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

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A possession of the premises or would have applied for an electric connection on 1 December 1989, as alleged by the appellant.

163Copy pinpoint163. However, neither party has submitted any material on record to prove the date of the application for the grant of a power connection. In view of the material factual dispute and insufficient evidence on record, B we remand the matter to the High Court to determine whether Condition 15 of Conditions of Supply of Electrical Energy would apply to the appellant’s case, bearing in mind the principles which have been laid down in this judgment. II. Maharashtra

164Copy pinpoint164. In the state of Maharashtra, the terms and conditions under which the MSEB supplied electrical energy were provided in the MSEB Conditions of Supply. The MSEB Conditions of Supply were made effective from 1 January 1976. The MSEB Conditions of Supply laid down a detailed procedure in respect of the application for supply of electrical energy, payment of bills, procedure to be adopted in case of prejudicial use of electrical energy and the terms on which the supply of electrical energy is released to a consumer.Condition 23 of MSEB Conditions of Supply provides for assignment and transfer of agreement.

165Copy pinpoint165. In light of the New Industrial Development Policy 1993, aimed at reviving sick industries,the MSEB issued Circular 518 dated 18 June 1993, titled “Power Supply to closed and Sick Industrial Unit”. The aim of Circular 518 was to encourage prospective entrepreneurs to take over sick industrial units under Section 29 of the State Financial Corporation Act 1957. The Circular presented prospective owners who purchased sick/ closed industrial units in auction with two options — F either pay arrears including minimum charges to get electricity supply reconnected, or apply for a fresh connection after completing necessary formalities, without being liable for outstanding arrears of the previous owner. The circular further provided that Condition 23(b) of the MSEB Conditions of Supply would not apply to prospective consumers with effect from 1 April 1993.

166Copy pinpoint166. The circular was withdrawn by the Circular 607 dated 19 December 1998, whereby it was mandated that reconnection or fresh connection would be released only after the arrears of the Electricity Board are cleared. The circular purported to emanate from Condition 23(b) of the Conditions of Supply, as framed by the MSEB. The circular was made operative with immediate and prospective effect.

K. C. NINAN v. KERALA STATE ELECTRICITY BOARD & 725 ORS. [DR DHANANJAYA Y CHANDRACHUD, CJI]

167Copy pinpoint167. In light of the impugned judgments of the Bombay High Court, A which are in appeal before us, MSEB by its Circular 684 dated 25 September 2003 allowed auction purchasers of closed/ sick industrial units to exercise either of the options as prescribed by Circular 518 dated 18 June 1993. However, an undertaking was required by the incoming consumers to unconditionally agree to pay the arrears of previous owners in case the Supreme Court decided in favour of MSEB.

168Copy pinpoint168. After the enactment of the 2003 Act, the Maharashtra Electricity Supply Code, 2005 was framed under Section 50 of the 2003 Act. The regulations came into effect from 20 January 2005, and apply prospectively. Regulation 10.5 of the Maharashtra Electricity Supply Code provides that dues owed to the distribution licensee are charge on the property and as a statutory effect, the liability for the payment of electricity dues is passed on to the new owner/ occupier of the premises, albeit to a certain time restriction. Regulation 10.5 provides as follows: “10.5: Any charge for electricity or any sum other than a charge for electricity due to the Distribution Licensee which remains unpaid by a deceased consumer or the erstwhile owner / occupier of any premises, as a case may be, shall be a charge on the premises transmitted to the legal representatives / successors-in- law or transferred to the new owner / occupier of the premises, as the case may be, and the same shall be recoverable by the E Distribution Licensee as due from such legal representatives or successors-in-law or new owner / occupier of the premises, as the case may be. Provided that, except in the case of transfer of connection to a legal heir, the liabilities transferred under this Regulation 10.5 shall be restricted to a maximum period of six months of the unpaid charges for electricity supplied to such premises”

169Copy pinpoint169. Presently, the Maharashtra Electricity Regulatory Commission (Electricity Supply Code and other Standards of Performance of Distribution Licensees including Power Quality) Regulations 202176 have been enacted repealing the Maharashtra Electricity Supply Code 2005. Clause 12.5 of the 2021 Regulations reiterates that any unpaid charges for electricity shall be a charge on the premises.

76 “2021 Regulations” H

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170Copy pinpoint170. From the state of Maharashtra, there are six judgments of the Bombay High Court which are in appeal before us.

169. Mr. Ajit Bhasme, learned senior counsel appearing on behalf of the appellant-Board urged the following common legal submissions: a. MSEB Conditions of Supply, as then prevalent under the 1910 B Act and the 1948 Act, are statutory in character, as held by this Court in Hyderabad Vanaspati (supra). The Conditions of Supply are in addition to and not in lieu of other modes of recovery; b. MSEB Conditions of Supply are a part of the standard agreement entered into between the consumer and the Electricity Company. Clause 14 of the standard agreement between the Electricity Board and the consumer incorporates the Conditions of Supply as a part of the agreement; c. The reliance placed by the Bombay High Court on the judgement in Isha Marbles (supra) cannot be sustained since the case of Isha Marbles (supra)is distinguishable on facts; d. The General Auction Conditions of Sale of SICOM in Clause 2 stipulate that the sale is on “as is where is and what is” basis. Auction purchasers were put on notice of their liability for the past electricity arrears due to the inclusion of the standard auction proclamation (Clause 6) while inviting bids; e. Regulation 10.5 of Maharashtra Electricity Supply Code 2005 explicitly states that any unpaid electricity dues shall be a charge on the premises transferred; and F f. All six cases pertain to the period prior to 2005 i.e., before the enactment of the Maharashtra Electricity Supply Code

2005. The 1976 MSEB Conditions of Supply would continue to operate till the enactment of the Maharashtra Electricity Supply Code in 2005.

171Copy pinpoint171. In Maharashtra, the right of the Electric Utilities to demand outstanding dues is traceable to provisions across different time periods: a. Up to enactment of the 2003 Act on 10 June 2003: The governing laws are the 1910 Act and the 1948 Act. The MSEB Conditions of Supply were framed under Section 49 of the H

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1948 Act. The MSEB Conditions of Supply which were made A effective from 1 January 1976 would apply; b. From 10 June 2003 to 20 January 2005: The provisions of the 2003 Act were brought into force with effect from 10 June 2003. The 1910 Act and 1948 stood repealed after the enactment of the 2003 Act. The Maharashtra Electricity B Supply Code 2005 came into force from 20 January 2005. In the interregnum, the MSEB Conditions of Supply would continue to apply, so far as they are not inconsistent with the provisions of the 2003 Act. This is due to the following reasons: C i. By virtue of Section 185(2)(a) of the 2003 Act, notwithstanding such repeal anything done or any action taken or purported to have been done or taken including any rule, notification, inspection, order or notice made etc. under the repealed law shall, in so far as it is not inconsistent with the provisions of this Act, be deemed to have been done or taken under the corresponding provisions of this Act. Section 185(2)(5) further provides that Section 6 of the General Clauses Act 1897 would be applicable in relation to matters prescribed in Section 185(2) with regard to the effect of repeals; ii. Regulation 19(1) of the Electricity Supply Code 2005, provides that any terms and conditions of supply which are inconsistent with the provisions of the Maharashtra Electricity Supply Code 2005 shall be deemed to be invalid from the date on which these regulations come into force; and c. From 20 January 2005till the enactment of the 2021 Regulations: The Maharashtra Electricity Supply Code 2005, which came into force from 20 January 2005, would apply. To determine whether the Maharashtra Electricity Supply G Code 2005 would govern the facts of a particular case, the relevant date would be when the auction purchaser had requested the Electricity Board to supply electricity.

172Copy pinpoint172. In the six cases originating from Maharashtra, the respondents were successful auction purchasers who purchased the premises in court H

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A auction sales. The appellant-Board relied on Condition 23 of the MSEB Conditions of Supply to impose a precondition of clearing electricity arrears of the erstwhile consumer, before a new electricity connection could be provided. The High Court in all the cases directed the appellant- Board to provide reconnection or fresh connection to the respondents, without insisting on payment of arrears. B

173Copy pinpoint173. These impugned judgments raise a common question on the applicability and the scope of Condition 23. This Court would first deal with the overall argument on the applicability of Condition 23 of the MSEB Conditions of Supply, and its interpretation, before delving into the specific factual matrix of the cases. C

174Copy pinpoint174. In Maharashtra State Electricity Board v. Super & Stainless Hi Alloys Ltd.,77 the Bombay High Court relied on the decision of this Court in Isha Marbles (supra) to quash the impugned circular dated 19 December 1998 for lack of jurisdiction as it was held to be beyond the powers of the Electricity Board under Section 24 of the 1910 D Act. The High Court concluded that the contract of supply was only between the Electricity Board and the previous consumer, and since the subsequent purchaser was a third party, it cannot be made liable for the past liabilities of the erstwhile consumer.

175Copy pinpoint175. In Supdt. Engg. Maharashtra State Electricity Board v. E M/s Umang Enterprises,78 the High Court placed reliance on the decisions of this Court in Isha Marbles (supra)and Gujarat Inns (supra) to reject the argument of the appellant-Board. The Bombay High Court disposed of the writ petition with a direction to the appellant to grant an electricity connection to the premises, without insisting on F clearance of past dues of the previous consumer. It is important to note that the High Court in its reasoning did not refer to the MSEB Conditions of Supply and the import of Condition 23 on the liability of the auction purchasers.

176Copy pinpoint176. In Maharashtra State Electricity Board v. Ecto G Spinners,79 and Maharashtra State Electricity Distribution Co. Ltd. v. M/s Zia Iron Store,80 the High Court considered the purport of Condition 23 of the MSEB Conditions of Supply. It concluded that 77 Civil Appeal 5312-5313 of 2005 78 Civil Appeal No. 5314 of 2005 79 Civil Appeal No. 6587 of 2005

H 80 SLP(Civil) No. 6068 of 2006

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Condition 23 was not applicable to involuntary transfers, such as by A operation of law or in pursuance of the decree of a competent court. Accordingly, it held that the respondent-purchasers could not be made liable for the dues of the erstwhile owners as a prerequisite to obtain a new electricity connection.

177Copy pinpoint177. The Bombay High Court in the impugned judgement dated B 20 July 2005 in Ecto Spinners was aided by the following reasons to arrive at this conclusion: a. Condition 23(b) does not refer to an involuntary transfer though it does refer to a voluntary transfer or a transfer on account of the death of the owner. The word “successor” in the expression “any person claiming to be heir, legal representative, transferee, assignee or successor of the defaulting consumer” would have to be understood by applying the principle of ejusdem generis. Accordingly, the words preceding the word “successor” clearly disclose a reference to a person who acquires the right to the property on account of either voluntary transfer or on account of death of the owner; and b. Transfer of a property purchased in a public auction is an involuntary transfer by the owner. Hence, Condition 23 does not impose any liability on a transferee occupying the premises of the erstwhile consumer on account of having acquired right by public auction or any other mode of non-voluntary transfer.

178Copy pinpoint178. The Electricity Board can demand arrears due by an erstwhile defaulting consumer in regard to supply of electricity to premises from the purchaser of a property seeking reconnection or fresh connection of electricity when either of two conditions are met: a. An express provision exists in law providing that electricity arrears constitute a charge over the property. For the statutory charge to be enforced against the property in the hands of a person to whom such property has been transferred for consideration, the transferee must have notice, either actual or constructive, of the charge; and b. The statutory regulations or terms and conditions of supply which are statutory in character, authorise the supplier of electricity to make such a demand. H

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179Copy pinpoint179. In general law, electricity arrears do not constitute a charge over the property. Under the provisions of the 1910 Act read with the1948 Act, electricity arrears do not create a charge over the property. In the cases before us governed by the 1910 Act read with 1948 Act, no charge was created on the property in favour of the Electricity Board for the payment of electricity dues. The arrears of electricity dues were not levied against the premises, but were levied against the erstwhile consumer.

180Copy pinpoint180. We are of the opinion that the Bombay High Court’s interpretation of the ratio in Isha Marbles (supra) in Super & Stainless Hi Alloys Ltd and M/s Umang Enterprises is incorrect due to the reason that the High Court failed to enquire into whether any statutory regulation or statutory terms and conditions of supply existed which pertained to the liability of a third person who acquires the property of the erstwhile consumer.

181Copy pinpoint181. In the cases pertaining to Maharashtra, MSEB or its successor the Maharashtra State Electricity Distribution Co. Ltd. placed specific reliance on Condition 23 of the statutory Conditions of Supply. Condition 23 is the only clause in the statutory provisions which pertains to the liability of a person who acquires the property of the erstwhile consumer in circumstances specified thereunder. Circular 607 dated 19 E December 1998 is stated to emanate from Condition 23(b) of the Conditions of Supply. The Bihar State Electricity Board in Isha Marbles (supra) did not have a specific condition having a similar effect as Condition 23.

182Copy pinpoint182. In Hyderabad Vanaspathi (supra) this Court held that the F Conditions of Supply in the State of Andhra Pradesh, notified in exercise of the powers conferred by Section 49 of the 1948 Act, are statutory in character. The Court noted that no regulation has been made under Section 79(j) of the 1948 Act.

183Copy pinpoint183. In the present case, the appellant-Board in exercise of its G powers under Section 49 of the Electricity Supply Act formulated the MSEB Conditions of Supply. Accordingly, the MSEB Conditions of Supply are statutory in nature.

184Copy pinpoint184. When a provision having a statutory force and effect is relied upon by the Electric Utilities to impose the liability of clearing the outstanding dues of the erstwhile consumer on a third party, it is for the H

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courts to determine whether the said statutory provision is applicable to the facts of the case before it. In Special Officer, Commerce, North Eastern Electricity Supply Company of Orissa v. Raghunath Paper Mills Private Limited,81 this Court observed that Regulation 13(10)(b) of the Orissa Electricity Regulatory Commission Distribution (Conditions of Supply), Code, 2004 was inapplicable to the facts of the case as the auction purchaser had requested for a fresh connection, whereas in terms of the concerned regulation, previous dues had to be cleared only with respect to a reconnection or a transfer of service connection from the name of the erstwhile consumer.

185Copy pinpoint185. The submission of the appellant on the applicability of Condition 23 rests on the meaning and scope of Condition 23 in relation to the liability of a person who becomes the new owner or occupier of the premises of the erstwhile consumer, to which electricity was being supplied. Condition 23 is extracted below: “Clause 23: Assignment or Transfer of Agreement D a) The consumer shall not without previous consent in writing of the Board, assign, transfer or part with the benefit of his Agreement with the Board nor shall the consumer in any manner part with or create any partial or separate interest thereunder. b) A consumer who commits breach of condition 23(a) above and neglects to pay to the Board any charges for energy or to deposit with the Board amount of security deposit or compensation and the supply of such consumer is disconnected under Section 24 of the Indian Electricity Act, 1910 or under condition no. 31(a) of these conditions dies, or transfers, assigns or otherwise dispenses of the undertaking or the premises to which energy was being supplied to the consumer, any person claiming to be heir, legal representative, transferee, assignee or successor of the defaulting consumer with or without consideration in any manner shall be deemed to be liable to pay the arrears of electricity charges, security deposit or compensation due payable by the consumer and it shall be lawful for the Board to refuse to supply or reconnect the supply or to give a new connection to such personclaiming to be the heir, legal representative, transferee, assignee or successor of the defaulting consumer of such premises, 81 (2012) 13 SCC 479 H

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A unless the amount of such charges due and / or the compensation demanded from the defaulting consumer, is as the case may be duly paid to or deposited with the Board.” (emphasis supplied)

186Copy pinpoint186. In terms of Condition 23(a), a consumer is not entitled to B transfer the benefit under their agreement with the Electricity Board without the previous consent of the Board. In terms of Condition 23(b), if the consumer commits breach of Condition 23(a) and neglects to pay the Board any charges for energy and consequently, the electricity supply of such consumer is disconnected, then the third party upon whom such C a transfer was effected is liable to pay arrears of electricity which the defaulting consumer has not paid. Liability of a third party to pay dues of the erstwhile consumer is attached when the conditions specified in Condition 23(a) and Condition 23(b) are satisfied.

187Copy pinpoint187. The rule of “ejusdem generis” is a principle of construction. D The rule is that when general words follow particular and specific words of the same nature, the general words must be confined to the things of the same kind as those specified. It applies when the following ingredients are present: (i) the statute contains an enumeration of specific words; (ii) the subjects of enumeration constitute a class or category; (iii) that category is not exhausted by the enumeration; (iv) a general term follows E the enumeration; and (v) there is no indication of a different legislative intent.82

188Copy pinpoint188. For the application of the ejusdem generis rule, it is essential that enumerated things before the general words must constitute a distinct category or a genus or a family which admits of a number of members.83 F In Adoni Cotton Mills Ltd. v. Andhra Pradesh State Electricity Board,84 this Court had to interpret Section 49(3) of the 1948 Act, which empowered the Electricity Board to fix different tariffs for the supply of electricity to any person having regard to the geographical position of any area, the nature of supply and purpose for which the supply is required G and any other relevant factors. This Court refused to limit the generality 82 Amar Chandra v. Collector of Excise, Tripura, (1972) 2 SCC 442; Grasim Industries Ltd. v. Collector of Customs, (2002) 4 SCC 297 83 Lokmat Newspapers (P) Ltd. v. Shankarprasad, (1999) 6 SCC 275; Jaiprakash

Associates Ltd. v. Tehri Hydro Development Cor pn. (India) Ltd., (2019) 17 SCC 786 84 (1976) 4 SCC 68 H

K. C. NINAN v. KERALA STATE ELECTRICITY BOARD & 733 ORS. [DR DHANANJAYA Y CHANDRACHUD, CJI]

of “other relevant factors” since there was no genus of the enumerated A factors. Geographical position of the area and the nature and purpose of the supply were held not to be related to any common genus.

189Copy pinpoint189. In the impugned judgment Ecto Spinners, the Bombay High Court observed that the word “successor”, occurs in the collocation of other words “heir”, “legal representative”, “transferee” and “assignee”, B and its meaning must take colour from the preceding words in association with which it is used. It held that the word “successor” has to be understood to refer to an owner acquiring the right by way of voluntary transfer or on account of the right of inheritance.

190Copy pinpoint190. We are unable to accept the reasoning of the High Court. C The dictionary meaning of some words and expressions, which have a bearing on this case, has been set out in Black’s law Dictionary as follows: “Heir: A person who, under the laws of intestacy, is entitled to receive an intestate decedent’s property85 Legal representative: A legal heir; or an executor, administrator D or other legal representative86 Transferee: One to whom a property interest is conveyed87 Assignee: One to whom property rights are transferred by another”88 E

191Copy pinpoint191. It is clear from the plain meaning of the words that the expressions “heir”, “legal representative”, “transferee” and “assignee” do not fall into one single distinct category. According to the reasoning in the impugned judgment, Condition 23 itself consists of more than one genus or category of transfer — acquiring the right to a property on F account of voluntary transfer, or on account of death of the owner. The word “successor”, which was interpreted by the High Court in a restricted manner, is itself of wide amplitude and will have to be given a plain meaning. The expression “successor” has been defined in Black’s Law Dictionary as “a person who succeeds to the office, rights, responsibilities, or place of another; one who replaces or follows a G predecessor.” 89 The category of a “universal successor” is further 85 Black’s Law Dictionary (WEST: Thomson Reuters 9 th edition), Pg 791 86 Black’s Law Dictionary (WEST: Thomson Reuters 9 th edition), Pg 1416 87 Black’s Law Dictionary (WEST: Thomson Reuters 9 th edition), Pg 136

88 Black’s Law Dictionary (WEST: Thomson Reuters 9 th edition), Pg 1636

89 Black’s Law Dictionary (WEST: Thomson Reuters 9 th edition), Pg 1569 H

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A understood to mean “someone who succeeds to all the rights and powers of a former owner, as with an intestate estate or an estate in bankruptcy”.90

192Copy pinpoint192. The wide compass of the expression “any person claiming to be heir, legal representative, transferee, assignee or successor of the defaulting consumer” can be understood with regard to the former corresponding phrase “dies, or transfers, assigns or otherwise dispenses of the undertaking or the premises”.

193Copy pinpoint193. In the case at hand, the use of the expression “otherwise dispenses of” in the phrase “a consumer…dies, or transfers, assigns or otherwise dispenses of the undertaking or premises’’, does not bring into play the rule of ejusdem generis for the preceding words “dies”, “transfers”, “assigns” do not belong to a single limited genus.

194Copy pinpoint194. The word “transfer” itself is generally regarded to have a wide connotation, comprehending within it both voluntary and involuntary transfers. In Mangalore Electric Supply Co. Ltd. v. The Commissioner of Income Tax, West Bengal,91 a three-judge Bench of this Court held that a compulsory acquisition of property can constitute a “transfer” within the meaning of Section 12B(1) of the Indian Income Tax Act 1962. It rejected the argument that the word “transfer” must be construed ejusdem generis with the preceding words “sale”, “exchange”, E “relinquishment”. On the wide amplitude of the word ‘transfer’, this Court observed: “8. We find it impossible to accept this submission. In the first place if it was intended that voluntary transfers alone should fall within the meaning of the section, it was unnecessary for the legislature to use the expression “transfer”, an expression acknowledged in law as having a wide connotation and amplitude. Earl Jowitt, in “The Dictionary of English Law” says: “In the law of property, a transfer is where a right passes from one person to another, either (1) by virtue of an act done by the transferor with that intention, as in the case of a conveyance or assignment by way of sale or gift, etc; or (2) by operation of law, as in the case of forfeiture, bankruptcy, descent, or intestacy.” 90 Id 91 H (1978) 3 SCC 248

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Roland Burrows on “Words and Phrases”, Volume V, contains a A statement under the caption “Transfer on Sale” at p. 331 that even a transfer of land under compulsory powers is a transfer “on sale”. It is unnecessary for us to consider the question whether a compulsory acquisition of property is a “sale” within the meaning of Section 12-B(1) and indeed, it is needless for the present purpose B to go that far. We are concerned with the narrower question whether a compulsory acquisition of property can amount to a “transfer” within the meaning of Section 12-B(1) and upon that question it is important to bear in mind that the word “transfer” is comprehensive and is regarded generally as comprehending within its scope transfers both of the voluntary and involuntary kinds. C Without more, therefore, there is no reason for limiting the operation of the word “transfer” to voluntary acts of transfer so as to exclude compulsory acquisitions of property.” (emphasis supplied)

195Copy pinpoint195. The rule of ejusdem generis cannot be applied when there is D no distinct category or a genus. In the absence of a genus, the words ‘transfer’ or ‘otherwise dispenses of’, which are wide in their meaning, cannot be restricted to only mean voluntary transfers by the application of the ejusdem generis principle.

196Copy pinpoint196. The rule of ejusdem generis is not an inviolable rule of law. 92 E Where the context and mischief of the statutory enactment do not require a restricted meaning to be attached to words of general import, the court has to give the words their plain and ordinary meaning.93 Condition 23 of the MSEB Conditions of Supply is a mode of recovery of electricity arrears of the erstwhile consumer, which could be recovered even from F a successor. The MSEB, in our opinion, intended to cover all possible cases of transfer of the undertaking or premises of the erstwhile consumer, be it voluntary, on account of death of the consumer, or by operation of law. Circular 518 dated 18 June 1993 and Circular 607 dated 19 December 1998 issued by the MSEB emanated from Condition 23 of the MSEB Conditions of Supply. They contained directions vis-à-vis power supplied G to those property owners who purchased sick and closed industrial units. The context and the purpose of the statutory terms and conditions of

92 Valparaiso Kottarathil Kochuni v. States of Madras & Kerala, (1960) 3 SCR 887 93 BHEL v. Globe Hi-Fabs Ltd., (2015) 5 SCC 718 H

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A supply demand that a broader construction should be adopted, and there is no room for the application of the rule of ejusdem generis.

197Copy pinpoint197. On our interpretation of Condition 23 of the MSEB Conditions of Supply with particular reference to subclause (b) thereof, we are of the view that the said sub-clause is applicable to involuntary transfers, B such as court auctions.

198Copy pinpoint198. Applying the above considerations to the appeals our conclusions are as follows: Item 101.1: Maharashtra State Electricity Board v. Super & Stainless Hi Alloys Ltd; Civil Appeal 5312-5313 of 2005 C

199Copy pinpoint199. The first respondent purchased a sick industrial unit in auction from the SICOM under Section 29 of the State Financial Corporations Act. It filed a writ petition challenging the actions of the appellant-Board in denying it a new electricity connection. A subsequent writ petition was filed by SICOM challenging the vires of Circular 607 dated 19 D December 1998. By a common judgment dated 19 December 2002, the Bombay High Court disposed of the writ petitions and quashed the impugned Circular 607 on the ground that MSEB lacked jurisdiction as the circular was beyond the powers of the Board under Section 24 of the 1910 Act. The High Court relied on Isha Marbles (supra), to reach E the conclusion that although Section 24 provides for payment of arrears for reconnection after the supply is disconnected, it only refers to the consumer who failed to pay the dues and does not concern itself with a new owner or occupier of the premises.

200Copy pinpoint200. The appellant preferred the present Special Leave Petition. F This Court issued notice on 6 May 2003 and leave was granted on 25 August 2005. By an order dated 24 August 2006, the question whether electricity dues constitute a charge on the property so far as the transferor and the transferee of the unit are concerned was referred to a larger bench.

201Copy pinpoint201. In our considered view, the decision in Isha Marbles G (supra)and Section 24 of the Electricity Act 1910 are by themselves not an answer on whether the appellant-Board had a power to issue Circular

607. In Srigdhaa Beverages (supra), this Court held that the electricity dues, where they are statutory in character under the Electricity Act and as per the terms and conditions of supply, cannot be waived in view of the provisions of the Act itself, more specifically Section 56 of the

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2003 Act (pari materia with Section 24 of the 1910 Act), and cannot partake the character of purely contractual dues. The power of the appellant-Board to impose a condition that the purchaser of an undertaking will have the obligation to clear the arrears of electricity dues of the prior consumer is sourced from Condition 23 of the MSEB Conditions of Supply framed under Section 49 of the 1948 Act. B

202Copy pinpoint202. It was the submission of the respondents that the impugned circular cannot affect the rights of the auction purchasers who purchased sick/ closed industrial units under Section 29 of the State Financial Corporation Act 1951 as the sale was “not voluntary”. As discussed above, Condition 23 is of wide import, which covers sale of property made in court auctions. Furthermore, Section 29(2) of the State Financial C Corporation Act provides that a sale under Section 29 which resulted in transfer of property shall vest in the successor all rights in the property transferred as if the transfer has been made by the owner of the property. Accordingly, a sale made by the corporation is deemed to be a sale made by the owner of the property, attracting Condition 23 of the MSEB D Conditions of Supply.

203Copy pinpoint203. It is necessary to reproduce some of the relevant clauses of the “General Auction Conditions of Sale” of properties put on sale by SICOM. The clauses are extracted below: “Clause 4: The purchaser may take inspection of the property to be sold. Even if the purchaser does not take inspection, he shall be deemed to have inspected all the assets put up for sale on “As is where is and what is basis” in regard to the condition thereof, before making the offer for purchase of the same. It is hereby expressly agreed and declared that notwithstanding the provisions of Section 55 of the Transfer of Property Act or any other enactment for the time being in force in that behalf, SICOM shall not be bound to disclose to the purchaser any defect, whether material or otherwise in the property, whether or not SICOM may be or may not be aware of such defect and whether or not the purchaser could not with ordinary care and diligence discover such defects. Clause 6: The purchaser shall make his own arrangement for getting required power connection, water and other facilities and payment of arrears of rates and taxes of the said property and shall meet all the costs of whatever nature to be incurred in that H

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A behalf. SICOM shall not be liable to pay any arrears if charges and costs/ expenses, if any, in respect of power, water or any other facilities required. The purchaser shall make own inquiries about arrears of dues for supply of power, water and other facilities, if any, and the same shall be borne and paid by the purchaser alone.” B (emphasis supplied)

204Copy pinpoint204. The aforesaid terms and conditions of the auction as set out by SICOM indicate that the property was being sold on “as is where is and what is basis”. The auction purchaser was at all times on clear notice of the fact that the property was being sold on an “as is where is” basis and that SICOM did not undertake any liability for the payment of dues. This clause was further subject to another provision in Clause 6, where the purchaser was liable to make their own inquiries about arrears of dues for supply of power, water and other facilities and the auction purchaser was made liable to pay such arrears. This makes it clear that apart from the MSEB Conditions of Supply, which have statutory effect, the purchaser who purchased property in auctions conducted under Section 29 of the State Financial Corporations Act also had knowledge of his liability for the past arrears of electricity of the premises when he bid in the auction. By virtue of the stipulations in the sale deed, as far as the first respondent is concerned, it was liable to discharge the electricity dues payable to the Electricity Board by the erstwhile consumer.

205Copy pinpoint205. In light of what we have stated above, we set aside the judgement of the Division Bench and allow the appeal. Item 101.10: Supdt. Engg. Maharashtra State Electricity F Board v. M/s Umang Enterprises; Civil Appeal No. 5314 of 2005

206Copy pinpoint206. The first respondent was a successful auction purchaser of the property of M/s Creekay Yarn Industries Ltd, which was put to sale in consequence of an arbitral award. The respondent-purchaser took out a Judges Order94 in a civil suit before the Bombay High Court, seeking G a clarification that it was not liable for past dues and liabilities of any kind in respect of the property purchased through the auction sale. The Bombay High Court by its order dated 29 January 2003 declared that the respondent-purchaser was not liable to pay any arrears payable by the erstwhile owner. The appellant alleges that this order was passed H 94 Judges Order No. 10 of 2003 in Civil Suit no. 2978 of 1991

K. C. NINAN v. KERALA STATE ELECTRICITY BOARD & 739 ORS. [DR DHANANJAYA Y CHANDRACHUD, CJI]

ex-parte. The order of the Bombay High Court in Judges Order dated A 29 January 2003 has not been placed on record before this Court.

207Copy pinpoint207. The respondent-purchaser requested the appellant for a new electricity connection, which was denied on 6 June 2003 on the ground that the respondent was not eligible for a new connection unless the dues of the erstwhile consumer were discharged in terms of Condition B 23 of the MSEB Conditions of Supply. The respondent filed a writ petition, with an interim prayer seeking a direction to grant a new electric connection. The main prayer in the writ petition sought a declaration that the demand made by the Electricity Board to pay arrears was unfounded in law. The Bombay High Court by its impugned judgment dated 24 September 2004 disposed of the writ petition with a direction to C the appellant to grant an electricity connection to the premises within one month, without insisting on clearance of past dues of the previous consumer. The High Court placed reliance on the decisions of this Court in Isha Marbles (supra)and Gujarat Inns (supra).

208Copy pinpoint208. The appellant preferred the present Special Leave petition. D This Court issued notice on 6 January 2005.

209Copy pinpoint209. As already stated before, this Court in both Isha Marbles (supra)and Gujarat Inns (supra)did not hold the auction purchaser liable to clear the electricity arrears incurred by the previous owners because there was no specific statutory provision in that regard, or any clause dealing with the issue of electricity dues. In the present case, the MSEB placed specific reliance on Condition 23 of MSEB Conditions of Supply to hold the auction purchasers liable. The MSEB Conditions of Supply were incorporated in the individual contracts entered between the Electricity Board and the consumers. Clause 14 in the standard agreements entered between the MSEB and consumers provides that the Conditions of Supply, as amended from time to time, shall be deemed to be part of the agreement. The erstwhile consumers were aware of the statutory MSEB Conditions of Supply. The relevant clause is extracted below: G “Clause 14(a): Condition and Miscellaneous Charges for supply of electrical energy of the Maharashtra State Electricity Board for the time being in force and as amended by supplier from time to time shall be deemed to be part of the Agreement and shall govern the parties hereto in so far as applicable. A copy of the H

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A current Conditions and Miscellaneous Charges for supply is set out in the second schedule hereto.”

210Copy pinpoint210. We are of the considered view that the impugned order cannot be sustained and is accordingly set aside. Item 101.11: Maharashtra State Electricity Board v. Ecto B Spinners; Civil Appeal No. 6587 of 2005

211Copy pinpoint211. In 1999, the unit of M/s Prabhavati Spinning Mill, a co- operative spinning mill, was closed down. The electricity supplied to M/ s Prabhavati Spinning Mill had earlier been disconnected by the appellant in default of payment of consumption charges. In 2004, the first respondent purchased M/s Prabhavati Spinning Mill, which was liquidated by the authorities under the Maharashtra Co-operative Societies Act 1960. The agreement of sale was executed in favour of the first respondent on 26 July 2004 and since then, the first respondent had the possession of the property. The final deed of assignment was yet to be executed. The first respondent incurred an expenditure of Rs 4 crores to overhaul the plant and machinery at the premises, and thereafter applied for a fresh electricity connection as a High Tension Consumer for the premises. Meanwhile, the plots were transferred by the Maharashtra Industrial Development Corporation to the first respondent on 4 February 2005. The appellant, however, relied on the MSEB Conditions of Supply and the agreement entered with the erstwhile consumer to decline granting electricity connection until the arrears of the erstwhile consumer were cleared. The respondent filed a writ petition before the Aurangabad Bench of the Bombay High Court, seeking a direction to the appellant to supply electricity to the respondent at its premises.

212Copy pinpoint212. By the impugned judgement dated 20 July 2005, the Bombay High Court allowed the writ petition. The High Court held that the respondent could not be made liable for the dues of the erstwhile owner as a prerequisite for obtaining a new electricity connection as there was neither any statutory provision nor an agreement creating any charge G over the property in relation to the electricity arrears.

213Copy pinpoint213. This Court granted leave on 24 October 2005. As discussed above, Condition 23 of MSEB Conditions of Supply is a specific provision applicable to the case of the first respondent. In view of the above, we allow this appeal, and set aside the judgment and order of the High Court. H

K. C. NINAN v. KERALA STATE ELECTRICITY BOARD & 741 ORS. [DR DHANANJAYA Y CHANDRACHUD, CJI]

Item 101.12: Maharashtra State Electricity Distribution Co. A Ltd. v. M/s Zia Iron Store; SLP(Civil) No. 6068 of 2006

214Copy pinpoint214. The original consumer, M/s Sumit Re-Rolling Mills Pvt. Ltd, Nagpur, defaulted in the payment of a loan taken from the Nagpur Nagrik Sahakari Bank. The bank filed a dispute before the Co-operative court at Nagpur. The Judge, Cooperative court at Nagpur by an order dated B 23 February 2005 granted permission to sell the hypothecated plant and machinery and mortgaged land and building of M/s Sumit Re-Rolling Mills Pvt. Ltd. In the execution of the award, the property belonging to M/s Sumit Re-Rolling Mills Pvt. Ltd was purchased by the first respondent. C

215Copy pinpoint215. The authorised officer of the bank handed over the physical possession of the entire moveable plant and machinery and immovable land and building, mortgaged with the bank, to the respondent on 21 March 2005 on “as is where is” and “as is what is” basis.

216Copy pinpoint216. A deed of assignment and sale dated 17 February 2006 was entered between the Nagpur Nagarik Sahakair Bank Ltd. and the respondent. Clause 2 of the indenture notes that the bank would not take any liability for any dues like electricity dues and charges for fresh power connection. The relevant clause is extracted below: “The liabilities, if any and the liabilities which may arise in future in respect of the dues of Local authorities and dues of Revenue Authority, MIDC Authority and Sales Tax etc. and also for transfer of property in question, shall be for transfer of property in question shall be payable by the purchaser. The property hereby assigned in on “as is where is” and “as is what is” basis. The Bank does not undertake any liability or responsibility to procure any permission/licence etc. in respect, of the property offered for sale or for any dues like water/service charges of the MIDC, transfer fees, electricity dues and charges for fresh power connection, Local Authority, or Nazul/NIT dues, in respect of the said property and the same shall be solely and exclusively borne and paid by the G Purchaser.”

217Copy pinpoint217. The first respondent applied for a fresh electricity connection for the premises. The appellant-MSEDC refused the request of the first respondent by a letter dated 9 September 2005 on the ground that the arrears of electricity charges of the earlier owner were pending, and the H

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A first respondent was liable to clear them in light of Condition 23 of MSEB Conditions of Supply. The Bombay High Court by its impugned judgment dated 12 December 2005 held that Condition 23 was inapplicable and directed the appellant to grant a fresh connection to the first respondent, if otherwise eligible. The High Court observed that Condition 23 intended to apply to voluntary acts of the original consumer by which he transfers the benefit of his agreement with the Board.

218Copy pinpoint218. The appellant filed a Special Leave Petition challenging the impugned judgement. The appellant has argued that the concept of voluntariness is not a sine qua non for Condition 23 of the MSEB Conditions of Supply. In the reply filed by the respondent, it has been urged that it is not a necessary party to the present petition since it had sold the premises in dispute to Rajaram Steel Industries Pvt Ltd by a deed of assignment dated 29 March 2006.

219Copy pinpoint219. The High Court in the impugned judgment has based its decision on the MSEB Conditions of Supply 1976. What is the effect of the respondent applying for a fresh electricity connection after the enactment of the Maharashtra Electricity Supply Code on 20 January 2005 was not considered. The relevant date to determine the applicability of the statutory provisions governing conditions of supply of electricity is the date on which the auction purchaser applies for an electricity connection.

220Copy pinpoint220. The application by the respondent in which it sought a fresh electricity connection has not been placed on record. At the same time, from the deed of assignment and sale placed on record, it emerges that the sale of the premises and possession was given after 20 January

F 2005. The permission to sell was granted to the bank only on 23 February

2005. The physical possession of the premises was given to the respondent only on 21 March 2005. A fresh connection of electricity supply could not have been requested even before the sale was confirmed in favour of the respondent. Accordingly, the relevant statutory provision governing this case is the Maharashtra Electricity Supply Code 2005. G

221Copy pinpoint221. In terms of Regulation 10.5, any charge for electricity or any sum other than a charge for electricity due to the distribution licensee which remains unpaid by a deceased consumer or the erstwhile occupier/ owner of any premises shall be a charge on the premises transmitted to the legal representatives / successors-in-law or transferred to the new H

K. C. NINAN v. KERALA STATE ELECTRICITY BOARD & 743 ORS. [DR DHANANJAYA Y CHANDRACHUD, CJI]

owner / occupier of the premises, as the case may be, and the same shall be recoverable by the Distribution Licensee as due from such legal representatives or successors-in-law or new owner / occupier of the premises. However, the proviso lays down that except in the case of a transfer of a connection to a legal heir, the liabilities which are transferred under Regulation 10.5 are restricted to a maximum period of six months of the unpaid charges for electricity supplied to the premises. Accordingly, the dues owed by M/s Sumit Re-Rolling Mills Pvt. Ltd, Nagpur are charged on the property purchased by the first respondent in a public auction.

222Copy pinpoint222. The sale was conducted on “as is where is” basis and the respondent accordingly had adequate notice of the charge. Hence, the distribution licensee is entitled to recover the unpaid dues from the first respondent subject to the permitted period specified in the proviso to Regulation 10.5.

223Copy pinpoint223. In view of the aforesaid legal position, which has emerged, we are of the view that the impugned order of the High Court cannot be sustained. The appeal is allowed. D

Item 101.13: Maharashtra State Electricity Board v. M/s Jai Tirath Financiers Pvt. Ltd.; SLP(Civil) No. 10732 of 2006

224Copy pinpoint224. ÿþIn 1999, liquidation proceedings were initiated against M/ s Hariganga Alloys & Steel Ltd. By a sale notice dated 2 May 2001, E offers were invited from interested bidders for purchase of properties of M/s Hariganga Alloys & Steel Ltd on “as is where is” and “as is what is” basis. The first respondent successfully purchased the assets in the auction sale and took possession of the purchased property in 2002.

225Copy pinpoint225. On 17 June 2005, the respondent applied to the appellant for F a new electricity connection to the premises purchased in the auction. By a letter dated 22 June 2005, the appellant rejected the application on the ground that arrears of electricity charges of Rs 83 lakhs of the erstwhile owner were pending and a permanent electricity connection could not be released till full dues were paid. The appellant permitted release for a temporary connection. The respondent filed Company Application No. G 106 of 2005 in Company Petition No.6 of 1999 in the matter of liquidation of M/s Hariganga Alloys & Steel Ltd, seeking the release of a new electricity connection without clearance of arrears.

226Copy pinpoint226. The application of the respondent was allowed by the impugned order dated 10 February 2006, passed by a Single Judge at the H

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A Nagpur Bench of the Bombay High Court. The High Court held that the appellant could not deny electricity connection to the respondent on the ground of recovery of arrears of the erstwhile owner of the plot. The High Court noted that the appellant was one of the secured creditors and directed it to make its claim before the Official Liquidator in accordance with law. B

227Copy pinpoint227. The appellant preferred the present Special Leave petition. On 17 July 2006, this Court issued notice and stayed the operation of the impugned order.

228Copy pinpoint228. During the pendency of the appeal, the respondent had sold the property to M/s Ankush Shikshan Santha and the new owner had submitted a proposal dated 9 August 2007 to the appellant that it was prepared to settle the dues of M/s Hariganga Alloys & Steel Ltd in twelve instalments. By an order dated 22 October 2007, this Court directed the appellant to restore the electricity connection after receipt of the first two instalments by the respondent in view of the undertaking given by the respondent that it shall deposit the entire arrears of Rs 83 lakhs in terms of the proposal dated 9 August 2007. The Court has been informed that pursuant to the order, M/s Ankush Shikshan Santha had paid the arrears to the tune of Rs 83 lakhs and the appellant has granted a fresh electricity connection.

229Copy pinpoint229. In the meantime, an Interlocutory Application95 was filed by the respondent for disposing the petition on the ground that it had become infructuous. The appellant in the reply affidavit has contested the IA on the ground that even though the principal amount of Rs 83 lakhs has been paid towards arrears, interest charges to the tune of approximately F Rs 2 crore on the principal amount are still to be recovered.

230Copy pinpoint230. Since the respondent applied for electricity connection on 17 June 2005, the Maharashtra Electricity Supply Code 2005, which came into force from 20 January 2005, is applicable in the instant case. Accordingly, a charge was created on the electricity arrears in terms of G Regulation 10.5. At the same time, the Court cannot be oblivious to the commercial exigencies in view of which the settlement proposal was complied with. The appellant has recovered an amount of Rs 83 lakhs. In the facts and circumstances of the case it would be iniquitous to direct the payment of interest at this stage. We therefore direct a closure

H 95 IA No. 2 of 2007

K. C. NINAN v. KERALA STATE ELECTRICITY BOARD & 745 ORS. [DR DHANANJAYA Y CHANDRACHUD, CJI]

of the dispute in the above terms in the exercise of the jurisdiction under A article 142 of the Constitution.

231Copy pinpoint231. In the circumstances, it is not possible to entertain the appeal at this stage. The appeal is accordingly dismissed. Pending applications, if any, stand disposed of. Item 101.14: Maharashtra State Electricity Distribution Co. B Ltd. v. M/s Garib Nawaj Scrap Merchant; Civil Appeal No. 10732 of 2006

232Copy pinpoint232. In 2002, the electricity supply of M/s R & J Alloys Pvt. Ltd was permanently disconnected by the appellant. On 3 October 2005, the first respondent successfully purchased the properties of M/s R & J C Alloys Pvt. Ltd in an auction held pursuant to a sale conducted for enforcement of a recovery certificate issued by the Debt Recovery Tribunal. The respondent took over possession of the property and the sale was confirmed by the order of the Recovery Officer dated 8 December 2005. The terms of the auction sale of the properties of M/s D R & J Alloys Pvt. Ltd stated that the sale was conducted on “as is where is basis”.

233Copy pinpoint233. On 30 December 2005, the respondent applied to the appellant for a new electricity connection. This was followed by a subsequent letter dated 2 January 2006. By letter dated 12 January 2006, the appellant E refused to give a new electric connection unless the arrears of Rs 11 crores of the erstwhile owner of the property were paid. The respondent filed a writ petition before the Bombay High Court, seeking an electricity connection. On 13 October 2006, the High Court passed the impugned order granting interim relief to the first respondent. The High Court took note of the pending referral of the legal issue to a larger bench of this F Court. It observed that the right of the Electricity Board to claim arrears from auction purchasers hinged upon the adjudication of the said issued. The High Court directed the Electricity Board to grant interim electricity connection subject to final adjudication of the rights of the parties.

234Copy pinpoint234. The appellant herein preferred the present Special Leave G Petition against the interim order of the High Court. On 9 July 2007, leave was granted by this Court and the case was tagged with Civil Appeal No. 5312-5313 of 2005. The impugned order of the High Court granting interim electricity connection was stayed by this Court. H

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235Copy pinpoint235. The submission which has been urged by Mr Ajit Bhasme, senior counsel appearing on behalf of the appellant is that the first respondent knowingly purchased the premises with the liability to pay past dues, evident from clause 3 and clause 4 of the terms of the auction sale. Accordingly, it has been urged that the respondent is liable to pay the dues in view of Condition 23(b) of the MSEB Conditions of Supply. B Mr MY Deshmukh, counsel appearing on behalf of the first respondent has urged that the MSEB Conditions of Supply 1976 are inapplicable after the enactment of the Maharashtra Electricity Supply Code 2005.

236Copy pinpoint236. The respondent has in its written submissions has brought to the attention of this Court the suit for recovery96 initiated by the appellant against the erstwhile owner. During the pendency of the present appeal, the trial court by an order dated 30 September 2009 passed a decree in favour of the appellant for the debt due from the erstwhile consumer and its proprietor in respect of the arrears of electricity bills. The first respondent has urged that in view of the decree, the appellant ought to have withdrawn the present appeal instead of protracting the litigation.

237Copy pinpoint237. At the outset, we would deal with the submissions on the applicability of the 2003 Act. The electricity connection was permanently disconnected in 2002, and the first respondent acquired ownership rights in the premises in 2005. The first respondent made the application for a E new electricity connection on 30 December 2005. Hence, the first respondent requested the appellant to supply electricity after the Maharashtra Electricity Supply Code 2005 came into effect on 20 January

2005. Accordingly, the Maharashtra Electricity Supply Code 2005 would govern the facts in the present case. In terms of Regulation 10.5 of the Maharashtra Electricity Supply Code 2005, any unpaid electricity dues constitute a charge on the premises, and would be recoverable from the new owner or occupier of the premises to whom the premises have been transferred.

238Copy pinpoint238. Furthermore, the terms of the auction sale put the first respondent on notice that this was a sale on “as is where is” basis and the purchaser would be liable for arrears of different authorities, including MSEB, if an excess amount in sale proceeds was not available. The relevant clauses are extracted below:

H 96 Spl. Civil No. 104 of 2003

K. C. NINAN v. KERALA STATE ELECTRICITY BOARD & 747 ORS. [DR DHANANJAYA Y CHANDRACHUD, CJI]

“3. So far known to this office there are (no) arrears of Municipal A tax, MSEB or Corporation tax or both taxes. However, any legitimate claim made in that behalf shall be paid from out of the sale proceeds if the same is in excess of the amount mentioned in the Recovery Certificate. In case such excess amount is not available the liability shall be borne by the purchaser. B However, prospective purchaser is expected to check up from MIDC, CIDCO, MSEB, Municipal corporation etc. for the dues if any on the property.

4. The properties shall be sold on “AS IS WHERE IS BASIS”.” (emphasis supplied) C

239Copy pinpoint239. Accordingly, the dues owed by M/s R & J Alloys Pvt. Ltd to the MSEB are a charge on the property purchased by the first respondent in a public auction. The charge attaches to the property and a distribution licensee is entitled to recover the unpaid dues from the first respondent subject to the permitted period specified in the proviso to Regulation D 10.5.

240Copy pinpoint240. So far as the filing of civil suit by the appellant in 2003 against the erstwhile owner is concerned, that is an alternative remedy provided by law which the appellant can undertake in order to recover electricity arrears from the erstwhile consumer. Besides disconnection of electricity, E the MSEB has the remedy to file civil suits followed by execution petitions for recovery of the dues from the erstwhile consumer. The filing of the civil suit will not debar the appellant from recovering any outstanding charge for electricity from a person to whom the property is transferred or the occupier of the said premises where new electricity connection is sought in terms of Regulation 10.5. F

241Copy pinpoint241. The counsel for the respondent has urged that although the decree in the civil suit was passed in favour of the appellant on 30 September 2009, the appellant has failed to execute it till date. The distribution licensee should not let arrears mount up and must be prompt in disconnecting electricity supply and thereafter pursuing its remedy by G filing a suit for recovery of moneys/ dues. It becomes the bounden duty of the distribution licensee to diligently pursue the decree awarded and recover amounts from the real defaulter. Any amount that may have been realised in the execution of the decree would have to be given due credit for in determining the amount payable by the respondent. H

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242Copy pinpoint242. In view of the reasons which have been adduced earlier, we allow the appeal and set aside the order of the High Court. III. Gujarat

243Copy pinpoint243. In Gujarat, the right of the Electric Utilities to demand outstanding dues is traceable to the following provisions: B a. Up to the enactment of the 2003 Act on 10 June 2003: The governing legislation consists of the 1910 Act and the 1948 Act. Clause 2(j) of Conditions of Supply of the Gujarat Electricity Board was inserted by a notification dated 10 August

2001. It reads: C “2(j) Recovery of old dues: Reconnection or new connection for any premises, where there are arrears of the Board pending from the consumer/occupier, shall not be entertained. The new successor/ occupier has to clear these dues of the previous consumer before the application of successor/occupier is processed for supply of electricity. If the Board, at a later date, gets the full or part of these dues from the previous consumer, the amount shall be refunded to the successor/occupier after adjusting the costs including legal expenses to recover such arrears and the refund shall bear no interest.” b. From 10 June 2003 to 31 March 2005: As per Section 185(2)(a) of the 2003 Act, the extant Conditions of Supply continued to apply. c. From 31 March 2005 when the Supply Code came into force: Clause 4.1.11 was notified under the Supply Code. The relevant regulation is as follows: “Regulation 4.1.11 An Application for new connection, reconnection, addition or reduction of load, change of name or shifting of Service Line need not be entertained unless any dues of the Applicant to the Distribution Licensee in respect of any other service connection held in his name anywhere in the jurisdiction of the Distribution Licensee have been cleared.”

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d. From 20 August 2010 when the Supply Code was amended: Clauses 4.1.11, 4.1.16, and 4.8 of the Supply Code were notified under Section 43 read with Section 50. Clause 4.1.11 post the amendment in 2010 reads thus: “Clause 4.1.11 An application for new connection, reconnection, addition or reduction of load, change of name or shifting of service line for any premises need not be entertained unless any dues relating to that premises or any dues of the applicant to the Distribution Licensee in respect of any other service connection held in his name anywhere in the jurisdiction of the Distribution Licensee have been cleared. Provided that in case the connection is released after recovery of earlier dues from the new applicant and in case the licensee, after availing appropriate legal remedies, get the full or part of the dues from the previous consumer/owner or occupier of that premise, the amount shall be refunded to the new consumer/owner or occupier from whom the dues have been recovered after adjusting the expenses to recover such dues.” The High Court of Gujarat had occasion to deal with the validity of Clause 2(j) of the Conditions of Supply and Clause 4.1.11 of the Gujarat E Electricity Supply Code. Item 101.2: M/s Navyug Steel Cast and Anr. v. Paschim Gujarat Vij Co.; Civil Appeal No. 7303 of 2005

244Copy pinpoint244. On 10 August 1998, a petition for winding up of Anik Steel Ltd. was filed wherein an order for winding up of the company was passed and an Official Liquidator was appointed. By an advertisement dated 21 December 2001, the Official Liquidator invited tenders for the auction sale of the property of the previous owner. The appellant submitted an offer of Rs. 35.5 lakhs for purchase of the property on an “as is where is” basis. The offer letter specified that the petitioner “shall not be responsible for any of the past dues of the Gujarat Electricity Board, Excise and Customs Department, Sales Tax and Income Tax Department and of any outsiders whether it is Government, Semi- Government Corporations and/ or Board, Bank or of any private parties”. After inter se bidding, the appellant’s offer of Rs. 45.5 lakhs was found to be highest. On 23 July 2022, the Official Liquidator submitted H

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A a report before the Gujarat High Court for confirmation of the sale in favour of the appellant for Rs. 45.5 lakhs. The High Court accepted the sale in favour of the appellant subject to certain terms and conditions. One such condition was: “10. The purchaser shall be liable to pay all statutory dues, B if any, due and payable on the properties of the company for the period after the date of winding up. The payment of such dues for pre-liquidation period shall be settled as per the provisions of the Companies Act, 1956. However, dues, taxes, cess, if any applicable on the sale of assets shall be paid by the purchaser.” C (emphasis supplied)

245Copy pinpoint245. In accordance with the auction terms laid down by the High Court, the consideration was paid and possession of the assets was handed over to the appellant. When the appellant applied for a fresh connection, the respondent insisted on payment of outstanding dues of the previous owner before granting a fresh connection. The appellant filed a writ petition challenging Clause 2(j) of the Conditions of Supply. The Single Judge allowed the writ petition and struck down clause 2(j) of the Conditions of Supply for being arbitrary and inconsistent with statutory provisions of the law. The respondent preferred special appeals against the judgment of the Single Judge before the Division Bench. The Division Bnech by judgment dated 18 July 2005 upheld the validity of Clause 2(j) on the ground that it fell within the ambit and scope of Section 49(1) of the 1948 Act.

246Copy pinpoint246. On 10 August 2001, Gujarat Electricity Board issued a F notification under Section 49 of the 1948 Act incorporating Condition 2(j) in the ‘Condition and Miscellaneous Charges for Supply of Electrical Energy’. Condition 2(j) empowered the Board to insist on payment of arrears of electricity dues of the former consumer as a condition precedent to the restoration of the earlier connection or release of a G fresh connection in favour of the new owner/occupier of the premises. As discussed in preceding paragraphs, such conditions can lawfully be stipulated in light of the overall scheme of the 1910 Act and the 1948 Act. Such terms and conditions stipulated in accordance with Section 49 of the 1948 Act have a statutory character.

K. C. NINAN v. KERALA STATE ELECTRICITY BOARD & 751 ORS. [DR DHANANJAYA Y CHANDRACHUD, CJI]

247Copy pinpoint247. On 23 July 2002, the High Court passed an order confirming the sale in favour of the appellant on the terms and conditions mentioned in the order. The terms and conditions of the auction sale show that the property was sold on an “as is where is” basis to the appellant. The appellant has relied on Condition 10 to argue that it was only liable to pay charges accrued after the date of winding up order. It has been further averred by the appellant that the arrears are for a period before the date of winding up order, which is 10 August 1998. The facts of the case make it evident that the appellant requested supply of electricity by a letter dated 12 August 2002. In the present case, the payment of electricity dues, being statutory in nature, cannot be waived. The auction conditions are subservient to the statutory demand made under Condition 2(j) of the Conditions of Supply. Therefore, we uphold the impugned judgment of the High Court.

248Copy pinpoint248. Before parting, we would like to highlight that by an order dated 18 November 2011, this Court directed the appellant to deposit Rs. 25 lakhs with the respondent and secure the balance principal amount by giving a bank guarantee of a nationalised bank in the name of the respondent within a period of eight weeks from the date of the order to obtain a fresh electricity connection. The relevant part of the said order is reproduced below: “The principal amount claimed by Paschim Gujarat Vij Company E Limited is to the tune of Rs. 1.26 crores. The applicant-petitioner has applied for grant of fresh electricity connection which is being denied on the ground that arrears, referred to above, have not been paid by the previous owner [consumer]. The petitioner is an auction purchaser. Pending further orders, we direct the petitioner to deposit Rs. 25 lakhs with Respondent No. 1 and secure balance F principal amount by giving a Bank Guarantee of a Nationalised Bank in the name of Paschim Gujarat Vij Company Limited - Respondent No. 1 within a period of eight weeks from today, without prejudice to their rights and contentions. Upon compliance of above conditions, electricity connection shall be granted.” G

249Copy pinpoint249. This Court has been informed that the appellant chose not to get the fresh connection in terms as set out by this Court. Through an Interlocutory Application, the appellant has indicated that it is impossible for them to pay the total accumulated dues amounting to Rs. 578 lakhs with interest and other charges. Therefore, the appellant seeks the benefit H

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A of the amnesty scheme dated 29 March 2012 issued by the Gujarat government. Further, the appellant submits that it can only clear its original liability upto Rs. 126 lakhs. The relevant part of the said application is extracted hereunder: “10. The applicants submit that the applicant is approaching this B Hon’ble Court with the intention to get the benefit of this amnesty scheme of Government of Gujarat for only reasons that if the applicant succeeds, the Applicant would be required to pay original dues if the applicant lose the matter in the Hon’ble Supreme Court the liability of the applicant will be only upto Rs. 126.00 Lakhs (original amount) and the Applicant will not be liable to pay any C other delay payment charges and other charges, etc. Therefore, the applicant prays before this Hon’ble Court that is liability of the Applicant is fixed only upto the amount of the original dues i.e. Rs. 126.00 Lakhs without any interest and penalty, etc., the applicant is ready to deposit such sum as is required by this Hon’ble D Court to be deposited with respondent no. 1 and for the balance the applicant is ready to submit the bank guarantee and/ or is ready to deposit the whole amount with this Hon’ble Court as security.” We allow the above application in the interests of equity, justice, E and fairness to the extent that the appellant is only liable to pay the principal amount of Rs. 126 lakhs and any outstanding interest accrued prior to the date of application for supply of electricity. Item 101.3: Torrent Power AEC Limited v. M/s Shreeji (Rakhail) Commercial Cooperative Housing Society Limited & F Others; SLP (C) No. 2880 of 2007

250Copy pinpoint250. The appellant is an electric utility engaged in distribution and retail supply of electricity in Ahmedabad. Raipur Manufacturing Company Ltd, the previous owner, became liable to pay an amount of Rs. 12 crores towards electricity dues together with running interest thereon. On G account of the outstanding debt, the appellant disconnected electricity supply to the premises of the company at Ahmedabad on 15 July 1999. In 2001, winding up proceedings were filed against the previous owner before the Company Court of the High Court of Gujarat. The sale of property of the previous owner was sanctioned by the High Court of Gujarat by an order dated 2 December 2002 in favour of the respondent. H The relevant terms and conditions imposed by the High Court were:

K. C. NINAN v. KERALA STATE ELECTRICITY BOARD & 753 ORS. [DR DHANANJAYA Y CHANDRACHUD, CJI]

“1. The sale of properties of the Company shall be on “as is where is and whatever there is” basis and the Official Liquidator will not transfer the title except the title which the company was having prior to its liquidation. ***

5. All the statutory dues including the municipal dues, taxes, cess, etc. shall be paid and borne by the purchaser, Ajar Enterprises Private Limited. The purchaser shall be solely liable to all levies, charges, claims, arrears, etc. that may be existing or imposed by any Central, State or local authorities or any other person claiming through them in whatever manner, on the said properties sold.” C

251Copy pinpoint251. After taking possession of the property, the respondent addressed a letter dated 7 January 2004 to the appellant for grant of an electricity connection. However, the appellant declined to grant supply of electricity unless the respondent paid the pending dues of the erstwhile owner. The respondent filed a writ petition before the High Court of D Gujarat challenging the appellant’s refusal to grant an electricity connection. Through a common judgment, the Single Judge held that respondent, being an auction purchaser, cannot be called upon to clear the past arrears of the previous owners in the absence of any statutory provision. Further, it was observed that there was no condition between the parties by which the respondents were made liable to pay the arrears E of electricity dues of the previous owners. It was also observed that the state government had not incorporated any condition similar to Condition 2(j) of the Conditions of Supply in respect of the Petitioners. The Division Bench in the impugned judgment dated 1 May 2006 upheld the decision of the Single Judge. F

252Copy pinpoint252. The respondent has submitted that the Gujarat Electricity Supply Code relied upon by the distribution licensee has no application to the facts of the present case. According to the auction purchaser, the Gujarat Electricity Supply Code came into force with effect from 31 March 2005, whereas the respondent auction purchaser applied for G electricity on 13 August 2004, that is, much prior to the Electricity Supply Code having come into effect.

253Copy pinpoint253. In the impugned judgment, the High Court considered the purport of the Regulation 4.1.11 of the Gujarat Electricity Supply Code and held that it was not applicable to the respondent. According to the H

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A High Court, the sole reason that Regulation 4.1.11 of the Gujarat Electricity Supply Code was inapplicable was because the said regulations only applied to the electricity dues of the applicant, and did not make the applicant liable to clear the dues of the previous owner.

254Copy pinpoint254. The High Court omitted to notice that the Gujarat Electricity B Supply Code came into force with effect from 31 March 2005 while the respondent applied for electricity connection on 13 August 2004. Hence, the respondent had applied for a connection before the coming into force of the Gujarat Electricity Supply Code. Thus, the said regulations will not be applicable to the facts of the present case.

255Copy pinpoint255. Since the respondent applied for electricity connection on 13 August 2004, the 2003 Act and the rules and regulations made thereunder are inapplicable in the instant case. It has been admitted by the appellant that there was no statutory condition requiring the respondents to pay the outstanding electricity dues of the previous owner at the point of time when they applied for electricity connection. D

256Copy pinpoint256. The appellant has submitted that Ahmedabad Electricity Company,97 the predecessor of the appellant, notified the Conditions of Supply on 14 October 1994, and that would be applicable. For the period from 10 June 2003 till 31 March 2005, when the Electricity Supply Code came into force, the 1994 Conditions of Supply continued to operate in terms of Section 185(2)(a) of the 2003 Act. Condition 2 of the 1994 Conditions of Supply provided that a requisition for supply of electrical energy shall be made in accordance with the requisition form attached at Annexure A of the said conditions and shall be signed by the owner or occupier of the premises for which supply is required. Annexure A of the said conditions provides a form of requisition for supply of energy. The requisition form is not only limited to a new connection, but also extends to reconnection, extension of load, tapping connection, and name change. The form also requires the applicant to pay all the dues of energy bills and other charges up to the date of transfer. The relevant undertaking is extracted below: G “I/We hereby give consent to transfer above mentioned service in the name of the applicant and I/We abide to pay all the dues of energy bills & other charges upto the date of transfer.”

H 97 “AEC”

K. C. NINAN v. KERALA STATE ELECTRICITY BOARD & 755 ORS. [DR DHANANJAYA Y CHANDRACHUD, CJI]

257Copy pinpoint257. A perusal of Annexure A makes it evident that the above extracted undertaking is actually the undertaking of a ‘current consumer’ giving consent to transfer the service connection and undertaking to pay all past dues. This is not an undertaking of an applicant, which has been separately provided for in the same form. Therefore, Annexure A makes a clear distinction between a ‘current consumer’ and an applicant for electricity connection. Since the respondent purchased the said property through an auction-purchase, there was no ‘current consumer’ to give any consent. Therefore, the undertaking under Form A will not be applicable qua the respondent. Hence, we find no reason to interfere with the findings of the High Court. The appeal shall stand dismissed. Item 101.4: Dakshin Gujarat Vij Co. v. Apurva Chemicals, C SLP (C) No. 37871 of 2012 and 101.17: Paschim Gujarat Vij Company v. Apurva Chemicals, SLP (C) No. 18280 of 2013

258Copy pinpoint258. A power connection was issued in favour of Arunesh Processors Pvt Ltd, the previous owner. Due to non-payment of energy bills, the agreement with the power supply company was terminated with effect from 01 February 1995. In 1995, the appellant filed a suit for recovery of Rs. 3.41 lakhs against the previous owner before the Civil Judge, Sr. Division, Valsad. In 2002, the suit was decreed in favour of Gujarat Electricity Board, which was the predecessor of the appellant. Arunesh Processors Pvt Ltd was wound up in 2002 and its assets were auctioned by the Bombay High Court on an “as is where is basis”. The respondent participated in the auction proceedings and acquired the assets of Arunesh Processors Pvt Ltd at Vapi, Gujarat. The sale was confirmed in favour of the respondent for Rs. 70 lakhs on 11 August 2005 by the Bombay High Court. Thereafter, on 12 December 2008 a deed of conveyance was executed between the Official Liquidator, High Court F of Bombay and the respondent. In 2010, the appellant filed Darkhast No. 7 of 2010 for execution of the decree passed in the suit in 2002.

259Copy pinpoint259. On 16 December 2010, the respondent approached the appellant requesting it to release power supply to the plot at Vapi, Gujarat. On 03 January 2011, the appellant informed the respondent that power G supply cannot be released on the plot because Darkhast No. 7 of 2010 was pending and dues were not recovered from the previous owner. Since the respondent was in need of power supply on the said plot, it paid the outstanding dues of the previous owner to the tune of Rs. 17 lakhs on 25 February 2011. However, on 17 August 2011, the respondent H

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A approached the appellant to refund the paid amount. The appellant refused to refund the amount, contending that the previous owner had not yet acknowledged the receipt of their claim. The respondent instituted a writ petition before the High Court of Gujarat for challenging Clause 4.1.11 of the Gujarat Electricity Supply Code as being inconsistent with the 2003 Act. The High Court in the impugned judgment dated 03 B December 2012 held that Clause 4.1.11 of the Conditions of Supply was ultra-vires the provisions of 2003 Act.

260Copy pinpoint260. It is beyond the pale of doubt that the respondent requested the appellant to release power supply to their premises on 16 December

2010. At the relevant point of time, the amended Clause 4.1.11 was in C force. In the impugned judgment dated 03 December 2012, the High Court held that the State Commission is not authorised to prescribe a condition under Section 50 of the 2003 Act for payment of dues of a previous owner or occupier from the new owner as a precondition to supply electricity. It was further held that Section 43 of the 2003 Act D does not impose any condition for payment of electricity dues attached to the premises before getting supply of electricity. The High Court observed that the phrase “any dues relating to that premises” conveyed that the premises were held to be a defaulter of electricity dues and charges, and was inconsistent with the provisions of the 2003 Act. On the basis of the above reasons, the High Court concluded that the first part of Clause 4.1.11 was ultra vires the provisions of Sections 43, 50, 56, and 181 of the 2003 Act.

261Copy pinpoint261. The appellant submitted that the Board is empowered to frame terms and conditions providing for recovery of electricity dues attached to the premises. It has been further contended that since the auction was held on “as is where is basis”, the auction purchaser was required to carry out due diligence in regard to the dues owed against the property being purchased. The appellant has further submitted that the regulations imposing a condition that the dues relating to particular premises should be cleared before electricity supply is restored or a new connection is given to the premises cannot be termed as arbitrary or unreasonable. To reinforce their argument, the appellant has relied upon the observations made by this Court in Paschimanchal Vidyut Vitran Nigam (supra).

262Copy pinpoint262. On the other hand, the respondent contended that there is no provision under the 2003 Act enabling the distribution licensee to impose

K. C. NINAN v. KERALA STATE ELECTRICITY BOARD & 757 ORS. [DR DHANANJAYA Y CHANDRACHUD, CJI]

a pre-condition of the clearance of dues relating to the previous owner or their premises. It has been further argued that Clause 4.1.11 affixing the dues to the premises is contrary to Section 43 of the 2003 Act, which affixes the liability to pay electricity dues and charges on the consumer. The dues relating to the premises would be a financial encumbrance on the property, and as such would be transferred with the sale of the land. B

263Copy pinpoint263. In the instant case, the first part of Clause 4.1.11 provides that an application for electricity supply for any premises need not be entertained unless any dues relating to the premises have been cleared. The said clause indicates that a distribution licensee can withhold connection to the premises unless its dues with respect to the said premises have been cleared. In our opinion, the High Court has erred in observing that the phrase “any dues relating to that premises” is inconsistent with the provisions of the 2003 Act. The use of the said phrase does not entail that the premises are deemed to be a defaulter and made liable to pay electricity dues, as the High Court suggests. According to Clause 4.1.1 of Electricity Supply Code, it is the applicant who has to make an application in terms of Annexure A and pay all the required electricity dues and charges, including the electricity arrears of the previous owner relating to the premises. Thus, on the overall reading of the Electricity Supply Code, it becomes evident that dues of the previous consumer relating to that premises are sought to be recouped from the new owner or occupier of the premises. E

264Copy pinpoint264. In the impugned judgment, the High Court referred to the example of a multi-storied residential building to observe that “the licensee may successfully demand that a new purchaser of a different flat whose vendor was not a defaulter, would still be liable to pay the arrears of a defaulting consumer of another flat of the same on the ground that it is a part of the same premises.” In this context, we have already held that there is a synergy between the consumer and premises. A new owner can only be obligated to pay the electricity arrears of the previous owner with respect to the premises to which electricity connection is being sought. Therefore, the phrase “any dues relating to that premises” has to be understood with regard to the supply of electricity made to the premises when it was in occupation of the previous owner.

265Copy pinpoint265. We have already clarified that electricity arrears do not automatically become a charge over the premises. A Statutory charge is created only where there is an express provision of law providing for H

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A creation of a statutory charge upon the transferee. Clause 4.1.11 does not have the effect of creating a charge on the property as it does not specifically provide for creation of a statutory charge. Besides, the phrase “any dues relating to that premises” cannot be interpreted to impute financial liability on the premises.

266Copy pinpoint266. Moreover, the High Court has held that the 2003 Act does not enable the Electric Utilities to frame conditions to recover dues of a previous consumer from a subsequent owner or occupier. We disagree with this reasoning of the High Court in view of our analysis in the preceding paragraphs, where we have held that the Electric Utilities can specify the requirement that the subsequent owner or occupier of the C premises has to pay the arrears of electricity dues of the previous consumer as a pre-condition for the grant of an electricity connection. However, such terms and conditions of supply should be valid and reasonable by conforming to the overall scheme and purpose of the 2003 Act.

267Copy pinpoint267. Consequently, we set aside the impugned judgment of the High Court dated 2 December 2012. Any pending IAs are disposed of accordingly. Item 101.5: Madhya Gujarat Vij Co. Ltd. v. Agriculture Produce Market Committee, SLP (C) No. 8197-8198 of 2014 E

268Copy pinpoint268. Rajprakash Spinning Mills Ltd.98 was a consumer of the Gujarat Electricity Board since 1967. On 31 December 1994, its power was disconnected due to the non-payment of electricity dues. On 18 July 1995, the Gujarat Electricity Board instituted a suit in the Civil Court, Nadiad against RSML for recovery of electricity charges amounting to F Rs. 78 lakhs. In the meantime, RSML went into liquidation and the High Court appointed the Official Liquidator. On 20 August 2002, the suit was decreed in favour of the Electricity Board. In 2003, the Board lodged a claim before the Official Liquidator with decree in the suit for Rs. 78 lakhs and legal expenses and interest up to December 2002, which G cumulatively amounted to Rs. 1.39 crores.

269Copy pinpoint269. On 17 December 2003, the Official Liquidator executed a sale deed in favour of the respondent. The sale deed specifically mentions the liability of the purchaser about the dues. On 25 February 2004, a revised sale deed was registered and executed in favour of the respondent 98 H “RSML”

K. C. NINAN v. KERALA STATE ELECTRICITY BOARD & 759 ORS. [DR DHANANJAYA Y CHANDRACHUD, CJI]

and the said sale deed was executed by the Official Liquidator in pursuance of the confirmation of the sale for a consideration of Rs. 97 lakhs.

270Copy pinpoint270. On 10 April 2007, the respondent addressed a letter to the appellant for release of the electricity connection. On 13 April 2007, the appellant declined to grant a new connection unless the electricity charges amounting to Rs. 78 lakhs outstanding against the premises were paid. The respondent filed a writ petition for the grant of an electricity connection. The petition was dismissed by a Single Judge by an order dated 08 September 2009 on the ground that the person who purchased the premises had to pay the electricity dues of the previous occupant. The Division Bench in the impugned judgment dated 16 July 2013 held that the subsequent purchaser is not liable to pay the electricity dues of the previous owner.

271Copy pinpoint271. The auction-purchaser submitted an application for a new electric connection on 10 April 2007. The Gujarat Electricity Supply Code was notified on 31 March 2005. At the relevant time, unamended D Regulation 4.1.11 was applicable, according to which only the dues of the applicant to the distribution licensee had to be cleared for the grant of a new connection or for reconnection of electric supply. The said regulation did not obligate the new owner to clear the electricity dues of the previous owner. Therefore, the respondent could not have been made E liable to pay the arrears of the previous owner as a pre-condition to obtain a new electricity connection.

272Copy pinpoint272. In view of the above reasons, we uphold the impugned judgment dated 16 July 2013 of the High Court. The appeal shall stand dismissed. F Item 101.6: Torrent Power Limited v. M/s Shashwat Homes Private Limited; SLP No. 19878 of 2007

273Copy pinpoint273. Gujarat Steel Tubes Company99, the previous owner, was subjected to liquidation proceedings and the electricity connection was disconnected for non-payment of dues amounting to Rs. 1.5 crores. GSTC G was ordered to be wound up by the Gujarat High Court. A parcel of the GSTC’s land was bought in auction by Spectra Enterprises Private Limited for a sum of Rs. 42.10 crores. In 2006, the name of the respondent came to be mutated in the revenue records pertaining to the said parcel 99 “GSTC” H

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274Copy pinpoint274. The respondent approached the appellant for seeking a new electricity connection on 24 January 2007. At the relevant time, the 2005 Electricity Supply Code was in force. Regulation 4.1.11 of the 2005 Electricity Supply Code required only the dues of the applicant, if any, to be paid at the time of the application for a new connection. In the affidavit filed before the High Court, the appellant conceded that unamended Regulation 4.1.11 was applicable to the respondent, who is the auction- purchaser. The facts of the present clearly demonstrate that on 24 January 2007, when the auction-purchaser applied for electricity, unamended D Clause 4.1.11 was operational and applicable. Therefore, the respondent cannot be made liable to clear the dues of the previous owner in the absence of any express statutory condition in that regard. The impugned judgment of the High Court is upheld. The appeal shall stand dismissed. Item 101.7: Dakshin Gujarat Vij Co. Ltd v. Amardeep E Association; SLP (C) No. 73 of 2015

275Copy pinpoint275. In 1994, Navsari Cotton and Silk Mills Ltd100 was declared a sick industrial unit. As on the date of NCSML’s closure, it owed outstanding electricity dues of Rs. 416.36 lakhs. On 17 October 1994, the electricity supply was permanently disconnected. On 15 December F 1996, the Board for Industrial and Financial Reconstruction101 prepared a New Rehabilitation Scheme under Section 18 of SICA. The said scheme provided for sale of surplus land of NCSML under paragraph 2(g): “(g) The plant and machinery of the weaving section and the G process house along with its building and the surplus land with the company are proposed to be disposed of and the sale proceeds of about Rs. 500 lakhs would be utilised for the implementation of the scheme.”

100 “NCSML” 101 H “BIFR”

K. C. NINAN v. KERALA STATE ELECTRICITY BOARD & 761 ORS. [DR DHANANJAYA Y CHANDRACHUD, CJI]

276Copy pinpoint276. Pursuant to the Rehabilitation Scheme of 1996, the A Government of Gujarat passed a resolution inter alia granting (i) permission for sale of surplus land of NCSML; and (ii) exemption from power cut for five years to NCSML with the condition that, any reconnection charges as in the case of arrears shall be given to the Gujarat Electricity Board in instalments. Later, in 1997, the workers of B NCSML decided to form a co-operative by the name Morarji Desai Textile Labour Co-operative Society Industries Limited102 to take over the unit of the company for its revival.

277Copy pinpoint277. In 2003, the BIFR directed the disposal of the surplus land of the said company by constituting an Assets Sale Committee. The notice for sale of the surplus land was published in Gujarat Samachar in 2003 C under which the land was to be sold on “as is where is basis”. The relevant extract of the notice is set out below: “As per the order of the B.I.F.R., the land situated at Vijalpore bearing Survey No. 336/1, 311, 310/1, 310/2, 310/5, 310/7, 307/1, 308/1 having ownership of Navsari Cotton and Silk Mills, out of D total admeasuring area of the land, 11 Lakh square feet land with possession is to be given on AS IS WHERE IS BASIS as per the prevailing laws and rules.”

278Copy pinpoint278. The Assets Sale Committee accepted the offer made by respondent for a consideration of Rs. 561 lakhs for the surplus land. The E sale deed dated 29 May 2003 mentioned that the additional open land was free from all encumbrances including lien and charge. Clause 9 further specified that “all taxes, land revenue, education cess, and other outstanding dues up to date has been paid and if any dues remain unpaid that is to be paid by the Company.” F

279Copy pinpoint279. On 01 December 2004, the respondent applied for a new connection. However, the appellant refused to grant a new connection until the outstanding dues were cleared in terms of Clause 2(j) of the Conditions of Supply. In 2006, the respondent moved an application before the BIFR for a direction to release power supply. On 12 June 2006, the G BIFR sanctioned a Revised Rehabilitation Scheme directing the appellant to release an electricity connection to the respondent. Since the electricity supply was not released, the respondent instituted a writ petition before the High Court of Gujarat. In 2010, a Single Judge of the High Court 102 “MDTLCIL” H

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A allowed the writ petition by directing the appellant to release the electricity connection to the residential establishments on the surplus land without insisting on the payment of the dues of the previous owner. The Single Judge held that Clause 2(j) was not applicable because the worker’s co- operative society was a going concern and the Electricity Board can recover the dues from them. The Division Bench in the impugned judgment dated 21 November 2014 upheld the decision of the Single Judge. The Court held that the BIFR scheme would be binding on the appellant even though they were not a party to the proceedings. It was further held that SICA is a special Act in comparison to the 2003 Act. Therefore, a scheme framed under SICA was held to have an overriding effect over Clause 2(j) of the Conditions of Supply.

280Copy pinpoint280. The respondent has contended that according to the BIFR Scheme, electricity connection was provided to MDTLCIL separately and not to the surplus land sold to the respondent. Hence, no dues could have been recoverable from the respondent. The respondent further contended that the rehabilitation schemes framed by BIFR have an overriding effect on the terms and conditions stipulated under Clause 2(j) of the Conditions of Supply. The respondents have also drawn attention to Clauses 3 and 9 of the sale deed which exempted the respondent from the payment of the past dues of NCSML. The said clauses are extracted below: E “(3) [...] On the said property, there is no debt i.e. lien or charge of anybody and is not under seize, attachment, or injunction of any court. [...] On the said property, nobody has maintenance and residence charge on it, there is no charge of Government taxes/ duties like, Income Tax, Sales Tax, etc. on said property. There is no acquisition, requisition, or reservation of Government or local body or with that intention any notice in not served to the company. In short, there is no one claiming right title or claim as mortgage, claimant, shareholder or by other way or any other interest in the said property and the company has all rights and authority for managing the said property by all way and by giving such trust and assurance, the company has executed this sale deed. And even if, in future, any one claims right on the property, then risk thereof stands on the company and that is if due to such right or chapter if any loss or expenses occurred by you or your heirs, that is to be repaid by the company.” H

K. C. NINAN v. KERALA STATE ELECTRICITY BOARD & 763 ORS. [DR DHANANJAYA Y CHANDRACHUD, CJI]

[...] A (9) All taxes, land revenue, education cess, and other outgoings related to the said property and outstanding dues upto date has been paid and if any dues remains to be paid that is to be paid by the company. Now onwards, the responsibility for payment of all taxes, etc. related to the said property will be on the first party. B By support of this deed the purchaser can enter its name on said property in Government, Semi-Government and local records, City Survey Records and Municipal Records and for that we have to give our signature, consent, and such signed consent admitted being considered.” C (emphasis supplied)

281Copy pinpoint281. To decide this issue, the question that arises before us is whether SICA is special legislation in relation to the 1910 Act and 2003 Act. SICA was enacted with a view to secure the timely detection of sick companies and speedy determination of the preventive, ameliorative, remedial and other measures which need to be taken with respect to such companies. Section 18 mandated an operating agency such as a BIFR to prepare a scheme providing for transfer of business, properties, assets, and liabilities of the sick industrial company on terms and conditions as specified in the scheme. According to Section 18(8) of SICA, once the scheme is sanctioned, it is binding on the sick industrial company as well as the shareholders, creditors, and guarantors of the sick industrial company. Section 32 of the SICA gave overriding effect to any rules or schemes made under the provisions of the Act: “32. Effect of the Act on other laws.—(1) The provisions of this Act and of any rules or schemes made thereunder shall have effect notwithstanding anything inconsistent therewith contained in any other law except the provisions of the Foreign Exchange Regulation Act, 1973 (46 of 1973), and the Urban Land (Ceiling and Regulation) Act, 1976 (33 of 1976), for the time being in force or in the Memorandum or Articles of Association of an industrial company or in any other instrument having effect by virtue of any law other than this Act. *** (emphasis supplied) H

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282Copy pinpoint282. In Tata Motors Ltd v. Pharmaceutical Products of India Ltd103 this Court held that SICA is a special legislation in comparison to the Companies Act. The Court observed: “22.The provisions of a special Act will override the provisions of a general Act. The latter of it (sic Act) will B override an earlier Act. The 1956 Act is a general Act. It consolidates and restates the law relating to companies and certain other associations. It is prior in point of time to SICA. 23.Wherever any inconstancy (sic inconsistency) is seen in the provisions of the two Acts, SICA would prevail. SICA C furthermore is a complete code. It contains a non obstante clause in Section 32.

24. SICA is a special statute. It is a self-contained code. The jurisdiction of the Company Judge in a case where reference had been made to BIFR would be subject to the provisions of D SICA.” (emphasis supplied)

283Copy pinpoint283. The 2003 Act also contains a provision similar to Section 32 of SICA. Section 174 of the 2003 Act provides that the provisions of the said Act will have overriding effect notwithstanding anything contained E in any other law for the time being in force. It therefore becomes evident that both SICA and 2003 Act are special laws in their respective field.

284Copy pinpoint284. In LIC v. D J Bahadur,104 this Court was confronted with the question as to whether the LIC Act is a special legislation or a general legislation with respect to the Industrial Disputes Act, 1947. Justice V R F Krishna Iyer(supra) held that in determining whether a particular statute is general or special, the focus has to be on the principal subject matter and the particular perspective. On the basis of the observation that a legislation may be general for some purposes and special for other purposes it was held that the Industrial Disputes Act, 1947 being a special law, prevails over the LIC Act. It was held: G “52. In determining whether a statute is a special or a general one, the focus must be on the principal subject-matter plus the particular perspective. For certain purposes, an Act may be general 103 (2008) 7 SCC 619 H 104 (1981) 1 SCC 315

K. C. NINAN v. KERALA STATE ELECTRICITY BOARD & 765 ORS. [DR DHANANJAYA Y CHANDRACHUD, CJI]

and for certain other purposes it may be special and we cannot blur distinctions when dealing with finer points of law. In law, we have a cosmos of relativity, not absolutes — so too in life.”

285Copy pinpoint285. In UP State Electricity Board v. Hari Shankar Jain,105 a three-judge Bench of this Court was called upon to determine whether the Industrial Employment (Standing Orders) Act, 1946 is a special legislation and overrides the 1948 Act in regard to the age of superannuation. Justice O Chinnappa Reddy, speaking on behalf of the Bench held that the Industrial Employment (Standing Orders) Act, 1946 is a special legislation dealing with the conditions of service of workmen in industrial establishments. On the other hand, the 1948 Act is an act to coordinate the development of electricity, and does not seek to regulate the conditions of services of the employees of the State Electricity Board. The Court held that the 1948 Act is a special legislation in regard to the subject of development of electricity. It was observed: “7. [...] The Electricity Supply Act does not presume to be an Act to regulate the conditions of service of the employees of State D Electricity Boards. It is an Act to regulate the co-ordinated development of electricity. It is a special Act in regard to the subject of development of electricity, even as the Industrial Employment (Standing Orders) Act is a special act in regard to the subject of conditions of service of workmen in industrial E establishments. If Section 79(c) of the Electricity Supply Act generally provides for the making of regulations providing for the conditions of service of the employees of the Board, it can only be regarded as a general provision which must yield to the special provisions of the Industrial Employment (Standing Orders) Act in respect of matters covered by the latter Act.” F

286Copy pinpoint286. Keeping the above principle in mind, it is necessary to examine the subject matter of SICA and the 2003 Act. Under SICA, the operating agency had to prepare a scheme with respect to a sick industrial company providing for financial reconstruction, proper management, amalgamation, and any other preventive, ameliorative, and remedial G measures. On the other hand, the 2003 Act is a consolidating law relating to generation, transmission, distribution, trading, and use of electricity. The 2003 Act relates specifically to supply of electricity to consumers,