K. C. NINAN v. KERALA STATE ELECTRICITY BOARD & ORS.

A The Judgment of the Court was delivered by DR DHANANJAYA Y CHANDRACHUD, CJI Table of Contents* A. Overview .......................................................................... 4 B B. Regulatory Regime ........................................................... 5 C. The position in law ......................................................... 10 D. Issues .............................................................................. 14 E. Submissions .................................................................... 15 C F. Analysis .......................................................................... 25 G. Application: Facts of Individual Cases ........................... 89 I. Kerala ............................................................................. 90 II. Maharashtra ................................................................... 99 D III. Gujarat .......................................................................... 132 IV. Assam........................................................................... 166 V. West Bengal ................................................................. 170 H. Equity and Fairness ...................................................... 175 E I. Conclusions ................................................................... 177 A. Overview

1Copy pinpoint1. The nineteen cases in this batch of appeals follow a similar pattern of facts. The supply of electricity was discontinued due to the failure of the previous owners to pay the dues for consumption of electricity on the premises. The previous owners had borrowed money or raised loans on the security of their premises. In some cases, the erstwhile owner went into liquidation. The premises were sold in auction sales generally on an “as is where is” basis. The new owners, who purchased the properties in auction, applied for new electricity connections for the premises to which electricity had been disconnected for failure to pay the dues. The Electric Utilities refused to provide an electricity connection unless the auction purchaser paid the dues of the previous owner. This refusal was derived from powers conferred under subordinate legislations, notifications, electricity Supply Codes or state regulations. H *Ed. Note : Pagination in the Table is as per the original Judgment.

K. C. NINAN v. KERALA STATE ELECTRICITY BOARD & 653 ORS. [DR DHANANJAYA Y CHANDRACHUD, CJI]

The denial of electricity supply resulted in the institution of petitions under A Article 226 before the High Court, leading to the judgments which are in appeal.

2Copy pinpoint2. In Maharashtra State Electricity Board v. Super & Stainless Hi Alloy Ltd1, this Court by an order dated 24 August 2006 referred the Civil Appeals to a Bench of three Judges for dealing with the issue of the recovery of arrears of electricity. The order of reference referred the question of whether electricity dues constitute a charge on the property so far as the transferor and the transferee of the unit are concerned.

3Copy pinpoint3. The matters involving similar nature of dispute were tagged along with the above reference by an order dated 1 November 2007. The issue which is raised in these appeals is whether the arrears of unpaid electricity dues outstanding from the erstwhile owner can be claimed from the subsequent owner, who has acquired the property in proceedings initiated to enforce mortgages or to pay off the dues of creditors. D

B. Regulatory Regime

4Copy pinpoint4. Electricity is a concurrent subject under the Constitution of India. Prior to the enactment of the Electricity Act 20032, the Electricity Act 19103 governed the supply and use of electrical energy in India. The E 1910 Act prescribed the legal framework for laying down cables and other works related to the supply of electricity. It also laid down a legal framework for supply of electrical energy and imposed certain responsibilities and obligations on persons licensed to supply electricity with a view to incentivise the growth of the electricity industry through private licensees. F

5Copy pinpoint5. Section 2(c) of the 1910 Act defined “consumer” as any person supplied with energy by a licensee or any other person engaged in the business of supplying energy to the public under the Act, and included any person whose premises were for the time being connected for the purposes of receiving energy. Section 21(2) empowered a licensee to G make conditions to regulate their relations with persons who were or intend to become consumers. Section 22 obligated a licensee to supply 1 Civil Appeal Nos 5312-5313 of 2005 2 “2003 Act” 3 “1910 Act” H

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A electrical energy, on application, to every person within the area of supply on the same terms as those on which any other person in the same area was entitled. Section 24 empowered the licensee to disconnect the supply of electricity if any person neglected to pay any charge or sum for energy due to the licensee.

6Copy pinpoint6. The 1910 Act was found inadequate for a coordinated development of electricity and a “grid-system” in India. Therefore, the Electricity (Supply) Act 19484 was enacted for the rationalisation of the production and supply of electricity and for taking measures conducive to the development of electricity. The 1948 Act mandated the state governments to constitute State Electricity Boards under Section 5 and C entrusted them with the responsibility of administering the grid-system and arranging the supply of electricity in the state. Section 26 provided that, subject to the provisions of the Act, the Board shall have all the powers and the obligations of a licensee under the 1910 Act. Section 49 empowered the Boards to supply electricity to any person, not being a D licensee, on such terms and conditions as laid down by the Board. In terms of Section 70(2), the provisions of the 1948 Act were in addition to, and not in derogation of the 1910 Act.

7Copy pinpoint7. Parliament enacted the Electricity Regulatory Commissions Act 19985 with an aim to distance the government from determination of tariffs. The 1998 Act created the Central Electricity Regulatory Commission and enabled the state governments to create State Electricity Regulatory Commissions.

8Copy pinpoint8. Parliament consolidated and harmonised the provisions of the 1910 Act, 1948 Act, and 1998 Act by enacting the 2003 Act. In the process, the 2003 Act repealed the aforesaid three legislations. The long title of the 2003 Act reads as follows: “An Act to consolidate the laws relating to generation, transmission, distribution, trading and use of electricity and generally for taking measures conducive to development of electricity industry, promoting competition therein, protecting interests of consumers and supply of electricity to all areas, rationalisation of electricity tariff, ensuring transparent policies regarding subsidies, promotion of efficient and environmentally benign policies, constitution of Central Electricity Authority, Regulatory Commissions and 4 “1948 Act” H 5 “1998 Act”

K. C. NINAN v. KERALA STATE ELECTRICITY BOARD & 655 ORS. [DR DHANANJAYA Y CHANDRACHUD, CJI]

establishment of Appellate Tribunal and for matters connected therewith or incidental thereto.”

9Copy pinpoint9. The 2003 Act has been enacted in pursuance of the policy of encouraging private sector participation in the generation, transmission, and distribution of electricity. Other objectives of the 2003 Act include vesting the regulatory responsibilities from government to the regulatory commissions, delicensing of electricity generation, promotion of captive generation, and encouraging open access transmission. Section 2(15) of the 2003 Act defines ‘consumer ‘in terms similar to Section 2(c) of the 1910 Act. Part VI of the 2003 Act deals with distribution of electricity. Section 43 casts a Universal Service Obligation6 on the distribution licensee to provide supply of electricity to the premises of an owner or occupier. The State Commission has been empowered under Section 50 to specify an Electricity Supply Code to provide among other things for the recovery of electricity charges, intervals for billing of electricity charges and disconnection of supply of electricity for non-payment. Under Section 56, the generating company or distribution licensee, as the case may be, may disconnect electricity supply of any person who neglects to pay any charge or sum for electricity. Section 181(2)(x) provides that the State Commission may make regulations inter alia providing for, the Electricity Supply Code under Section 50.

10Copy pinpoint10. In light of the provisions contained in the 1910 Act, 1948 Act, E and 2003 Act, various Electric Utilities such as State Electricity Regulatory Commissions, State Electricity Boards, and distribution licensees notified Conditions of Supply requiring the new owner of premises to clear the outstanding dues of the previous owner. The nineteen cases in the batch of appeals originate from the States of Kerala, Maharashtra, Gujarat, Assam, and West Bengal. F

11Copy pinpoint11. In Kerala, the Kerala State Electricity Board7 notified the Conditions of Supply of Electrical Energy in 1990. Condition 15(e) of the Conditions of Supply provides that reconnection or a new connection shall not be given to any premises unless the arrears due to the Board are cleared. G

12Copy pinpoint12. In Maharashtra, the Maharashtra State Electricity Board8 framed MSEB Conditions and Miscellaneous Charges for Supply of 6 “USO” 7 “KSEB” 8 “MSEB” H

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A Electrical Energy, 19769 in exercise of power under the 1948 Act. Clause 23(b) of the MSEB Conditions of Supply allowed the Board to refuse to supply or give a new electricity connection to any person claiming to be an heir, legal representative, transferee, assignee or successor of the defaulting consumer. After the enactment of the 2003 Act, the Maharashtra Electricity Regulatory Commission (Electricity Supply Code B and other Conditions of Supply) Regulations 200510 were framed. Regulation 10.5provides that unpaid electricity dues constitute a charge on the property and can be recovered from the transferee (subject to a maximum of six months of unpaid charges for electricity supplied).

13Copy pinpoint13. In Gujarat, the Gujarat Electricity Board inserted Condition C 2(j) in the Conditions and Miscellaneous Charges for Supply of Electrical Energy in 2001.11 This condition empowered the Board to insist that the new occupier of the premises clear the pending electricity dues of the previous consumer as a precondition to reconnection or release of a fresh connection. In 2005, the Gujarat Electricity Regulatory Board D notified the Gujarat Electricity Regulatory Commission (Electricity Supply Code and Related Matters) Regulations, 200512. Clause 4.1.11 of Gujarat Electricity Supply Code, 2005 provided that only the dues of the applicant, if any, were required to be paid at the time of the application for a new connection. The said Clause was later amended in 2010 to provide that the distribution licensee need not entertain an application for reconnection or a new connection unless any dues relating to those premises are cleared.

14Copy pinpoint14. In Assam, the Assam Electricity Regulatory Commission13 framed the Assam Electricity Regulatory Commission (Electricity Supply Code and Related Matters) Regulations, 2004. 14 Clause 3.6 dealing with the requisition of electricity supply requires a person occupying a new premises to ensure that all the outstanding electricity dues are duly paid up and discharged.

15Copy pinpoint15. In West Bengal, the West Bengal Electricity Regulatory Commission (Electricity Supply Code) Regulations, 201215 have been G 9 “MSEB Conditions of Supply” 10 “Maharashtra Electricity Supply Code 2005’’ 11 “Gujarat Conditions of Supply”

12 “Gujarat Electricity Supply Code”

13 “AERC”

14 “AERC Supply Code”

H 15 “WB Electricity Supply Code”

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notified under the 2003 Act. Clause 3.4.2 of the said regulations empowers A the licensee to recover the dues of a previous consumer in respect of the premises from a new consumer only if there is a nexus between the previous consumer and the new consumer.

16Copy pinpoint16. The subsequent owners or occupiers of the premises challenged the Conditions of Supply and Electricity Supply Codes enacted by the B Electric Utilities before the respective High Courts when they were called upon to clear the arrears of the previous owners or dues relating to the premises. C. The position in law

17Copy pinpoint17. Prior to the enactment of the 2003 Act, in Isha Marbles v. C Bihar State Electricity Board,16 a three-judge Bench of this Court held that in the absence of a charge being created over the premises by a statutory regulation, an auction purchaser cannot be asked to clear the past arrears of electricity dues as a condition precedent to the grant of electricity. This Court elucidated the position in the context of Section 24 D of the 1910 Act to emphasise that the contract for supply was only between the Electricity Board and the previous consumer, and the subsequent purchaser was neither a consumer within the meaning of the 1910 Act nor had any contractual relationship with the Electricity Board. This Court noted that though electricity is public property which the law must protect, yet the law, as it stood at that time, was inadequate E to enforce the liability of unpaid electricity charges of a previous consumer against a subsequent purchaser of the premises. In Isha Marbles (supra), this Court did not have to deal with any statutory rule, regulation or conditions of supply dealing with the imposition of liability for the payment of electricity dues on a subsequent purchaser. F

18Copy pinpoint18. Thereafter, another Bench of three judges in Ahmedabad Electricity Co. Ltd. v. Gujarat Inns (P) Ltd,17 held that in a 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 supplied to the premises in the G absence of a specific statutory provision in that regard. However, this Court opined that there was a need for reconsideration of the “wide propositions of law” laid down in Isha Marbles (supra). 16 1995 SCC (2) 648 17 (2004) 3 SCC 587 H

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19Copy pinpoint19. In Hyderabad Vanaspathi Ltd v. Andhra Pradesh State Electricity Board,18 a three-judge Bench of this Court observed that the terms and conditions of supply notified by the Electricity Boards are statutory in character as they have been framed in exercise of statutory power under Section 49 of the 1948 Act. The mere fact that individual agreements were entered into with every consumer did not make the agreement contractual in nature.

20Copy pinpoint20. In a series of subsequent decisions of this Court, various two- judge Bench decisions have taken note of specific statutory regulations enabling recovery of dues from subsequent purchasers. In the process, this Court distinguished Isha Marbles (supra), where the Court had no occasion to consider similar provisions. In Dakshin Haryana Bijli Vitran Nigam Ltd v. M/s Paramount Polymers Pvt Ltd,19 this Court was dealing with Clause 21A of the relevant Conditions of Supply, which entitled a licensee to demand payment of outstanding dues from a transferee if they desired a service connection. It was held that Isha D Marbles (supra) cannot be applied to strike down Clause 21A as the Court in that case had no occasion to consider the effect of a similar clause. The matter was remitted back to the High Court for a fresh decision since it had not adjudicated on the implication of Clause 21A of the Conditions of Supply.

21Copy pinpoint21. In Paschimanchal Vidyut Vitran Nigam Limited v. DVS Steels and Alloys Private Limited,20 this Court observed that a licensee or an electricity distributor can insist upon fulfilment of statutory rules, regulations or the conditions of supply so long as they are not arbitrary and unreasonable. It was further held that the conditions of supply mandating the clearance of electricity dues of a previous owner F by a new purchaser before electricity supply is restored or a new connection is given to the premises cannot be termed as unreasonable or arbitrary.

22Copy pinpoint22. The position of law as formulated in Paramount Polymers (supra) and Paschimanchal Vidyut Vitaran Nigam Limited (supra) G has been consistently followed by this Court in ensuing decisions. Recently, in Telangana State Southern Power Distribution Co. Ltd. v.

18 (1998) 4 SCC 470 19 AIR 2007 SC 2 20 (2009) 1 SCC 210 H

K. C. NINAN v. KERALA STATE ELECTRICITY BOARD & 659 ORS. [DR DHANANJAYA Y CHANDRACHUD, CJI]

Srigdhaa Beverages,21 this Court reiterated the judicial thinking on the A liability of subsequent owners with regard to the electricity dues of the past owners. This Court observed: “16.1. That electricity dues, where they are statutory in character under the Electricity Act and as per the terms & conditions of supply, cannot be waived in view of the provisions of the Act B itself more specifically Section 56 of the Electricity Act, 2003 (in pari materia with Section 24 of the Electricity Act, 1910), and cannot partake the character of dues of purely contractual nature 16.2. Where, as in cases of the E-auction notice in question, the existence of electricity dues, whether quantified or not, has been C specifically mentioned as a liability of the purchaser and the sale is on “AS IS WHERE IS, WHATEVER THERE IS AND WITHOUT RECOURSE BASIS”, there can be no doubt that the liability to pay electricity dues exists on the respondent (purchaser) D 16.3. The debate over connection or reconnection would not exist in cases like the present one where both aspects are covered as per clause 8.4 of the General Terms & Conditions of Supply.” Having set the stage of the legal and decisional framework, we have been tasked to decide the present batch of appeals. E D. Issues

23Copy pinpoint23. Based on the submissions of the parties, the specific issues which arise for determination are: a. Whether the Universal Service Obligation under Section 43 of the 2003 Act is linked to premises to which the connection is sought; b. Whether a connection of electricity supply sought by an auction- purchaser comprises a reconnection or a fresh connection; c. Whether the power to recover arrears of a previous owner or occupier from an auction-purchaser of the premises falls within the regulatory regime of the 2003 Act; d. Whether the power to enable the recovery of arrears of the previous owner or occupier from an auction-purchaser can be 21 (2020) 6 SCC 404 H

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A provided through subordinate legislation by the State Commissions; e. Whether the 1910 Act, 1948 Act, and the 2003 Act have express provisions enabling the creation of a charge or encumbrance over the premises; B f. Whether the statutory bar on recovery of electricity dues after the limitation of two years provided under Section 56(2) of the 2003 Act, will have an implication on civil remedies of the Electric Utilities to recover such arrears; and g. What is the implication of an auction-sale of premises on “as is where is” basis, with or without reference to electricity arrears of the premises? E. Submissions

24Copy pinpoint24. To put the above-mentioned issues in their proper context, we refer to the broad legal submission adduced before us by the parties. I. Electric Utilities

25Copy pinpoint25. Sarvashri M G Ramachandran, Mr Ranjit Kumar, Mr Vijay Hansaria, Mr. Ajit Bhasme, learned senior counsel appearing for Electric Utilities have made the following submissions: E a. USO is not absolute i. The duty of the licensee to supply electricity under Section 43 of the 2003 Act is not absolute. Section 43 provides that an applicant has to fulfil the corresponding obligations to become entitled to the supply of electricity; F ii. Section 43(1) opens with the words “save as otherwise provided in the Act”, which brings in compliance with other provisions of the 2003 Act including Section 50 which empowers the State Commission to specify the Electricity Supply Code; G iii. The Explanation to Section 43(1) requires the applicant to submit an application complete in all respects along with documents showing payment of necessary charges and other compliances. This payment not only includes application fees, but also includes the charges related H

K. C. NINAN v. KERALA STATE ELECTRICITY BOARD & 661 ORS. [DR DHANANJAYA Y CHANDRACHUD, CJI]

to supply of electricity; The other compliances would include due discharge of any pending or outstanding dues, if so demanded by the licensee; and iv. Section 43(2) specifically provides that the applicant has to fulfil the obligation to pay the price as determined by the State Commission to demand the supply of electricity. The term “price” used in Section 43 is the consideration for the supply of electricity. b. Supply of electricity is with respect to premises i. The supply of electricity is with reference to the “premises” according to Sections 2(15), 43, 45, and 50 C of the 2003 Act. Similar provisions existed in the 1910 Act and 1948 Act. Further, the disconnection dealt in Section 56 of the 2003 Act and Section 24 of the 1910 Act necessarily relate to identified premises; ii. The definition of consumer under Section 2(15) of the D 2003 Act includes “any person whose premises are for the time being connected for the purpose of receiving electricity with the works of a licensee…” Hence the expression “premises” is the continued identified place for supply of electricity, irrespective of any change in the owner or occupier; and iii. The Electric Utilities are required to have an infrastructure in place for the purposes of supplying electricity to consumers. They have to incur operation and maintenance costs to be in readiness to supply electricity. Therefore, if liability is not fastened to the premises, such charges would ultimately be borne by the general consumers since this would be factored in the fixation of tariff. c. Regulatory regime to recover arrears of electricity dues G i. Section 49 of the 1948 Act empowers the Electricity Board to supply electricity upon such terms and conditions as the Board thinks fit. Under Section 79 of the 1948 Act, the Board can make regulations not inconsistent with the Act and the Rules made H

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A thereunder. In Hyderabad Vanaspathi (supra) this Court held that terms and conditions of supply framed by the Electricity Board under Section 49 of the 1948 Act are statutory in character; ii. The terms and conditions of supply under the 2003 Act B are framed by independent regulators in terms of Section 50 read with Section 181(2)(x) of the 2003 Act after following a detailed procedure. Therefore, the Electricity Supply Code framed by the State Commission is a subordinate legislation and has a statutory character. This statutory authority enables the Supply Code to C provide for recovery of dues of the previous owner from the subsequent owner; and iii. The condition of payment of outstanding dues is not a compulsory extraction of money and does not require a primary legislation by Parliament or state legislature. D Such a condition can be prescribed by a subordinate legislation. d. Electricity arrears as charge over the premises i. i. It is not the case of the Electric Utilities that there is any mortgage or charge over the property in the form that the licensee is a secured creditor. The licensee has the right to insist on clearance of outstanding dues of the premises before giving a new connection. e. Civil and Statutory remedies to recover electricity arrears of the Utilities (i) Section 56(2) of the 2003 Act does not bar the recovery of electricity arrears through other avenues of recovery in accordance with law; (ii) The limitation of two years under Section 56(2) of the G 2003 Act is with reference to bar on disconnection by the licensee. There is no limitation under Section 56 after the electricity is discontinued for non-payment of dues. A Condition of Supply to recover electricity arrears is not barred by limitation under Section 56(2) of the 2003 Act; and H

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(iii) The right of a distribution licensee to deny electricity connection till outstanding dues are cleared is a continuing right and cannot be said to be extinguished. It can be exercised when the new owner or occupier approaches the licensee for connection. f. Implication of an auction-sale of premises on “as is where is” basis I. i. The auction purchasers were put to notice of the requirement of clearing the dues as the public auction- sale of the premises on “as is where is” basis would include a condition of acknowledging all liabilities in respect of the said premises, with or without specific reference to the payment of electricity dues; i. ii. There is an obligation on persons acquiring the premises to verify and obtain a no dues certificate from the licensee or otherwise factor the dues while quoting the bid price in the auction; and ii. iii. The purchaser cannot deny knowledge of the requirement to clear outstanding dues of the premises when these are provided for in the conditions of supply or Supply Code. E II. Auction Purchasers

26Copy pinpoint26. Sarvashri Shekhar Naphade, Mr. V Giri, Mr. PS Patwalia, Mr. S Ganesh, senior counsel, and Mr. Puneet Jain, Mr. Amar Dave, Mr. EMS Anam, Mr. DN Ray, Mr. T Srinavasa Murthy, Mr. Bharat Patel, Mr. Ram Lal Roy, Mr. Purvish Jitendra Malkan, and Mr. MY F Deshmukh learned counsel on behalf of the auction purchasers have urged the following submissions: a. USO is absolute i. (i) Electricity constitutes goods within the meaning of Entries 53, 54, and 56 of List II of the Seventh Schedule G of the Constitution and under the Sale of Goods Act 1930; ii. (ii) The obligation to provide electricity to consumers under Section 43 of the 2003 Act is not hedged by a condition H

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A to discharge the arrears incurred by the previous consumer; iii. (iii) The phrase “price as determined by the appropriate commission” in Section 43(2) of the 2003 Act could only be the price at which electricity is supplied to the B distribution licensee. Thus, ‘price’ under Section 43 cannot include the arrears of the previous consumer; (iv) The payment of necessary “charges” and “other compliances” contemplated under Section 43 relates to the application fees, and cannot be stretched to include C a power to require the payment of third-party arrears; (v) The statutory duty of a licensee to supply power on an application by the owner or occupier of any premises within one month is contained in Section 43(1) of the 2003 Act. The only exception to this statutory obligation is provided by Section 44 where the licensee is prevented from giving supply due to cyclone, floods, storms or other circumstances beyond his control; and (vi) The legislature has consciously inserted all the substantive requirements which the person making an application for supply of electricity is required to meet, which has been primarily captured under Sections 43(2), 45, 46, 47, and 48 of the 2003 Act. Therefore, no power has been endowed upon the State Commission to impose any other substantive condition in the form of providing a precondition of clearance of a previous owners’ dues on a subsequent owner who seeks a fresh connection. Any such condition would be in conflict with Section 43. b. Supply of electricity is with respect to consumer (i) The reference to “premises” in the definition of G “consumer” under Section 2(15) as well as under Section 43 of the 2003 Act is only to fix a situs, that is, to identify a licensee operating in the area vis-à-vis the property. The emphasis under Section 2(15) is therefore on the “person” who is the owner or occupier of the premises; and

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(ii) Sections 2(15), 43, and 44 refer to “premises” because while an ordinary manufacturer or distributor may insist on the consumer to come to this factory or warehouse to take the supply of goods, the distribution licensee is obliged to take the supply to the consumer’s premises. Therefore, the premises where the supply is to be made had to be necessarily identified. c. Regulatory regime to recover arrears of electricity dues a. The provisions of the 1910 Act and 1948 Act do not empower the Electricity Board to recover the electricity dues of the previous owner or occupier from the new owner or occupier of such premises. The liability to pay electricity dues is only on the person to whom the supply of electricity is made. It is a contractual liability; b. Section 49 of the 1948 Act only enables the Board to prescribe the conditions of supply in a contract to be entered into with the prospective consumer. Such conditions of supply cannot be termed as rules or regulations as they are not published in the official gazette and therefore, cannot have the character of regulations and are not statutory in character; and E c. A condition requiring an applicant to clear the past dues of a previous consumer before the application for a fresh connection is considered is manifestly unfair. The arrears are due to a default committed by a previous consumer and the negligence of the Electric Utilities which continued to supply electricity despite default, without resorting to its power of disconnection. d. Subordinate Legislation a. The liability of one person, whether statutory or contractual, cannot be enforced against another person unless there is a substantive provision in law to do so. Such enforcement of liability cannot be provided by a piece of delegated legislation; b. Even if it is assumed that such liability can be enforced by a delegated legislation, the parent law must clearly H

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A prescribe the power of framing such a piece of legislation. Neither the 1910 Act nor the 1948 Act provides any specific provision empowering the Electricity Board to recover the electricity dues of the previous owner or occupier of the premises from the new owner or occupier of premises in question; B c. The scheme of the 2003 Act, from Sections 43 to 49, makes it evident that no specific power has been conferred upon the State Commission under Section 50 read with Section 181 of the 2003 Act or with the State under Section 180 of the 2003 Act to add further C substantive conditions like clearance of past dues of another consumer; and d. It is a settled principle of law that for framing any rule or regulation, a specific source of power must be provided in the parent legislation. D e. Electricity arrears do not constitute a charge over the premises a. Electricity dues do not constitute a charge over property as they do not run with the land. Only a fiscal levy by way of statutory exaction could be fastened on land or any other immovable property. The State Commission under Section 50 of the 2003 Act can only frame regulations for supply of electricity and has no power to provide for any fiscal exaction. Only a state legislation can provide for a charge on a property by providing for levy of a duty on consumption or sale of electricity, under Entry 53 of List II of the Seventh Schedule; b. There is no provision under the 2003 Act for creating charge on the premises and a charge cannot be introduced by way of Regulations as the subject matter is not covered under Section 50 of the 2003 Act; c. The Conditions of Supply are contractual and therefore do not constitute a charge under Section 100 of the Transfer of Property Act 1882. The Conditions of Supply are contained in a contract and to constitute a charge, H

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it must be registered under Section 17 of the Indian A Registration Act 1908; and d. Enforcement of a charge against the property in the hands of the transferee for consideration without notice of the charge does not arise. Electricity dues are simply an unsecured debt. B f. Civil and Statutory remedies to recover electricity arrears of the Utilities a. Under Section 56 of the 2003 Act, the right to disconnect the supply in default of payment is relatable to the default committed by the defaulting consumer. Electric Utilities C cannot recover dues over and above what is provided for in the Section 56 (2) of the 2003 Act; and b. To the extent that the monies realised from sale of the company in liquidation were insufficient to clear the unsecured debts such as electricity dues, they would abate. The Electric Utilities allowed the dues to mount up instead of taking effective steps to recover the dues. Conditions of Supply cannot be used to resurrect a time-barred debt. g. Implication of an auction-sale of premises on “as is where is” basis (i) A condition such as “as is where is and whatever there is” is a feature of physical properties and does not extend to claims that are not charges, mortgages, or other encumbrances running with the land; and F (ii) There was no obligation on the applicants to ascertain the electricity dues and more so in view of the judgement in Isha Marbles (supra), which held the field then, and which continues to hold the field in all cases where there is no statutory imposition of liability for past dues G of previous owners on subsequent purchasers. F. Analysis I. Universal Service Obligation is not absolute

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27Copy pinpoint27. The Electric Utilities have argued that the duty to supply electricity under Section 43 of the 2003 Act is not absolute. It has been submitted that under Section 43, an applicant has to fulfil the obligation to pay the ‘price’ as determined by the State Commission to become entitled to receive supply of electricity. The ‘price’, it is urged, includes application fees as well as arrears of unpaid electricity dues of the previous owner or occupier. The Electric Utilities argue that in case there are outstanding dues of the previous owner they are entitled to refuse a new connection or decline to commence the supply of electricity until the dues owed by the previous owner are cleared. On the contrary, the auction purchasers have urged that Section 43 obligates the distribution licensees to supply electricity when demanded by the auction purchaser. It is further urged that the ‘price’ in Section 43 can only mean the price at which electricity is supplied to the distribution licensee, and cannot include the arrears of the previous owner or occupier of the premises.

28Copy pinpoint28. To contextualise the submissions of counsel, it is appropriate to refer to the relevant provisions of the 1910 and 2003 enactments. Under Section 3 of the 1910 Act, the State Government could grant a licence to any person to supply energy in any specified area. By virtue of Section 3(2)(f), the provisions contained in the Schedule stood incorporated in the licence. Under Section 22 read with Section 3(2)(f) and Clause VI of the first Schedule, there was an obligation to supply electricity on the distribution licensees. Section 22 of the 1910 Act obligated the licensee to supply energy to every person within the area of supply on the same terms as those on which any other person in the same area was entitled. Clause VI provided that the licensee shall supply energy within one month of a requisition by the owner or occupier of any premises situated within the area of supply.

29Copy pinpoint29. Section 43 of the 2003 Act is similar to Section 22 of 1910 Act read with Clause VI of Schedule I of the latter Act. Part VI of the 2003 Act contains provisions dealing with distribution of electricity by distribution licensees. Section 2(17) defines a ‘distribution licensee’ as a G licensee authorised to operate and maintain a distribution system for supplying electricity to the consumer in their area of supply. Section 43 of the 2003 Act casts a duty on every distribution licensee to supply electricity to the premises on an application made by the owner or occupier of such premises. The provision requires the distribution licensee to lay down its network in a particular area to supply electricity to a consumer, H who demands supply.

K. C. NINAN v. KERALA STATE ELECTRICITY BOARD & 669 ORS. [DR DHANANJAYA Y CHANDRACHUD, CJI]

30Copy pinpoint30. The relevant portion of Section 43 reads as follows: A “43. Duty to supply on request – (1) Save as otherwise provided in this Act, every distribution licensee, shall, on an application by the owner or occupier of any premises, give supply of electricity to such premises, within one month after receipt of the application requiring such supply: B *** Explanation – For the purposes of this sub-section, “application” means application complete in all respects in the appropriate form, as required by the distribution licensee, along with the documents showing payment of C necessary charges and other compliances. (2) It shall be the duty of every distribution licensee to provide, if required, electric plant or electric line for giving electric supply to the premises specified in sub-section (1): D Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of electricity for any premises having a separate supply unless he has agreed with the licensee to pay to him such priceas determined by the Appropriate Commission.” E (emphasis supplied)

31Copy pinpoint31. According to Section 43, the distribution licensee is obligated to supply electricity to the premises of an owner or occupier within a month of the receipt of an application requiring such supply. The provision casts a duty on the distribution licensee to supply electricity to the owner F or occupier’s premises. Correspondingly, the owner or occupier of the premises has a right to apply for and obtain electric supply from the distribution licensee.22 Both the right and the corresponding duty are imposed by the statute. The owner or occupier of the premises has to submit an application to avail of the supply of electricity.

32Copy pinpoint32. In Brihanmumbai Electric Supply & Transport G Undertaking v. Maharashtra Electricity Regulatory Commission,23 a two-judge Bench of this Court observed that the obligation of the distribution licensee to supply electricity to premises will begin after the 22 Chandu Khamaru v. Nayan Malik, (2011) 12 SCC 314 23 (2015) 2 SCC 438 H

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A owner or occupier of such premises submits a completed application. The explanation to Section 43 clarifies that the application must be complete in all respects along with the necessary documents showing payment of “necessary charges” and other compliances, as required by the distribution licensee. Thus, under Section 43, the distribution licensee is obligated to supply electricity to the premises of an owner or occupier, B provided that the owner or occupier pays all charges and complies with all conditions stipulated by the distribution licensee. Section 43 begins with the words “Save as otherwise provided in this Act”. Hence, the operation of Section 43 will also be subject to compliance with the other provisions of the 2003 Act.

33Copy pinpoint33. Section 45 lays down the manner of computation of the price to be charged by the distribution licensee for supply of electricity under Section 43. It provides that a distribution licensee may fix charges for supply of electricity in accordance with the tariffs fixed from time to time in accordance with the methods and principles specified by the concerned State Commission. Under Section 46, a distribution licensee is empowered to charge from any person who seeks supply of electricity any expenses reasonably incurred in providing any electric line or electric plant used for the purpose of giving electricity. Section 47 empowers the distribution licensee to seek a reasonable security from any person who requires supply under Section 43. It further provides that the distribution licensee can refuse to supply electricity to any person who fails to give the security deposit. The provision is extracted below: “47. Power to require security – (1) Subject to the provisions of this section, a distribution licensee may require any person, who requires a supply of electricity in pursuance of section 43, to give him reasonable security, as may be determined by regulations, for the payment to him of all monies which may become due to him – (a) in respect of the electricity supplied to such person; or

G (b) where any electricity line or electrical plant or electric meter is to be provided for supplying electricity to such person, in respect of the provision of such line or plant or meter, And if that person fails to give such security, the distribution licensee may, if he thinks fit, refuse to give the supply of H

K. C. NINAN v. KERALA STATE ELECTRICITY BOARD & 671 ORS. [DR DHANANJAYA Y CHANDRACHUD, CJI]

electricity or to provide the line or plant or meter for the period during which the failure continues.” (emphasis supplied)

34Copy pinpoint34. Section 47 indicates that a distribution licensee can refuse to supply electricity under Section 43 if the applicant fails to furnish the requisite security. Under Section 48, a distribution licensee may require the applicant, who requires a supply of electricity in pursuance of Section 43, to accept (i) any restrictions which may be imposed for the purpose of enabling the distribution licensee to comply with the regulations made under Section 53; and (ii) any terms restricting any liability of the distribution licensee for economic loss resulting from negligence of the person to whom electricity is supplied. Thus, it is implicit that the distribution licensee may refuse electricity supply to the applicant until they accept such terms and restrictions reasonably imposed by the distribution licensee incidental to the statute.

35Copy pinpoint35. Further, Section 50 empowers the State Commission to specify an Electricity Supply Code providing for recovery of electricity charges, among other things. The Electric Utilities have urged that the duty to supply electricity is subject to the Electricity Supply Code specified under Section 50. As mentioned in the preceding paragraphs, an applicant is required to submit a completed application along with documents showing the payment of necessary charges and other compliances. The Electricity E Supply Code can stipulate such other compliances that an applicant has to observe for getting the supply of electricity under Section 43. Therefore, reading Section 43 along with Sections 45, 46, 47, 48, and 50, it becomes evident that the right of an applicant to seek supply of electricity under Section 43 is not absolute. The right is subject to the payment of charges, security deposit, as well as terms and restrictions imposed by the distribution licensee.

36Copy pinpoint36. The distribution licensee can stipulate such terms and conditions as it deems necessary when an owner or occupier of the premises approaches it seeking the supply of electricity. A two-judge Bench of this Court in Paschimanchal Vidyut Vitran Nigam (supra) held that a distribution licensee can stipulate terms and conditions subject to which it will supply electricity to the applicant which are not arbitrary and unreasonable.

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37Copy pinpoint37. The auction purchasers have urged that the “charges” levied by the distribution licensee are explicitly dealt with by Section 45. It was further urged that Section 45 does not provide that charges should include the arrears of the previous owner or occupier of the premises. On the contrary, the distribution licensees have argued that the term ‘price’ used in Section 43 is the consideration for the supply of electricity as determined by the State Commission. It has been argued that the arrears of the previous owner or occupier of the premises is also a ‘price’ determined by the State Commission and payable at the time of making an application for the supply of electricity.

38Copy pinpoint38. The words “price”, “tariff”, or “charges” have not been defined in the 1910 Act or the 2003 Act. In AP TRANSCO v. Sai Renewable Power (P) Ltd,24 this Court observed that the term “tariff” has neither been defined nor explained in the 2003 Act. The Court held that in the absence of any specific definition in the legislation, recourse has to be taken to the “meaning attached to these expressions under the general law or in common parlance.”25

39Copy pinpoint39. In BSES Ltd. v. Tata Power Co. Ltd.,26 a two-judge Bench of this Court interpreted ‘tariff’ in the context of the Electricity Regulatory Commissions Act, 1998. It observed: “16. The word “tariff” has not been defined in the Act. “Tariff” E is a cartel of commerce and normally it is a book of rates. It will mean a schedule of standard prices or charges provided to the category or categories of customers specified in the tariff.”

40Copy pinpoint40. The proviso to Section 43(2) further refers to the “price” payable by an applicant to demand or to continue to receive the supply of electricity from a distribution licensee. The “price” is to be determined by the appropriate commission. This “price” is the consideration, as determined by the State Commission, that an applicant pays for receiving a supply of electricity.

41Copy pinpoint41. The term “price” has to be given a broad meaning to include all the ‘tariffs’ and ‘charges’ that may be determined by the appropriate commission. This includes the ‘charges’ fixed under Section 45 by the appropriate commission from time to time and the ‘charges’ that a 24 (2011) 11 SCC 34 25 (2011) 11 SCC 34 26 (2004) 1 SCC 195 H

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distribution licensee may impose under Section 46 to recover any reasonable expenditure. The ambit of the term ‘price’ is wide enough to also include the statutory dues that the State Commission decides to enact by way of regulations under Section 50.

42Copy pinpoint42. Thus, the duty to supply electricity under Section 43 is not absolute, and is subject to the such charges and compliances stipulated by the distribution licensees as part of the application. II. Duty to supply electricity is with respect to consumer

43Copy pinpoint43. The Electric Utilities urge that the duty to supply electricity is with respect to the premises and not to an individual. They refer to the definition of ‘consumer’ under Section 2(15) and to Section 43 of the C 2003 Act. Further, it was urged that Section 50 and Section 181(2)(x) of the 2003 Act enable the distribution licensee to provide for payment of dues of electricity supplied to the premises if a reconnection or new connection is sought for the same premises. Contrariwise, the auction purchasers have submitted that the consumption of electricity is always D by the owner or occupier of the premises through appliances and apparatus installed within the premises. The reference to premises in the definition of ‘consumer’ under Section 2(15) as well as Section 43 of the 2003 Act is, it is urged, only to fix a situs for the supply of electricity to the owner or occupier of the premises. E

44Copy pinpoint44. Electricity is a movable good because it can be transmitted, transferred, delivered, and possessed like any other movable property. 27 This position of law was established by a Constitution Bench of this Court in State of AP v. National Thermal Power Corporation Ltd.28 In Paschimanchal Vidyut Vitaran Nigam (supra) a two-judge bench of this Court held that the supply of electricity to a consumer is a sale of F goods. The charges paid by the consumer to the distribution licensee is essentially the price paid for goods supplied and consumed. The consumption of electricity by a consumer is always effected through equipment or appliances installed within the premises.

45Copy pinpoint45. Section 2(15) of the 2003 Act defines the expression G ‘consumer’ as follows:

27 Commissioner of Sales Tax, Madhya Pradesh, Indore v. Madhya Pradesh Electricity Board, Jabalpur (1969) 1 SCC 200 28 (2002) 5 SCC 203, paragraph 20. H

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A “(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 B with the works of a licensee, the Government or such other person, as the case may be;” (emphasis supplied)

46Copy pinpoint46. The definition of “consumer” under Section 2(15) of the 2003 C Act is similar to the definition of “consumer” in the 1910 Act. The definition consists of two limbs: (i) any person who is supplied with electricity for their own use; and (ii) any person whose premises are for the time being connected for the purposes of receiving electricity, irrespective of whether or not such person is supplied with electricity for his own use. 29 The first limb of the definition is prefaced with “means” while the second limb is prefaced with “includes”. The definition is thus exhaustive of the ambit of the expression defined. The inclusive part is intended to expand the ambit of the initial limb of the definition.

47Copy pinpoint47. In Jivendra Nath Kaul v. Collector/District Magistrate30, a two judge Bench of this Court held that the meaning of the phrase “for the time being” means at the moment or the existing position. The F reference to premises in the second limb connotes that the demand for guaranteed charges or dues will incur even if the owner or occupier has stopped consuming power for the time being, but the premises remain connected. The second limb clarifies that a consumer who commences receiving power at the premises will continue to remain a consumer even if they stop consuming power for the time being, so long as the G premises are connected to the power system. The second limb encompasses a variety of foreseeable and practical situations. For example, the consumer may have rented out the premises to a tenant. In

29 Uttar Pradesh Power Corporation Limited v. Anis Ahmad, (2013) 8 SCC 491 H 30 (1992) 3 SCC 576

K. C. NINAN v. KERALA STATE ELECTRICITY BOARD & 675 ORS. [DR DHANANJAYA Y CHANDRACHUD, CJI]

this situation, the consumer continues to remain a consumer as the premises are connected for the time being for the purposes of receiving the supply of electricity, though the consumer may not themselves be consuming electricity (the consumption being by the tenant). Here, the distribution licensee demands charges incurred from the consumer, even though the electricity is being consumed by the tenant. Another situation contemplated under the second limb is where the consumer is unable to consume electricity due to circumstances such as accident or strike. In this case, as long as the premises of the consumer are connected to the power system, they will have to pay the demand charges and minimum guaranteed charges stipulated by the distribution licensee.

48Copy pinpoint48. We are unable to accept the submission of Electric Utilities C that the second limb of Section 2(15) connotes a supply of electricity to premises, irrespective of a change in the owner or occupier. The 2003 Act provides an inclusive definition of ‘premises’ under Section 2(51). According to the definition, premises include land, building, or structure. The second limb goes only so far as to say that when electricity is supplied D to any person at a particular land, building, or structure, such person will continue to remain a consumer, even though they are not consuming electricity, so long as the electricity connection exists. The expression ‘premises’ used in the second limb identifies the place where the supply of electricity has to be made. E

49Copy pinpoint49. It would be material to refer to some other definitions under the 2003 Act which emphasise that supply of electricity is with respect to consumer: “2. Definitions.- In this Act, unless the context otherwise requires,- *** F (17) “distribution licensee” means a licensee authorised to operate and maintain a distribution system for supplying electricity to the consumers in his area of supply; *** G (19) “distribution system” means the system of wires and associated facilities between the delivery points on the transmission lines or generating station connection and the point of connection to the installation of the consumers; *** H

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A (61) “service line” means any electric supply line through which electricity is, or is intended to be, supplied - (a) to a single consumer either from a distributing main or immediately from the Distribution Licensee’s premises; or (b) from a distributing main to a group of consumers on the same premises or on contiguous premises supplied from the same point of the distribution main; *** (70) “supply”, in relation to electricity, means the sale of electricity to a licensee or consumer;” (emphasis supplied)

50Copy pinpoint50. The definition of ‘supply’ specifically states that supply means the sale of electricity to a consumer. The said definition does not indicate that supply of electricity is vis-a-vis the premises of the consumer. D Considering the overall scheme of the 2003 Act, the supply of electricity is to the consumer and not the premises.

51Copy pinpoint51. Section 43 of the 2003 Act obligates a distribution licensee to supply electricity “on an application by the owner or occupier of any premises”. Under the provision, the right to obtain a supply of electricity is vested with the owner or occupier of the premises. Invariably, such owner or occupier means the consumer under Section 2(15). As held in Brihanmumbai Electric Supply & Transport Undertaking (supra), the duty to supply electricity comes into play only on an application made by the owner or occupier of the premises. Hence, the term “premises” has to be contextualised and understood with respect to the preceding portion, that is, the owner or occupier of the premises.

52Copy pinpoint52. The duty to supply electricity under Section 43 is only with respect to the owner or occupier of the premises, and not the premises, as it is the owner or occupier who has the statutory right to “demand” electricity for the premises under their use or occupation. Further, it is the applicant who has to fulfil all the statutory conditions laid down under the 2003 Act to become entitled to get supply of electricity to their premises. The applicant has to pay the necessary charges and comply with all terms and conditions as determined by the appropriate commission for the supply of electricity. H

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53Copy pinpoint53. It is true that Sections 43 and 44 of the 2003 Act talk about supply of electricity to premises. However, the use of such phrases is borne out of the practical consideration of supply of electricity. Unlike other goods, a distribution licensee cannot insist that the consumer come to their factory or warehouse to receive the supply of electricity. The distribution licensee necessarily has to lay down special infrastructure such as electricity lines and transformers to transmit electricity and supply it directly to the consumer, at their premises. On an application, the distribution licensee is statutorily obliged to supply electricity to the consumer. Consequently, the place where the supply of electricity is to be made has to be necessarily identified. Thus, Section 43 and 44 refer to the consumer’s premises to fix the situs for the purpose of supplying electricity.

54Copy pinpoint54. Section 56 provides that it is the liability of the consumer to pay the charge for electricity in respect of the supply of electricity. Under Section 56 the duty of effecting the payment of charges for electricity is on a person, that is, the consumer. Further, Section 56(2) specifically contains the expression “no sum due from any consumer”. Section 126 also uses the words “the electricity charges payable by such person or any other person benefited by such use.” Thus, the overall scheme of the 2003 Act makes it evident that only a consumer can be held liable for default in payment of electricity dues or charges. E

55Copy pinpoint55. Under the 2003 Act, the Central government has enacted various rules and regulations for carrying out the provisions of the Act. The government notified the Electricity (Rights of Consumers) Rules, 202031 laying down the rights of the consumers of electricity. The Rules detail the rights of consumers and obligations of distribution licensees; release of new connections; metering arrangements; billing and payment; disconnection and reconnection; grievance redressal mechanism, among others. The Rules define an ‘applicant’ as an owner or occupier of any premises who files an application form with a distribution licensee for supply of electricity. The Rules defines ‘point of supply’ to mean the point, as may be specified by the State Commission, at which a consumer is supplied electricity. The Rules make it evident that electricity is supplied to the consumer.

56Copy pinpoint56. Thus, it is always the consumer who is supplied electricity and is held liable for defaulting on payment of dues or charges for supply of 31 “Rules” H

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A electricity. Perforce, the premises cannot be held to be a defaulter and no dues can be attached to the premises of the consumer. III. Whether electricity connection sought by a subsequent owner constitutes a reconnection or fresh connection

57Copy pinpoint57. Another issue before us, as argued by the counsel, is whether the connection sought by a subsequent owner constitutes a reconnection or fresh connection. In IshaMarbles (supra), the Electricity Board had disconnected electricity supplied to the erstwhile owner pursuant to its power under Section 24 of the 1910 Act. The Electricity Board insisted upon the auction purchaser paying the arrears owed by the erstwhile owner as a condition precedent to provide an electricity connection. The Board did not place reliance on any statutory conditions of supply. This Court observed that the law, as it stood then, was inadequate to enforce such a liability. The Court further held that a connection sought by a subsequent purchaser should be regarded as a reconnection:

D “49.It is important to note that though the purchasers asked for electricity connection as a new connection it cannot be regarded as a new connection. It is only a reconnection since the premises had already been supplied with electrical energy. Such a supply had been disconnected owing to the default of the consumer. That consumer had bound himself to E the Board to pay the dues. He also agreed to abide by the condition as stipulated in the Act and the Rules including the payment of the dues.” (emphasis supplied)

58Copy pinpoint58. This Court further went on to hold that a distribution licensee cannot make the auction-purchaser liable when seeking reconnection of electricity supply for the same premises. According to the Court, this was not feasible considering the fact that “with change of every ownership new connections have to be issued [which] does not appear to be the correct line of approach as such situation is brought G by the inaction of the Electricity Board in not recovering the arrears as and when they fall due or not providing itself by adequate deposits.” However, this Court also conceded that liability of previous owners could be fastened on auction-purchasers if the law so prescribed.

59Copy pinpoint59. In Gujarat Inns (supra), another three-judge Bench of this H Court held that the connection sought by auction-purchasers of properties

K. C. NINAN v. KERALA STATE ELECTRICITY BOARD & 679 ORS. [DR DHANANJAYA Y CHANDRACHUD, CJI]

would constitute a fresh connection. The Court held that in case of a A fresh connection, the auction purchasers cannot be held liable to clear the arrears incurred by the previous owners in the absence of any specific statutory provision. It was observed: “3. In our opinion, the present two cases are cases of fresh connection. The learned counsel for the respondents (auction- B purchasers) have stated that they have taken fresh connections and they have no objection if their connections are treated as fresh connections given on the dates on which the supply of electricity was restored to the premises. We are clearly of the opinion 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. Though we find some merit in the submission of the learned counsel for the appellant calling for reconsideration of the wide propositions of law laid down in Isha Marbles case [(1995) 2 SCC 648] we think the present one is not a case for such exercise. We leave the plea open for consideration in an appropriate case.” (emphasis supplied)

60Copy pinpoint60. In Isha Marbles (supra), a three-judge Bench of this Court E held that an application for supply of electricity to the same premises is to be regarded as a reconnection. This Court, while interpreting the provisions of the 1910 Act, gave its reasoning on the assumption that the supply of electricity is with respect to premises and not the consumer. However, the 2003 Act has statutorily clarified the position that supply of electricity is with respect to the consumer. It necessarily follows that when a new owner or occupier of the premises applies for supply of electricity in terms of Section 43 of the 2003 Act, it will constitute a fresh connection, regardless of the fact that the premises for which the electricity is sought was being supplied with electricity previously. An application for supply of electricity can be categorised as reconnection only when the same owner or occupier of the premises, who was already a consumer, applies for supply of electricity with respect to the same premises in case the electricity supply is disconnected.

61Copy pinpoint61. We need to highlight that the 2003 Act contemplates a synergy between the consumer and premises. Under Section 43 of the 2003 Act, H

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A the owner or occupier of premises can seek a supply of electricity for particular premises. Perforce, when electricity is supplied, the owner or occupier becomes a consumer only with respect to those particular premises for which electricity is sought and provided. For example, when a person owning an apartment in a residential complex applies for supply of electricity to such an apartment, they become a consumer only with respect to the apartment for which the application is made and to which electricity is supplied. Such a person may own another apartment to which electricity may already be supplied, but they will be considered a separate consumer with respect to the second apartment. For an application to be considered as a ‘reconnection’, the applicant has to seek supply of electricity with respect to the same premises for which electricity was already provided. Even if the consumer is the same, but the premises are different, it will be considered as a fresh connection and not a reconnection.

62Copy pinpoint62. In Gujarat Inns. (supra), this Court held that an application for electricity by an auction-purchaser will constitute fresh connection even though the premises are the same. The reasoning is based on the correct assumption that supply of electricity is with respect to the consumer, and not the premises. Therefore, even if the premises may be the same to which electricity had already been supplied, it will be considered as a fresh connection in the situation where a different applicant, in that case an auction-purchaser, applies for supply of electricity. IV. Regulatory power of the Electricity Boards/ State Commissions

63Copy pinpoint63. The Electric Utilities have submitted that: (i) Section 49 of the F 1948 Act empowered the Board to supply electricity upon such terms and conditions as it thinks fit; (ii) the phrase “regulate” in Section 79 of the 1948 Act has a wider implication allowing the State Commission to do everything necessary to prescribe the principles governing the supply of electricity; (iii) the Electricity Supply Code notified under Section 50 read with Section 181(2)(x) of the 2003 Act governs all matters relating G to the supply of electricity to premises; and (iv) the Conditions of Supply which provide for payment of outstanding dues of the previous consumer have a clear nexus to the scheme of the 2003 Act and the objectives sought to be achieved.

64Copy pinpoint64. From the other side, the auction purchasers have urged that: H (i) the provisions of the 1910 Act, 1948 Act, and the 2003 Act do not

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empower the Electricity Board or, as the case may be the distribution licencee to recover the arrears of electricity of the previous consumer from the new owner or occupier of the premises; and (ii) the conditions of supply prescribed under the 1948 Act do not have the character of regulations and are not statutory.

65Copy pinpoint65. Section 2(h) of the 1910 Act defined “licensee” as any person licensed under Part II to supply energy. Section 21 provided that a distribution licensee shall not interfere with the use of energy by any person. Section 21(2) empowered the licensee to make conditions for the purpose of regulating its relations with the consumer with the previous sanction of the State Government. C

66Copy pinpoint66. The 1910 Act did not include the State Electricity Board within the definition of “licensee”. Section 26 of the 1948 Act states that the Board shall, in respect of the whole State, have all the powers and obligations of a licensee under the 1910 Act. The first proviso specified that certain provisions of the 1910 Act relating to the duties and obligations of a licensee shall not be applicable to the Board. In its decision in State D of Uttar Pradesh v. Hindustan Aluminium Corporation32 this Court analysed the interconnection between Section 26 of the 1948 Act and Section 22 of the 1910 Act. The court held that the obligation under Section 22 of the 1910 Act to supply energy to every person within the area of supply is not fastened to the Board. Although Clause VI of E Schedule to the 1910 Act also mandates the licensee to supply electricity on demand, the second proviso specifies that the said clause is applicable to the Board only when the distribution mains have been laid by the Board and the supply through any of them has commenced.

67Copy pinpoint67. Under Section 21 of the 1910 Act, the Supply Licensee F prescribed conditions with the previous sanction of the state government. Similarly, the Boards could also prescribe conditions under Section 21 of the 1910 Act by virtue of Section 26 of the 1948 Act.

68Copy pinpoint68. Section 49 of the 1948 Act read as follows: “49. Provisions for the sale of electricity by the Board to G 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

32 (1979) 3 SCC 229 H

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