Bombay High Court
Aeon Creations Pvt. Ltd. And Anr vs The State Of Maharashtra, Industries, … on 6 June, 2025
Author: G.S. Kulkarni
Bench: G. S. Kulkarni
Digitally
2025:BHC-AS:22552-DB
PRASHANT
VILAS
signed by
PRASHANT
VILAS RANE
Date:
RANE 2025.06.06
16:41:11
WP2734_2025-16.05.2025.DOC
+0530
Vidya Amin
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO. 2734 OF 2025
1. Aeon Creations Pvt. Ltd.
2. Mr. Rajendra Prasad Jain,
Shareholder of Petitioner No. 1 ... Petitioners
Vs.
1. The State of Maharashtra, Industries, Energy &
Labour Department, Mantralaya, Mumbai.
2. Maharashtra State Electricity Distribution Co. Ltd.,
through its Chief Engineer (Commercial)
3. The Chief Engineer, (KZ), MSEDCL, Kalyan Zone
4. The Superintendent Engineer, MSEDCL,
Palghar Small Circle
5. Maharashtra Electricity Regulatory Commission,
a State Electricity Regulatory Commission ... Respondents
Mr. Jay Sanklecha a/s. Mr. Kunal Damle for the petitioners.
Ms. Deepa Chawan, Senior Advocate a/w. Mr. Kiran Gandhi, Ms. Ruchi Patil i/b.
Little and Company for respondent nos. 2 to 4.
Mr. M.M. Pabale, AGP for the State.
CORAM : G. S. KULKARNI &
ADVAIT M. SETHNA, JJ.
RESERVED ON : 16 April 2025
PRONOUNCED ON : 6 June 2025
Judgment (Per G.S. Kulkarni, J.)
1. Rule, made returnable forthwith. Respondents waives service. By consent
of the parties, heard finally.
2. This petition under Article 226 of the Constitution of India assails the
communication dated 6 December, 2024 issued by respondent no. 2-Maharashtra
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State Electricity Distribution Co. Ltd. (for short “MSEDCL”) whereby the
petitioners (for short “petitioner”) have been called upon to pay an amount of
Rs.2,07,24,237/- in relation to the charges for the electricity consumed being
categorized as a theft case, failing which the petitioner’s online application dated
11 October 2024 under the “Mahavitaran Abhay Yojana, 2024” (for short
“Amnesty Scheme”) shall not be considered for approval and will be rejected after
13 December 2024 without further intimation.
3. The impugned communication is issued on the basis of Circular no.7 of
2024 dated 3 December 2024, issued by MSEDCL titled as ‘Extension to
Mahavitaran Abhay Yojana-2024’ whereby the Amnesty Scheme earlier floated
was extended till 31 December 2024, with an additional provision, that in case of
permanently disconnected (PD) consumers having theft cases, 100% interest will
be waived off, on making payment of 100% theft assessment amount. The
validity of the said circular has also been challenged by the petitioner on the
ground that the impugned communication dated 6 December 2024 is issued to
the petitioner on the basis of said circular. In these circumstances, the petitioner
has prayed that a writ be issued to MSEDCL and its officers, who are arrayed as
respondent nos. 2 to 4 to accept the petitioner’s application under the Amnesty
Scheme and without insisting for compliance of the additional condition imposed
in the impugned circular dated 3 December, 2024.
Facts
4. The relevant facts as averred in the petition needs to be noted: The
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petitioner is inter alia engaged in the business of manufacturing of mild steel
ingots. The petitioner was in need of a manufacturing unit to expand its existing
business, when it came across a public notice dated 24 January, 2008, issued by a
secured creditor qua industrial unit of one “Vishwas Steel Ltd.” being industrial
unit at Plot No. J-79, Tarapur Industrial Area, MIDC Sarvali Palghar, District
Thane, (for short “said premises”) inviting bids for the sale of the said premises
under the provisions of the Securitisation and Reconstruction of Financial Assets
and Enforcement of Security Interest Act, 2002 (for short “SARFAESI Act‘) and
the rules framed thereunder on “as is where is basis and whatever there is basis”.
The petitioner participated in the auction and acquired the said premises. A sale
certificate dated 12 May, 2008 was issued in favour of the petitioner. Consequent
to the sale certificate, a registered agreement dated 5 January, 2010 was executed
between the secured creditor and petitioner No.1 conveying the right, title and
interest in the said premises in favour of the petitioner. The petitioner was also
put in possession of the premises on 12 May, 2008.
5. Since the electricity connection at the said premises was permanently
disconnected with effect from 1 April 2001 and in order to commence its
business/manufacturing activity, the petitioner made an application to MSEDCL
(erstwhile MSEB) requesting for a fresh electricity supply connection in the
petitioner’s own name. As MSEDCL failed to process the petitioner’s application,
the petitioner’s made a representation to the MSEDCL, which also did not find
favour with the said authority. The petitioner was also informed by concerned
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officers of MSEDCL that to avail a fresh connection, it would be subject to the
petitioner clearing the arrears of electricity charges that were due and payable by
the previous occupant/owner of the premises.
6. In the aforesaid circumstances, the petitioner approached this Court by
filing Writ Petition No. 1686 of 2011 inter alia praying for a direction that
MSEDCL be directed to provide a new electricity connection at the premises, as a
circular, on the basis of which MSEDCL insisted that the petitioner-company
clear the arrears of electricity charges payable by the previous occupant/owner of
the premises, be quashed and set aside. The substantive prayers as made in the
said petition are required to be noted which reads thus:
“a. that this Hon’ble Court be pleased to issued a Writ of Certiorari or a Writ
in the nature of Certiorari or any other appropriate writ, order or direction
under Articles 226 of the Constitution of India calling for the papers and
proceedings with respect to the Impugned Condition 20.8 (Exhibit I-1
hereto), Impugned Regulation No.10.5 (Exhibit I-2 hereto) and Impugned
Circular No.53 dated 7th May, 2007 (Exhibit I-3 hereto) and, after examining
the legality and validity of the same, this Hon’ble Court be pleased to quash
and set aside the same as void, being ultravires the Electricity Act, 2003 and in
violation of Articles 14 and 19(1)(g) of the Constitution of India;
(b) that in the alternative and without prejudice to prayer clauses (a) above,
this Hon’ble Court be pleased to declare that the Impugned Condition 20.8
(Exhibit I-1 hereto), Impugned Regulation No.10.5 (Exhibit I-2 hereto) and
Impugned Circular No.53 dated 7 th May, 2007, (Exhibit I-3 hereto) are
inapplicable to the Petitioners’ case;
(c) that this Hon’ble Court may be pleased to issue a Writ of Mandamus or a
Writ in the nature of Mandamus or any other appropriate writ, order or
direction under Articles 226 of the Constitution of India restraining the
Respondent Nos. 2 to 4 from implementing and/or taking any steps in
furtherance of and/or acting upon Impugned Condition 20.8 (Exhibit I-1
hereto), Impugned Regulation No. 10.5 (Exhibit I-2 hereto), and Impugned
Circular No.53 (Exhibit I-3hereto) against the Petitioner No.1;
(d) that this Hon’ble Court may be pleased to issue a Writ of Mandamus or a
Writ in the nature of Mandamus or any other appropriate writ, order or
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WP2734_2025-16.05.2025.DOCdirection under Articles 226 of the Constitution of India directing Respondent
Nos. 2 to 4 to issue a fresh electricity connection to the Petitioners’ premises,
being the factory premises situated at leasehold Plot No. J-79, admeasuring
6151 sq. mtrs or thereabout, in Tarapur Industrial Area of MIDC, Tarapur,
within the village limits of Sarvali and outside the limits of Municipal Council,
in rural area, Taluka and Registration Sub-District Palghar, Registration
District Thane, Maharashtra, as mentioned in the letter dated 16 th July 2009
(Exhibit D-1 hereto) and the Application (Exhibit D-2) hereto;”.
7. The said Writ Petition came to be admitted by an order dated 15 June,
2011 passed by this Court. Insofar as interim relief was concerned, the Court
considering the statutory regulations, namely, the Maharashtra Electricity
Regulatory Commission (Electricity Supply Code and Other Conditions of
Supply) Regulations, 2005 (for short “Maharashtra Electricity Supply Code
2005”) passed interim orders directing the MSEDCL to grant an electricity
connection to the petitioner subject to the petitioner depositing unpaid dues of
electricity in respect of the premises in question of a period of six months prior to
the date on which electricity supply was disconnected, which were quantified by
the petitioner in paragraph 6.8 of the memo of the writ petition at
3,35,54,866.94. The amount to be deposited by the First Petitioner with the
Second Respondent shall be subject to due verification. As the petitioner’s case in
this petition is based on this interim order, the same is required to be noted in its
entirety which reads thus:
“1. The challenge in these proceedings under Article 226 of the
Constitution is to (i) A condition (Condition 20.8) contained in the
Conditions of Supply (ii) Regulation 10.5 of the Maharashtra Electricity
Regulatory Commission (Electricity Supply Code and Other Conditions
of Supply) Regulations, 2005; and (iii) A circular dated 7 May 2007.
2. The Fifth Respondent, IFCI Limited invited bids for the purchase of
the immovable property of the Sixth Respondent under the provisions of
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WP2734_2025-16.05.2025.DOCof Security Interest Act, 2002. The First Petitioner submitted a bid and
was declared as a successful bidder. The sale in favour of the First
Petitioner was confirmed and a sale certificate was issued on 12 May 2008,
following which a registered deed of sale was executed on 5 March 2010.
The First Petitioner submitted an application on 16 July 2009 under the
Regulations seeking a fresh electricity connection. The grievance of the
Petitioners is that the application was not being disposed of. Following
this, the Petitioners made an application under the Right to Information
Act, 2005, which led to a disclosure that there were outstanding arrears of
electricity charges amounting to Rs.3.35 crores for a period of six months
prior to the disconnection of supply. These charges were due and payable
by the Sixth Respondent, the original owner. The Petitioners have
submitted in these proceedings that as auction purchasers, they are not
liable to pay the outstanding dues of the Sixth Respondent as a condition
precedent to obtaining a fresh electricity connection.
3. The terms and conditions on which the petitioners purchased the
property are set out in Clauses 2.4 and 2.5 of the tender document which
reads as follows:-
“2.4 All the assets offered for sale are on AS IS WHERE IS
AND WHATEVER THERE IS BASIS’ as composite unit.
The quantity indicated, if any, are purely indicative and
without any guarantee and IFCI Ltd. shall not entertain any
claim/complaint from the buyer for any deficiency in
quantity/size/number etc. for recovery of whole or any part of
the bid/ purchase money, loss of profit/ interest, damages etc.2.5 The unit(s) may have certain outstanding liabilities which
are to be met by the purchaser and which will be over and
above the sale consideration. The prospective purchaser may
carry out due-diligence in respect of likely liabilities pertaining
to the unit(s) before submitting the tender. It may be noted
that the purchaser will be responsible for meeting these
liabilities, if arise, and IFCI Ltd. will not be liable to meet any
such liabilities whatsoever.”
4. These conditions clearly provide that the Petitioners had purchased
the secured asset on an “as is where is basis” and were placed on notice that
there may be outstanding liabilities which would have to be met by the
auction purchaser over and above the sale consideration. But, the
submission of the Petitioners is that conditions 2.4 and 2.5 constitute a
contractual agreement between the Petitioners and the Fifth Respondent
to the sale of the property as a secured asset. Hence it has been urged that
this would not preclude the Petitioners from challenging the power of the
Second Respondent to demand the arrears of electricity charges as a
condition for the grant of a new electricity connection.
5. Now in this regard, the question before the Court is whether the
Second Respondent has either a statutory power or a contractual power to
demand the payment of arrears from the Petitioners as a condition for the
grant of an electric connection. The Second Respondent is governed by
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statutory regulations, namely, the Maharashtra Electricity Regulatory
Commission (Electricity Supply Code and Other Conditions of Supply)
Regulations, 2005. Regulation 10.1 postulates that a connection may be
transferred in the name of another person inter alia in case of transfer of
ownership or occupancy of the premises, upon an application for the
change of name by the new owner or the occupier. Regulation 10.5 is
however, material and 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
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.”
6. Similarly, clause 20 of the Conditions of Supply deals with a change of
name or a change in the ownership of the installation and Clause 20.8
provides as follows:-
“20.8 Any charge of electricity or any sum other than the charge
of electricity due to the MSEDCL, which remains unpaid by a
deceased consumer or the previous owner/ occupier of any
premises, as the 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 MSEDCL
as due from such legal representatives or successors-in-law or
new owner/ occupier of the premises, as the case may be; except
in the case of transfer of connection to a legal heir, the liabilities
transferred shall be restricted to a maximum period of six
months of the unpaid charges for electricity supplied to such
premises.”
7. Analysing Clause 10.5, it is evident that charges for electricity which
have remained unpaid by an erstwhile owner or occupier, constitute a
charge on premises transmitted to the successors-in-law or to the new
owner or occupier of the premises. Consequently, by and as a result of a
statutory regulation, a charge has created upon the premises in respect of
the unpaid electricity dues of a previous owner. Regulation 10.5 brings
within its hold, not merely a case of a voluntary transfer but, it is evident at
least prima facie that the use of the words “successors-in-law” would
involve a case such as the present. The second important aspect about
Regulation 10.5 is that the unpaid dues of the previous owner are
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recoverable by the distribution licencee from the new owner or, as the case
may be, the successor-in-law. This is subject to the condition that the
electricity dues can be recovered for a maximum period of six months of
the unpaid charges for electricity supplied to the premises. Consequently,
by and as a result of the statutory regulation, a charge has been created and
a provision has been incorporated by which the dues can be recovered
from the successor-in-law or new owner subject to the maximum period
that is stipulated therein.
8. This provision assumes significance in view of the Judgment of the
Supreme Court in Dakshin Haryana Bijli Vitran Nigam Ltd. Vs. M/s.
Paramount Polymers Pvt. Ltd. The judgment of the Supreme Court
involved a case where a sale had taken place of an asset, which had been
mortgaged to the State Financial Corporation in exercise of powers under
Section 29 of the State Financial Corporations Act, 1951. The sale there, as
in the present case, was on an “as is where is basis”. The Supreme Court
adverted to an earlier decision in M/s. Isha Marbles Vs. Bihar State
Electricity Board, where the Court had held that in the absence of there
being a charge over the property and the premises come to be owned or
occupied by an auction purchaser who seeks a fresh connection, the
purchaser cannot be called upon to clear the past arrears as a condition
precedent for the grant of a fresh connection. In the decision in Dakshin
Haryana Bijli Vitran Nigam Ltd. (Supra), the Supreme Court after
adverting to the judgment in Isha Marbles (Supra) made a reference to the
conditions contained in clause 21-A of the Conditions of Supply. Those
Conditions of Supply had stipulated an entitlement in the licencee to
demand the arrears of electricity charges from the purchaser for the grant
of a re-connection or a fresh connection. The Supreme Court held that the
terms and conditions of supply were applicable to the First Respondent
when it sought a fresh connection for the grant of electric supply. The
Supreme Court also noted that the earlier decision in Isha Marbles had no
occasion to consider provision in the nature of clause 21-A of the
Conditions of Supply.
9. A Division Bench of this Court consisting of Palshikar and Munshi, JJ
delivered a Judgment on 19 December 2002 in Super and Stainless Hi-
Alloys Ltd. Vs. State of Maharashtra & Ors. by which it struck down a
commercial circular issued by MSEB on 19 December 1998 (Circular
607). By the circular that was challenged before the Division Bench,
MSEB had modified an earlier circular dated 18 June 1993 under which a
purchaser of an undertaking under Section 29 of the State Financial
Corporations Act, 1951 had been granted an option of either getting a
reconnection by paying the arrears of the outgoing consumer or to get a
fresh supply of electricity without clearing the arrears of the outgoing
consumer. By circular 607 the said provision was withdrawn and it was
stipulated that re-connection or a fresh supply would be released only after
the arrears of the Board were cleared. This circular was struck down by the
Division Bench, following the Judgment of the Supreme Court in Isha
Marbles. An Appeal against the judgment of the Division Bench has been
admitted by the Supreme Court and is pending. The point to be noted at
this stage however, is that the Judgment of the Division Bench was to the
enforcement of the statutory regulations of 2005. As already noted earlier,
the Judgment of the Division Bench was delivered on 19 December 2002
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which was before the statutory regulations were enforced. Once the
regulations have been enforced, a prospective applicant for electric supply
would be governed by those regulations. The Petitioners before the Court
have also challenged the circular dated 7 May 2007. The circular inter alia
makes interim arrangements for the grant of electric connections during
the pendency of the proceedings before the Supreme Court. For the
reasons, which have been indicated earlier, prima facie, it would not be
possible to accede to the contention of the Petitioners that they would be
entitled to the grant of an electric connection without clearing the unpaid
dues. The Petitioners are subject to Regulation 10.5. However, in terms of
the provisions of Regulation 10.5, the Petitioners would be liable only to
the extent of a maximum period of six months of the unpaid charges in
respect of electricity supplied to the premises.
10. The attention of the Court has been drawn to the fact that a Division
Bench of this Court presided over by the learned Chief Justice has
admitted a Petition (M/s. Namco Corporation Limited Vs. State of
Maharashtra & Ors. W.P. 8654 of 2010) on 16 November, 2010. The
Division Bench while granting Rule, had directed the distribution licencee
to supply electricity, subject to the Petitioner filing an undertaking that in
the event that the Petitioner there, was held liable to pay any amount to
the electricity company, the Petitioner would pay the amount as may be
directed by the Court at the final hearing. The conditions on which the
property was sold in that case have been adverted to in the order of the
Division Bench. Condition 13 in that case stipulated that the purchaser
would be liable to pay cess, charges, fees and outgoings only from the date
of the confirmation of sale and that all earlier taxes, charges, fees and out
going would be paid out of the sale proceeds. Condition 13 in that case
must be contrasted with conditions 2.4 and 2.5 in the present case
governing the tender sale. That apart, having regard to the provisions
contained in Regulation 10.5 and condition 20.8 of the Conditions of
Supply, it would not be possible for the Court to direct the grant of interim
relief of electric supply being restored without an order of deposit. Hence,
the following order is passed:-
(i) Rule;
(ii) The Second Respondent shall grant an electric connection to
the First Petitioner subject to the deposit by the Petitioners of the
unpaid dues of electricity in respect of the premises in question of a
period of six months, prior to the date on which electric supply was
disconnected. In paragraph 6.8 of the Petition these dues have been
quantified at 3,35,54,866.94. The amount to be deposited by the
First Petitioner with the Second Respondent shall be subject to due
verification;
(iii) In the event that the Petitioners succeed, the Second
Respondent shall refund and/or adjust the amount which has been
paid by the First Petitioner together with such interest as may be
awarded by the Court at the final hearing.”
(emphasis supplied)
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8. It is submitted that this order does not deal with the issue of the theft
charges. Further, the petitioner although was granted the aforesaid interim relief
by this Court, the petitioner did not take benefit of such order i.e. the petitioners
never deposited the said amount till date i.e. (period of 14 years).
9. On such backdrop, the petitioner has contended that the petitioner learnt
about the Amnesty Scheme which was introduced by MSEDCL by issuing
Circular dated 29 August, 2024 in pursuance of the directions of the Supreme
Court in the case of K.C. Ninan vs. Kerala State Electricity Board & Ors. 1. One
the conditions of the Amnesty Scheme for an applicant to be eligible for
participation was to the effect that the applicant would be required to
unconditionally withdraw any petition/case/suit filed against MSEDCL. Although
the petitioner had obtained an interim order (supra) [albeit the benefit of which
was never taken by the petitioner], the petitioner has stated that the petitioner
took necessary steps to withdraw the said pending Writ Petition which was
allowed to be withdrawn by this Court by an order dated 11 October, 2024.
10. It is the petitioner’s contention that the petitioner had become eligible to
participate in the amnesty scheme and entitled to the benefit of delayed payment
charges and interest being waived off, under the amnesty scheme, and the waiver
was to take effect from the date of permanent disconnection till the date of
application. The petitioner thus contends that the petitioner was under an
impression, as gathered from the amnesty scheme, that upon payment of the
1 2023 SCC OnLine SC 663
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principal arrears due on 31 March 2024, all interest and delayed payment charges
would be waived and petitioner No. 1 would be provided with a fresh electricity
connection.
11. On such backdrop, on 11 October 2024, the petitioner made an online
application under the Amnesty Scheme. While filling up the said online
application, which was in the name of the previous owner of the premises, the
petitioner opted to pay the principal arrears as on 31 March 2024, which was auto
calculated to Rs.3,35,55,255.43 in six installments. Also as earlier legal
proceedings were pending, the Competent Authority of MSEDCL was required
to approve the Application submitted by petitioner No.1 before the petitioner
could make the necessary payment, which the petitioner was ready and willing to
make, however, the system did not allow the petitioner to make such payment
until its application was approved by the Competent Authority.
12. As the amnesty scheme was to expire on 30 November 2024 (the period of
the scheme as notified was 1 September 2024 to 30 November 2024), the
petitioner addressed a letter dated 25 November 2024 to the MSEDCL regarding
that the petitioner had not received any response on its application and reiterated
its readiness and willingness to make the payment. Further, another letter dated
28 November 2024 was addressed by the petitioner, however, no action was
taken. Thus, insofar as the petitioner’s application was concerned, the scheme
stood lapsed on 30 November 2024.
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13. The amnesty scheme was however extended by the impugned circular
dated 3 December 2024, whereunder MSEDCL informed the consumers, that
many industries/consumers were facing financial crisis and were willing to
participate in the scheme, it was hence proposed for extension of the Amnesty
Scheme, as approved by the Competent Authority, however, with an additional
provision that in case of PD (Permanent Disconnection) consumers having theft
cases, 100% interest will be waived off on making payment of 100% “theft
assessment amount”. The impugned circular is required to be noted, which reads
thus:
“Ref: CE (B&R)/Extn.MAY-2024/Circular/No.037449 Date: 03.12.2024
B&R Circular No.07/2024
Extension to Mahavitaran Abhay Yojana-2024
Sub: Extension to Mahavitaran Abhay Yojana: 2024 for HT/LT PD consumers.
Ref: 1. Circular No. 06/2024; CE (B&R)/PD Amnesty/Circular/No. 26407
dated 29.08.2024.
2. Approval from competent authority vide ON No. F-2024012522/2024
Dt. 25.09.2024.
3. Board Resolution No. 2947 Dt. 29.11.2024
MSEDCL has launched Mahavitaran Abhay Yojana 2024 to boost the
recovery of PD arrears for 03 Months (from 1st Sept+2024 to 30th Nov-2024).
There are many industries and other consumers facing the financial crisis and
willing to participate in the scheme, approaching to Corporate office as well as
field offices.
Accordingly proposal for extension to Mahavitaran Abhay Yojana 2024
was submitted for approval. Competent authority has accorded approval for
extension till 3 December, 2024 with additional provision as below:
In case of PD consumers having theft cases, 100% interest will be waived off on
making payment of 100% theft assessment amount.
All other terms & conditions of B&R Circular No. 06/2024 shall remain
unaltered.
This circular is available on www.mahadiscom.in.
Executive Director”
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14. Applying the aforesaid Circular in regard to the petitioner’s application,
the impugned communication dated 6 December 2024 was received by the
petitioner informing the petitioner that in regard to the previous owner M/s.
Vishwas Steel Ltd., a supplementary energy bill of Rs. 2,07,24,237/- regarding
theft of energy for the period of April 1991 to July 1994 was payable, in respect of
which Special Civil Suit No. 876 of 1996 was filed by MSEDCL, which was
decreed in favor of MSEDCL by judgment and order dated 23 September 2003.
It was recorded that the said amount was due and payable along with interest
@18%. The petitioner was informed that the petitioner can take benefit of the
extension of the Amnesty Scheme 2024, which was upto 31 December 2024,
however, with the additional provision that the petitioner/consumer has to pay
the 100% theft assessment amount and 100% interest will be waived off only after
the payment of principal electricity charges.
15. As the communication dated 6 December 2024 refers to the decree in the
Special Civil Suit No. 876/96 which was decreed in favour of MSEDCL, the
operative part of the judgment and decree is required to be noted, which reads
thus:
“ORDER
1. The suit is decreed with costs.
2. The defendant is hereby ordered to pay Rs.2,07,24,237.16 ps.
3. The defendant do pay further interest upon a due amount of
Rs.2,07,24,237.16 ps. at the rate of 18% p.a. from the date of suit till
realisation.”
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16. The petitioner being aggrieved by the impugned letter dated 6 December
2024 addressed a representation dated 12 December 2024, contesting the
additional levy of Rs.2,07,24,237/-, to contend that an additional condition
ought not to have been applied to the petitioner’s case, as the petitioner had made
its application within the extended period or prior thereto and which was not
processed. However, the petitioner’s representation was not considered and it is
in these circumstances, the present petition has been filed praying for the
following reliefs:
“(a) That this Hon’ble Court be pleased to issue a writ of certiorari
or a writ in the nature of certiorari or any other appropriate writ,
order or direction calling for the records and papers pertaining to
the impugned letter dated 6 December, 2024 [Ex. R] and after
going into the legality, validity and propriety thereof, quash or set
the said the same.
(b) That this Hon’ble Court be pleased to issue a writ of certiorari
or a writ in the nature of certiorari or any other appropriate writ,
order or direction calling for the records and papers pertaining to
the impugned circular dated 3 December, 2024 [Ex. S] and after
going into the legality, validity and propriety thereof, quash or set
the said the same.
(c) That this Hon’ble Court be pleased to issue a writ of mandamus
or a writ in the nature or mandamus or any other appropriate writ,
order or direction:
i) directing Respondent Nos. 2 to 4 to forthwith process
and/or approve the Petitioner No. 1’s Application dated 11
October, 2024 as on the terms and conditions of the Amnesty
Scheme prevailing on such date without instating for
compliance of the additional condition imposed vide circular
dated 3 December, 2024; and
ii) directing Respondent Nos. 2 to 4 to forthwith take all
necessary steps to issue a fresh connection for the supply of
electricity in the name of Petitioner No. 1 in respect of the
Subject Premises.
(d) That pending the hearing& and final disposal of the present
petition, direct the Respondent Nos. 2 to 4 to provide a temporaryPage 14 of 43
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Petitioners making necessary deposits of the principal arrears in
installment as contemplated under the circular dated 29 August,
2024 or on such other terms and conditions as this Hon’ble Court
deems fit.”
Submissions on behalf of the Petitioners
17. Mr. Sanklecha, learned counsel for the petitioners has made the following
submissions:
(i) The principal arrears which were due and payable by the petitioner
and as set out in the petitioner’s application filed under the Amnesty
Scheme was an amount of Rs.3.35 crores, being the amount payable by the
petitioner, as recognized by the Division Bench of this Court in the order
dated 15 June 2011 passed in Writ Petition No. 1686 of 2011. The
petitioner had withdrawn the said petition so as to be eligible to participate
in the amnesty scheme, being one of the requirements of the amnesty
scheme.
(ii) The petitioner’s application under the amnesty scheme was made
on 11 October 2024, which was prior to the impugned circular dated 3
December 2024 issued by the MSEDCL, whereby the additional condition
in relation to the recovery of theft charges was imposed, hence, it was
incumbent on the MSEDCL to grant a benefit of amnesty scheme to the
petitioner by accepting the amount of Rs.3.35 crores and not by demanding
any other amount.
(iii) The aforesaid contentions of the petitioner are required to be
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interim order (supra) on the earlier writ petition of the petitioner, the
Maharashtra Electricity Supply Code 2005 was in operation, and it is on
such basis the High Court had passed interim orders on the said writ
petition filed by the petitioner permitting the petitioner to deposit Rs. 3.35
crores. This position was required to be accepted by the MSEDCL, even for
the amnesty scheme.
(iv) It is next submitted that in the present case, on 7 June 2000,
electricity connection to the premises, which at the relevant time were held
by the previous owner M/s. Vishwas Steel Ltd., was temporarily
disconnected and subsequent thereto, on 1 April 2001, electricity was
permanently disconnected. It is thus submitted that MSEDCL for such
reason should not have demanded theft charges of Rs.2,07,24,237/-, which
would also be contrary to the view taken by the Division Bench of this
Court in its order dated 15 June 2011 (supra).
(v) In any event, the petitioner had purchased the premises in auction
sale under the SARFAESI Act, which was on “as is where basis”, and
accordingly had made an application on 16 July 2009 to MSEDCL for fresh
electricity connection in the petitioner’s name. In view of the failure to
process the application, the petitioner had approached this Court in its
previous Writ Petition no. 1686 of 2011 assailing the powers of MSEDCL
to insist upon payment of arrears of electricity charges due from the
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previous owner, as a condition to grant a new electricity connection and it is
in such context, interim order dated 15 June 2011 passed by this Court
became relevant and the amounts which were directed to be paid by the
petitioner would entail to the benefit of the petitioner, namely, an amount
of Rs.3,35,54,866.94.
(vi) On the petitioner’s application under the Amnesty Scheme, the
principal arrears were auto calculated to approximately Rs.3.35 crores,
which the petitioner was ready and willing to pay, however, the MSEDCL
failed to process the application despite the petitioner’s reminders and
hence the petitioner’s application could not be outside the purview of
amnesty scheme as originally notified so as to be categorized as an
application falling under the extended scheme, which was per se not
applicable insofar as the petitioner’s case was concerned.
(vii) Insofar as the decree dated 23 September 2023 passed in the
MSEDCL’s suit is concerned, the same stood crystallized against the
previous owner and not against the petitioner. The execution against the
decree was also dismissed on account of non-prosecution and accordingly,
the amounts/arrears under the decree could not have been foisted on the
petitioner.
(viii) It is submitted that the decision of the Supreme Court in K.C.
Ninan (supra) needs to be given effect to, more particularly
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in the context of the observations in relation to Maharashtra as made in
paragraph nos. 171 to 231.
(ix) It is submitted that even the MSEDCL in its reply affidavit, which
was filed in the petitioner’s earlier Writ Petition, accepted the position that
it is Regulation 10.5 of the Maharashtra Electricity Supply Code 2005
which would become applicable and it is on overall consideration of these
issues, this Court in the order dated 15 June 2011 had observed that for
grant of electricity connection to the petitioner, the dues quantified by the
petitioner in paragraph 6.8 of the said petition are Rs.3,35,54,866.94
which were to be taken into consideration. All such amounts were subject to
due verification of the MSEDCL. These conditions could not have been
different even if the previous owner M/s. Vishwas Steel Ltd. was to come
forward and make payment of the electricity charges as due. It is hence
submitted that on such submissions, the Writ Petition needs to be allowed.
In support of the submissions reliance is placed on the following decisions:-
Namco Industries Vs. State of Maharashtra 2, K. C. Ninan (supra), Kamlesh
Vasudeva Vs. Municipal Corporation of Delhi 3 & TNEB Vs. Sabasthi
Ammal4.
2 Writ Petition No.9906 of 2010 dated 16/09/2011 & decision of Supreme Court in SLP NO.38269-
38270-2012 dated 05-09-2023
3 2010 SCC Online Del.1625
4 2015 SCC Online Mad 1299
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Submissions on behalf of the Respondents
18. On the other hand, Ms. Deepa Chavan, learned senior counsel for the
MSEDCL has made the following submissions:-
i. At the outset, it is submitted that it is erroneous on the part of the
petitioners to assume that the amount due and payable by the petitioners as
arrears of electricity charges was an amount of Rs.3,35,54,866.94 merely
relying on the order dated 15 June 2011 passed by this Court on Writ
Petition No. 1686 of 2011. Such stance of the petitioner for two fold
reasons is untenable: firstly the said order passed by the Division Bench
does not take into consideration anything in regard to the liability of the
previous owner M/s. Vishwas Steel Ltd. on the theft charges which stood
crystallized in view of the judgment and decree passed by the Court of
Civil Judge, Senior Division, Thane dated 23 September 2003 in Special
Civil Suit No. 876/96 being an amount of Rs.2,07,24,237.16. Secondly,
the petitioners purchased the premises in question on “as is where is” and
“whatever there is” basis meaning thereby that the petitioners were liable to
discharge all the liabilities, which had stood attached to the said premises.
It is submitted that on the petitioners own showing as also held by the
Division Bench of this Court in petitioners’ previous writ petition, the
Court observed that Regulation 10.5 of the Maharashtra Electricity Supply
Code 2005 provided that charges for electricity which had remained
unpaid by erstwhile owner or occupier constitute a ‘charge’ on the premises
transmitted to the legal representatives/successors-in-law or transferred to
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independent liability, which was in fact, taken over by the petitioners when
the petitioners purchased the premises in an auction undertaken under the
SARFAESI Act. In such context, reliance is also placed on the decision of
the Supreme Court in K.C. Ninan (supra) in regard to the position in law
when a person purchases a property on “as is where is basis”.
(ii) It is next submitted that the amnesty scheme 2024 as introduced by
the MSEDCL under Circular dated 03 December 2024 had categorically
incorporated, that for the consumers to be eligible to take the benefit of
waiver of delayed payment charges as also the interest, in cases of theft,
100% of the principal amount is required to be paid under the provisions
of original amnesty scheme. Hence, there was no provision for exemption
or waiver of the principal amount of such electricity dues in regard to the
theft cases.
(iii) It is submitted that in the present case, the amounts payable had
stood crystallized by virtue of a decree passed by the competent court
against M/s. Vishwas Steel Ltd. and such charges were certainly relatable to
the electricity connection provided to the premises in question which were
a charge on the premises, as also payable under a binding decree of the
Civil Court although qua M/s. Vishwas Steel Ltd. Hence, it cannot be said
that the petitioner was not aware of such decree as the case of the MSEDCL
in regard to an amount of Rs.2,07,24,237.16 payable under the decree was
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well to the knowledge of the petitioner, as pointed out by the MSEDCL in
the reply affidavit of Shri. S. M. Rathod, Superintending Engineer dated 30
March 2011.
(vi) It is submitted that once such amounts as payable to the MSEDCL
stood crystallized under the decree of the Court, it was an amount due and
payable to MSEDCL, considering that the petitioner purchased the said
premises in an auction on “as is where is basis” and such liability was a
charge on the premises.
(v) It is submitted that the petitioner’s contention that the amount of
Rs.3,35,54,866.94 as referred in the interim order dated 15 June 2011
passed by the Division Bench of this Court in the petitioner’s earlier Writ
Petition No. 1686 of 2011 ought to enure to the benefit of the petitioner to
which the petitioner has expressed its willingness to pay, is untenable,
inasmuch as the Court had categorically observed that the amount which
would be deposited by the petitioners with the MSEDCL shall be subject
to due verification. It is submitted that at no point of time the petitioner
had approached the MSEDCL for due verification of the said amount.
Even otherwise the petitioners would not be entitled to rely on the interim
orders dated 15 June 2011 passed by this Court inasmuch as such interim
orders passed by this Court could have entailed to the benefit of the
petitioner, for obtaining an electricity connection in the manner as
considered and directed. Admittedly for a period of 13 years, the petitioner
had not taken the benefit of the said order and/or not complied and
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thereafter the petitioners withdrew the Writ Petition No. 1686 of 2011. By
withdrawing the said writ petition, the petitioners waived their rights to
take any benefit of the said order, even assuming while not admitting, that
at the relevant time the petitioners were required to pay an amount of
Rs.3,35,54,866.94 although it was subject to further verification of the
MSEDCL. Thus, the petitioner is estopped from asserting any rights under
the said order much less to contend, as to what was mandated under the
said order was a pre-deposit of principal amount of Rs.3,35,54,866.94. It
is submitted that considering the principles of law as laid down by the
Supreme Court in K.C. Ninan (supra), the petitioner is not entitled for the
reliefs as prayed for. It is, hence, submitted that the petition does not need
to be entertained and it deserves to be dismissed.
(vi) It is next submitted that in passing the interim order dated 22 June
2015 (supra) this Court had proceeded on the premise that Regulation 10.5
of the 2005 Regulation was applicable as the relevant time, however, in so
far as the petitioner’s amnesty application is concerned, the same was
governed by 2021 Regulations which does not provide the proviso to
clause 10.5 hence, the benefit of the proviso is not available to the
petitioner. It is hence submitted that the Writ Petition does not deserve
interference and needs to be rejected.
The question
19. Whether in the facts and circumstances of the case, the petitioners are
entitled to maintain its application under the amnesty scheme without accepting
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the liability to pay the theft charges of Rs.2,07,24,237.16.
Analysis:-
20. We have heard learned counsel for the parties. We have perused the record.
The primary submission as made on behalf of the petitioner is to disown the
liability to discharge the theft charges being called upon by the MSEDCL to be
paid by the petitioner. The petitioner contends that by applying Regulation 10.5
of the Maharashtra Electricity Supply Code 2005 (now repealed) and more
particularly the proviso thereunder, the petitioner is not liable to pay the theft
charges. Regulation 10.5 although is noted in the interim order passed by this
Court in the previous writ petition for convenience, we extract the same
hereunder:-
“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 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”
21. The contention of the petitioner in regard to the applicability of
Regulation 10.5 (supra) is on the basis that the petitioner had made an application
for supply of electricity on 16 July 2009, at which point of time the said
Regulation was prevalent. The second contention in this regard is that the
petitioner had approached this Court in the proceedings of Writ Petition No.
1686 of 2011 wherein a Division Bench of this Court passed an interim order
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dated 15 June 2011 directing that the petitioner has quantified the electricity dues
at Rs.3,35,54,866.94 in paragraph 6.8 of the said writ petition, which shall be
deposited by the petitioner for the electricity supply to be reconnected. Thus, the
petitioner’s contention is that on these two basic reasons, the MSEDCL
addressing the impugned letter is not correct and the petitioners’ application
under the amnesty scheme is required to be held to be eligible. We examine these
contentions.
22. Insofar as the first contention is concerned, we may observe that the
Maharashtra Electricity Supply Code 2005 now stands repealed by the
Maharashtra Electricity Regulatory Commission (Electricity Supply Code and
Standards of Performance of Distribution Licensees including Power Quality)
Regulations, 2021 (for short “2021 Regulations”) which were brought into force
with effect from 24 February 2021. Regulation 10.5 of the Maharashtra
Electricity Supply Code 2005 now stands substituted by Clause 12.5 of the 2021
Regulations which reads thus:-
12. Change of Name
12.5 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 Distribution Licensee as due from such legal
representatives or successors-in-law or new owner / occupier of the
premises, as the case may be.
23. On a plain reading of Clause 12.5 (supra) it is clearly seen that under the
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regime of the 2021 Regulations, the proviso as it stood below Regulation 10.5 of
the Maharashtra Electricity Supply Code 2005 stands deleted. The consequence
being the benefit if at all was available to the petitioner at the relevant time under
the proviso below Regulation 10.5, the same is no more available to the petitioner
in the present regime under the 2021 Regulations.
24. It is not in dispute that on the date of the amensty scheme the 2021
Regulations held the field, hence petitioner’s contention of the applicability of the
Maharashtra Electricity Supply Code 2005 is not well founded when the said
Regulations had stood repealed. Such submission if accepted would amount to
reviving the repealed Regulation 10.5 and that too retrospectively. This can
neither be done or accepted. Further when to this extent the Maharashtra
Electricity Supply Code 2005 was repealed, there is nothing in the 2021
Regulations to indicate that the new regulation saves the effect of any right which
if at all had accrued under Regulation 10.5, much less in so far as the terms and
conditions of the amnesty scheme are concerned.
25. In such context, we may refer to a decision of the Constitution Bench of
the Supreme Court in Kolhapur Canesugar Works Ltd. Vs. Union of India5. The
question which had arisen for consideration of the Constitution Bench was
whether after the omission of old Rules 10 and 10-A of the Central Excise Rules
and their substitution by new Rule 10, the proceedings initiated under the old
Rules would be continued in law. The Constitution Bench held that once the
rules are repealed and are substituted by new rules, in such event the court is to
5 (2000) 2 SCC 536
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look to the provisions which has been newly introduced to examine whether
pending proceedings will continue or lapse. If there is a provision in the new rules
that pending proceedings shall continue and be disposed of under the old rule, as
if the rule has not been deleted or omitted then such proceedings will continue.
In the absence of any such provision in the statute or in the rule the pending
proceedings would lapse on the rule under which the notice was issued or
proceedings were initiated being deleted/omitted. The following observations as
made by the Supreme Court are required to be noted which reads thus:
“34. ……..It is not correct to say that in considering the question of
maintainability of pending proceedings initiated under a particular provision
of the rule after the said provision was omitted the court is not to look for a
provision in the newly-added rule for continuing the pending proceedings. It
is also not correct to say that the test is whether there is any provision in the
rules to the effect that pending proceedings will lapse on omission of the rule
under which the notice was issued. It is our considered view that in such a
case the court is to look to the provision in the rule which has been
introduced after omission of the previous rule to determine whether pending
proceedings will continue or lapse. If there is a provision therein that pending
proceedings shall continue and be disposed of under the old rule as if the rule
has not been deleted or omitted then such proceedings will continue. If the
case is covered by Section 6 of the General Clauses Act or there is a pari
materia provision in the statute under which the rule has been framed, in that
case also the pending proceedings will not be affected by omission of the rule.
In the absence of any such provision in the statute or in the rule the pending
proceedings would lapse on the rule under which the notice was issued or
proceedings were initiated being deleted/omitted. It is relevant to note here
that in the present case the question of divesting the Revenue of a vested right
does not arise since no order directing refund of the amount had been passed
on the date when Rule 10 was omitted.
37. The position is well known that at common law, the normal effect of
repealing a statute or deleting a provision is to obliterate it from the statute-
book as completely as if it had never been passed, and the statute must be
considered as a law that never existed. To this rule, an exception is engrafted
by the provisions of Section 6(1). If a provision of a statute is unconditionally
omitted without a saving clause in favour of pending proceedings, all actions
must stop where the omission finds them, and if final relief has not been
granted before the omission goes into effect, it cannot be granted afterwards.
Savings of the nature contained in Section 6 or in special Acts may modify the
position. Thus the operation of repeal or deletion as to the future and the past
largely depends on the savings applicable. In a case where a particularPage 26 of 43
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with the same contingency is introduced without a saving clause in favour of
pending proceedings then it can be reasonably inferred that the intention of
the legislature is that the pending proceedings shall not continue but fresh
proceedings for the same purpose may be initiated under the new provision.
38. In the present case, as noted earlier, Section 6 of the General Clauses Act
has no application. There is no saving provision in favour of pending
proceedings. Therefore action for realisation of the amount refunded can only
be taken under the new provision in accordance with the terms thereof.”
(emphasis supplied)
26. We are thus of the clear opinion that Regulation 10.5 of the Maharashtra
Electricity Supply Code 2005 having stood repealed, there is no question of the
petitioner asserting any right, inasmuch as the provision which is brought into
force post-repeal i.e. the 2021 Regulations, do not in any manner contemplate
any retrospective applicability of Regulation 10.5. Also, the applicability of
Regulation 10.5 post repeal in juxtaposition to the amended Clause 12.5 of the
Regulation 2021, would bring about an integral conflict. Even otherwise, we
cannot hold that after its repeal, Regulation 10.5 would continue to operate,
considering the settled principles of law including on the applicability of Section
6 of the General Clauses Act. Thus, the petitioner certainly cannot raise a
contention that any legal right has accrued in its favour under the Regulation 10.5
of the 2005 Regulation.
27. In regard to the petitioner’s contention that no liability can be fastened on
the petitioner to discharge the debts of Vishwas Steel Ltd. to pay the theft charges
or even under the decree as obtained by the MSEDCL against Vishwas Steel Ltd.
for the reason that the petitioner has acquired rights qua the premises under the
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SARFAESI sale, is also wholly untenable. In our opinion, such issue is no more res
integra in view of the principles of law as laid down by the Supreme Court in K.C.
Ninan v. Kerala State Electricity Board (supra).
28. In K. C. Ninan‘s case (supra), the Supreme Court was dealing with a batch
of appeals on similar facts, when the supply of electricity was discontinued due to
the failure of the previous owners to pay the dues for consumption of electricity
on the premises. The previous owners had borrowed money or raised loans on
the security of their premises. In some of the cases, the erstwhile owners had gone
into liquidation. The premises were sold in auction sale generally on “as is where
is” basis. The new owners, who purchased the properties at auction, applied for
new electricity connections for the premises to which electricity had been
disconnected for failure to pay the dues. The Electric Utilities refused to provide
electricity connection unless the auction purchaser paid the dues of the previous
owner. This refusal was derived from the powers conferred under the subordinate
legislations, the notifications, Electricity Supply Codes, or State regulations. The
denial of electricity supply resulted in the institution of the petitions under Article
226 of the Constitution before the High Courts, leading to the judgments which
were subject matter of appeal before the Supreme Court. It is in the context of an
order passed under the Maharashtra State Electricity Board vs. Super and Stainless
Hi Alloy Ltd.6 the Court referred the civil appeals to a Bench of three Judges for
dealing with the issue of the recovery of arrears of the electricity charges. In the
6 Civil Appeal Nos.5312-5313 of 2005
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reference order, the questions which were posed to be answered by the Larger
Bench were inter alia whether electricity dues constitute a charge on the property
vis-a-vis the rights of the transferor and the transferee of the unit are concerned.
It is in such context, the Supreme Court considering the regulatory regime and
the position in law, framed the following issues for determination:-
“24. Based on the submissions of the parties, the specific issues which arise for
determination are:
a. Whether the Universal Service Obligation under Section 43 of the 2003
Act is linked to premises to which the connection is sought;
b. Whether a connection of electricity supply sought by an auction- purchaser
comprises a reconnection or a fresh connection;
c. Whether the power to recover arrears of a previous owner or occupier from
an auction-purchaser of the premises falls within the regulatory regime of the
2003 Act;
d. Whether the power to enable the recovery of arrears of the previous owner
or occupier from an auction-purchaser can be provided through subordinate
legislation by the State Commissions;
e. Whether the 1910 Act, 1948 Act, and the 2003 Act have express provisions
enabling the creation of a charge or encumbrance over the premises;
f. Whether the statutory bar on recovery of electricity dues after the limitation
of two years provided under Section 56(2) of the 2003 Act, will have an
implication on civil remedies of the Electric Utilities to recover such arrears;
andg. What is the implication of an auction-sale of premises on “as is where is”
basis, with or without reference to electricity arrears of premises?
(emphasis supplied)
29. Insofar as the present proceedings are concerned, issue nos.(b), (c), (e), (f)
and (g) are relevant. Before we advert to the relevant observations as made by the
Supreme Court, we note the conclusion as rendered by the Supreme Court in
answering the aforesaid issues as set out in paragraph 342 of the report, which
reads thus:-
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WP2734_2025-16.05.2025.DOC“342. The conclusions are summarised below:
342.1. The duty to supply electricity under Section 43 of the 2003 Act is
not absolute, and is subject to the such charges and compliances stipulated
by the Electric Utilities as part of the application for supply of electricity;
342.2. The duty to supply electricity under Section 43 is with respect to
the owner or occupier of the premises. The 2003 Act contemplates a
synergy between the consumer and premises. Under Section 43, when
electricity is supplied, the owner or occupier becomes a consumer only
with respect to those particular premises for which electricity is sought
and provided by the Electric Utilities;
342.3. For an application to be considered as a ‘reconnection’, the
applicant has to seek supply of electricity with respect to the same
premises for which electricity was already provided. Even if the consumer
is the same, but the PART I premises are different, it will be considered as
a fresh connection and not a reconnection;
342.4. A condition of supply enacted under Section 49 of the 1948 Act
requiring the new owner of the premises to clear the electricity arrears of
the previous owner as a precondition to availing electricity supply will
have a statutory character;
342.5. The scope of the regulatory powers of the State Commission
under Section 50 of the 2003 Act is wide enough to stipulate conditions
for recovery of electricity arrears of previous owners from new or
subsequent owners;
342.6. The Electricity Supply Code providing for recoupment of
electricity dues of a previous consumer from a new owner have a
reasonable nexus with the objects of the 2003 Act;
342.7. The rule making power contained under Section 181 read with
Section 50 of the 2003 Act is wide enough to enable the regulatory
commission to provide for a statutory charge in the absence of a provision
in the plenary statute providing for creation of such a charge;
342.8. The power to initiate recovery proceedings by filing a suit against
the defaulting consumer is independent of the power to disconnect
electrical supply as a means of recovery under Section 56 of the 2003 Act;
342.9. The implication of the expression “as is where is” basis is that
every intending bidder is put on notice that the seller does not undertake
responsibility in respect of the property offered for sale with regard to any
liability for the payment of dues, like service charges, electricity dues for
power connection, and taxes of the local authorities; and342.10. In the exercise of the jurisdiction under Article 142 of the
Constitution, the Electric Utilities have been directed in the facts of cases
before us to waive the outstanding interest accrued on the principal dues
from the date of application for supply of electricity by the auction
purchasers.”
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30. Thus, in answering the above questions, the Supreme Court has
categorically held that the duty to supply electricity under Section 43 of the
Electricity Act, 2003, is not absolute and is subject to such charges and
compliances as stipulated by the distribution licensees (MSEDCL) as part of the
application. It was held that the scope of the regulatory powers of the State
Commission under Section 50 of the 2003 Act is wide enough to stipulate
conditions for recovery of electricity arrears of previous owners from new or
subsequent owners. It was further held that the Electricity Supply Code providing
for recoupment of electricity dues of a previous consumer from a new owner have
a reasonable nexus with the objects of the 2003 Act. It was also held that the
implication of the expression “as is where is basis”, is that every intending bidder is
put on notice that the seller does not undertake responsibility in respect of the
property offered for sale with regard to any liability for the payment of dues, like
service charges, electricity dues for power connection, and taxes of the local
authorities.
31. In K. C. Ninan (supra) the Supreme Court also considered the Conditions
of Supply and Electricity Supply Code, when it observed that the provisions
therein require the payment of electricity dues of the previous owner as a
condition for the grant of an electricity connection have a clear nexus to the
scheme of the parent legislation and the objectives sought to be achieved. It was
observed that it is just and reasonable for distribution licensees to specify
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conditions of supply requiring the subsequent owner or occupier of the premises
to pay the arrears of electricity dues of the previous owner or occupier as a pre-
condition for grant of electricity connection to protect their commercial interests,
as well as the welfare of consumers of electricity. Analyzing the provisions of the
Section 100 of the Transfer of Property Act, 1882 which contemplates two types
of charges, namely, charges created by act of parties and charges arising by
operation of law, the Court made the following significant observations:
“99. An encumbrance means a burden or charge upon property or a claim
or lien upon an estate or on the land. Encumbrance must be a charge on
the property, which must run with the property. In terms of the first
paragraph of Section 100, when an immovable property of one party is
pledged as security for the payment of money to another, and the
transaction does not constitute a mortgage, the latter would acquire a
charge over the property. All provisions that apply to a simple mortgage are
applicable to a charge. A charge is neither a sale nor a mortgage because it
creates no interest in or over an immovable property but it is only a
security for the payment of money. In other words, a charge only results in
the creation of a right of payment out of the property towards the
satisfaction of the debt or obligation in question.”
32. Also, taking into consideration the Regulation 10.5 of the Maharashtra
Electricity Supply Code 2005, on which reliance is placed on behalf of the
petitioner, the Supreme Court in K. C. Ninan made the following observations:
“113. In exercise of such power, Regulation 10.5 of the Maharashtra
Electricity Supply Code 2005 provides that any charge for electricity or
any other sum which remains unpaid by an erstwhile owner constitutes a
charge on the property and can be recovered from the transferee subject to
the permitted period specified therein. This provision spelt out in the
present judgment is a mere illustration of a subordinate rule wherein
unpaid electricity dues constitute a charge on property and can be
recovered from a subsequent transferee.
……..
116. The provisions of the statute and statutory conditions of supply need
to be examined to determine whether the conditions of supply provide forPage 32 of 43
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Act, 1882. Once it is established that a statutory charge is created and
required notice was given, the charge attaches to the property and the
licensee is entitled to recover the unpaid electricity dues by proceeding
against the premises. Consequent to the charge created, Article 62 of the
Indian Limitation Act, 1963 would come into play. Article 62 of the
Limitation Act relates to enforcing the payment of money procured by
mortgaged or otherwise charged upon the immovable property. The
electricity utilities would get a period of twelve years to recover the dues
charged on the immovable property from the date when the money
payable became due.
117. In light of the above discussion, we are of the opinion that the
electricity utilities can create a charge by framing subordinate legislation or
statutory conditions of supply enabling recovery of electricity arrears from
a subsequent transferee. Such a condition is rooted in the importance of
protecting electricity which is a public good. Public utilities invest huge
amounts of capital and infrastructure in providing electricity supply. The
failure or inability to recover outstanding electricity dues of the premises
would negatively impact the functioning of such public utilities and
licensees. In the larger public interest, conditions are incorporated in
subordinate legislation whereby Electric Utilities can recoup electricity
arrears. Recoupment of electricity arrears is necessary to provide funding
and investment in laying down new infrastructure and maintaining the
existing infrastructure. In the absence of such a provision, Electric Utilities
would be left without any recourse and would be compelled to grant a
fresh electricity connection, even when huge arrears of electricity are
outstanding. Besides impacting on the financial health of the Utilities, this
would impact the wider body of consumers.
VI. Implication of Section 56(2) on recovery of electricity dues by Electric
Utilities……
130. Before we deal with the implication of Section 56(2) on the civil
remedies available to a licensee, it is important to clarify that when the
liability incurred by a consumer is prior to the period when the 2003 Act
came into force, then the bar of limitation under Section 56(2) is not
applicable. In Kusumam Hotels Pvt Ltd v. Kerala State Electricity
Board,59 this Court has held that Section 56(2) applies after the 2003 Act
came into force and the bar of limitation under Section 56(2) would not
apply to a liability incurred by the consumer prior to the enforcement of
the Act. In terms of Section 6 of the General Clauses Act 1897, the
liability incurred under the previous enactment would continue and the
claim of the licensee to recover electricity would be governed by the
regulatory framework which was in existence prior to the enforcement of
the 2003 Act.
……
134. The period of limitation under Section 56(2) is relatable to the sum
due under Section 56. The sum due under Section 56 relates to the sumPage 33 of 43
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56(2) provides that such sum due would not be recoverable after the
period of two years from when such sum became first due. The means of
recovery provided under Section 56 relate to the remedy of disconnection
of electric supply. The right to recover still subsists.
……
136. We therefore, reject the submission of the auction purchasers that the
recovery of outstanding electricity arrears either by instituting a civil suit
against the erstwhile consumer or from a subsequent transferee in exercise
of statutory power under the relevant conditions of supply is barred on the
ground of limitation under Section 56(2) of the 2003 Act. Accordingly,
while the bar of limitation under Section 56(2) restricts the remedy of
disconnection under Section 56, the licensee is entitled to recover
electricity arrears through civil remedies or in exercise of its statutory
power under the conditions of supply.
…….
143. Thus, the implication of the expression “as is where is” or “as is what
is basis” or “as is where is, whatever there is and without recourse basis” is
not limited to the physical condition of the property, but extends to the
condition of the title of the property and the extent and state of whatever
claims, rights and dues affect the property, unless stated otherwise in the
contract. The implication of the expression is that every intending bidder
is put on notice that the seller does not undertake any responsibility to
procure permission in respect of the property offered for sale or any
liability for the payment of dues, like water/service charges, electricity dues
for power connection and taxes of the local authorities, among others.
…….
146. To conclude, all prospective auction purchasers are put on notice of
the liability to pay the pending dues when an appropriate “as is where is”
clause is incorporated in the auction sale agreement. It is for the intending
auction purchaser to satisfy themselves in all respects about circumstances
such as title, encumbrances and pending statutory dues in respect of the
property they propose to purchase. In a public auction sale, auction
purchasers have the opportunity to inspect the premises and ascertain the
facilities available, including whether electricity is supplied to the
premises. Information about the disconnection of power is easily
discoverable with due diligence, which puts a prudent auction purchaser
on a reasonable enquiry about the reasons for the disconnection. When
electricity supply to a premises has been disconnected, it would be
implausible for the purchaser to assert that they were oblivious of the
existence of outstanding electricity dues.
147. In terms of the legal doctrine of caveat emptor, it becomes the duty
of the buyer to exercise due diligence. A seller is not under an obligation to
disclose patent defects of which a buyer has actual or constructive notice in
terms of Section 3 of the Transfer of Property act, 1882. However, in terms
of Section 55(1)(a), in the absence of a contract to the contrary, the seller
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is under an obligation to disclose material defects in the property or in the
seller’s title thereto of which he is aware and which a buyer could not with
ordinary care discover for himself.
148. While examining the effect of an “as is where is” clause, the facts and
circumstances of each case individually, along with the terminology of the
clauses governing the auction sales must be taken into consideration, to
arrive at an equitable decision.”
33. Further in dealing with the position in so far as Maharashtra is concerned,
the following significant observations were made, considering the applicable
statutory regime which is relevant in the context in hand.
171. 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.
…….
174. 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 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”
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175. 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.
…….
178. In Maharashtra, the right of the Electric Utilities to demand
outstanding dues is traceable to provisions across different time periods:
178.1. 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 1948 Act.
The MSEB Conditions of Supply which were made effective from 1
January 1976 would apply;
178.2. 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 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:
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; and178.3. 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 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.
179. In the six cases originating from Maharashtra, the respondents were
successful auction purchasers who purchased the premises in court auction
sales. The appellant-Board relied on Condition 23 of the MSEBPage 36 of 43
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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.
180. 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.
181. In Maharashtra State Electricity Board v. Super & Stainless Hi Alloys
Ltd., 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 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.
185. 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:
185.1 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; and185.2. The statutory regulations or terms and conditions of supply
which are statutory in character, authorise the supplier of electricity
to make such a demand.
186. 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.
187. 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.
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188. 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 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.
…….
224. 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
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.
…….
226. 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.
227. 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 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.
228. 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 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
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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.
229. 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.”
(emphasis supplied)
34. Adverting to the aforesaid principles of law, we have no manner of doubt
that when the petitioner applied under the amnesty scheme on 11 October 2024,
to avail the benefit under the said scheme, the same brought about a situation of
the petitioner making an application for grant of a electricity connection so as to
pave its way to clear the outstanding electricity charges. There is no dispute on
this. Although, the petitioner could have taken the benefit of the order dated 15
June 2011 passed by the Division Bench of this Court (supra) which permitted the
petitioner to deposit an amount of Rs. 3,35,54,866.94, the petitioner did not
avail of the benefit of the said order, as also the petitioner never approached the
Court for seeking extension of time to take the benefit of the said order rendering
the said orders passed by this Court to be of no utility to the petitioner by virtue
of the petitioner’s own conduct. Petitioner never showed a clear intention to take
benefit of the said order. As noted hereinabove, the said order of the Division
Bench in the petitioner’s earlier writ petition was passed on 15 June 2011. This
writ petition was filed on 27 January 2025, thus for the period of 14 years, the
petitioner did not take benefit of the said order and/or it had abandoned its rights
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under the said order. In the event, the petitioner was to comply with the said
order at the relevant time i.e. 2011 the petitioner would have parted with the
amount of Rs.3,35,54,866.94. It appears to be a commercial decision of the
petitioner not to part with such amount, inasmuch as the said amount if was to be
kept in a fixed deposit at the relevant time (now being offered under the amnesty
scheme), itself would have earned huge interest component until the same is
being deposited under the amnesty scheme. Having taken such position to earn
such interests, the petitioner now intends to even disown the liability to pay the
theft charges. Considering the principles of law as discussed hereinabove, it is
wholly untenable for the petitioner to assert such contentions as urged in the
present petition.
35. The aforesaid discussion also goes to show that the 2021 Regulations
clearly applied in the facts of the present case, as also the principles of law as laid
down by the Supreme Court in K.C. Ninan (supra) clearly brings about a
consequence that the subsequent purchaser, who purchased the property on “as is
where is” basis would become liable to discharge all the liabilities of the seller and
if that be so, insofar as the electricity charges which were due and payable by the
erstwhile owner, in regard to the theft of electricity, the petitioner cannot turn
around and take a position that the petitioner was not liable to pay such amount
and would still be governed by the provisions of Regulation 10.5 of the the
Maharashtra Electricity Supply Code 2005 and the proviso thereunder.
36. Insofar as the reliance of the petitioner in Namco Industries v. State of
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Maharashtra (supra)is concerned, the same is misplaced and would not assist the
petitioner. In Namco Industries, the Court’s direction to the petitioner therein to
pay six months of unpaid charges for electricity supplied to such premises, for
grant of fresh electricity supply, was rendered in the context of the 2005
Regulations and the proviso to Clause 10.5 of the 2005 Regulations, was not in
force at the relevant time. However, in the present case, the Amnesty Scheme was
introduced on 29 August 2024 under which the petitioner submitted its online
application on 11 October 2024. Accordingly, the Regulation applicable and in
force as on the date of the application were the 2021 Regulations, which would
govern the petitioner’s claim.
37. In any event, once an amnesty scheme was floated, the respondent is
bound by the terms and conditions of the amnesty scheme and as to what is
provided by the amnesty scheme. An amnesty scheme is in the nature of an offer
made to a person, who intends to avail of the benefits of the scheme. It is of a
nature intended to bring about a settlement between the licensee (MSEDCL) and
the consumer. The parties are thus strictly bound by the terms and conditions of
the scheme. The Court cannot alter the terms of such settlement which are
sacrosanct, except when the legality of the scheme on any of its clauses itself is in
question. Thus, accepting of an offer under the Amnesty Scheme is akin to a
settlement of a dispute between the parties, if any, which is being settled on the
terms and conditions of what has been provided in the amnesty scheme. The
court would not interfere in any settlement terms. It is for the parties to choose or
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not to choose the settlement terms. The result is either have a settlement or not
have a settlement or refuse the settlement. The sequel being, if such settlement is
not convenient, to invoke the jurisdiction of the Court under Article 226 of the
Constitution is certainly misconceived.
38. The petitioner cannot take a position that the terms and conditions of the
amnesty scheme as notified by the impugned circular dated 3 December 2024
requiring theft charges to be deposited in cases of applicants whose electricity
connection has been permanently disconnected, be not applied or that such
condition is erroneous and illegal. Certainly such a writ cannot be issued and
more so in the present case when the law itself does not provide for recovery of
such charges, in the position as the petitioner’s stand, so as to be a condition for a
fresh electricity connection to be installed at the petitioner’s premises. Thus,
considering the clear position in law, in such context, we do not countenance that
there is any alternative or way-out to the petitioner, to stand outside/ de hors the
terms and conditions of the amnesty scheme. This would amount to reading
something into the amnesty scheme, what is not been explicitly set out and/or
avoided to be incorporated. Thus, if the contentions as urged by the petitioner
are accepted, it would amount to the Court reading into the provisions of amnesty
scheme something which has not been provided for or by a judicial fiat
incorporating something alien to the Amnesty Scheme. This is not certainly the
jurisdiction of the Court, that by an interpretative process the Court would add a
category of applicants in the amnesty scheme, so as to grant a benefit to such
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applicant which is otherwise directly not provided by the amnesty scheme, and
which was not the intention and object of the authority in framing the specific
terms and conditions of the Amnesty Scheme.
39. In the light of the above discussion, the petition is devoid of merits. It is
accordingly rejected. No costs.
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