Subir Sanyal vs Sujit Bhunia

The writ petitioner had purchased the property in question by sale deed dated 14.02.2017 from one Singdha Pramanick. The said erstwhile owner had two tenants who ran electricity dues both under regular consumption as well as by theft. Criminal proceedings have been initiated under the Electricity Act by the Distribution Company against such tenants.

The writ petitioner applied for a fresh electricity connection since after purchase of the said property.

The connection was duly effected to the petitioner on 2nd of June, 2018. On 17th June, 2018, however, a sum of Rs.3,56,441/- was demanded from the writ petitioner in respect of dues of the erstwhile consumers on the said premises and that too of the years 2012-2013.

The writ petitioner denies such liability and his supply was disconnected on such refusal to pay. The connection has been temporarily restored pursuant to interim orders passed by Co-ordinate Bench of this Court that have been extended from time to time.

The principal contention of the writ petitioner is that the liability of the erstwhile owners/occupiers cannot be foisted on him. He relies upon a few judgements of this Court which I shall refer to shortly.

Mr. Nayak, Learned Advocate appearing for the Distribution Company supporting his client's right to claim the dues of the previous owners/occupiers from the petitioner would, inter alia, argue as follows :-

The writ petitioner is a beneficiary of the said property and any liability arising out of the electricity dues from any person attached to the said property should pass on to him. The writ petitioner has suppressed facts in his application for a fresh electricity connection that there were dues outstanding from the erstwhile occupiers and owners of the said property.

Regulation 13.9 of the West Bengal Electricity Regulatory Commission (Standards of Performance of Licensees Relating to Consumer Services) Regulations 2010 entitled the licensee/distribution company to recover dues of an erstwhile consumers enjoying a connection at the same premises from a new consumer who has applied for a fresh connection. In support of his contention Mr. Nayak relies upon firstly a decision of the Hon'ble Supreme Court in the case of Paschimanchal Vidyut Vitran Nigam Limited & Ors. - Vs. - D.V.S. Steels and Alloys Private Limited & Ors. reported in (2009) 1 SCC 210. He relies upon a judgment of this Hon'ble Court reported in 2010 (2) C.L.J. (Cal) 450 in the case of The Assistant Engineer & Anr. - Vs. - Nirmal Kumar Mondal which itself relied upon Paschimanchal (supra) decision.

A further Division Bench judgment of this Court rendered in M.A.T. No. 1392 of 2010 in the case of M/s. M.K. & Sons - Vs. - CESC Limited dated 25th August, 2011 is also relied upon wherein the Licensee therein was held entitled to recover the dues of the previous owners of the property from the subsequent purchaser.

Mr. Nayak further relies upon another Division Bench judgment of this Court in the case of WBSEDCL - Vs. - Ravi Jain being M.A.T. No. 178 of 2010 dated 17th March, 2010.

Each of the above judgments of this Court followed the Paschimanchal decision (supra) of the Hon'ble Supreme Court in the Paschimanchal (supra) decision. The only exception of the case of M.K. & Sons (supra) where there is reference to the decision of the Hon'ble Supreme Court in the case of Haryana State Electricity Board - Vs. - M/s. Hanuman Rice Mills & Ors. reported in AIR 2010 SC 3835.

Mr. Subir Sanyal, Counsel for the writ petitioner firstly sought to distinguish the judgment in the case of Paschimanchal Vidyut Vitran Nigam Limited (supra). He then relies upon Isha Marbles - Vs. - Bihar State Electricity Board reported in (1995) 2 SCC 648 being a three Judges Bench decision of the Hon'ble Supreme Court. He further relies upon the decision of Dakshin Haryana Bijli Vitran Nigam Limited - Vs. - Paramount Polymers (P) Ltd. reported in (2006) 13 SCC 101. He also refers to the Regulation 3.9 relied upon by Mr. Nayak and says that the same are inapplicable in this case. He then places the decision of the Supreme Court in the case of Hanuman Rice Mills (supra).

I have considered the rival submissions of the parties.

Let us address ourselves first to the law as it stands as settled by the Hon'ble Supreme Court and the applicability of the judgment of the Division Benches of this Court cited by the Distribution Company.

The Paschimanchal (supra) decision of a two-Judge Bench of the Hon'ble Supreme Court has been rendered in the context of sub-clause (g) and (h) of Clause 4.3 of the Electricity Supply Code of the State of U.P.

It is in that context at paragraph 10 of the said decision that the Hon'ble Supreme Court had held that the dues of a transferor of a premises could be recovered from the subsequent purchasers.

But it is indeed relevant to note paragraphs 11 and 12 of the said decision, which are set out hereinbelow:

The supply of electricity by a distributor to a consumer is "sale of goods". The distributor as the supplier, and the owner/occupier of a premises with whom it enters into a contract for supply of electricity are the parties to the contract. 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 file 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.

But the above legal position is not of any practical help to a purchaser of a premises. When the purchaser of a premises approaches the distributor seeking a fresh electricity connection to its premises for supply of electricity, the distributor can stipulate the terms subject to which it would supply electricity. It can stipulate as one of the conditions for supply, that the arrears due in regard to the supply of electricity made to the premises when it was in the occupation of the previous owner/occupant, should be cleared before the electricity supply is restored to the premises or a fresh connection is provided to the premises. If any statutory rules govern the conditions relating to sanction of a connection or supply of electricity, the distributor can insist upon fulfillment of the requirements of such rules and regulations. If the rules are silent, it can stipulate such terms and conditions as it deems fit and proper to regulate its transactions and dealings. So long as such rules and regulations or the terms and conditions are not arbitrary and unreasonable, Courts will not interfere with them."

From the above it is clear that it would depend on the facts and circumstances of each case and the concerned Regulations of each State, as to whether the liability of an erstwhile owner can be foisted on a subsequent purchaser.

It is also evident and clear from paragraph 12 as set out hereinabove that either such condition can be stipulated in the Statutory Regulations or a formal covenant may be inserted in the agreement with a new consumer for making him liable for the dues of the previous owners.

In the case of Isha Marbles (supra) it was held that a subsequent auction purchaser third party cannot be called upon to clear past dues of the erstwhile owners.

Since the Electricity Act, 2003 and the Supply Act do not conceive of any charge on the property in question arising out of electricity dues, it has been clarified by the said three Judges Bench in the said decision of Isha Marbles (supra) that the liability rests only with the concerned consumer and does not move as a charge on the land in question.

A similar view has been taken by the Hon'ble Supreme Court in the case of Paramount Polymers (supra). The matter was remanded back to the High Court by the Hon'ble Supreme Court in the said case to test the legality of a clause 21(a) in the agreement entered into with the consumer therein.

It is, therefore, clear that the said position of law as laid own in Isha Marbles (supra) has been followed by the Hon'ble Supreme Court also in the case of Paramount Polymers (supra). In the Paschimanchal decision (supra) although the Isha Marbles decision was not cited, the Hon'ble Supreme Court has not said anything to the contrary held in the latter decision.  It was only rendered in the context of the concerned U. P. Regulations.

Each of the aforesaid decisions have been comprehensively dealt with by the Hon'ble Supreme Court in the case of Hanuman Rice Mills decision (supra).

Paragraphs 9 and 10 of the said decision are relevant and are set out hereinbelow:

(9) 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 premises 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.

Position in this case

(10) 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.

The law as summarized by the Supreme Court must be applied in the instant case. It must be demonstrated that by the Distribution Company that there are statutory Rules under which it can foist liability as aforesaid, on the writ petitioner.

The statutory Rules relied upon by the Distribution Company is Regulation 13.9 of the West Bengal Electricity Regulation Commission (Standard of Performance of Licensees Relating to Consumer Services) Regulation of 2010. The said Regulation has been amended from time to time.: Regulation 13.9 is set out herein below :

"For getting new connection for supply of electricity from a licensee an intending consumer shall be required to pay all outstanding dues to the licensee in respect of any other service connection held in his/her name located in the area of supply of the same licensee and he/she shall also be responsible for payment of outstanding charges calculated in a prorated manner, if it is established that he/she has had a nexus with the previous consumer(s) including the purchaser/the new lessee/the new tenant of a property or a portion thereof in respect of which there are outstanding charges and/or who has/had benefited from non -payment of the aforesaid outstanding dues by the previous consumer(s) to the licensee."

A plain reading of the aforesaid Regulation would indicate that the Distribution Company is required to establish a nexus between the writ petitioner and the erstwhile owner of the property. In the instant case, except for first two Clauses of internal page 4 of the conveyance between the petitioner and the erstwhile owner, there are no other clauses relevant and the parties are ad idem in this regard.

The first of the aforesaid Clauses deals with an indemnity offered by the seller/erstwhile owner against any dispute as regards the title or possession in respect of the land that was handed over to the writ petitioner. The second of such Clause also refers to any liability that may accrue on the land in question. In fact the two Clauses are in nature of declarations. There is no indemnity under the aforesaid 2nd Clause, to entitle the petitioner to recover from the erstwhile owner any electricity or allied dues from the erstwhile owners.

The Distribution Company, therefore, cannot claim any nexus between the erstwhile owner and the writ petitioner on the basis of the aforesaid clauses in the conveyance between the erstwhile owner and the writ petitioner to be able to invoke Regulation 13.9 as above.

Since it has been held by the Hon'ble Supreme Court in the Hanuman Rice Mills Case (supra) that electricity dues do not create a charge on the land, under the Electricity Act, 2003, the WBSEDCL cannot even otherwise rely upon the aforesaid Clauses to claim the dues of erstwhile owners/occupiers from the writ petitioner.

Mr. Nayak next argued that these are the disputed questions of fact that cannot be gone into in a writ petition. It is, therefore, for the Distribution Company to institute appropriate proceeding in accordance with law to be able to establish any such nexus. Even a prima facie finding or nexus has not been communicated in any form to the writ petitioner nor is evident in the facts of the case.

Let us now consider the effect of the decisions of the Division Bench judgments of this Hon'ble Court relied upon by the Distribution Company.

In the case of Nirmal Kumar Mondal (supra), a Division Bench of this Court did not have occasion to deal and consider with the Hanuman Rice Mills (supra) decisions.

In the M.K. & Sons decision (supra) there was a definite and distinct nexus available in the facts as evident from the judgment itself. In the said case a partner of an existing partnership firm, had purchased the property in question from such partnership firm itself. The nexus that the Division Bench found in the said decision is loud and clear. The said judgment is, therefore, distinguishable in the facts of the case.

In the said decision Hanuman Rice Mills decision (supra) was considered but its actual application has not been restricted in any way. The said decision in fact follows the Clause 2 of paragraph 9 of Hanuman Rice Mill decision of the Hon'ble Supreme Court already set out herein above.

The case of WBSEDCL - Vs. Ravi Jain rendered by a Division Bench of this Court also does not address the dicta of the Hanuman Rice Mills case (supra).

In the light of the above discussions, I am of the clear view that for a Distribution Company to be able to foist the liability of an erstwhile consumer, on a subsequent purchaser, there is requirement of a clear nexus to be established or a clear Regulations to be available to it and or a formal covenant that is sustainable in law to be entered into as a pre condition for a fresh connection with the subsequent purchaser.

As already discussed herein above, neither has the Distribution Company been able to establish any nexus nor is there any specific regulation entitling the Distribution Company to foist the liability on the new owners. There is also no covenant between the Distribution Company and the writ petitioner making it a pre-condition that the dues of the erstwhile owners must be paid by the petitioner before enjoying the connection.

Mr. Nayak is lastly referred to the application forms submitted by the petitioner to the Distribution Company. He submits that there is suppression of fact and that any reasonable and prudent person would cause necessary searches on the dues arising in respect of such land before purchase of immovable property.

I find from the application form that the declaration in the printed format signed by the writ petitioner was to the effect that there was no outstanding dues in respect of any other existing connection in the same premises or in the vicinity or otherwise standing in the name of consumer/writ petitioner himself. The writ petitioner cannot, therefore, be stated to have suppressed any material facts.

Mr. Nayak would lastly argue that electricity dues, as held by the Hon'ble Supreme Court in the various decisions are in the nature of public dues and that a subsequent consumer cannot be allowed to enjoy an electricity connection by leaving outstanding dues of the erstwhile owner at the same premises.

The same, according to him, would create in fact a loss to the public exchequer and consequently hurting public utility services at large.

In this context I am constrained to refer to paragraph 63 of the decision of the Hon'ble Supreme Court in the case of Isha Marbles (supra).

Paragraph 63 is set out herein below:

"63. 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. 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."

Therefore, public dues and the compulsion to recover the same to avoid hurting public services cannot be a ground to justify foisting of liability of unscrupulous sellers on innocent and bona fide purchasers without notice of any previous dues.

If the Distribution Company was in fact so concerned about the recovery of erstwhile dues, appropriate amendments and/or inclusions should have been made in its Regulations or any lawful covenant should have been entered into before effecting any supply to the intending consumers.

Courts cannot ignore the fact that while purchasing new properties, every bona fide and vigilant purchaser, causes searches in public records to ascertain charges on land. Electricity dues are not reflected in public records and are also not a charge within the meaning of the Transfer of Property Act. The writ petitioner cannot be, therefore, blamed for not knowing of the electricity dues of an erstwhile consumer, who had an electricity connection at the said premises.

In view of the aforesaid discussion and in the facts of the present case, I am of the view that the disconnection of the writ petitioner's supply by the Distribution Company for refusal to pay dues of the erstwhile owners of the property in question is arbitrary and illegal and is hereby quashed and set aside.

The writ petitioner's electricity connection shall be restored by the Distribution Company to that which was available and afforded to him pursuant to his first application. The writ petitioner shall, however, continue to pay his current dues failing which the Distribution Company shall be entitled to take steps in accordance with law.

It is made clear that the instant judgment shall not be construed to prevent the Distribution Company to anyway recover the said dues either from the erstwhile owners/consumers in proceeding that have already been launched or that the Distribution Company may choose to launch in future.

In view of the above, the writ petition is allowed.

No order as to costs.

Urgent photostat certified copy of this order, if applied for, be given to the parties upon compliance of all formalities.