Satya Brata Sinha, J.:—The question which arises for consideration in this application is as to whether the petitioner's electrical connection is liable to be disconnected for non-payment of dues on the part of pre-occupier of the premises.
The fact of the matter lies in a short compass.
2. The petitioner no. 1 which is a company incorporated under the Indian Companies Act entered into an agreement on 11.12.1992 with the owners of the property in question (Respondent nos. 7-11) for developing the same on certain terms and conditions. For the aforementioned purpose an application for sanction of the plan was applied for and granted by the Howrah Municipal Corporation, and pursuant thereto the construction of the building started. An application was filed by the petitioner before the respondent-company for grant of temporary supply of electrical energy.
3. On 21.12.1993 the respondent-company ‘intimated that a sum of Rs. 1,50,085.95 p. is due from the erstwhile consumer. The petitioner was requested to pay the said dues failing which it was threatened that the electrical energy shall not be supplied at the said premises. However an inspection was held. The petitioner also deposited the security amount and the meter was installed. On 21.7.94 the petitioner received a notice that the outstanding dues of the erstwhile occupier is Rs. 49,50,481.61 p., besides the delayed payment surcharge to be levied thereupon.
3A. On 22.7.1994 the petitioner made a representation alleging therein that they have no knowledge about the erstwhile consumer.
4. The contention of the petitioner is that as it has applied for a new connection, the respondent-company having a statutory duty to supply the electricity to the petitioner cannot refuse to do so on the ground that there allegedly existed an outstanding dues of one Bajranglal Kedia.
5. In its affidavit-in-opposition, the respondents stated that one Kiran Ice and Cold Storage, which was a proprietory concern of Bajranglal Kedia, took electrical connection. Its outstanding bills accumulated to the tune of Rs. 49,50,481.61 p. The respondent-company however was prevented from disconnecting the electrical energy in view of orders of injunction passed in several suits. The said electrical connection was eventually disconnected in July, 1992.
6. The petitioner allegedly applied for a temporary connection which was granted. It, however, demanded the aforementioned sum from the petitioners by a letter dated 21st December, 1993 whereupon the petitioner paid a sum of Rs. 15,000/- and promised to pay the balance amount in instalments after they had obtained a new supply of electricity at the said premises. It is contended that by such payment the petitioners accepted that they were liable for the arrears and relying on the said promise, the respondent had acted to its disadvantage. It is stated that in the suit Bajranglal Kedia appeared through the same advocate on record who is also representing the petitioners. It has been contended that Shri Kedia is concealing himself behind the corporate veil of the petitioner and thus this writ application should be dismissed.
7. Mr. P.K Roy, learned Counsel appearing on behalf of the petitioner, inter alia, submitted that the respondents in law are bound to supply electrical energy to the petitioner and in support of the aforementioned contention reliance has been placed on John Earnest Edward v. Rai Jogendra Chandra Ghosh Bahadur reported in AIR 1935 Cal 298; Souriyar Luka v. Kerala State Electricity Board reported in AIR 1959 Ker 199; N.T.C Ltd. v. M.P Electricity Board, reported in AIR 1980 MP 32 and The C.E.S.C v. Arun Kumar Dhar reported in 1978 CHN 159.
8. The learned Counsel has further drawn my attention to the Affidavit-in-Opposition filed by the respondent nos. 7 to 11 wherein it has been alleged:
“Since the property was vacant but an electrical meter and accessories thereof were lying in a piece of land of the said property, I, represented before the competent officer of CESC Ltd. at their Regional Office, Howrah, for removal of the said meter board and allied accessories.
Till date CESC respondent did not respond to any of the representation inasmuch as the CESC respondents did not care to remove the said electrical meter and accessories thereof, for which the developer is to face trouble for development of the property also.”
9. Mr. Sinha appealing on behalf of the contesting respondents, however, submitted that the petitioner is bound by the promise, it is estopped and precluded from contending that it is not bound to pay all the outstanding dues of the aforementioned Shri Kedia. It has been submitted that keeping the fact that the petitioner has already paid a sum of Rs. 15,000/-, clearly goes to show that it had undertaken to pay the liabilities of the said Shri Kedia.
10. Section 22 of the Indian Electricity Act, 1910 imposes a statutory obligation on the licensee to supply the electrical energy in the following manner:
“Where energy is supplied by a licensee, every person within the area of supply shall, except in so far as is otherwise provided by the terms and conditions of the licence be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply.”
11. Electricity undertakings acquire the character of public utilities by reason of their virtually monopolistic position and their profession to serve the public. The State in exercise of its legislative power had a right to compel them to render service efficiently, promptly and impartially to the members of the public, as has been done by enacting s. 22 of the said Act. Even in common law such public utilities having obtained a licence under a statute are under an automatic obligation by reason of the fact that the property of a public utility is dedicated to public service and impressed with public interest to serve the public and any such statutory obligation is in effect and substance a declaration of the common law.
12. Upon the dedication of public utility to public use and in return for the grant to it of a public franchise, the public utility is under a legal obligation to render adequate and reasonably efficient service, without unjust discrimination and at reasonably rates to all the members of the public to whom its use and scope of operation extend and who apply for such service and comply with reasonable rules and regulations of the public utility.
13. In India in view of the aforementioned provision any member of the public may compel a licensee to connect his premises with his supply-lines by filing an application to the Court. There cannot however, be any gainsaying that the right of the prospective consumer is meticulously and minutely regulated under the Electricity (Supply) Act, 1948 and/or the Indian Electricity Act, 1910 and Indian Electricity Rules.
14. The grounds upon which a licensee can refuse to supply electrical energy is also governed by the statute. The licensee, thus, in refusing to supply electrical energy cannot take recourse to the plea which is not covered by the Indian Electricity Act or Rules framed thereunder or the conditions of licence or other law for the time being in force.
15. The Statutory obligations under s. 22 would have no meaning if it were not buttressed with liability on the licensee to suffer the penalty prescribed, apart from its civil liability to pay damages for failure to supply energy. Section 42 of the Act provides for penalty for illegal or detective supply of energy where without reasonable excuse, the burden of proving which is on the licensee, the licensee discontinues the supply or fails to supply. Section 48 provides that the penalties imposed by Ss. 39 to 47 are in addition to, and not in derogation of any liability for compensation or the liability of the licensee to have his license revoked.
16. The licensee thus has a statutory liability to supply electrical energy to any prospective consumer on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply. Such a statutory obligation on the part of the licensee is also reinforced in terms of Clause VI of the Schedule appended to the Act. It is interesting to note that s. 22 of the said Act employs the words ‘every person’ which thus not only bring within its purview natural person but also includes any company or association or body of individuals whether incorporated or not. The statutory duty imposed under s. 22 with regard to adequacy of supply is also reinforced by the provision of Rule 59 of the Indian Electricity Rules which costs a further obligation on the licensee to take certain precautions.
17. The right of a licensee to discontinue supply is circumscribed by its statutory power which is contained in s. 24 of the Indian Electricity Act and Clause VI of the Schedule appended thereto.
18. The respondent-company has not placed before me any provisions of the Indian Electricity Act, the rules framed thereunder or any conditions of licence in terms whereof it can refuse to grant electrical connection to a person who makes requisition therefor and who has either fulfilled all the requisite terms and conditions or is ready and willing to do so.
19. It stands admitted that the electrical connection of the said Kiron Ice and Cold Storage Ltd. was disconnected in July, 1992. It is also not disputed that the respondent-company has filed a suit against the said concern for recovery of its dues which is pending consideration. The petitioner, is not alleged to be the successor in interest of the said concern nor is it alleged that it has any statutory liability to pay his outstanding dues. In fact it is also disputed that the owner of the premises in question are Respondent nos. 7-11 with whom the petitioner had entered into an agreement.
20. In terms of the provision of the Indian Electricity Act all the rules framed thereunder no charge is created on the premises in relation to payment of electrical dues. The provisions of the Indian Electricity Act and in particular s. 24(1) thereof in no uncertain terms states that the obligation to pay all the dues for consumption of electrical energy is personal. The remedy of a licensee thus is against the consumer itself unless a contract is entered into by the concerned parties to the contrary.
21. When a licensee applies for grant of new connection and fulfils the terms and conditions therefor and an agreement is entered into, the rights and obligations of the parties to the said contract are personal in nature.
22. Section 24 of the said Act can be taken recourse to only in a case where a 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.
(Emphasis supplied)
23. In terms of s. 24 of the said Act, therefore, no charge is created in the premises where electricity is supplied. Supply of energy is made to a consumer occupying a premises but non-payment of bills despite supply of electrical energy is the personal liability of live consumer and the same thus is not statutory dues.
24. Primary remedy of a licensee to recover the dues from a consumer is to file a suit but s. 24 of the Act provides for an additional right to recover the same by disconnecting the electrical energy. The said provision, therefore, cannot apply in the case of a transfer of the premises and no liability can be fastened on the transferee who has purchased the property in question bona fide and in good faith.
25. Mr. Sinha, when questioned, conceded that apart from s. 24 there is no other provision which entitles the Respondent to withhold supply of electrical energy. No circular has also been issued by the Calcutta Electric Supply Corporation whereby it has a right not to give supply of electrical energy despite its statutory obligation under s. 22 of the said Act.
26. In the instant case, the old consumer was not the owner of the property. The petitioner company was not supposed to make an enquiry with regard to the personal liabilities of the occupier before purchasing the properties, thus even then a doctrine of ‘caveat emptor’ would have no application in the instant case.
27. It is not the case of the respondents nor this court in exercise of its jurisdiction under Article 226 of the Constitution of India can lift the corporate veil for the purpose of finding out as to whether Sri Kedia has any direct or indirect connection with the company.
28. So far as the question of estoppel raised by the learned Counsel for the respondent is ‘concerned, the same also cannot be accepted. The petitioner has categorically denied that it had made any payment of Rs. 15,000/- as alleged by respondents in their affidavit-in-opposition. The learned Counsel could not point out any document in support of, the plea that such a payment was made by the petitioner. He merely submits that the statement made in the affidavit-in-opposition should not be rejected. It is now well known that a person who raises a plea of estoppel must prove the same.
29. It is also unlikely that a temporary connection may be granted to the petitioner on the receipt of a sum of Rs. 15,000/- although a sum of about Rs. 50,00,000/- was due from Sri Kedia. Apart from the said sum, delayed payment surcharge also accrued on the said sum.
30. My reason of the impugned order dated 17th June, 1994 the Manager Mains (Distribution) directed the petitioner to call on the Deputy General (CCM-MT) at Victoria House for settlement of the dues of the erstwhile consumer failing which the temporary supply installed for construction purposes was to be disconnected on the expiry of 7 days from the date of the receipt of the said letter.
31. The right of the licensee is to sue the consumer for recovery of its dues or to take recourse s. 24 of the Indian Electricity Act.
32. It may also be noticed that under Clause VI of the schedule appended to the Indian Electricity Act, the consumer is required to furnish adequate security. Even additional security can be asked for.
33. In Ferro Alloys Corporation Ltd. v. A.P State Electricity Board, reported in JT 1993 (2) SC 85, the Supreme Court noticed that normally a period of 2 and 1/2 months is needed for recovery of the amount before an action for disconnection of electrical energy can be taken.
34. The licensee, thus, could take recourse of the provisions of s. 24 at the earliest opportunity as against Sri Kedia. It did not do so. It, therefore, cannot take benefit of its own wrong even if the company was prohibited in view of the court's order to disconnect the electrical energy of Sri Kedia it could have moved the higher courts or could have asked the court for a direction upon the licensee to furnish adequate securities therefor.
35. In Souriyar Luka v. Kerala State Electricity Board, reported in AIR 1959 Ker 199 it was held:—
“The purchaser of the premises in revenue sale held for the purpose of recovering dues from a defaulting consumer is not a person from whom any amount is or can be deemed to be due and he is not in the position of one on whom premises have devolved by succession or voluntary transfer. The amount due from a consumer to the licensee is not a charge on the premises used by such consumer and the purchaser of the premises in revenue sale gets a clear title, subject to such encumbrances as may have existed on the date of the attachment under the Revenue Recovery Act.”
36. In National Textile Corporation (M.P) Ltd., Bhopal v. M.P Electricity Board, Jabalpur reported in AIR 1980 MP a Division Bench interpreting the provision of Sick Textile Undertakings (Nationalisation) Act, inter alia, held that the Electricity Board is not entitled to demand from the National Textile Corporation pre-appointed day dues of the former owners of the National Textile undertakings owned by the owners to the Board on account of supply of electricity to such undertaking.
37. In the The Electric Supply Corporation & Ors. v. Arun Kumar Dhar reported in 1978 CHN 159, Monoj Kumar Mukherjee, J. (as His Lordship then was) observed that the provision to s. 22 of the Electricity Act does not require that payment to be made for arrear of electricity charges for others.
38. This aspect of the matter has also considered by me in Najeeb Zaman… v. Bihar State Electricity Board & Others… reported in 1994 (2) PLJR 657, wherein the Patna High Court took into consideration an unreported decision in Sugam Packaging Pvt. Ltd. v. Bihar State Electricity Board C.W.J.C No. 5358 disposed of on 22.7.92 holding that:—
“The law was further laid down in the following terms: It is thus, not correct to contend that the electrical energy is supplied to an industry and not to the Company. The Industry as such is not a juristic person. The Industry has its owner and although there is no electrical energy supplied to an unit but the unit is not a contracting party inasmuch as a unit is not a juristic person and thus capable of enterting into a contract.
Further it is now also well settled that s. 24 of the Indian Electricity Act has to be construed strictly. Such an action can only be taken as a last resort. It has also been held by various Courts including this Court that even if a person has two connections in the same premises, one connection cannot be disconnected for realisation of arrears of dues relating to the other connection.
Reference in this connection may be made to John Earnest v. Jogendra Chandra AIR 1935 Cal 298.
Following the aforementioned decisions in relation to a telephone matter, I have held in Chotanagpur Engg. Works v. Union of India, reported in 1987 BLT 299 that the telephone connection of a Director cannot be disconnected for non-payment of dues by a company.
In T. Chanchiah v. A.P.S Board reported in AIR 1980 AP 12 it has clearly been held that for default to pay electrical dues of a firm, the electrical connection of the partners thereof cannot also be disconnected.
Reference in this connection may be made to Andhra Cement Co. Ltd. v. A.P State Electricity Board reported in AIR 1983 AP 263.
These decisions therefor indicate that power under s. 24 can be exercised only in relation to a consumer and that too in respect of electrical connection in question.
Section 24 of the Indian Electricity Act, so construed, cannot be held to confer any power upon the Board not to give fresh electrical connection.”
39. Sugam Packaging (P) Ltd.'s case (supra) has followed by a Division Bench of Patna High Court in North East Fertilizer (P) Ltd. v. Bihar State Electricity Board reported in 1994 (2) BLJR 954; AIR 1995 Pat 33.
40. It is necessary to consider the matter any further, in view of the latest pronouncement of the Supreme Court upholding the aforesaid decisions of the Patna High Court in Isha Marbles v. Bihar State Electricity Board reported in JT 1995 (2) SC 626 wherein the Supreme Court categorically has held that in terms of s. 24 of Indian Electricity Act that the liability of the consumer cannot be thrust upon a third party.
The law was stated thus:—
“From the above it is clear, the High Court has chosen to construe s. 24 of the Electricity Act correctly. There is no charge over the property. Where that premises comes to be owned or occupied by the auction purchaser, when such purchaser seeks supply of electric energy he cannot be called upon to clear the past arrears as a condition precedent to supply. What matters is the contract entered into by the erstwhile consumer with the Board. The Board cannot seek the enforcement of contractual liability against the third party. Of course, the bona fides of the sale may not be relevant.”
41. The Apex Court observed:—
“No doubt, dishonest consumers cannot be allowed to play tyrant with the public property but inadequacy of the law can hardly be a substitute for overzelousness.”
42. For the foregoing reasons this applications allowed and impugned notice dated 17th June, 1994 as contained in Annexure ‘I’ to the writ application is quashed and the respondents are directed to continue to supply of electrical energy in accordance with law. However, in the facts and circumstances of the case there shall be no order as to costs.
Application allowed.
SP