Raghunath Paper Mill Pvt. Ltd. v. Official Liquidator
2010-08-05
SANJU PANDA
body2010
DigiLaw.ai
JUDGMENT Sanju Panda, J. 1. The Petitioner has filed this Writ Petition challenging the letter dated 21.5.2010 issued by the Special Officer (Commerce), North Eastern Electricity Company of Orissa (in short, "NESCO") directing the Petitioner to pay the arrear electricity dues amounting Rs. 79,02,262.00 outstanding against the premises to which it intends to avail power. 2. The Official Liquidator made an advertisement for sale of movable & immovable assets & properties of the factory unit i.e. M/s. Konark Paper & Industries covering the leasehold land, buildings/ sheds, plant & machinery, furniture & fixtures etc. which is in liquidation "as is where is & whatever there is" basis which was being monitored by this Court in Company Act Case No. 25 of 2005. In pursuance of the said advertisement, the Petitioner submitted its tender. Being the highest bidder, the sale was confirmed in favour of the Petitioner-unit. As the full payment of sale consideration was received by the Official Liquidator, possession of the unit was handed over by the Official Liquidator in pursuance of the direction of this Court dated 28.3.2008. As per the terms & conditions of sale, the purchaser shall not be liable for payment of any dues relating to the company in liquidation payable on or before handing over possession pursuant to the confirmation of sale. When the possession of the unit was handed over "as is where is & whatever there is", there was no power supply to the said unit. The Petitioner in order to establish a paper unit in the leasehold land, made an 'application on 10.12.2008 to the Opp. Parties for availing power of 100 KW at 33 KV. The said line was required to be drawn from Basta Feeder to the unit in question & an estimate was made to the tune of Rs. 14,48,792. As permission was granted, the Petitioner deposited 6% supervision charges amounting to Rs. 86,928 & constructed the line. The Electrical Contractor submitted the completion certificate in the prescribed format. To avail the construction load of the aforesaid line, the Petitioner executed an agreement on 27.3.2009 with the management of NESCO & deposited security amount of Rs. 1,65,156. Due to non-supply of power, the construction was completed by using Diesel Generator Set. After completion of the said construction work, Opp. Parties did not provide power supply to the Petitioner-unit.
To avail the construction load of the aforesaid line, the Petitioner executed an agreement on 27.3.2009 with the management of NESCO & deposited security amount of Rs. 1,65,156. Due to non-supply of power, the construction was completed by using Diesel Generator Set. After completion of the said construction work, Opp. Parties did not provide power supply to the Petitioner-unit. Thereafter, the Petitioner made an application in the prescribed format for supply of power. Along with the said application, the load details & forwarding letter were also given to supply permanent power from the existing transformer installed by the Petitioner-unit. However, the authorities remained silent over the matter & did not take any step to give permanent power supply to the Petitioner. On 21.5.2010, the Special Officer, Commerce, NESCO, Balasore, communicated a letter to the Petitioner-unit to pay arrear electricity dues amounting Rs. 79,02,262.00 outstanding against the premises to which the Petitioner intends to avail power supply with further condition that on clearance of the arrear electricity dues necessary permission letter shall be issued in its favour. 3. It is submitted by the Learned Counsel' for the Petitioner that as per the Electricity Act, 2003, on an application made by the owner or occupier of any premises, the authority has to supply electricity within one month from the date of receipt of the application. If a licence fails to supply electricity within the stipulated rime, he shall be liable to a penalty which may extend to one thousand rupees for each day of default. The regulation made under the above Act is known as "OERC Distribution (Conditions of Supply) Code, 2004" to govern distribution & supply of electricity & procedures thereof etc. Clause-13.5 of the said Code provides that the power supply shall be provided within a period of 90 days in case of 33 KV Supply Though the Petitioner submitted its application on 26.8.2009, without providing power supply, Opp. Party No. 2 communicated a letter dated 21.5.2010 to the Petitioner to pay arrear electricity dues. Therefore, the Petitioner has filed this Writ Petition for redressal of its grievance. He further submitted that as per the terms & conditions of the sale, the Petitioner is not liable to make any dues relating to the company in liquidation payable on or before handing over possession. Therefore, the demand of the Opp.
Therefore, the Petitioner has filed this Writ Petition for redressal of its grievance. He further submitted that as per the terms & conditions of the sale, the Petitioner is not liable to make any dues relating to the company in liquidation payable on or before handing over possession. Therefore, the demand of the Opp. Parties to clear the arrear electricity dues of the previous company is illegal, arbitrary & unsustainable in the eye of law, Hence, the letter dated 21.5.2010 issued by Opp. Party No. 2 in favour of the petitions; is liable to be quashed In support of his contention, he cited the decisions of this Court in the case of Anshuman Behera v. Orissa State Financial Corporation and Ors. reported in AIR. 2010 Ori 10 & Ajay Kumar Agrawal v. O.S.F.C. and Ors. reported in AIR 2010 Ori 37 . He further submitted that since the unit is purchased by the Petitioner on "as is where is basis" & as per the terms & conditions of sale the purchaser is not entitled to pay any arrear dues of the erstwhile company, any arrear dues of the erstwhile company is to be cleared by the Official Liquidator who was in charge of the winding process of the company & the Opp. Parties may put forth their claims before the Official Liquidator regarding arrear electricity dues of the erstwhile company. 4. In pursuance of the notice issued by the Court, Opp. Parties appeared through Counsel but they have not filed any counter affidavit. They argued the matter on merits. 5. Mr. P.K. Tripathy, Learned Counsel appearing on behalf of the Opp.
Parties may put forth their claims before the Official Liquidator regarding arrear electricity dues of the erstwhile company. 4. In pursuance of the notice issued by the Court, Opp. Parties appeared through Counsel but they have not filed any counter affidavit. They argued the matter on merits. 5. Mr. P.K. Tripathy, Learned Counsel appearing on behalf of the Opp. Parties, submitted that in view, of the decision of the Apex Court in Dakshin Haryana Bijli Vitran Nigam Ltd. v. Paramount Polymers (P) Ltd. reported in (2006) 13 SCC 101, wherein it has been held that in cases where a consumer had defaulted in paying electrical charges & there had been consequent disconnection of supply, no fresh connection in respect of the premises would be given to a purchaser unless the purchaser cleared the amount that was left in arrears by the Consumer whose undertaking had been purchased, the plea taken by the present Petitioner is liable to be rejected & since it has not cleared the arrear electricity dues in respect of the premises, no fresh connection can be provided & the Writ Petition is liable to be rejected. 6. Mr. Tripathy further submitted that under Sub-clause 10(b) of Clause 13 of Orissa Electricity Regulatory Commission Distribution (Conditions of Supply) Code, 2004 (in short, 'OER Code') the service connection from the name of a person to the name of another consumer shall not be transferred unless the arrear charges pending against the previous occupier are cleared. Therefore, the Petitioner is liable to clear the arrear charges. 7. In reply to the above, Learned Counsel for the Petitioner submitted that as per Clause-10 of the OER Code the Petitioner is not coming under the expression "the Applicant in respect of an earlier agreement executed in his name or in the name of his spouse, etc.". Therefore, the question of the Petitioner clearing the arrear dues as per Sub-clause 10(b) of Clause 13 of the OER Code, as contended by the Opp. Parties, does not arise. 8. From the above submissions of the parties & after going through the records, it appears that the Petitioner has purchased the unit from the Official Liquidator in pursuance of the advertisement for sale & on payment of the consideration amount, the sale was confirmed & possession of the unit was handed over to the Petitioner as per the order of this Court dated 28.3.2008.
Admittedly, as stated above, as per the terms & conditions of the sale, the purchaser shall not be liable for payment of any dues relating to the company in liquidation payable on or before handing over the possession in pursuance of confirmation of the sale. 9. So far as the decision cited by the Learned Counsel for the Opp. Parties in Dakshin Haryana Bijli Vitran Nigam Ltd.'s case (supra) is concerned, therein the licence incorporated Clause 21-A on 22.11.2001 in the terms & conditions of supply of electrical energy & after that date the consumer applied for electrical connection. In view of the said clause, the Apex Court observed that the purchaser was liable to clear the arrear's in respect of the premises. However, whether that clause violates any fundamental rights of the parties was not considered by the High Court for which the matter was remanded. Therefore, the said decision is not applicable to the facts & circumstances of the present case. 10. Having regard to the contention of the parties, in the present case it is to be considered by this Court, whether Clause-10 or Sub-clause 10(b) of Clause-13 of the OER Code is applicable to the Petitioner. 11. For better appreciation, the said provisions of the OER Code are extracted below: 10. If the Applicant in respect of an earlier agreement executed in his name or in the name of his spouse, parents or in the name of a firm or company with which he was associated either as a partner, director or managing director is in arrears of electricity dues or other dues for the same premises payable to the licensee, the application for supply shall not be allowed by the engineer until the arrears are paid in full. 13. Licensee's obligation to supply & power to recover expenditure- (1) to (9) xxx xxx xxx (10) Transfer of service connection (a) xxx xxx xxx (b) The service connection from the name of a person to the name of another consumer shall not be transferred unless the arrear charges pending against the previous occupier are cleared. Provided that this shall not be applicable when the ownership of the premises is transferred under the provisions of the State Financial Corporation Act. 12.
Provided that this shall not be applicable when the ownership of the premises is transferred under the provisions of the State Financial Corporation Act. 12. On a plain reading of the above provisions, it is crystal clear that the Petitioner being the purchaser of the unit on an advertisement made by the Official Liquidator is in no way connected with the erstwhile company. Therefore, Clause-10 is not applicable to the Petitioner. 13. So far as Sub-clause 10(b) of Clause-13 is concerned, the Petitioner has not applied for transfer of service connection from the name of a person to the name of another consumer. Rather it is a fresh connection to the Petitioner unit after he purchased the same from the Official Liquidator. As per the terms & conditions of the sale," the present Petitioner is not liable to clear any arrear dues of the erstwhile company. The dues are not levied against the premises, rather it is levied against the person & the ownership of the premises is transferred under the provisions of the Companies Act. The Opp. Parties have also not contended that there was an agreement between the Opp. Parties & the erstwhile company that in case the premises in question would be transferred, the transferee has to clear all the arrear dues. Therefore, it is open to the NESCO to take such steps as may be just & proper in consonance with the law for realization of the arrear dues, if any, from the Official Liquidator in respect of the erstwhile company. 14. This Court in Anshuman Behera's case (supra) has held that for grant of fresh connection, outstanding electricity dues of erstwhile owner cannot be recovered from the purchaser of premises in the auction held by the Financial Corporation under Section 19 of the SFC Act, 1951. Outstanding of electricity dues does not amount to charge on premises & in absence of such charge, subsequent occupier cannot be asked to pay the outstanding dues of the erstwhile occupier. 15.
Outstanding of electricity dues does not amount to charge on premises & in absence of such charge, subsequent occupier cannot be asked to pay the outstanding dues of the erstwhile occupier. 15. In Ajay Kumar Agrawal's case (supra), this Court after perusing Clause 9 made it clear that by not referring the name of its erstwhile consumer, namely, M/s. Maa Bhawani Rice Industries, WESCO in clause-9 of the agreement referred to the earlier agreement dated 24.12.1992 presumably with M/s. Maa Bhawani Rice Industries which provided that all arrears & liabilities under the old & superseded agreement shall be treated, as arrears & liabilities under the present agreement held that WESCO has no such power under the statute to treat arrears under the superseded agreement as arrears under the present agreement. Therefore, the said clause on the face of it ultra vires the provision of Section 43 of the said Act which fastens an obligation on WESCO to supply electricity to a consumer. 16. The Apex Court in the case of Paschimanchal Vidyut Vitran Nigam Ltd. and Ors. v. DVS Steels & Alloys Pvt. Ltd. and Ors. reported in AIR 2009 SC 647 , in paragraph-9, observed as follows: 9. A transferee of the premises or a subsequent occupant of a premises with whom the supplier has no privity of contract cannot obviously be asked to pay the dues of his predecessor in title or possession, as the amount payable towards supply of electricity does not constitute a 'charge' on the premises. A purchaser of a premises, cannot be foisted with the electricity dues of any previous occupant, merely because he happens to be the current owner of the premises. The supplier can therefore neither fila a suit nor initiate revenue recovery proceedings against a purchaser of a premises for the outstanding electricity dues of the vendor of the premises, in the absence of any contract to the contrary. 17. In view of the above position of law & the fact that the auction purchaser cannot be held responsible for making the payment of outstanding dues of earlier occupier unless it is charge on the property. The Opp. Parties had also not made it clear that the Petitioner has to clear the arrear dues in respect of the premises while entering into the agreement & granting permission for construction for power supply of 100 KW at 33 KV line.
The Opp. Parties had also not made it clear that the Petitioner has to clear the arrear dues in respect of the premises while entering into the agreement & granting permission for construction for power supply of 100 KW at 33 KV line. After completion of the construction the Petitioner has invested huge amount for supply of electricity to its unit. Therefore, the Opp. Parties should not demand the Petitioner to clear the arrear dues of the erstwhile company, which is arbitrary & illegal, 18. Considering the above background of facts & analyzing the above provisions, this Court quashes the letter dated 21.5.2010 passed by the Special Officer (Commerce), NESCO & directs the Opp. Parties to provide electricity to the Petitioner-unit within a period of seven days from today. The Petitioner is directed to pay the current dues. The Writ Petition is accordingly allowed No costs.