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2005 DIGILAW 953 (PNJ)

Paramount Polymers Private Limited v. Dakshin Haryana Bijli Vitran Nigam Limited

2005-09-07

M.M.KUMAR

body2005
Judgment M.M.Kumar, J. 1. This petition filed under Article 226 of the Constitution prays for quashing sale circular dated 27.11.2001 issued by the Dakshin Haryana Bijli Vitran Nigam Limited (for brevity, DHBVNL) which provides for recovery of outstanding dues from the defaulting premises even from an auction purchaser, although the arrears have accrued before the auction purchaser had purchased the premises. The basis of challenge is a judgment of the Supreme Court rendered in the case of Isha Marbles v. Bihar State Electricity Board and Anr., Another prayer has been made for issuance of a writ of prohibition restraining DHBVNL from removing the generators belonging to the petitioner from its premises situated at Sector 59, Part-B Industrial Area, 25th Mile Stone, Jhajru Road, .Jharsetli, Tehsil Ballabgarh, District Faridabad (Haryana). It has also been prayed that DHBVNL be issued directions to release electric connection to enable the petitioner to run its factory. The petitioner has claimed that the judgment in Isha Marbles case (supra) is fully applicable because when the petitioner purchased the premises, the amendment dated 27.11.2001 (Annexure P-4) had not been issued. However, the attempt of DHBVNL is to show that the amendment dated 27.11.2001 would govern the issue and the view expressed by the Supreme Court in Isha Marbles case (supra) to the effect that in cases where the statute adequately occupies the field by charging the premises with the financial liability of third party then such a statute would be fully applicable. 2. Facts in brief are that advertisement was issued by the Haryana Financial Corporation-respondent No. 3(for brevity the HFC) in the English Daily The Tribune for sale of the premises in dispute which belongs to M/s LLC Steels Private Limited, Jhajru Road, Village Jharsetli, Tehsil Ballabgarh. It appears that the proceedings by HFC were undertaken against the previous owner of the premises under Section 29 of the State Financial Corporation Act, 1951 (for brevity, the Act). The petitioner was the successful auction purchaser who had submitted his bid on 17.12.1998. It offered Rs. 26 lacs for purchasing the premises. The bid was eventually accepted and the petitioner was delivered the possession of the premises on 22.4.1999. In the year 2001,. the petitioner installed its plant and machinery on the premises. Thereafter, on 1.1.2002 it had applied for power connection and the application was rejected on the same day. It offered Rs. 26 lacs for purchasing the premises. The bid was eventually accepted and the petitioner was delivered the possession of the premises on 22.4.1999. In the year 2001,. the petitioner installed its plant and machinery on the premises. Thereafter, on 1.1.2002 it had applied for power connection and the application was rejected on the same day. However, DHBVNL refused to release the power connection by citing reasons that predecessor of the petitioner was a defaulter to the extent of Rs. 64,23,695/- and the petitioner was to deposit the aforementioned amount. It was further observed that after deposit of the defaulted amount, the case of the petitioner for power connection would be accepted. It is alleged that on 10.1.2002, DHBVNL threatened forcibly to remove two generators belonging to the petitioner unless the defaulted amount is paid. At this stage, the petitioner had filed a suit along with an application for stay. On 16.1.2002, ad interim stay was granted and the hearing of the suit along with application was adjourned to 11.3.2002. However,the suit has been withdrawn with liberty to file fresh one if permitted by law vide order dated 6.6.2002, petitioner submitted an application to the Haryana Electricity Regulatory Commission (for brevity the HREC) to set up Captive Power Plant. The HREC sought the consent of the DHBVNL for setting up a Captive Power Plant. No action was taken although more than a month had passed. It is claimed that the refusal of DHBVNL to grant electric/power connection is based on a proposed policy decision which is opposed to the judgment of the Supreme Court in Isha Marbles case (supra). 3. When the petition came for consideration of this Court, on 3.4.2002, a Division Bench of this Court, while issuing notice of motion, permitted the petitioner to run the unit with the help of Captive Power Plant installed in the premises. The petition was admitted by the Division Bench on 28.1.2003 and interim directions were allowed to continue till the decision of the writ petition. 4. The stand taken by HFC-respondent No. 3 in its written statement is that its action of refusing to supply power to the petitioner is sustainable in law because under Section 49 of the Electricity (Supply) Act, 1958 its has issued a Circular dated 27.11.2001 imposing condition that recovery has to be made from the premises which has committed the default. The stand taken by HFC-respondent No. 3 in its written statement is that its action of refusing to supply power to the petitioner is sustainable in law because under Section 49 of the Electricity (Supply) Act, 1958 its has issued a Circular dated 27.11.2001 imposing condition that recovery has to be made from the premises which has committed the default. It has been asserted that new Clause 21 (A) has been incorporated in terms of supply of electric energy as is evident from the Circular dated 27.11.2001 which is fully applicable to the case of the petitioner. 5. A separate reply has also been filed by HREC-respondent No. 2 and the fact with regard to filing of application for grant of consent to set up the Captive Power Plant in the premises of the petitioner has been admitted. It has further been accepted that the consent has been granted in 44th meeting of the HREC held on 3.5.2002. The consent has been granted for installation of Captive Power Plant till the new regulatory electricity connection is given to the petitioner and thereafter, the consent for Captive Power Plant is to be considered as stand by itself for a period of 10 years. A copy of the letter dated 28.6.2002 has been placed on record as Annexure R 1/2. 6. Mr. R.K. Chibbar, learned Senior Counsel has placed heavy reliance on the judgment of the Supreme Court in Isha Marbles case (supra) by arguing that on the date of advertisement for sale of the premises belonging to the earlier company namely, M/s LLC Steels Ballabgarh on 26.11.1998 or on the date of submission of bid by the petitioner on 17.12.1998, there was no statutory provision in operation governing the issue of recovery of defaulted amount and creating a charge for such like recovery on such like premises. Leamed counsel has further submitted that even on 22.4.1999 and thereafter in 2001 when the petitioner had installed its plant and machinery, the statutory provision was not in existence. According to the learned counsel, the amended provision-came into existence on 27.11.2001 (Annexure P-4) with no provision making its operation as retrospective and therefore, it has to be read prospectively. In other words, the submission is that no charge on the premises purchased by the petitioner on 17.12.1998 or 22.4.1999 could be deemed to have been created by the amendment promulgated on 27.11.2001. 7. In other words, the submission is that no charge on the premises purchased by the petitioner on 17.12.1998 or 22.4.1999 could be deemed to have been created by the amendment promulgated on 27.11.2001. 7. He has then made an elaborate reference to the view taken by the Division Bench of Kerala High Court in the case of A. Ramachandranan v. Kerala State Electricity Board. Mr. Chibbar has argued that the Kerala High Court has rightly understood the proposition of law laid down by the Supreme Court in Isha Marbles case (supra) because it has been held in para 63 that on account of inadequacy of law no liability of the previous contract could be enforced against the auction purchaser who is a third party and who is not connected with the previous owner/occupier. Sub-stantiating his arguments learned counsel has submitted that in A. Ramachandranans case (supra) regulations relating to conditions of supply of electric energy were published in the Official Gazette on 15.12.1989 which were to come in force w.e.f. 1-1-1990. The original owner committed default in making payment and the connection was disconnected on 28.12.1989. The premises were put to auction in exercise of power under Section 29 of the Act by the Kerala Financial Corporation. On 26.9.1990, the premises were purchased by the auction purchaser. Learned counsel has maintained that it is abundantly clear that the statutory provisions have come in operation in A. Ramachandranans case (supra) whereas in the present case, the disconnection had taken place on 6.4.1998 and the premises were purchased by the petitioner-auction purchaser in above auction on 22.4.1999 when possession was delivered. However, the amendment was made on 27.11.2001 which cannot deemed to have created any charge on the premises in dispute either on the date of the auction or on the date of delivery of possession to the petitioner. The argument in nut shell is that the judgment in A. Ramachandranans case (supra) would not be applicable and the facts of the present case are squarely covered by the judgment in Isha Marbles case (supra). 8. The argument in nut shell is that the judgment in A. Ramachandranans case (supra) would not be applicable and the facts of the present case are squarely covered by the judgment in Isha Marbles case (supra). 8. Learned counsel has further argued that a Division Bench of this Court in the case of Rayat Educational and Research Trust v. PSEB, (2004-2) 137 P.L.R. 370 has taken a view that the companies are independent juristic entities and liability of one company can be imposed on the other company only if there is a clear stipulation that the successor company has taken over the assets as well as liabilities of the earlier company with the condition in the contract that a charge in this regard has been created on the successor company and that the liability is purely contractual in nature. The Division Bench has further held that in the absence of any contractual obligation or charge created in favour of Electricity Board, liability of the successor company cannot be inferred by implication. Learned counsel has then submitted that the Supreme Court in Ahmedabad Electricity Companies Limited v. Gujarat Inns Private Limited and Ors., 2004 (120) Company Cases 290 has held that in case of fresh connection on the same premises an auction purchaser could not be held liable to pay the arrears incurred by the previous owner in respect of power supply to the premises in the absence of there being a specific statutory provision in that regard. In this judgment, the Supreme Court has also taken into consideration the view expressed in Isha Marbles case (supra). Learned counsel has then placed reliance on a Division Bench judgment of Orissa High Court in the case of Sunil Rajgharhis v. Orissa State Financial Corporation and Anr., 2004(1) Bank Commercial Law Reporter 390 (Orissa) and argued that the judgment of the Supreme Court in Isha Marbles case (supra) has been followed by the Division Bench holding that an auction purchaser is not under an obligation to pay the arrears of electricity dues of the previous owner. 9. Mr. 9. Mr. Chhibar has also placed reliance on a Division Bench order of this Court passed in the case of Ambika International Limited v. Dakshin Haryana Bijli Vitran Nigam Limited, C.W.P. No. 858 of 2005, decided on 27.1.2005 where DHBVNL has conceded that the case was covered by the judgment of the Supreme Court in Isha Marbles case (supra) despite the fact the auction purchaser had purchased the premises from the Official Liquidator on 3.12.2003, much after the issuance of amendment on 27.11.2001. Learned counsel has urged that this type of favourtism highlighted by the DHBVNL is not consistent with the fair play which is expected of a public authority like DHBVNL. Learned counsel has reiterated the prayer made in the petition. 10. Mr. Girish Agnihotri learned counsel for DHBVNL has argued that the effective date which deserves to be considered for the purpose of releasing the power connection is the date of application filed for issuance of power connection. According to the learned counsel if the facts of the present case are viewed from the aforementioned angle, the petitioner has applied for power connection on 1.1.2002 which would bring it within the sweep of amendment notified on 27.11.2001. Learned counsel has then submitted that para 9 of the judgment in A. Ramachandranans case (supra) makes it abundantly clear that when the auction purchaser purchased the property in public auction it was without any electricity supply and he was bound by the statute which was issued on 15.12.1989 w.e.f. 1.1.1990. Adverting to the facts of the instant case, learned counsel has argued that it is the fact of disconnection which would be material point to be taken into account irrespective of anything else. 11. Having heard learned counsel for the parties and after close examination of their submissions, I am inclined to accept the view that the amendment dated 27.11.2001 would not apply to the case of the petitioner. It is admitted fact that the petitioner has submitted its bid on 17.12.1998 which was accepted on 22.4.1999 and the possession of the premises was delivered. At that stage, there was neither any charge on the premises created by any statute nor statutory instrument nor any notice given to the petitioner. It is extremely doubtful if the petitioner would have given the bid for Rs. 26 lacs, had he known that there was recovery of Rs. At that stage, there was neither any charge on the premises created by any statute nor statutory instrument nor any notice given to the petitioner. It is extremely doubtful if the petitioner would have given the bid for Rs. 26 lacs, had he known that there was recovery of Rs. 64,23,695/- outstanding against the premises which is recoverable from it being auction purchaser because the premises was purchased at the price of Rs. 26 lacs. It would be pertinent to refer to the provisions incorporated by amendment dated 27.11.2001 which read as under: "21-(A)(a) When there is transfer of ownership or right of occupancy of a premises, the registered consumer shall intimate the transfer of right of occupancy of the premises within 15 days to the Assistant Engineer/Assistant Executive Engineer concerned. Intimation having been received, the service shall be disconnected unless application for transfer is allowed. If the transferee desires to enjoy the service connection, he shall pay the outstanding dues, if any, to the Nigam and apply for transfer of the service connection within 30 days and execute fresh agreement and furnish fresh security. New Consumer number shall be allotted in such cases canceling the previous number. (b) Reconnection or new connection shall not be given to any premises where there are arrears on any account to the Nigam unless these are cleared in advance. If the new owner/occupier/allottee remits the amount due from the previous consumer, the Nigam shall provide reconnection or new connection depending upon whether the service remains disconnected/dismantled as the case may be. The amount so remitted will Be adjusted against the dues from the previous consumer. If the Nigam get the full or partial dues from the previous consumer through legal proceedings or otherwise, the amount remitted by the new owner/occupier to whom the connection has been effected shall be refunded to that extent. But the amount already remitted by him/her shall not bear any interest. (c) The above proposed provisions of Clause 21-A(a) and (b) shall be applicable to existing consumers also where defaulting amount exists against premises occupied by such consumer". 12. A perusal of the aforementioned provisions read with Annexure R-4 (placed on record with CM. But the amount already remitted by him/her shall not bear any interest. (c) The above proposed provisions of Clause 21-A(a) and (b) shall be applicable to existing consumers also where defaulting amount exists against premises occupied by such consumer". 12. A perusal of the aforementioned provisions read with Annexure R-4 (placed on record with CM. No. 19843 of 2003) makes it abundantly clear that the provision has been made only to fill up the gap pointed out by the Supreme Court in Isha Marbles case (supra) so as to frame an adequate legislation. Obviously operation of the provisions has not been made retrospective. It is well settled that for retrospective operation of a provision of law, there has to be either an express provision or it has to be inferred by necessary intendment. In the absence of any of these two situations, the provision cannot be considered to operate retrospectively as has been held by the Supreme Court in para 25 of the judgment in the case of Garikepadi Veeraya v. N. Subbiah Choudhry and Ors., It is further evident that in the event of transfer of ownership or right of occupancy of premises, the registered consumer is under obligation to intimate the transfer of right within a period of 15 days to the Officers of DHBVNL. The supply to the premises is to be disconnected unless application for transfer of the connection is allowed. A new connection is not to be given to any premises where there are arrears on account of due to the DHBVNL unless the dues are cleared in advance. In other words, the amendment governs two situations (a) when the premises is transferred and the connection is live and (b) when the connection is not live. However, in the present case no charge could have been created on account of disconnection ordered by the DHBVNL at the time of auction of the property as there was inadequacy of legislation there being no provision for creation of such a charge. It is in this context that the Supreme Court in Isha Marbles case (supra) in para 63 has held as under: "We are clearly of the opinion that there is great reason and justice in holding as above. Electricity is public property. Law, in its majesty, benignly protects public property and behoves everyone to respect public property. Hence, the Courts must be zealous in this regard. Electricity is public property. Law, in its majesty, benignly protects public property and behoves everyone to respect public property. Hence, the Courts must be zealous in this regard. But, the law, as it stands, is inadequate to enforce the liability of the previous contracting party against the auction-purchaser who is a third party and is in no way connected with the previous owner/occupier. It may not be correct to state, if we hold as we have done above, it would permit dishonest consumers transferring their units from one hand to another, from time to time, infinitum without the payment of the dues to the extent of lakhs and lakhs of rupees and each one of them can easily say that he is not liable for the liability of the predecessor in interest. No doubt, dishonest consumers cannot be allowed to play truant with the public property but inadequacy of the law can hardly be a substitute for overzealousness." 13. The pleadings in the present case do not disclose any fact showing that the previous owner and the petitioner being the auction purchaser have acted dishonestly or fraudulently by transferring the premises in order to avoid liability. The reliance placed by Mr. Chhibbar on a judgment of the Supreme court in Ahmedabad Electricity Companiess case (supra) is also meritorious wherein it has been categorically held that in case of fresh connection in respect of same premises, the auction purchaser cannot be held liable to clear the arrears incurred by the previous owner in respect of power supply to the premises, in the absence of there being specific statutory provisions in that regard. The view of the Division Bench in the case of Rayat Educational and Research Trusts case (supra) is also on the same footing. Following the view in Isha Marbles case (supra) the Division Bench in para 7 goes on to observe as under: "Learned counsel for the respondents-Board has not been able to distinguish the aforesaid decision of the Supreme Court. Apart from this, it becomes apparent from the pleadings that even the Board accepts that the land has been purchased by the petitioner-Trust from M/s NAM Agro Inputs Private .Ltd. and M/s Futuristic Enterprises Ltd. No connection whatsoever has been established between M/s Shivalik Fertilizers Limited and the petitioner-Trust. Apart from this, it becomes apparent from the pleadings that even the Board accepts that the land has been purchased by the petitioner-Trust from M/s NAM Agro Inputs Private .Ltd. and M/s Futuristic Enterprises Ltd. No connection whatsoever has been established between M/s Shivalik Fertilizers Limited and the petitioner-Trust. The liability is sought to be fastened on the petitioner only on the ground that the land on which the petitioners Educational Institute is established, was previously owned by the sister concern of M/s Shivalik Fertilizers Ltd. the four concerns mentioned above are private limited companies. They are independent juristic entities. Liability of one Company can be fastened on another Company only, if there is a clear stipulation that the successor company has taken over the assets as well as liabilities of the earlier company. There is no material on record to show that the petitioner has in any manner taken over the liabilities of M/s Shivalik Fertilizers Ltd. The petitioner was not a consumer of electricity in the premises which belonged to M/s Shivalik Fertilizers Ltd. the liability of M/s Shivalik Fertilizers Ltd. was purely contractual in nature and could not be imposed on the petitioner who had purchased the land after due verification that the same was free from any charge. We are, therefore, of the considered opinion that the action taken by the respondents by orders/letters (Annexures P-4, P-5, P-9 and P-10) is clearly arbitrary and without jurisdiction." 14. The argument of the learned counsel for DHBVNL that the date of the application for issuance of fresh connection should be taken as a material date, has failed to impress me because in the absence of any charge or contractual liability created against the auction purchaser, the liability could not be fastened unless it is shown that on the date of transfer, the auction purchaser was either bound by a statute or by a contract or a fraud was played by the previous owner by transferring the premises to the auction purchaser with object of avoiding liability. Similarly, the date of disconnection as noticed in para 9 of the judgment in A Ramachandran s case (supra) would also not require any detailed consideration in view of the fact that no charge or contractual liability is stated to have been create against the account purchaser who is a third party. Similarly, the date of disconnection as noticed in para 9 of the judgment in A Ramachandran s case (supra) would also not require any detailed consideration in view of the fact that no charge or contractual liability is stated to have been create against the account purchaser who is a third party. The stand taken by the respondents is without any merit and the same is rejected. 15. Before parting with the judgment, it deserves to be noticed that DHBVNL has conceded before the Division Bench of this Court in Ambika International Limiteds case (supra) the application of the judgment rendered by Supreme Court in Isha Marble s case (supra), although the transfer of ownership of premises in that case was effected in the year 2003 when the amendment has already come in operation. However, in the present case, although the amendment was not in operation on the date of transfer and there was no charge created by operation of law, DHBVNL has preferred to contest. It is not possible to reconcile these two contradictory stands which are diametrically opposed to each other. I do not wish to state anything further in this regard but these observations must set in motion self retrospection by the top brass of DHBVNL. 16. For the reasons stated above, this petition succeeds. The respondents are directed to release the power connection to the petitioner expeditiously but not later than 30 day from the date of this order. The respondents are also restrained from removing the generators from its premises. The petitioner shall be entitled to cost of the petition which is determined at Rs. 20,000/-.