1. The question to be determined in these Petitions is whether the Respondents are empowered to insist upon the clearance of arrears on account of electricity supplied to premises which have come to be occupied and/or owned by a different consumer.
2. The conundrum before the Supreme Court Bench presided over by P.B. Sawant, S. Mohan and K.S. Paripoornan, JJ. in Isha Marbles v. Bihar State Electricity Board (1995) 2 Supreme Court Cases 648, was whether an auction-purchaser under Section 29(1) of the State Financial Corporation Act 1951 can be fastened with the liability of the erstwhile consumer of electricity to the said premises. The petitioners, apart from one, were found by the Court to be bona fide purchasers under a statutory sale. The interconnection between Section 22 of the Indian Electricity Act 1910 (Electricity Act for short) and Section 26 of the Electricity (Supply) Act 1948 (Supply Act for short) had been considered in detail. Reference to the definitions of "consumer" and "occupier" were made, as also Section 22, dealing with the obligation of the licensee to supply energy. Clause VI of Schedule to the Electricity Act was duly noted. It was observed that Section 24 of the Electricity Act relieves the Licensee of its obligation under Section 22 to supply energy if the consumer has not paid the charges for electricity already supplied. The Apex Court noted that after service of the prescribed notice electricity supply could be cut-off by resorting to Section 24; but this action was in addition to the general remedy of filing a recovery suit. So far as the said civil remedy is concerned it may be relevant to immediately refer to the decision dated 6th May, 1977 of this Court in CW No. 1331 of 1976 titled as Palam Potteries v. Delhi Electricity Supply Undertaking, wherein it had been observed that an amount claimed as arrears cannot be assumed to be due until it is adjudicated upon, on the analogy of the ratio of Union of India v. Raman Iron Foundry . It appear to me that wherever a genuine dispute arises as to the arrears or quantum of electricity consumed by a consumer the salutary principle for the Court to follow would be to direct a proper adjudication thereof, with a direction nonetheless to deposit whatever appears to be the admitted or un-contestable sum. Returning now to Isha Marbles, the Supreme Court reproduced a part of the High Court judgment which may be summarized as being "consumer-centric" in contradistinction to "premises-centric", if I may be permitted to coin these terms. It had opined that "it is clear that the High Court has chosen to construe Section 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." The legal position was thereafter enunciated in these words:
61. What we have discussed above appears to be the law gatherable from the various provisions which we have detailed out above. It is impossible to impose on the purchasers a liability which was not incurred by them.
62. No doubt, from the tabulated statement above set out, the auction-purchasers came to purchase the property after disconnection but they cannot be "consumer or occupier" within the meaning of the above provisions till a contract is entered into.
63.We are clearly of the opinion that there is great reason and justice in holding as above. Electricity is public property. Law, in its majesty, benignly protects public property and behoves everyone to respect public property. Hence, the courts must be zealous in this regard. But, the law, as it stands, is inadequate to enforce the liability of the previous contracting party against the auction-purchaser who is a third party and is in no way connected with the previous owner/occupier. It may not be correct to state, if we hold as we have done above, it would permit dishonest consumers transferring their units from one hand to another, from time to time, infinitum without the payment of the dues to the extent of lakhs and lakhs of rupees and each one of them can easily say that he is not liable for the liability of the predecessor in interest. No doubt, dishonest consumers cannot be allowed to play truant with the public property but inadequacy of the law can hardly be a substitute for over zealousness.
Mr. Chandhioke, Learned Senior Counsel for the Respondents has strongly stressed on the words "the law as it stands" and has contended that Isha Marbles does not apply to these Petitions for the reason that the legal position has been amended by filling up the vacuum pertaining to disconnection of energy because of existence of arrears against the previous consumers. In order to pass judicial scrutiny it would indeed have to be explicit and unambiguous statutory terminology which would allow liability to be artificially imposed on a person who has not consumed any electricity. This is especially and additionally so because arrears of long outstandings cannot exist without the connivance or culpable negligence of the licensee itself through its offices and employees.
3. The ratio in Isha Marbles case was reflected upon in Ahmedabad Electricity Co. Ltd. v. Gujarat Inns Pvt. Ltd. (2004) 3 Supreme Court Cases 587 by a Bench presided over by R.C. Lahoti, J., (as the Learned Chief Justice of India then was), Brijesh Kumar and Arun Kumar, JJ. The petitioners were auction-purchasers of urban property and had applied for fresh connections for supply of power to their respective premises. On behalf of the electricity licensees it was contended that Isha Marbles does not laydown the correct law and needs fresh consideration on the grounds that it is essential to distinguish between re-connections and fresh connections. In paragraphs 49 and 57 of Isha Marbles, there is a brief discussion of these two terms. All that the Supreme Court observed in Ahmedabad Electricity Co. was that where electric supply has already been made to a building, but the supply has been discontinued for any reason including that of pending arrears, re-activating the supply would not constitute a fresh connection. What is of great importance is that the Court opined that "in case of a fresh connection though the premises are the same, the auction-purchasers cannot be held liable to clear the arrears incurred by the previous owners in respect of power supply to the premises in the absence of there being a specific statutory provision in that regard." Therefore, there has been no change in the legal opinion of the Apex Court even during the passage of one decade and cogitation upon this legal nodus by six Learned Judges of the Highest Court of the land. Has the statutory matrix been altered to such an extent as to render this enunciation of the law a jural anachronism, is the question which has to be answered.
4. Before venturing into and investigating this aspect of the case, it would be appropriate to discuss some precedents relied upon by the parties, the foremost being Souriyar Luka v. KSEB , which decision has been affirmed in Isha Marbles. The facts were that the Palai Mills Ltd. had outstandings on account of electricity supplied by KSEB, in connection whereof its properties stood attached. The petitioner purchased the building and machinery in the revenue sale and thereupon applied for electric supply, which was declined. This action was upheld in view of Section 24(1) of the Electricity Act. The Court observed that the Section did not contain any reference to "the premises" of the person in default; on the contrary it envisages a person who neglects to pay charges for energy due from him. The Division Bench further held that the purchaser was not the defaulting consumer, and he could not be equated with a person who had acquired the premises by succession or voluntary transfer. In a later decision of another Division Bench of the Kerala High Court namely A. Ramachandran v. KSEB the ratio in Isha Marbles was held not to be applicable because in exercise of the powers conferred by Section 79(j) of the Supply Act 1948 the Board had framed Regulations which rendered superfluous the existence of a contract between the parties. The Division Bench held that the demand of arrears of electricity could not constitute a precondition for supply of such energy predicated on Regulation 5(d) which provision stipulates that all dues to the Board from a consumer shall be the first charge on the assets of the consumer and thereupon will be realizable as arrears of revenue. With all respect I am unable to subscribe to the conclusion arrived at since this Regulation speaks of the "consumer" in contradistinction to the "premises". The new or fresh applicant cannot be confused with the earlier defaulting consumer. This Regulation empowers the Board to resort to "disconnection", which is an expeditious form of recovery of dues, rather than relegate the Board to seek its remedy by way of an ordinary Civil Suit. The Regulation cannot achieve more than insulating the Board from the Raman Iron Foundry doctrine, proving its due as a prelude to adjusting them. Interestingly, Luka had not been cited or considered by the Division Bench. It needs to be noted that K.J. Dennis v. Official Liquidator AIR 2001 Kerala 380, had been authored by the same Learned Judge in which Regulation 15(e) had come up for judicial scrutiny. All these precedents were perused in Seena B. Kumar v. Assistant Executive Engineer , in which the Division Bench again opined that the new owner would be liable to remit dues payable by the previous owner in order to claim reconnection. However, an important qualification had been articulated to the effect that the Board had the bounden duty to recover amounts from the real defaulter and refund it to the new owner. In my view if no such action has been initiated by the licensee, the power to withhold electricity cannot be countenanced especially since a meaningful life without it is inconceivable. If no demand has been raised prior to the purchase of the premises and supply has not been disconnected on account of pendency of arrears, the Court would be remiss not to direct the licensee to pursue the ordinary mode of recovery through a Civil Suit.
5. Sona Cooperative Housing Society Ltd. v. Gujarat Electricity Board is of topicality not merely because it was opined therein that the dues outstanding in the name of the previous owner/occupier cannot be demanded as a precondition for supply of electricity to the new consumer. It is also relevant because of the distinction drawn between Terms and Conditions of Supply under Section 49, and Regulations under Section 79 of the Supply Act. In the absence of the specific approval of the State Legislature the Court held them to be unenforceable. It has been contended by learned counsel for the Respondent that this Judgment is incorrect as it is contrary to the dictum in Hyderabad Vanaspathi Ltd. v. A.P. State Electricity Board , which decision had been duly referred to. The following paragraph has been emphasised by learned counsel for the Respondent:
20. We have already seen that Section 49 of the Supply Act empowers the Board to prescribe such terms and conditions as it thinks fit for supplying electricity to any person other than a licensee. The section empowers the Board also to frame uniform tariffs for such supply. Under Section 79(j) the Board could have made regulation therefore but admittedly no regulation has so far been made by the Board. The Terms and Conditions of Supply were notified in BPMs No. 690 dated 17th September, 1975 in exercise of the powers conferred by Section 49 of the Supply Act. They came into effect from 20th October, 1975. They were made applicable to all consumers availing supply of electricity from the Board. The section in the Act does not require the Board to enter into a contract with individual consumer. Even in the absence of an individual contract, the Terms and Conditions of Supply notified by the Board will be applicable to the consumer and he will be bound by them. Probably in order to avoid any possible plea by the consumer that he had no knowledge of the Terms and Conditions of Supply, agreements in writing are entered into with each consumer. That will not make the terms purely contractual. The Board in performance of a statutory duty supplied energy on certain specific terms and conditions framed in exercise of a statutory power. Undoubtedly, the terms and conditions are statutory in character and they cannot be said to be purely contractual.
On a perusal of the entire Judgment it will be evident that the contention is mandatory for the State Legislature to approve the terms and conditions of the supply had not been raised before the Apex Court. Sona Cooperative, therefore, cannot be seen as contrary to the ratio in Hyderabad Vanaspathi.
6. The decision in Maharashtra State Electricity Board Mumbai v. Maharashtra Electricity Regulatory Commission, Mumbai in my understanding bears little relevance to the dispute which has arisen in these writ petitions. Reliance on the following passage thereof does not advance the case of the Respondent-
10. We are unable to accept the submissions of Mr. Diwan. ERC Act confers exclusive jurisdiction on the State Regulatory Commission to determine the tariff for electricity. Section 22(1) requires the Commission to determine the tariff for electricity subject to Section 29. Section 29 incorporates a non-obstante clause which provides that notwithstanding anything contained in any other law, the tariff for supply of electricity grid, wholesale, bulk or retail, as the case may be, shall be subject to provisions of the ERC Act, Section 29 is in two parts. First is the non-obstante clause which provides that the tariff shall be determined by the State Commission in accordance with the provisions of the ERC Act. The State Commission is obliged to take it to consideration various factors while determining the tariff as set out in Sub-clauses (2) (3) and (4) of Section 29. By Section 26 of the ERC Act consumer has been given a right of participation in fixation of tariff. The provisions relating to the State Advisory Committee also emphasised the legislative intent to protect consumers interest. The terms and conditions for supply of electricity also go with the cost of electricity. Therefore, while fixing the tariff for electricity, the State Commission has to necessarily take into consideration terms and conditions for supply of electricity insofar as they add to the cost of the electricity. In determination of the tariff of electricity, the terms and conditions of supply which form integral part of the electricity tariff cannot be bifurcated in the manner suggested by Mr. Diwan. Fixing of such terms and conditions of MSEB also impinges on payment of charges by the consumers and are, therefore, subject to review by the Commission in view of Section 29(1) and (4) of ERC Act. Section 29 of ERC Act provides that the Board shall observe methodology and procedure specified by the Commission from time to time in calculating the expected revenue from tariff which it is permitted to recover and in determining tariffs to collect that revenue. Therefore, the charges as such service line charges, transmission charges etc. which were charged by MSEB will have to be approved by the Commission.
The portion in italics has been relied upon by Mr. Chandhioke. But when the entire paragraph is read it does not subscribe to the narrow meaning sought to be placed on that passage. The principal question was the legal capacity of the Maharashtra electricity Regulatory Commission (MERC) to issue directions relating to the terms and conditions for supply of electricity energy fixed by the Maharashtra Electricity Board and to its right to claim transit loss of coal. The Division Bench took the view that transit loss of coal was beyond the control of MERC. It was also opined that the provisions of ERC Act would prevail over the Electricity Supply Act as well as the Electricity Act. The stance of MERC was that the terms and conditions of supply are fixed by the Board under Section 49 of the Supply Act and the Commission has no jurisdiction in respect thereof. A reading of a passage from a Judgment, without adverting to the facts of the case, is always fraught with the danger of wrongly applying the observations contained therein. The question which remains and has not been covered in the said Judgment is whether the claim for payment of arrears from a prospective consumer of electricity supplied to another consumer, is permissible. The second question which remains is whether a provision of this nature can be relied upon even in the absence of the approval of the State Legislature, as has been laid down in the provision itself.
7. In Sun Chem v. G.E.B. and Ors. the Court understandly found Isha Marbles to be inapplicable since it was a condition of the public auction that the dues of the erstwhile owners would have to be cleared. In Inndev Engineers (India) P. Ltd. v. Delhi Vidyut Board my learned Brother R.C. Chopra, J. had applied Isha Marbles to negative the legal propriety of transferring arrears of electricity charges from the connection at premises A to those as premises B; and the impugned action was seen as "illegal, arb ary, unwarranted and unjust". I am in entire agreement with the observations that the licensee should be prompt in disconnecting the electricity supply and thereafter should also file a suit for recovery of money/dues. This was despite having noticed that the defaulter and the company upon which the arrears had been transferred were within the same group. In CW 2340/2002 Doodh Nath v. DVB my learned Brother Sanjay Kishan Kaul, J. pursued the path traversed in Seena B Kumar observing that the purchaser has explicitly agreed to assume the liability of power arrears. In my view, the pervasive principle in such cases would be that even if recourse were to be taken of the ordinary civil remedy of recovery of dues, it would be the new consumer/owner who would be reverted to.
8. In Rajat Educational and Research Trust v. P.S.E.B. the Division Bench recorded that no connection had been established between the defaulting erstwhile owner/consumer and the purchaser and the latter had not taken over the liability of the former. Applying Isha Marbles to these facts the disconnection of electricity order had been quashed.
9. My learned Brother, Manmohan Sarin, J. has applied the principle of privity of contract in Shikha Properties Pvt. Ltd. v. NDMC 90 (2001) DLT 18 to strike down the Respondent's attempt to fasten responsibility and liability for payment of arrears on a landlord in respect of his tenants who had been favored with their own electric connection; the tenants were thus the registered consumers. Support was taken from the decision in Fateh Chand Murli Dhar v. MSEB Nagar AIR 1985 Bombay 197 wherein the dues of the tenants who had obtained a separate service connection were held to not be recoverable from the owner; the latter was not includable in the definition of "consumer" in Section 2(c) of the Electricity Act. In Nabin Agarwal v. CESC Ltd. it was again ordered that the prospective consumers cannot be required to make payment of outstanding dues of erstwhile consumers for purpose of getting a separate supply directly from the licensee. It was also opined that upon the coming in to force of the Electricity Act 2003 with effect from 10th June, 2003 the conditions of supply framed under the 1910 Act ceased to have any legal efficacy.
10. The following propositions can be distilled and culled out from the precedents perused above-
(a) Liability for arrears of electricity charges cannot be fastened on a prospective consumer as a pre-condition for supply electricity to any premises unless mala fides of the old and the new consumer are evident, and have been established
(b) The liability for payment of charges for electricity consumption would ordinarily fall on the consumer and not the premises.
(c) If a person is an heir or successor of the defaulting party, or assumes the liability of the defaulter, or had actual notice of existence of arrears, the said pre-condition may be valid. Where electric supply stands withdrawn it would become extremely difficult for the purchaser to asseverate that it was oblivious of the existence of arrears of electricity dues. Such purchases can be viewed as distress sales, made for depressed price; the purchaser cannot be permitted to profit at the expense of the Department. Exercise of extraordinary powers in favor of such a person, who is not the consumer as envisaged in the said statues and Rules/Regulations properly passed thereon, may justifiably be refused.
(d) However, disconnection as a stand-alone action, without initiation of recovery proceedings by way of a civil suit for recovery of arrears, would become unsustainable. If the dues become non-recoverable, refusal to supply energy unless such dues are cleared by the prospective customer could well be viewed as illegal.
(e) Disputed demands on account of arrears of electricity charges must be adjudicated in Court. Plainly, where electricity supply is discontinued after the premises are purchased, without there being any nexus between the purchaser and seller, the licensee should be directed to avail civil proceedings for recovery of its alleged dues.
(f) A purchaser in open auction, without notice of liability to make good the arrears, has a right to receive electric supply, if other conditions are complied with.
(g) These propositions may be rendered futile by the coming into force of a valid legislation, since it is only by this means that an artificial liability can be created.
11. Mr. Chandhioke submits that the last proposition stands complied with in the present case by valid legislation. The argument is that since Clause 2 of the General Conditions of Supply contained in the Tariff Order 1997-1998 and 2001-2002 has been framed by the Delhi Electricity Regulatory Commission (DERC for brevity), the expectation expressed in Isha Marbles has been met. These are critical to the debate and are reproduced for facility of reference:
2. General Conditions of Supply 2.1 Supply of electricity in all cases is subject to condition that :
i) The peripheral electrical services have been laid for the electrification of the area or where supply is required on HT (High Tension) or ET (Extra High Tension) system.
ii) The electrical load applied for is technically feasible from the existing system at the voltage applied for.
iii) The applicant is eligible to get electrical connection for the specific purpose under the provisions of the Act/ Supply Act/ Electricity Act/ Rules/ Regulations/ Orders.
iv) The applicant deposits development charges, advance consumption deposit and all such charges as may be applicable including outstanding dues against the premises and/or disconnected connection (s)
v) The applicant executes agreement with the board/licensee, submits Test Report of electrical installations and completes other commercial formalities, as specified from time to time.
12. The definition of "consumer" is found in Section 2(c) of the Indian Electricity Act, 1910 as well as in Section 2(15) of the Electricity Act 2003 which repeals the 1910 statute, and reads as follows:
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.
13. The power to discontinue/disconnect supply to a consumer is dealt with in Section 24 of the 1910 Act and Section 56 of the 2003 Act. They are in para materia and 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 property of the licensee, through which energy may be supplied, 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.
These provisions do not directly come into play for the reason that the petitioners are concerned with reconnection in contradistinction to disconnection. However, it should be noted that the language employed in these provisions relates to the person in neglect and not the premises in question. After reconnection or fresh connection, if the petitioners are found to be in default these provisions would authorise disconnection of power supply. They are not directly relevant for unraveling the legal nodus that has arisen in these petitions.
14. Mr. Chandhioke has relied heavily on Section 21(2) of the Indian Electricity Act, 1910 in order to predicate the validity of the provisions of Clause 2 of General Conditions of Supply. Section 21(2)reads as follows:
21. Restriction on licensees controlling or interfering with use of energy.__ (1) ...
(2) A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority, make conditions not inconsistent with this Act or with this license or with any rules made under this Act, to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such conditions; and any conditions made by a licensee without such sanction shall be null and void:
Provided that any such conditions made before the 23rd day of January, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this sub-section.
Obviously for the same reason Mr. Chandhioke has also relied on Section 49 of the Supply Act which reads as follows:
49. Provision for the sale of electricity by the Board to persons other than licensees.--(1) Subject to the provisions of this Act and of Regulations, if any made in this behalf, the Board may supply electricity to any person not being a licensee upon such terms and conditions as the Board thinks fit and may for the purposes of such supply frame uniform tariffs.
(4). In fixing the tariff and terms and conditions for the supply of electricity, the Board shall not show undue preference to any person.
It is plainly obvious even from a reading of these provisions that "Tariff" and "terms and conditions for supply" are different to each other. Reliance has also been drawn to Section 79 of the Supply Act which empowers the Board to make regulations now in consistent with the Act and Rules, inter alia, in respect of principles governing the supply of electricity by the Board to any person.
15. Clause 2.1(iv) of the General Conditions of Supply are contained in the Tariff Order 2001-2002. It explicitly requires payment of outstanding dues as a pre-condition for supply of electricity. For these provisions to to be legally effective, they must comply with the mandates of Section 21(2) of the Electricity Act 1919, which requires (a) their approval by the State Legislature and (b) their consistency with that Act. Obviously and uncontroverterly there is no statutory sanction for this regime, which are to be found only in a Tariff Order. Learned Counsel for the Respondent cite Ashok Soap Factory v. MCD in support of the contention that fixation of Tariff is a legislative function which cannot be assailed on the grounds of non-disclosure of reasons. This is no doubt a settled proposition of law, but what nevertheless needs to be answered is whether a provision making it compulsory to pay someone else's Bill partakes of the nature of tariff. The Concise Oxford English Dictionary expounds that tariff is a tax or duty to be paid on a particular class of imports or exports or a table of fixed charges made by a business, especially in a hotel or restaurant. The Chambers 21st Century Dictionary elucidates tariff to be a list of price for charges e.g. in a hotel or the tax or duty to be paid on a particular class of goods imported or exported or a list of such taxes and duties. The Collins Cobuild English Dictionary similarly explicates tariff as a tax that a Government collects on goods coming into a country or the rate at which a person is charged for public services. Black's Law Dictionary Fifth Edition interprets tariff as the list of schedule of articles on which a duty is imposed upon their importation with the rates at which they are severally taxed; also the custom or duty payable on such articles; a public document setting forth services being offered, rates and charges with respect to services and governing rules, regulations and practices relating to those services. Words and Phrases, Permanent Edition states that the following definition is practically the same as that given by Webster, Worcester, and the Standard Dictionaries - "As defined by the law dictionaries, the word "tariff" is a cartel of commerce; a book of rates; a table or catalogue, drawn usually in alphabetical order, containing the names of several kind of merchandise, with the duties or customs to be paid for the same as settled by authority or agreed on between the several princes and states that hold commerce together." Section 28(10)(b) of Delhi Electricity Reforms Act 2000 defines "tariff" to mean " a schedule of standard prices or charges for specified services which are applicable to all such specified services provided to the type or tyres of customers specified in the tariff". All these definitions do not make reference to conditions of supply.
16. It is not logical or possible to confuse and merge "tariff" with "conditions of supply"; these are distinct of each other. Their only connectivity can be understood by considering the example of the credit period granted to the consumer. The tariff or rates could not possibly remain static, immutable or the same where a customer is allowed six months in one case and six days in the other within which to make the payment for charges. The tariff would justifiably increase if a condition is introduced for its collection by the utility Authority or Company or its agency since expenses for collection would have to be budgeted in. The tariff may also vary according to the amount of consumption allowed or permitted to the consumer by the conditions of supply. It is in this light that the observations in MSEB v. MERC have to be understood, viz. that while fixing the tariff the condition leading to its supply has to be taken into consideration. The arguments of Mr. Diwan, learned counsel for MSEB were upheld. He had submitted that the accounting practice adopted by MSEB with regard to transit loss of coal had been consistent with the Electricity (Supply) Annual Account Rules framed under Section 69 of the Supply Act. It appears to me that the attempt to illogically fuse and merge tariff with conditions of supply is with the purpose of insulating the introduction of the pre-condition of clearance of outstandings in the Tariff Act by masquerading it as tariff. All that needs to be said is that assuming such a condition to have been legally enacted, the outstandings may get wiped out, thereby bringing the tariff down. Any other connectivity or cognateness will be legally illogical and incorrect. By planting a condition of supply in the Tariff, the Respondents cannot be allowed to hide behind the curtain drawn in the Ashok Soap Factory case. Tariff has the intrinsic nature of mutability and hence the legislature may be able to fix it only for a short period; therefore there is a necessity for the fiction of changes in Tariff incorporated by the executive continuing to partake of a legislative function.
17. Reliance on the decision of the Apex Court in Hyderabad Vanaspati is misplaced. It was inter alia laid down that (a) Conditions of Supply of electricity to consumers notified by the Board in exercise of powers under Section 49 of the Supply Act (not the Tariff Act) assumed statutory character; (b) this statutory character did not change merely because a contract containing the conditions had been signed with the consumer; (c) the Board was competent to frame such terms and conditions as were not inconsistent with the Act; (d) provisions regarding malpractices and pilferage of energy and frauds played by the consumer could not be seen as in conflict with the Electricity Act; and most importantly (e) the provisions (Clause 39) enabling disconnect on of electricity on detection of any malpractice with the power to restore supply on payment of half (50 per cent) of the provisional assessment was not violative of Article 14 of the Constitution. This case did not deal with the legal propriety of compelling a person to pay the dues of a distinctly different defaulter, or the inclusion of this condition in a Tariff Act rather than a Supply Act, or the efficacy of such an oppressive condition without the approval of the State Legislature. Sona Cooperative Housing Society is not per incuriam as the points of contention were altogether different. I am in complete and respectful agreement with the ratio thereof. In this context, it has not been denied that the assailed provision, regardless of whether it had been incorporated in the Tariff Rules and not the Supply Rules, has not obtained the imprimatur of the Legislature.
18. The answer may well be that the Respondents are mindful of the fact that arrears cannot mount-up without connivance of their own officials with the defaulting consumer. Alternatively, arrears may build-up because of their officers' negligence. If disconnection of electric supply is carried out in a timely and prompt manner, arrears would be eliminated. This is also the understanding of the Respondents themselves as can be gleaned from Office Order No. CO II/Com-26/36/10 dated 25th June, 1995, relevant portion of which reads as under:
Vide office order No. CO 22/183 dated 1st October, 1966, the instructions were issued wherein AFOs have been made personally responsible for the outstanding dues accumulated beyond the security deposit, which was further reiterated vide office order No: CCO. 22(92/74-75 dated 13th January, 1975 that any lapse resulting in loss of revenue to the undertaking shall be dealt seriously and the amount is liable to be recovered from the official responsible for accumulating the same beyond the security deposit.
It has been observed that there are lot of cases where arrears of electricity charges have been allowed to accumulate for months together and much beyond the security (or consumption) deposit against such connections, which is laxity on the part of Accounts Department who are responsible for timely recovery of outstanding dues which is not being paid proper attention. To avoid illegal restoration, supply should be disconnected from feeding point, if feasible. In case request for restoration is not received within a month of disconnection, order for meter removal etc. should be issued.
It has been viewed very seriously and hereby all concerned are warned that if in future there will be delay in recovery of outstanding dues from the existing consumers beyond their security deposit (now consumption deposit), serious action shall be taken against defaulting officials.
The Respondents would, therefore, have correctly anticipated the rejection by the peoples' representatives of the imposition of any artificial liability on a consumer. The State Legislature would at least balance the rights of the citizen against that of a monopolistic undertaking supplying a product (energy) without which life would become unbearable. It is for very good reason, therefore, that validity of a subordinate legislation such as the present one has been made subject to the approval of the legislature itself. It is only upon its approval that it metamorphoses into a statutory provision itself. I am also of the view that disguising this liability as a tariff is a sagacious but futile attempt to circumvent the need to receive the approval of the State Legislature. In this analysis the Isha Marbles mandate continues to apply and the Respondents cannot be allowed to rely on provisions which do not manifest tariff character but are clearly conditions of supply of electricity. Clause 2.1 (iv) of the General Conditions of Supply contained in the Tariff Order 1997-1998 and 2001-2002 which obliges, nay enjoins, an applicant for the supply of electricity to deposit charges "including outstanding dues against the premises and/or disconnected connection(s)" is struck down as ultra vires the Electricity Act as well as the Supply Act.
19. Reliance has also been placed on the following provisions of the DERC (Performance Standards Metering and Billing) Regulations 2002:
7. Transfer of ownership of Connection.- The licensee shall deal with the application relating to transfer within the time limits as prescribed below:
(i) Change of ownership of connection due to change in ownership/occupancy of property:
The applicant shall apply for change of ownership of connection along with copy of latest bill duty paid on the format prescribed by the licensee. The application shall be accepted on showing proof of lawful ownership/occupancy of property. The license shall give a demand note for advance consumption deposit within seven days under proper receipt. The applicant shall make the payment within 10 days of receipt of demand note. After payment, the change of ownership of connection shall be effected within two billing cycles.
(ii) Transfer of ownership of connection to legal heir: The applicant shall apply for change of ownership of connection with copy of latest bill duly paid on the format prescribed by the licensee. The application shall be accepted on showing proof of legal heir ship and no objection certificate from other legal heirs, if any. The change of ownership of connection shall be effected within two billing cycles after acceptance of application. However, if the change of ownership of connection is not effected within the said two billing cycles, a penalty as specified in chapter IX shall be paid by the licensee.
14. Change of occupancy/vacancy of premises.--(i) It shall be the responsibility of the owner of the connection to get a special reading done by the licensee at the time of change of occupancy or on the premises falling vacant.
(ii) The owner/user of the connection may request in writing to the licensee for special reading at least 30 days in advance of the said vacancy of the premises by the existing user or change of the occupancy, as the case may be.
(iii) The licensee shall arrange a special reading to be done and deliver the final bill, including all arrears till the date of billing, at least 7 days before the vacancy of the premises. The final bill shall also include payment for the period between the date of special reading and date of vacancy of premises on pro-rata basis.
(iv) Once the final bill is raised, the licensee shall not have any right to recover any charge(s), other than those in the final bill, for any period prior to the date of such bill.
None of these provisions impose the liability on the new incumbent consumer for payment of arrears of electricity left outstanding by the previous consumer. These provisions on the other hand fortify the view taken above, namely, that if this liability were to be thrust upon the purchaser it could easily have been incorporated in these Regulations itself, if not in their parent statute, namely, Delhi Electricity Reforms Act 2000. Provisions of such far-reaching consequences must be contained in the statute itself if it is to withstand an assault on the grounds of excessive delegation. It may thereafter be adumbrated amplified, clarified or regulated by subordinate legislation such as the aforementioned DERC (Performance Standards Metering and Billing) Regulations 2002. It should also be noted that these Regulations have come into effect on 1st April, 2003. There can be no gainsaying that while considering the vires of subordinate legislation the Court should start with presumption that it is intravires. (see Indian Express Newspapers (Bombay) Pvt. Ltd. v. Union of India . The "legislation", however, has not been placed before the Legislature but has been inserted in the Tariff Act. DERC (Performance Standards Metering and Billing) Regulations 2002 further defines energy charges to mean the charges for energy actually consumed by the consumer in any billing cycle. To use the terms coined above the Regulations are "consumer-centric" rather than "premises-centric". It is on lines similar to those articulated in Section 2(15) of the Electricity Act 2003 which speaks of a consumer as a person who is supplied with electricity for his own use. Clause 2.1(iv) of the Tariff Act 1997-98 and 2001-2002 is struck down.
W.P. (C) No. 3532 of 2003
20. The petitioner had purchased Property bearing Municipal No. 10, JA Road, Civil Lines, Delhi by means of a registered Sale Deed dated 17th September, 2002; possession of this property was taken on that very day. At that point of time dues of Rs. 7,48,720 towards electricity consumed by the previous consumer namely Jathedar Richpal Singh who was the tenant of the premises, was outstanding. These dues had accumulated over six and half years, during which the officials of the Respondent had either slept over their power and bounden duty to disconnect electric supply to the premises or had connived with Jathedar Richpal Singh in the creation of these arrears. It is not denied that a Civil Suit had been filed against Jathedar Richpal Singh bearing Suit No. 857/98 in the Court of the Civil Judge, Delhi. A disconnection Notice appears to have been issued for the first time on 3rd March, 2003, and was accompanied by a Bill for the period 4th February, 2003 to 28th February, 2003 demanding the sum of Rs. 7,87,564.6 including current charges of Rs. 1030; it was stated in the said Bill that no payment had been received after 3rd January, 1996. This Bill was in the name of Jathedar Richpal Singh. In April, 2003 the petitioner reminded the Respondent of the pendency of a civil suit filed by Jathedar Richpal Singh against Delhi Vidyut Board praying for the decree of permanent injunction. A temporary injunction was passed on 28th November, 2000.
21. It is also relevant to note that in the Sale Deed executed in favor of the petitioner Clause 6 reads as follows:
That the property tax in respect of the said property shall be the sole responsibility of the vendors for the period up to the date of handing over of possession and execution of this Sale Deed and for the subsequent period the liability for the payment of the same shall be discharged by the vendees. The Vendors, however, shall carry no liability to pay the arrears of electricity and water and other such charges which shall be paid by the Vendees.
22. The facts of the case make it very difficult for the writ Court to rule on the dispute. This is for the reason that it is palpably clear that the petitioners were fully aware of the existence of outstanding dues in regard to the premises. If this were not so Clause 6 reproduced above would not have been incorporated into the Sale Deed. It would also be fair to assume that the transaction was in the nature of a distress sale because possession was taken by the petitioners from the erstwhile tenant and defaulter Jathedar Richpal Singh. The writ Court would not permit the petitioner to pocket amounts apparently due to the Respondents. On the other hand the DVB has not even filed a suit for claiming the arrears of electricity dues.
The complicity and connivance of the DVB is also obvious from the fact that during the passage of over six years it did not disconnect electric supply.
23. The provisions permitting and empowering Respondents to claim arrears from the purchaser of the premises and/or the prospective consumer, contained in the Tariff Act, have already been held to be illegal and ultra vires. Since the petitioner had due knowledge of the existence of arrears of electricity dues, this case, does not fall within the ratio set down in Isha Marbles. The only way out of this quandary is to direct the petitioners to pay dues corresponding to electricity consumed by Jathedar Richpal Singh for three years prior to the purchase of the property i.e. from 18th September, 1999 to 17th September, 2002. The Respondents are directed to initiate appropriate proceedings against the officials who were posted in the area at the relevant time. These Orders are restricted to its own facts.
W.P. (C) No. 2479 of 2003
24. The petitioner purchased Shed-1 Category-1, DIDC Complex, Nangloi, Delhi. It's name stands mutated in the records of the DSIDC after it had paid full consideration and transfer fee as in December, 2001. On 15th November, 2002 the petitioner got the requisite Municipal license for the running of an industry on the premises. A fortnight latter on 30th November, 2002 the petitioner applied for transfer of the existing electricity connection in the premises. A month later, on 30th December, 2002 the petitioner applied for a new connection since no response had been allegedly received by it from the Respondents. The Respondents asseveration is that Connection No. 002-156-022/IP was sanctioned for a load of 89.52 kw in the name of Shri Dev Arora. As per Inspection dated 22nd April, 1997 a connected load of 169.11 KW was detected. Accordingly, a Demand of Rs. 5,14,168.83 for a period of six months preceding the date of inspection was raised on LIP Tariff. In proceedings before the Permanent Lok Adalat the petitioner paid this demanded sum. The present claim of Rs. 43,17,190.92 is stated to be for the period 22nd April, 1997 to 2nd May, 2002 after adjustment of LIP demand raised before that period. The Respondents claim for Rs. 43,54,047.13 is towards excess load and has been raised in response to the petitioner's application for transfer of the old connection and thereafter for the grant of a fresh connection. In the circumstances of the case I am of the view that the amount claimed by the Respondents must be proved by them. An Authority cannot be permitted to raise an astronomical demand on a citizen and refuse to supply electricity until that non-adjudicated claim is settled. There is nothing on record to indicate even prima facie that there is connection between the petitioner and Shri Dev Arora thereby giving the purchase transaction the colour of mala fide attempt to escape liability for payment of arrears of consumption of electricity. In any event it is not even prima facie evident that amounts were due from Sh. Dev Arora. These observations shall not influence the decision in CWP 715/2003. The petitioner has also claimed damages at the rate of Rs. 1000 per day under Section 43(3) of the Electricity Act 2003.
25. Writ Petition No. 2479 of 2003 is accordingly allowed. The Respondents are directed to give a fresh connection to the petitioner within fifteen days from today as per its request dated 30th December, 2002.
26. So far as the claim under Section 43(3) of the Electricity Act 2003 is concerned the maximum liability under this provision works out to approximately Rs. 10 lacs as on date. I award a sum of Rs. 99,000 in respect of this claim which shall be credited to the account of the petitioner. These are only token damages in the hope that the citizen is not vexed by the Respondents in the future. It is true that the petitioner had not purchased the premises through an auction and, therefore, Isha marbles would not apply. However, keeping in perspective the absence of any provision enabling the Respondents to demand arrears from a new consumer, and keeping in view the fact that no mala fides have been proved against the petitioner, the writ petition ought to be allowed.
27. The writ petition is disposed of in these terms.
W.P. (C) No. 10586 of 2004
28. The petitioner contends that the previous tenant of the vendor from whom he had purchased the property on 7th February, 2003 had trespassed into three rooms thereof on 9th February, 2003. Since litigation is pending between these parties no observations contained herein should be construed as a finding of this Court. The uncontrovertable fact is that the petitioner had to face litigation from the trespasser/occupant/tenant in respect of supply of electricity. After the filing of actions in the District Court and the Court of the Rent Controller, the petitioner had applied for an independent electric connection on 24th April, 2004 He had also deposited the demanded sum of Rs. 20,370 towards arrears. On 28th April, 2004 the petitioner deposited a sum of Rs. 4,250 towards a new connection and the premises were energized on 21st June, 2004 The first prayer in the writ petition is for the issuance of a direction to the Respondents to adjust the sum of Rs. 20,370 being an illegal demand raised by the Respondents. The facts, however, are similar to that of Madhu Garg's petition. Supply of electricity, however, had been disconnected on the date when the purchase was made and, therefore, the petitioner had due knowledge of the existence of arrears. The case, therefore, does not fall within the ratio set down in Isha Marbles. Under Article 226 of the Constitution this Court will not assist a person from making a profit, in the context of arrears existing on the property, by entering in to what prima facie appears to be a distress sale. So far as the prayer for restraining the Respondents from sanctioning any independent connection in the name of a third party is concerned, it essentially entails deciding disputed questions of fact which I consider to be inappropriate in the facts of this case.
29. The writ petition No. 10586 of 2004 is accordingly dismissed.
W.P. (C) No. 7638 of 2002
30. After hearing learned counsel for the Respondent I am of the view that this petition ought not to have been linked with the others in which Isha Marbles (supra) was at the fulcrum of arguments. The petitioner's own case is that she had purchased the subject property on 17th October, 1997 by execution of a General Power of Attorney, Agreement to Sell, Receipt, Will etc. Her asseveration that she had informed the Delhi Vidyut Board of the misuse of the connection and had requested for sanction of a fresh connection by its letter dated 1st November, 1997 has been categorically denied. Even in these circumstances the postal receipt has not been filed. I am unable to accept the petitioner's ipse dixit. The petitioner has further contended that her tenant, who was misusing the electricity connection, had not been paying the Electricity Bills as well as rent is equally incredible. No steps for the tenants ejectment, or disconnection of electricity supply has been initiated by her in the long period of five years between 17th October, 1997 and 31st October, 2002 when she allegedly received possession of suit property from the tenant. The alleged Surrender Deed contains the following significant contents which lead to the conclusion that the petitioner should have made payment and then initiated recovery proceedings against the alleged tenant --
The first party has already paid the electricity charges to the Electricity Board and nothing is due against electricity charges from the first party. The second party has suo moto agreed to forgo the payment of rent which was due from the first party to the second party and the first party has delivered vacant, peaceful, physical and actual possession of the tenanted premises to the second party and now nothing is due from the first party to the second party.
31. The contention of the petitioner that she had no knowledge of the illegal activities of the Tenant cannot be believed. In any event the petitioner has constructive notice of such activities. This case constitutes an exception to the general rule and assumption that the erstwhile consumer is liable for the arrears of energy consumption to the premises.
32. Writ petition No. 7638 of 2002 is accordingly dismissed.
W.P. (C) No. 1105 of 2002
33. I do not propose to enter upon the facts of the present case since the matter has been adjudicated by the Bijli Adalat which, on 6th October, 2001 passed the following order DELHI VIDYUT BOARD Sh. Nasib Singh, DISTT. ROHINI F.No. 58, Pkt. A-1, BIJLI ADALAT Shop No. 3, Sec.5, Rohini. HELD ON 6.10.01 K.No. 561-1267335/Y-105/DL/DM. CASE NO. 4 DECISION The officials of DVB have not brought the latest orders on the point. However, we remember that there is a ruling of the Hon'ble Supreme Court wherein it has been specifically directed that the purchaser is not liable to pay the dues which were payable by the original consumer because electricity dues are not a charge on the property but it is a charge on the user. If that is the position, the present complainant who seeks a new connection cannot be made liable to pay the arrears of the registered consumer who is no more the owner of the premises. This case be put up in the next Bijli Adalat to be held on 3.11.2001 for final disposal.
(M.K.SANGAL) (D.R.SETHI) (SHRI GOPAL) Chairman, B.A., D_DHN Member_Secy. Member This Order was not complied with and as a consequence on 5.1.2002 the following order was passed DELHI VIDYUT BOARD Sh. Anil Kumar Singh (Applicant) Sh. Nasib Singh, (R/C) DISTT. ROHINI Flat No. 58, Pkt. A-1 BIJLI ADALAT Shop No. 3, Sec. 5, RHN. HELD ON 5.1.02 K.NO. 56Y1-1267335/Y-105/DL/DM CASE NO. 15 DECISION Consumer's grievance is against non-compliance of the order passed by this Bijli Adalat on 3rd November, 2001 in case No. 1. Sh.Sethi, XEN(D) RHN states that there are clear guidelines from the Department not to sanction electricity connection till the arrears on pro-rata basis are paid by the applicant. It had clearly been mentioned in the order referred above that in view of the law laid down by the Hon'ble Supreme Court in the case of Isha Marbles v. Bihar Electricity Board that arrears cannot be recovered from the subsequent purchaser because electricity dues are charged on the person and not on the property, so fresh connection cannot be refused to the applicant Sh. Anil Kumar Singh. Sh. Sethi states that he had moved the higher authorities but they insisted that the guidelines issued by the Department should be followed. If that is so, Sh. Sethi would be advised to show the ruling of the Hon'ble Supreme Court to higher authorities and seek orders for implementation of this order within 15 days from today. This case be put up for fresh directions in the next Bijli Adalat to be held on 2nd February, 2002.
(M.K.SANGAL) (D.R.SETHI) (SHRI GOPAL) Chairman, B.A., D_DHN Member_Secy. Member
34. The writ petition No. 1105 of 2002 is allowed and the Respondent is directed to grant a fresh connection to the petitioner within fifteen days from today.
W.P (C) No. 3996 of 2002
35. The petitioner purchased the subject property in a public auction which transaction was confirmed by the Debt Recovery Tribunal, New Delhi on 20th May, 2003. The Respondent has obliquely attempted to set up a case that the existence of arrears on account of electric supply was known to the petitioner. This is not borne out from the records. On the facts of the case of the petition it falls squarely within the ratio set down in Isha Marbles.
36. The writ petition No. 3996 of 2002 is allowed and the Respondents are directed to grant a fresh electric connection to the petitioner for the subject property within fifteen days from today. The petitioner shall also be entitled to costs which is quantified at Rs. 5,000.