ESCON PRIVATE LTD vs KARNATAKA ELECTRICITY BOARD

THIS is a complaint made under Section 17(1)(a) read with Section 12(1)(a) of the Consumer Protection Act, 1986 (hereinafter referred to as the Act). 1. The original complaint was filed on 8.12.1989 making only the Respondents 1 and 2 as Parties. Subsequently, on 23.3.1990 the complaint was amended making the Third Respondent also as a party. The facts in brief are as follows:- The complainant had a factory at No. 8-2B, Hoodi Mahadevapura on White field Road and the Unit was closed in May 1985. The First Respondent namely, the K.E.B. was supplying Electricity to the complainant in accordance with an Agreement dated 18.8.1972 between them. On 26.8.1985 the complainant wrote to the Second Respondent intimating that they have closed their operations and requested them that the minimum charges may be waived until a request was made for re-connection. Again by a letter dated 4.12.1985 the Second Respondent was informed that the factory had been permanently closed and requested for a permanent disconnection and termination of the Agreement entered into with them. The complainant executed a Sale Deed dated 7.9.1987 selling the land and building in which his factory was situated to the Third Respondent The Sale Deed has been registered on 30.9.1987. The First Respondent has raised a Bill dated 14.10.1987 for Rs. 54,484.50 towards electricity charges upto December 1985 and the same has been paid by the complainant on 14.10.1987. The First Respondent has raised another Bill dated 21.9.1987 for Rs. 1,07,250/- which has been paid by the Third Respondent on 18.10.1987 out of the Sale consideration left with them. The grievance of the complainant is that the First Respondent was not right in raising the two Bills after they had received the letters dated 26.8.1985 and 4.12.1985 and prays for a declaration that the two demands made in the two Bills are illegal, unenforceable and void.

THE Respondents 1 & 2 in their objections admit the receipt of the letters dated 26.8.1985 and 4.12.1985 written by the complainant to the Second Respondent. THEy however, contend that they did not take action to terminate the contract as the complainant did not persue the matter; that the inpugned bills were raised in September 1987 as some persons on behalf of the complainant approached the Board and asked for the arrears to be paid and the same was paid without any protest. Having paid the bills without protest, the complainant cannot turn around and say that the amount was collected illegally. THE Respondents 1 & 2 further contend that according to Clause 16(a) of the Agreement dated 18.8.1972, a Notice for termination of the Agreement is six calendar months ending with the year. As the Notice dated 4.12.1985 does not satisfy this requirement, it is invalid and there is no termination of the Agreement. Since there is no valid termination, the arrears recovered by the Board are valid and authorised. As the payment has been made by the Third Respondent (wrongly stated as Second Respondent in the rejoinder), the Petitioner has no locus standi to question the same. On these grounds the Respondents 1 & 2 pray that the complaint may be dismissed. The contention of the Third Respondent in short is that at the time of sale of the property to them the complainant did not disclose that they had applied for permanent disconnection of the power line and that the sale consideration was arrived at assuming that all facilities including the power connection was available and that they paid the amount to the KEB because in the Sale Deed a clause had been inserted that the arrears of electricity upto 30.9.1987 may be paid and therefore the amount has been paid by the Third Respondent to the First Respondent The valuable rights of the Third Respondent would be affected if any order is made in favour of the complainant. The rights inter se between the Third Respondent and the Complainant cannot be adjudicated in these proceedings.

The main arguments advanced on behalf of Respondents 1 & 2 are as follows : (a) Since electricity is ''goods'' according to the Sale of Goods Act and the complainant was buying electricity for commercial purpose and the Bill dated 21.9.1987 is towards supply of electricity for commercial purpose, the complainant would not be a Consumer within the meaning of Section 2(1)(d)(i) of the Consumer Protection Act, 1986.

(b) Since the cause of action arose on 21.9.1987 before the coming into force of the Consumer Protection Act, which has no retrospective operation, complaint is liable to be dismissed.

(c) Since according to Clause 16 of the Agreement, it can be terminated only by six calendar months notice expiring with the end of the year, the letter dated 4.12.1985 which is not in accordance with this Clause does not cause valid termination of the agreement and therefore the agreement is deemed to have continued and the complainant was liable to pay the electricity dues subsequent to 4.12.1985 also.

(d) As the subsequent arrears have been paid by the Third Respondent without protest complainant cannot seek refund of the amount.

IN the course of the proceedings, Shri Gopal Hegde, learned Counsel for the complainant submitted that he will not be pressing his claim in so far as the Bill dated 14.9.1987 for Rs. 54,484-50 as it related to the period prior to December 1985. What remains therefore is with respect to the payment of Rs. 1,07,250/- on 21.9.1987. This Bill is admittedly for the period from January 1986 to September 1987. The main thrust of the argument of Shri. Gopala Hegde, the Learned Counsel for the complainant is that by the letter dated 4.12.1985 the complainant sought permanent disconnection of the power supply as well as the termination of the Agreement dated 18.8.1972 and the First Respondent acted upon the said notice by not raising any bills thereafter and so the claim of arrears under the bill dated 21.9.1987 is therefore not valid. His further contention is that even though according to Clause 16 of the Agreement and the regulation six months notice ending with the year is required to be given for termination of the Agreement, the KEB having acted upon the notice by not raising any bills for nearly two years is deemed to have waived this requirement and is therefore estopped from contending that the Agreement is still in force. The first point that arises for consideration is therefore whether the complainant is a consumer as defined under the Act. It is not doubt correct that electricity is ''goods'' and the complainant was buying electricity from the respondent for a commercial purpose namely the running of his factory where they were producing Auto spare parts and obviously selling them for profit. If this was all, the complainant would not be a consumer according to Sub-clause (1) of Clause (d) of Sub-section (1) of Section 2 of the Act. But according to Sub-clause (ii) of this Clause, a person who hires any services for consideration would be a consumer and Clause (o) defines ''service'' as including the provision of facilities in connection with supply of electrical or other energy. In this case, it has to be noticed that after 4.12.1985 no electricity has been supplied to the complainant. The charges are the minimum charges which are to be paid only for maintaining the facility in connection with the supply of electrical energy. Therefore, it is clear that the Bill dated 21.9.1987 is not for consideration for the sale of ''goods'' but consideration for the maintenance of the service line. Therefore the complainant will be a consumer according to Sub-clause (ii) of clause (d) of Section 2(1) of the Act

THE next point is whether the complaint is not maintainable because it relates to a Bill dated 21.9.1987. Chapter III of the Act came into force with effect from 1.7.1987, so the cause of action for the complaint arose after the coming into force of the Act. THE complaint was filed on 8.12.1989. THErefore, the claim is not barred by limitation. THE National Commission has held that if a claim is barred by limitation, a relief cannot be claimed under the Consumer Protection Act. THEre is nothing in the Act which says that in respect of anything done prior to the coming into force of the Act, a complaint under the Act will not lie. We, therefore, reject the contention of the Respondent 1 & 2 as not tenable. The Third point is whether the letter dated 4.12.1985 does not constitute a valid notice as it is not in accordance with Clause 16 of the Agreement and the regulations and whether any portion of the condition regarding the notice has been waived by Respondents 1 & 2. According to Clause 16 of the agreement dated 18.8.1972 entered into between the complainant and the First Respondent, the agreement is terminable by six calendar months Notice ending with the year. It is no doubt, true, that the letter dated 4.12.1985 is not in accordance with this clause but it is a well settled principle of law that a party entitled to a notice under a contract may waive or relax the terms of the notice. When we got the file relating to the complainant from the KEB, we found that on the original of the letter dated 4.12.1985, the Second Respondent has written "information as to the details of charges upto 4.6.1986 may be put up". This means that the Second Respondent had acted upon notice dated 4.12.1985 and had asked for charges to be levied for the next six months only, namely upto 4.6.1986. This means that the Respondents were satisfied with a notice of six months only from 4.12.1985 and were not insisting on six months notice ending with the year which would have been upto December 1986. In other words, there has been a waiver in part of the condition under Clause 16 of the Agreement. We, therefore, are of the view that the First Respondent was entitled to claim the charges only for six months from 4.12.1985 to 4.6.1986 and the claim for subsequent period is not tenable. The fourth point is whether the refund of the amount paid under the bill dated 21.9.1987 cannot be claimed as the amount has been paid by the 3rd Respondent neither under threat or mistake nor under protest. We cannot accept this contention. Having, held that the First Respondent was not entitled to claim any charges after 4.6.1986, it has necessarily to follow that the First Respondent cannot retain any amount paid towards the subsequent period, as the said amount has been paid due to mistake of law.

FINALLY we come to the question of the relief to be granted in this case. The Third Respondent has contended that the payment under the Bill dated 21.9.1987 has been made by them in accordance with the terms of the Sale Deed dated 7.9.1987 in his favour, that at the time of the entering into the Sale deed, the complainant did not disclose to him that he had put an end to his Agreement with the KEB and that power supply was not available; that while arriving at the sale consideration under the Sale Deed they had assumed that power was available and if the complainant had disclosed that power supply was not available that would have affected the sale price and that the complainant now cannot turn back and say that the amount paid to the KEB should be refunded to them, and if that is done, the rights of the Third Respondent would be affected and what these rights are cannot be adjudicated in these proceedings. There is considerable force in the contention of the 3rd Respondent. The amount admittedly has been paid by the Third Respondent. The privity of contract between the Third Respondent and the complainant cannot be adjudicated in these proceedings. Having received the payment from the Third Respondent, the First Respondent cannot be asked to refund the amount so received to the complainant. Besides this, the recital in the Sale Deed dated 7.9.1987 authorising the Third Respondent to pay arrears of electricity charges to the First Respondent and leaving a part of the Sale consideration with them for this purpose clearly support the contention of the Third Respondent that at the time of entering into the Sale transaction, the fact of termination of the Agreement with the KEB was not disclosed by the complainant to them. The rights interse between the complainant and the Third Respondent cannot be decided in these proceedings. Further, prayer of the complainant is also for a declaration that the demands made in the two bills are illegal, unenforceable and void. We, therefore feel that it would be sufficient to make a declaration and leave the Parties to persue their remedy in an appropriate Forum.

IN the result, the complaint is allowed in part and it is hereby declared that in the Bill dated 21.9.1987 for Rs. 1,07,250/-, the claim relating to the period subsequent to 4.6.1986 is illegal and not recoverable by the First Respondent K.E.B. Parties to bear their own costs. Complaint partly allowed.