dealing with that aspect of the controversy. We accept the finding

of the Division Bench on that count. Board could not have had

ignored the directive of a statutory forum and imported their own

perception of what was legal to proceed against a consumer.

13. The third point urged before us relates to the issue as to

whether the company was required to pay AMG charges or not

during the period their supply stood stalled by disconnection. The
19

Forum referred to Circular No. 477 dated 29.10.2002 (General

Terms and Conditions of Supply) while accepting the consumers

stand that the Board could not do so. In the order of the Forum

dated 12th February 2008 paragraphs 6(B) and 6(B)(iii) of that

circular have been quoted as:

“If the line of a consumer is disconnected
for default in payment of dues of the Board
and the same remains disconnected for a
period of 3 months, the date of
disconnection of line shall be deemed to be
the date of notice for termination of
agreement and the agreement shall be
deemed to have ceased and determined after
a period of three months, calculated from
the month of disconnection. The Consumer
shall be liable to pay minimum
energy/charge/demand charges; as per tariff
provisions for this period of 3 months.”

“If, after termination of agreement, the
consumer comes forward with a request to
provides to his premises, he will be treated
as a new applicant, but he shall clear all dues
against the erstwhile connections.”

14. The AMG charges quantified in the bills raised subsequent to

the one dated 17th April 2006 did not take into account the period
20

during which supply to the consumer had remained disconnected.

On behalf of the Board, on the other hand reliance was placed on

clauses 9(a) and (b) of the Supply Agreement dated 16th April 2004

to contend that the circular No. 477 could not have had been made

applicable within the first three years from the date of

commencement of the supply of energy. These two clauses read:-

“9(a)The consumer shall not be at liberty to
determine this agreement before the
expiration of three years from the date of
commencement of the supply of energy.
The consumer may determine this
agreement with effect from any date after
the said period on giving to be Board not
less than twelve calendar months’ previous
notice in writing in that behalf and upon the
expiration of the period of such notice this
agreement shall cease and determine
without prejudice to any right which may
then have accrued to the Board hereunder
provided always that the consumer may at
any time with the previous consent of the
Board transfer and assign this agreement to
any other person and upon subscription of
such transfer, this agreement shall be
binding on the transferee and Board and
taken effect in all respects as if the
transferee had originally been a party hereto
in place of the consumer who shall
21

henceforth be discharged from all liabilities
under or in respect thereof.

(b) In case the consumer’s supply is
disconnected by the Board in exercise of its
powers under this agreement and/or law and
the consumer does not apply for
reconnection in accordance with law within
the reminder period of the compulsorily
availing of supply as stated above or the
period of notice whichever be longer, he
will be deemed to have given a notice on the
date of the disconnection in terms of
aforesaid clause 9(a) for the determination
of the agreement and on expiration of the
abovesaid reminder period of compulsorily
availing of supply or the period of notice
whichever is longer, this agreement shall
cease and determine in the same way as
above.”

15. The Redressal Forum in its order of 12th February 2008 (in

case no. 108/2007) has construed the said Circular partly in favour

of the company in the following manner:-

“Thus, it is very clear that after three months of
the month of disconnection, i.e. after
termination of the agreement, the consumer
requested to the concerned authorities of the
Board to allow him 20 equal instalments of the
AMG bill for 2005-2006 and monthly energy
bill for August 2006, but the concerned
22

authorities of the Board has executed the
agreement of instalments with disconnection &
reconnection on 11.04.2007 in violation of this
important Circular of the Board and the line was
reconnected on 16.04.2007 after acceptance of
payment of Rs.9,27,257.00 (1st instalment) and
disconnection & Reconnection charge of
Rs.2,000=00 vide money receipt no – 444920 &
444921 respectively of dated 12.04.2007;

whereas the petitioner/consumer would have
been treated as new applicant.

This letter of ESE/Patna further states that on
reconnection, the consumer were served the
regular energy bill and the AMG bill during the
period of this connection i.e. from 11/2006 to
4/2007 worth Rs.70,23,149.00.

The Forum finds that, during the issue of energy
bill for the month of 4/2007, the bill issuing
authority i.e. ESE (Consumer &
Revenues)/Patna Electrical Circle has issued
MMC bill including the period of 01.11.2006 to
30.04.2007 – for six months for
Rs.70,36,946=00 by mentioning the rebate
Amount of Rs.13797=00, if paid before
16.05.2007.

On examination of the copy of his issued energy
bill, the Forum finds; that this energy bill-
mentioned as bill for the month of 4/2007 – is
wrongly prepared and levied as after termination
of agreement, as per Circular of Board the
consumer/petitioner is only liable for payment
of AMG/MMC charge for three months from the
23

months of disconnection i.e. AMG charge for
the month of Sept’ 2006 and Oct.2006 and
Monthly Minimum Base Charge for the month
of November 2006 only, hence charging/levying
of Monthly Minimum Base charge for the period
December 2006 to March 2007 is wholly illegal
and incorrect.

The Forum also detects that Electricity Duty of
6% of Rs.3,47,684=00 on the total amount of
Monthly Minimum base charge of
Rs.57,94,740=00 have been wrongly levied,
where as the Electricity Duty @ 6% is to be
chargeable only on the energy charge of the
units as recorded and calculated as per reading
shown in the installed Meter.

Even though the amount of DC&RC Charge for
Rs.2000=00 has already been deposited by the
consumer on 12.04.2007, this amount of
Rs.2000=00 is again shown as charged in the
instant bill for the month of 4/2007, issued on
04.05.2007, with due date of the date
16.06.2007, which makes this bill as incorrect.”

16. We thus find that the statutory Forum has come to a finding

in dealing with certain circular issued by the Board. We do not

think we ought to interfere at this stage with such finding so far the

same related to applicability and interpretation of the said circular.
24

17. As regards the provisions of clauses 9 (a) and (b) of the

agreement, the first provision curb the right of a consumer to

determine the agreement unless certain conditions are fulfilled. The

circular relied upon by the Forum however has wider application

and its applicability has not been disputed by the Board. Contention

of the Board is that the Forum did not adhere to clause 6 (B) (i) of

the circular, which according to the Board, constituted partial

modification of general terms and conditions of supply. We do not

accept this argument, particularly in the factual perspective of these

appeals. The Board had agreed to instalments for clearing the dues

and restored the supply. On that basis, an independent arrangement

came into existence vis-a-vis the company’s terms of supply in the

given case.

18. The only point which now remains to be dealt with is as to

whether the representation of the company after issue of notice of

disconnection could absolve them from rigours of Section 56 of the

2003 Act which relates to disconnection of supply, on the ground

that such representation demonstrated there was no negligence on
25

the part of the consumer to pay any charge of electricity. Section

56 of the Act provides:-

“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
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
26

(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.”

19. Under the aforesaid provision, disconnection of supply is

special power given to the supplier in addition to the normal mode

of recovery by instituting a suit. Both the Single Judge and the

Appellate Bench of the High Court have held that the respondent

company did not neglect to pay their dues, for which reason the

supplier could have effected the harsher mode by disconnection

supply. The Single Judge referred to two authorities, Corporation

of the City of Nagpur Vs. Nagpur Electric Light and Power
27

Company Limited – (AIR 1958 Bom. 498) and Amalgamated

Commercial Traders Vs. A.C.K. Krishnaswami – (1995)(XXV)

CC 454 in which it has been held that in the event there is bona fide

dispute between the parties on the quantum of dues, non-payment

of such sum would not amount to negligence to pay. The first

authority relates to Section 24(1) of the Indian Electricity Act, 1910

having provision similar to that of Section 56 of the 2003 Act. The

second case related to initiation of winding-up proceeding under

the Companies Act, 1956. The other authority referred to was the

case of Laxmikant Revchand Bhojwani and another Vs.

Pratapsing Mohansingh Pardeshi – (1995) 6 SCC 576. In this

case, one of the issues involved was default in payment of dues on

account of rent, for which eviction could be asked for. The court

found that the rent in that case was sought to be paid through money

order within the specified period. It was held that it was not a case

default to pay simpliciter and hence the rigours of the default

provision leading to eviction under the applicable rent law stood

diluted.

28

20. So far as the subject controversy is concerned, there is no

dispute on obligation of the respondent company to pay the AMG

charges, at least so far as first bill is concerned. Its representation

for instalment was in the nature of a mercy plea. Going by that

factor alone, we might not have had accepted the finding of the

High Court that the consumer did not neglect to pay so as to warrant

the disconnection provision contained in Section 56 of the Act. But

in respect of respondent company, eventually instalment was

granted subsequent to the period of disconnection. Once that plea

for instalment payment was accepted and agreement was entered

into for clearing the dues, it demonstrated willingness to pay on the

part of the company of the dues in a manner acceptable to the

appellant Board. Such plea of the company was accepted after

keeping the matter pending for a long time. In such circumstances,

in our opinion the High Court was right in giving its finding that

the act of disconnection on 8th September 2006 was arbitrary.

Because of these reasons we do not want to disturb the finding of

the Courts below.

29

21. The appeals filed by the Board are accordingly dismissed. The

judgment of the Division Bench of the Patna High Court is

sustained. All connected applications stand disposed of. There

shall be no order as to costs.

……………………………J.

(DEEPAK GUPTA)

……………………………J.

(ANIRUDDHA BOSE)
New Delhi;

April 27, 2020



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