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2013 DIGILAW 703 (BOM)

State of Goa v. Kirit J. Maganlal

2013-03-22

U.V.BAKRE

body2013
Judgment : This appeal arises out of the judgment, order and decree dated 18.02.2005 passed by the learned Ad-hoc Additional District Judge-II, Panaji, (trial Court, for short), in Civil Suit No. 166/2004 (New)/Special Civil Suit No. 31/2002/A (Old ). 2. The parties shall herein after be referred to in the manner in which they appear in the cause title of the said suit. 3. The plaintiff had filed the said suit for declaration that he is not liable to pay the amount of Rs.6,59,047/- as claimed in the notice of the demand dated 18.05.2001, and that the said amount if payable to the Electricity Department, is liable to be paid by defendant no.6 and/or defendants no.7 and 8 jointly and/or severally and that the order of the Mamlatdar and Recovery Officer dated 18.03.2002 is illegal, null and void and without any authority of law and not binding on the plaintiff. By way amendment, an alternative prayer was made by the plaintiff to the effect that in the event the Court comes to the conclusion that the plaintiff is liable to pay the said amount of Rs.6,59,047/- to defendants no.1 to 4 as claimed in the notice of demand dated 18.05.2001, the Court be pleased to pass a decree against defendants no.6, 7 and 8 jointly and/or severally to pay to the plaintiff the said sum of Rs.6,59,047/- as claimed in the notice of demand dated 18.05.2001. 4. Case of the plaintiff in short is as follows: The plaintiff was a director of M/s K. M. Seafoods (Goa) Pvt. Ltd., and the said company had purchased a landed property bearing survey no. 11/1 at Corlim, Ilhas, Goa, in or about August, 1970 to set up a fish processing unit. As required under the provisions of the Indian Electricity Act, 1910 an agreement dated 05.06.1990 was executed between the State Government of Goa and M/s K. M. Seafoods (Goa) Pvt. Ltd., for supply of 48 H.P. for the purpose of Industrial use. The said agreement was executed by the plaintiff on behalf of M/s K. M. Seafoods (Goa) Pvt. Ltd., as its director. By a Deed of Sale dated 14.11.1991, M/s. K. M. Seafoods (Goa) Pvt. Ltd., sold an area of 2850 square metres out of the total area of 5590 square metres of the landed property under survey no.11/1 of Corlim Village to defendant no. By a Deed of Sale dated 14.11.1991, M/s. K. M. Seafoods (Goa) Pvt. Ltd., sold an area of 2850 square metres out of the total area of 5590 square metres of the landed property under survey no.11/1 of Corlim Village to defendant no. 5 together with old existing building and structures concerning the fish processing unit. Pursuant thereto, defendant no. 5 became the lawful owner in possession of the fish processing unit. By letter dated 05.12.1991, the plaintiff as director of M/s K. M. Seafoods (Goa) Pvt. Ltd., informed the Chief Electrical Engineer, Electricity Department, about the Sale Deed executed with defendant no.5 and requested for transfer of the electrical connection in the name of defendant no.5. The plaintiff bonafidely believed that the said request has been complied with since there could possibly be no objection to such transfer. Subsequently, by a Deed of Sale dated 07.12.1993, defendant no. 5 sold the said portion of 2850 square metres along with existing building and structures concerning the fish processing unit to defendant no. 6, represented by its partner namely defendant no. 8. By a further Deed of Sale dated 17.04.1995, M/s K. M. Seafoods (Goa) Pvt. Ltd., also sold the remaining portion of the suit property admeasuring about 2740 square metres to the said defendant no. 6 represented by its partner namely defendant no.7. In view of the above, defendant no. 6 became the lawful owner in possession of the fish processing unit from 07.12.1993. By a letter dated 29.07.1998, the plaintiff had requested the Assistant Engineer, Electricity Department to delete their name and incorporate the name of defendant no.6 as the consumer. The plaintiff bonafidely believed that this request for transfer must have been complied with as there was no possibility of any objection to such transfer and furthermore no reply was received rejecting the request. However, the plaintiff received the notice of demand No. REV/REC/ELEC-3-2001 dated 18.05.2001 from the Mamlatdar of Tiswadi, Panaji, requiring the plaintiff to pay a sum of Rs.6,59,047/-being the outstanding of the electricity energy charges for the period from April, 1997 to June, 2000 within a period of 15 days, failing which compulsory proceedings would be taken against the plaintiff for recovery of the dues. The plaintiff by his representation dated 27.6.2001 informed the Mamlatdar that the said notice has been wrongly issued to him. The plaintiff by his representation dated 27.6.2001 informed the Mamlatdar that the said notice has been wrongly issued to him. The plaintiff even appeared before the Mamlatdar who by order dated 18.03.2002 rejected the submission made by the plaintiff and held that the plaintiff is personally liable to pay the outstanding dues. Hence, the suit. 5. Defendants no. 2 and 3, by way of their written statement, alleged that M/s K. M. Seafoods (Goa) Pvt. Ltd., had entered into the said agreement dated 05.06.1990 and was one of the consumers of the Electricity Department. The said defendants further alleged that the letter dated 29.07.1998 was received by the Department. As per the law, mere submission of the letter is not enough and the official formalities had to be carried out and the previous consent of the Chief Electrical Engineer in writing was required as per Clause 27 of the condition of supply in terms of the agreement signed by the party with the Department. Defendants no. 2 and 3 further alleged that they are not aware of any Sale Deeds as stated by the plaintiff and they are entitled to recover the said charges from the plaintiff as per the agreement. 6. Defendant No.4, by way of his written statement alleged that no notice under Section 80 of the Civil Procedure Code has been served and therefore, the suit is bad in law. Defendant no.4 stated that the plaintiff has an alternative and efficacious remedy due to which the suit is bad. Defendant no.4 further stated that pursuant to the recovery certificate filed by defendant no.3, the notice of demand was sent to the plaintiff for the sum of Rs.6,59,047/-due from him on account of arrears of land revenue and the same was sought to be recovered under Section 54 of the Indian Electricity Act, 1910 and the process of recovery was under the Land Revenue Code (Amendment) Act, 1985. Defendant no.4 stated that in view of the remedy available to the plaintiff as against the order dated 18.03.2002, the Civil Court has no jurisdiction to entertain and decide the suit. 7. Lastly, defendants no. 6, 7 and 8, by way of their written statement, alleged that the suit is not maintainable in law and that the same is also barred by law of limitation. 7. Lastly, defendants no. 6, 7 and 8, by way of their written statement, alleged that the suit is not maintainable in law and that the same is also barred by law of limitation. They further stated that they have their separate electrical installation for the purpose of fish processing unit and the electricity installation belonging to the plaintiff has not so far been transferred to defendant no.4 and therefore there is no question of any transfer of said installation in favour of defendant no. 6. The said defendants therefore claimed that they are not liable to pay any electrical charges relating to the said installation belonging to the plaintiff. 8. Issues were framed and the plaintiff examined himself as PW1 and produced the documents referred to by him in the plaint. Defendants did not examine any witnesses. 9. Upon consideration of the entire evidence on record, the trial Court held that the notice issued by defendant no. 4 is bad in law and that the plaintiff is not liable to make the payment. It has been held that in view of the ruling of the Bombay High Court in the case of “S. L. Kirloskar V/s Union of India”, (probably, the one reported in 1993(1) Bom. C.R. 557), a director of the Company cannot be held liable to pay the liability of the Company as Company being a legal entity is alone liable to pay its liability. According to the trial Court, it is an admitted fact that from 1997 to June, 2000, defendant no. 6 was in possession of the premises to which the electric connection was installed and energy was supplied and therefore, in view of the ruling of the Supreme Court in the case of “Ram Chandra Prasad Sharma and others Vs. State of Bihar and another”, (probably reported in AIR 1967 349), it is the defendant no. 6 who is liable to pay the energy charges consumed by it. It has been held that equity is in favour of the plaintiff. According to the trial Court, though as per Clause 27 of the conditions of supply of energy, a person cannot transfer the electrical connection meant for industry without previous consent in writing of the Department, however, the plaintiff has shown his bonafides by writing a letter dated 05.12.1991 though subsequently he did not take interest to see the outcome of his letter. Consequently, the order of the Mamlatdar and Recovery Officer dated 18.03.2002 demanding recovery of the amount of Rs.6,59,047/-was declared as null and void and not binding on the plaintiff. Defendants no.1 to 4 are aggrieved by the impugned judgment and decree. 10. Mr. Afonso, learned Government Advocate appearing on behalf of respondents no.1 to 4 submitted that the agreement of the respondents was with the plaintiff and not with M/s K. M. Seafoods (Goa) Pvt. Ltd. He further submitted that in terms of the said agreement the plaintiff could transfer his rights under the said agreement only with previous consent of the Chief Electrical Engineer and there had to be an execution of a valid assignment by the transferee. He further submitted that in terms of Clause 27 of the conditions of supply of electrical energy also the consumer cannot assign, transfer or part with the benefit of electrical connection in favour of the third person without consent in writing of the Department. The learned Government Advocate further submitted that there was no privity of contract between the defendants no.1 and 2 one side and defendants no.5 and 6 on the other side and hence the question of respondents no.1 and 2 demanding the said charges from defendants no. 5 and 6 does not arise. According to the learned Government Advocate, the plaintiff had to ask for disconnection which was not done by him. He invited my attention to the definition of 'Consumer' as given in the Indian Electricity Act, 1910 and submitted that it is the plaintiff who was a consumer though the connection was for M/s. K. M. Seafoods. He, therefore, urged that the findings in the impugned judgment are perverse and appeal is liable to be allowed. 11. Per contra, Mr. He invited my attention to the definition of 'Consumer' as given in the Indian Electricity Act, 1910 and submitted that it is the plaintiff who was a consumer though the connection was for M/s. K. M. Seafoods. He, therefore, urged that the findings in the impugned judgment are perverse and appeal is liable to be allowed. 11. Per contra, Mr. Nadkarni, learned counsel appearing on behalf of the plaintiff took me through the said agreement which is at Exhibit PW1/B and showed that the same is signed by the plaintiff for M/s. K. M. Seafoods (Goa) Pvt. Ltd. He, therefore, contended that the said agreement was not with the plaintiff in his personal capacity but was with M/s. K. M. Seafoods (Goa) Pvt. Ltd. He invited my attention to paragraph 6 of the plaint wherein it is specifically pleaded that the agreement dated 05.06.1990 was executed by the plaintiff on behalf of M/s. K. M. Seafoods (Goa) Pvt. Ltd., as its director and that the electrical energy was agreed to be supplied for the purpose of industrial use. He then pointed out from the written statement filed by defendants no. 2 and 3 that paragraph 6 of the plaint has been specifically admitted to be correct. He submitted that since the dues were of the company, defendants no.1 and 2 could not have proceeded against its director. In this regard, the learned counsel relied upon the judgment of Division Bench of this Court in the case of “Vandana Bidyut Chaterjee V/s The Union of India” (Writ Petition No. 165 of 2012). He also relied upon the judgment of this Court in the case of “Adesh Kumar Jain and others V/s U. P. State Electricity Board and others [1997 AWC (Supp) 645]. He then invited my attention to the recovery order dated 18.03.2002 which is at Exhibit PW1/G which is passed against the plaintiff in person. He submitted that M/s. K. M. Seafoods (Goa) Pvt. Ltd., was dissolved on 21.12.2000. He invited my attention to the notification in this regard, which is on record. He, therefore, urged that the plaintiff in person cannot be held to be liable to pay the dues. The learned counsel on behalf of the plaintiff showed from the impugned judgment that the trial Court has held that it is defendant no.6 who is liable to pay the energy charges. He, therefore, urged that the plaintiff in person cannot be held to be liable to pay the dues. The learned counsel on behalf of the plaintiff showed from the impugned judgment that the trial Court has held that it is defendant no.6 who is liable to pay the energy charges. He, therefore, submitted that the recovery order has been rightly declared as null and void as against the plaintiff and not binding against the plaintiff. He submitted that it is defendant no. 6 who should be ordered to pay the said charges. 12. Mr. D'Silva, learned counsel appearing on behalf of defendant no. 8 submitted that the plaintiff had requested the Electricity Department by letter dated 5.11.1991 requesting to transfer the electrical connection in the name of defendant no.5. He further pointed out from paragraph 13 of the plaint that again by letter dated 29.07.1998, plaintiff requested the Electricity Department to delete their name and to incorporate the name of defendant no. 6 as a consumer. According to Mr. D'Silva, therefore, admittedly till 1998 the electricity connection was not in the name of defendant no. 6. He further submitted that there is no agreement between defendant no.6 and the Electricity Department and thus no privity of contract. He also submitted that there was no written consent for transfer of electricity connection. In view of the above, the learned counsel submitted that defendant no. 6 cannot be held liable to pay the said charges. 13. I have carefully considered the entire material on record in the light of the argument advanced by the parties. 14. The first point that arises for determination is whether the recovery order could have been made against the plaintiff. The perusal of the agreement dated 05.06.1990 reveals that the same is signed by the plaintiff for M/s. K. M. Seafoods (Goa) Pvt. Ltd., as director of the said company. It is further seen that the defendants no. 1 to 2 in the written statement have specifically admitted that the said agreement dated 05.06.1990 was executed by the plaintiff on behalf of M/s. K. M. Seafoods ( Goa ) Pvt. Ltd., as its director. It is further seen that in the cross examination of PW1 a suggestion was put to him that supply of electricity was made in the name of M/s. K. M. Seafoods (Goa) Pvt. Ltd. The plaintiff has admitted this suggestion. It is further seen that in the cross examination of PW1 a suggestion was put to him that supply of electricity was made in the name of M/s. K. M. Seafoods (Goa) Pvt. Ltd. The plaintiff has admitted this suggestion. In the Writ Petition No. 165 of 2012 (supra), relied upon by the plaintiff, it has been held that the arrears of dues belonging to a limited company shall be recoverable only from the limited company which is independent entity in law. In the case of “Adesh Kumar Jain” (supra), the question was whether the electric dues due from the company consumer can be recovered from the assets of directors of the company. In that case, the agreement had been entered into between M/s Kavita Steel Limited, through its director Shri Ishwar Chand Agarwal and on the agreement, the signatures were made by the said Ishwar Chand Agarwal, the then director in the capacity of a director and not in his personal capacity. The learned Division Bench of Allahabad High Court has held that the definition of the term “consumer” as per Section 2(c) of the Indian Electricity Act, 1910 means any person who is supplied with energy by the board or in whose premises the electric connection has been given or any person whose premises are for the time being connected for the purpose of receiving energy with the work of a licensee. It was therefore held that M/s Kavita Steel Limited was the consumer to which the electric connection was given and therefore the said company as a consumer was liable to pay the electricity dues. From the above, it is clear beyond doubt that the dues of Rs.6,59,047/- cannot be recovered from the plaintiff since as per the agreement, the consumer was M/s. K. M. Seafoods (Goa) Pvt. Ltd.. The recovery order dated 18.03.2002 is therefore null and void as against the plaintiff and is not binding on him. The learned Trial Court has therefore rightly held so. 15. The dues were of the period from April 1997 to June 2000 but the demand notice was served on 18/6/2001 and the recovery order is dated 18/3/2002. It so happens that the Company M/s K.M. Seafoods Pvt. Ltd. has been dissolved and its name has been struck off from the register maintained by the registrar of Companies. If timely action had been taken by the defendants no. It so happens that the Company M/s K.M. Seafoods Pvt. Ltd. has been dissolved and its name has been struck off from the register maintained by the registrar of Companies. If timely action had been taken by the defendants no. 1 and 2, the amount of electricity dues would not have been allowed to be accumulated as from April 1997 and timely recovery could have been made from M/s K. M. Seafoods (Goa) Pvt. Ltd. No doubt, the limitation is of 30 years. 16. As per the proviso to Clause 7 of the agreement dated 05.06.1990, the consumer i.e. M/s. K. M. Seafoods (Goa) Pvt. Ltd., could have transferred its right under the said agreement to any other person but only with previous written consent of the Chief Electrical Engineer and to any other person approved by the Chief Electrical Engineer. As per the said agreement there is bound to be a valid assignment. The same condition has been laid down by Clause 27 of the conditions of supply of electric charges. Though by a Sale Deed dated 14.11.1991 M/s. K. M. Seafoods ( Goa ) Pvt. Ltd. sold an area of 2850 square metres out of total area of 5590 square metres from survey no.11/1 of Corlim Village, along with the old and existing building and structures concerning the fish processing unit to defendant no.4, however, admittedly, there was no previous written consent obtained from the Chief Electrical Engineer for such transfer and there was no approval given by the Chief Electrical Engineer for the same. Thereafter, by a Sale Deed dated 07.12.1993 the defendant no.4 sold the said portion of 2850 square metres along with the existing building and structures to defendant no. 6, represented by defendant no.8 as director and by a further Sale Deed dated 17.04.1995, M/s. K. M. Seafoods (Goa) Pvt. Ltd., sold the remaining portion admeasuring 2740 square metres to defendant no.6, represented by defendant no.7 as director. Thus, as from 17/4/1995, the entire fish processing unit and land, etc. belonged to defendant no. 6. The electricity dues are subsequent to this, being from 1997 to 2000. However, admittedly, the electricity connection still remained in the name of M/s. K. M. Seafoods (Goa) Pvt. Ltd, until it was disconnected. Thus, as from 17/4/1995, the entire fish processing unit and land, etc. belonged to defendant no. 6. The electricity dues are subsequent to this, being from 1997 to 2000. However, admittedly, the electricity connection still remained in the name of M/s. K. M. Seafoods (Goa) Pvt. Ltd, until it was disconnected. Though M/s. K. M. Seafoods (Goa) Pvt. Ltd. sent a letter to the Department informing them about the sale, however, that was not sufficient compliance with law that was applicable. In such circumstances, M/s. K. M. Seafoods (Goa) Pvt. Ltd., could not have escaped from the liability of payment of electricity energy consumption charges which accumulated to the tune of Rs.6,59,047/-. But since the Company M/s K.M. Seafoods Pvt. Ltd. has been dissolved and its name has been struck off from the register maintained by the registrar of Companies, in my considered view, it can be said that defendant no. 6 is liable to pay to defendants no.1 and 2 the said amount of Rs.6,59,047/-, since the assets of M/s K.M. Seafoods(Goa) Pvt. Ltd. belong to the defendant no. 6 as from 1995 and factually, it is defendant no. 6 who was the consumer, since then. The plaintiff in fact in para 22(2) has prayed for a declaration that the said amount of Rs.6,59,047/-as claimed in the notice of demand dated 18.05.2001, if payable to the Electricity Department, is liable to be paid by defendant no. 6 and/or defendants no.7 and 8 jointly and/or severally. The evidence of the plaintiff (PW1) is not challenged by defendants no.6, 7 and 8. Suit proceeded ex-parte against them. The learned trial Court, in fact has held that the defendant no. 6 is liable to pay the said charges. In view of the above, the learned trial Court could not have dismissed the suit wholly after holding that the order of Mamlatdar and Recovery Officer dated 18.03.2002 was null and void as against the plaintiff and not binding on him. It ought to have been granted the prayer made in paragraph 22(2) of the plaint. Therefore, the appeal must succeed partly. 17. In the result, the appeal is partly allowed. The impugned judgment and award declaring that the order of the Mamlatdar and Recovery Officer is null and void as against the plaintiff and not binding on the plaintiff is upheld. Therefore, the appeal must succeed partly. 17. In the result, the appeal is partly allowed. The impugned judgment and award declaring that the order of the Mamlatdar and Recovery Officer is null and void as against the plaintiff and not binding on the plaintiff is upheld. However, since M/s. K. M. Seafoods (Goa) Pvt. Ltd., has sold the premises and the unit to defendant no.4 and defendant no.4 has sold it to defendant no.6 and further since M/s. K. M. Seafoods (Goa) Pvt. Ltd., has also sold the remaining portion to defendant no.6, it is defendant no.6 who is liable to pay the said amount of Rs. 6,59,047/- to defendants no.1 and 2. 18. Decree shall be drawn accordingly. 19. The appeal stands disposed of accordingly.