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Judgment
G.S. Sandhawalia, J.—The present appeal has been filed by defendant no. 1, who is aggrieved against the concurrent findings of the Courts below whereby suit for declaration that the plaintiff is entitled to continue in possession as lessee of Industrial Plot bearing No. E-25, Focal Point, Hoshiarpur shown red and marked A B C D in the site plan attached was decreed and the letter dated 10.6.2002 issued by defendant no. 1-appellant canceling the lease was held as ineffective and the said defendant was restrained from taking any recovery of past arrears of any kind against the plot in dispute. The facts necessary for decision of the present appeal are as under:-
That the plot in dispute was owned by the appellant-defendant no. 1-Corporation, who vide a lease agreement dated 30.6.1978 leased out the said plot for a period of 99 years to one M/s Ashoka Spinning Industries and the lease was with effect from 5.12.1970 and was for a period of 99 years. M/s Ashoka Spinning Industries had taken an industrial loan from defendant no. 2-Punjab Financial Corporation and mortgaged the lease right of plot in dispute along with building and machinery built thereon with said defendant no. 2 and the charge was created with the permission of defendant no. 1. The loanee industry failed to return the loan and an application was filed by defendant no. 2 before the Court of Addl. District Judge, Hoshiarpur for recovering the loan from M/s Ashoka Spinning Industries and a decree for recovery was obtained and plot in dispute and the super structure and machinery standing thereon was accordingly put to auction by the then Addl. District Judge, Hoshiarpur. Defendant No. 2-Punjab Financial Corporation after obtaining permission purchased the plot in dispute vide sale certificate dated 29.3.1988 and was declared owner of the lessee rights of the plot in dispute and the super structure standing thereon. Thereafter, defendant no. 2 issued public notice to sell the plot in dispute and in the notice the intended purchaser was not to be fastened with any past liability of payment of dues with regard to the plot in dispute. Keeping in view the said conditions, the plaintiff agreed to purchase the plot in dispute along with machinery etc. for a total consideration of Rs. 3 lacs vide agreement to sell dated 15.12.1989. As per agreement itself the purchaser/plaintiff was liable to pay the land revenue or other taxes in respect of the property which would fall due after the date of the agreement to sell and the sale deed of the plot was not executed for want of no objection certificate from defendant No. 1. In 1994, defendant no. 1 tried to evict the plaintiff from the suit property on which the plaintiff filed a suit for injunction against the defendants, which was decreed by the Court vide judgment dated 6.11.1988 and the same was upheld on 3.8.2000 by the Appellate Court. Thereafter, defendant no. 1 issued letter dated 22.12.2000 and asked the plaintiff to pay amount of Rs. 8,55,855/-on account of some previous dues which were recoverable from M/s Ashoka Spinning Industries. The plaintiff had replied to the said notice and explained the position. Thereafter, the impugned letter dated 10.6.2002 was issued canceling the allotment/lessee rights of the plot. Accordingly, the said letter was challenged pleading that defendant no. 1 has no right to recover any dues from the plaintiff nor has any right to start any proceedings for taking possession from the plaintiff. The plaintiff had spent huge amount by raising factory over the site in dispute and the defendant no. 1 was now estopped from taking any action against the plaintiff and the plaintiff purchased the title from defendant no. 2, who had purchased vide court auction and the title of the plaintiff was without any past encumbrance of any nature.
Defendants No. 1 and 2 filed separate written statements and while contesting the suit took various objections including the maintainability of the suit, locus standi and on the ground of estoppel. It was pleaded that the allotment of the plot was on 5.12.1977 and not on 5.12.1970 and that the lessee was allowed to mortgage the lease rights in respect of the plot in dispute to obtain an industrial loan from the Punjab Financial Corporation-defendant no. 2. The plaintiff and defendant no. 2 had not disclosed the fact regarding the sale of the plot by the Punjab Financial Corporation and the sale certificate issued by the Court of Addl. District Judge was not produced before the Defendant No. 1-Corporation and the Corporation was never informed by defendant no. 2. It was alleged that there was a memorandum of understanding between defendant no. 1 and 2 to settle inter corporate claims and as per the said memorandum the substituted allottee was liable to deposit all the dues towards the plot. Accordingly, it was pleaded that a sum of Rs. 10,02,978/0 and other applicable charges were due against the plot as on 31.3.2003 and no dues certificate could be issued and plaintiff was a substituted allottee and the defendants were entitled to charge the principal amount along with normal interest as per the memorandum of understanding and the allottee had been in default and accordingly, the same was being claimed. Hence, plaintiff was liable to pay the outstanding dues and thereafter answering defendant could consider to transfer the lease rights of the plaintiff in favour of the plaintiff.
Defendant no. 2 in his written statement averred that the answering defendant had purchased the lease hold rights in the building and machinery etc. in public auction and a sale certificate was duly issued on 29.3.1988 in favour of the answering defendant by the Court of Addl. District Judge, Hoshiarpur and plaintiff had entered into sale agreement on 15.12.1989 with the answering defendant no. 2 and he failed to comply with the terms of the agreement to sell, therefore, the sale deed was not executed in his favour.
On the pleadings of the parties, the trial Court framed the following issues:-
1) Whether the plaintiff is entitled to continuous possession of lease of plot bearing No. E-25, as detailed in the head note of plaint? OPP
2) Whether the order of cancellation by defendant no. 1 is illegal and null? OPP
3) Whether the plaintiff is entitled to declaration as prayed for? OPP
4) Whether the suit is not maintainable in the present form? OPD
5) Whether the plaintiff has no locus standi to file the present suit? OPD
6) Whether the plaintiff is estopped from his act and conduct from filing the present suit? OPD
7) Relief.
After examining plaintiff Resham Singh and two defendants witnesses, the trial Court came to the conclusion that the plot had been leased out for 99 years and defendant no. 2 had purchased the said lease rights through public auction dated 15.9.1987 and the sale certificate dated 29.3.1988 had been issued by the Court of Addl. District Judge, Hoshiarpur Ex.P3. In pursuance of the said sale certificate, agreement to sell had been entered into with the plaintiff on 15.12.1989 for Rs. 3 lacs. It was accordingly noticed that the contesting defendant had never denied the execution of the sale certificate and the sale agreement and did not deny the right of defendant no. 2 to transfer the property in dispute in favour of the plaintiff and as per the sale agreement Ex.P4 for a sum of Rs. 3 lacs. It was mentioned that the property in dispute was free from all encumbrances till the payment of the entire consideration. Accordingly, it was held that the defendant no. 1 had no privity of contract with that of the plaintiff and if any dues were standing against the original allottee, it is not the fault of the plaintiff in any manner and he was not liable to pay the dues of the original industry M/s Ashoka Spinning Mills. Recovery, if any, had to be between defendant no. 1 and defendant no. 2 inter-se and the plaintiff was not liable to pay any dues as he had purchased the property free from all encumbrances. The fault lay somewhere else and plaintiff was only liable to pay all land revenue and other taxes, if any, in respect of the property after the date of agreement. Accordingly, it was held that plaintiff is entitled to continue in possession as lessee of the plot and that order contained in letter dated 10.6.2002 was illegal, null and invalid. Accordingly, the suit was decreed vide judgment and decree dated 4.4.2006. Defendant No. 1 accordingly filed the appeal before the Lower Appellate Court and the District Judge, Hoshiarpur dismissed the said appeal on 19.5.2008 and resultantly the present Regular Second Appeal has been filed.
Counsel for the appellant contended that the Corporation was entitled to recovery its dues against the plot in question as per the lease deed and the memorandum of understanding is binding upon the Punjab Financial Corporation and, therefore, the plaintiff was liable to pay the entire dues of the Corporation as demanded and the Courts have misread the evidence on record and erred in decreeing the suit. The submission of the counsel for the appellant-defendant no. 1 is without any merit. The memorandum of understanding was between the two Corporations. The plaintiff was an auction purchaser of the property in pursuance of the sale made after the Punjab Financial Corporation had purchased the property after taking permission from the Court of the Addl. District Judge, Hoshiarpur and sale certificate had been issued on 29.3.1988. The plaintiff had paid a sum of Rs. 3 lacs on the basis of the agreement to sell dated 15.12.1989 entered with the Punjab Financial Corporation who had firstly obtained a decree for recovery under the provisions of the State Financial Corporation Act, 1951 against the original loanee M/s Ashoka Spinning Industries. The Courts below have noticed that the advertisement mentioned that the purchaser had taken over the possession of the property which is free from all encumbrances. There was no privity of contract between the plaintiff and defendant no. 1 present appellant and the memorandum of understanding inter-se two Corporations to settle inter corporate claim could not bind the plaintiff. Another factor which is to be noticed is that the plaintiff had earlier filed a suit for permanent injunction restraining defendant no. 1 from taking over the possession of the factory along with machinery on 28.1.1994 and the said suit was decreed on 6.11.1998. The appeal was dismissed on 3.8.2000. The demand raised by defendant no. 1 which is the subject matter of challenge was raised on 10.6.2002 and the sale certificate issued by the Court on 29.3.1988 was never challenged, even though the suit for permanent injunction had been decreed in 1994. Admittedly the principal amount due on 27.2.2003 was only Rs. 24,127/-whereas rest of the amount is as interest/penal interest. Even though as per Clause A of Ex. D6, inter-se Corporation was not to charge any penal interest. The sale certificate was issued way back on 29.3.1988 and therefore, the Corporation kept on sleeping over its right and only cancelled the lease deed on 10.6.2002 and, thus, has swelled the amount of Rs. 24,127/-to claim of Rs. 10,02,978/-. The Hon''ble Supreme Court in Ahmedabad Electricity Co. Ltd. Vs. Gujarat Inns. Pvt. Ltd. and Others, held that an auction purchaser could not be saddled with arrears of charges for electricity energy due by the original owner while placing reliance upon the earlier judgment of the Apex Court in Isha Marbles Vs. Bihar State Electricity Board and Another, , in which it has held as under:-
The auction notice issued by the Corporation or even the subsequent transfer by it, did not mention anything about the outstanding electricity dues. Neo Chemicals and Waxpol Industries arc two different entities. Therefore, the liability of the previous consumer cannot be fastened to this respondent.
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From the above it is clear, the High Court has chosen to construe Section 24 of the Electricity Act correctly. There is no charge over the property. Where that premises comes to be owned or occupied by the auction purchaser, when such purchaser seeks supply of electric energy he cannot be called upon to clear past arrears as a condition precedent to supply. What matters is the contract entered into by the erstwhile consumer with the Board. The Board cannot seek the enforcement of contractual liability against the third party. Of course, the bona fides of the sale may not be relevant.
The said view has been followed subsequently in Haryana State Electricity Board Vs. Hanuman Rice Mills and Others, and it has been held that in general law transferee cannot be made liable for the dues of the previous owner and occupier. The principles laid down in the above citation are directly applicable to the facts and circumstances of the present case. Relevant paragraph reads as under:-
The position therefore can may be summarized thus:
(i) Electricity arrears do not constitute a charge over the property. Therefore in general law, a transferee of a premise cannot be made liable for the dues of the previous owner/occupier.
(ii) Where the statutory rules or terms and conditions of supply which are statutory in character, authorize the supplier of electricity, to demand from the purchaser of a property claiming re-connection or fresh connection of electricity, the arrears due by the previous owner/occupier in regard to supply of electricity to such premises, the supplier can recover the arrears from a purchaser.
The appellant did not plead in its defence that any statutory rule or terms and conditions of supply, authorized it to demand the dues of previous owner, from the first respondent. Though the appellant contended in the written statement that the dues of Durga Rice Mills were transferred to the account of the first respondent, the appellant did not specify the statutory provision which enabled it to make such a claim. The decision in Paramount Polymers shows that such an enabling term was introduced in the terms and conditions of electricity supply in Haryana, only in the year 2001. The appellant did not demand the alleged arrears, when first respondent approached the appellant for electricity connection in its own name for the same premises and obtained it in the year 1991. More than three years thereafter, a demand was made by the appellant for the first time on 16.1.1995 alleging that there were electricity dues by the previous owner. In these circumstances the claim relating to the previous owner could not be enforced against the first respondent.
In the present case as noticed above, the plaintiff is an auction purchaser and the Courts below have noticed that the terms of the advertisement did not mention that there were any dues. Accordingly, the liability cannot be fastened upon the plaintiff and the suit has been rightly decreed by the Courts below. Keeping all these factors in mind and in view of the concurrent findings recorded by the Courts below, which cannot be said to be suffering from any infirmity, no fault can be found with the well reasoned concurrent findings of the Courts below in the absence of any question of law much less any substantial question of law arising from the records of the present case which would warrant interference in Regular Second Appeal. Accordingly, the present appeal is dismissed and judgments and decrees of the Courts below are upheld.