Case title:
K.C. Ninan vs Kerala State Electricity Board & Ors
Date of Order:
May 19, 2023
Bench:
Dr Dhananjaya Y Chandrachud, Hima Kohli, Pamidighantam Sri Narasimha
Parties:
Appellants - K C Ninan
Respondents- Kerala State Electricity Board & Ors.
SUBJECT
The Electricity Act of 2003 was introduced in India to promote an efficient, coordinated, and economical electricity system. It also provided for the establishment of the Central Electricity Authority and State Electricity Regulatory Commissions. The Act aimed to create an environment conducive to the growth of the electricity industry, safeguarding the interests of consumers and facilitating the participation of private and foreign investors in the power sector. It introduced the concept of open access to electricity, mandated the constitution of the Central Electricity Regulatory Commission (CERC) and State Electricity Regulatory Commissions (SERCs) to regulate electricity markets, and provided for the unbundling of electricity services.
IMPORTANT PROVISIONS
Electricity Act, 2003
- Section 43
- Section 56
Electricity (Supply) Act, 1948
- Section 50
- Section 70(2)
OVERVIEW
- In this case, the property was purchased by the owners who then applied for an electricity connection to the premises.
- However, the connection was discontinued due to the previous owner's failure to pay the dues for electricity consumption on the premises.
- In order to receive an electrical connection, the Electric Utilities required that the auction purchaser pay the previous owner's dues.
- This denial by the authorities led to the filing of the present petition before the Hon'ble Court under Article 226 of the Indian Constitution.
ISSUES RAISED
- Can the arrears of unpaid electricity dues outstanding from the previous owner be claimed from the subsequent owner, who has acquired the property in proceedings initiated to enforce mortgages or to repay creditors.
ARGUMENTS ADVANCED BY THE APPELLANT
- The counsel representing the purchasers argued that as per the meaning of Section 43 of the 2003 Act, ‘price’ cannot include the arrears of the previous consumer.
- It was submitted that the state cannot impose any additional condition in the form of providing a precondition of clearance of a previous owner’s dues on a subsequent owner who seeks a fresh connection as it would be against section 43.
- The counsel urged that unless the law requires it, enforcing one person's liability, whether statutory or contractual is unfair.
- It was further submitted that according to Section 56 of the 2003 Act, the right to disconnect supply in default is associated with the consumer's default. Under Section 56 (2) of the 2003 Act, utilities cannot collect dues over what is provided for.
- Lastly, the counsel asserted that there is no statutory imposition of liability for past dues of previous owners on subsequent purchasers.
- Reliance was placed on the case of Isha Marbles v. Bihar State Electricity Board [1995 SCC (2) 648] to substantiate the above point.
ARGUMENTS ADVANCED BY THE RESPONDENT
- The counsel representing the appellants submitted that the licensee's duty to supply electricity under Section 43 of the 2003 Act is not absolute.
- The counsel pointed out that certain obligations must be fulfilled by the applicant to avail of electricity supply. These obligations included the applicant submitting an application complete in all respects along with documents showing payment of necessary charges and other compliances.
- The counsel further pointed out that the right of a distribution licensee to deny electricity connection until outstanding dues are cleared is a continuing right. This cannot be extinguished. As soon as a new owner or occupant approaches for an electrical connection, the licensee can exercise the right.
- It was finally urged by the counsels that the purchasers cannot deny knowledge of the requirement to clear outstanding dues of the premises when these are provided for in the Supply Code conditions.
JUDGEMENT ANALYSIS
- The Supreme Court in this case held that the duty to supply electricity under Section 43 of the 2003 Act is not absolute.
- The court observed that Owners and occupiers become consumers only for certain premises for which the Electric Utilities seek and provide electricity under Section 43.
- The case of Brihanmumbai Electric Supply & Transport Undertaking v. Maharashtra Electricity Regulatory Commission [(2015) 2 SCC 438] was cited where the court held that once a completed application is submitted by the occupier, the distribution licensee's obligation to supply electricity to premises will begin.
- The Court further held that a connection sought by a subsequent purchaser should be considered a fresh reconnection.
- The bench analyzed the scope of section 50 and held that the State Commission had the power to stipulate conditions for collecting electricity arrears of previous owners from new or subsequent owners
- The court found a reasonable relation between the Electricity Supply Code providing for the recoupment of electricity dues of a previous consumer and the objects of the 2003 Act.
- By using the expression “as is where is,” every bidder is informed that the seller is not responsible concerning the property offered for sale for any PART I 179 liability for the payment of dues. This includes service charges, electricity charges for power connections, and local authority taxes.
CONCLUSION
The Universal Service Obligation (USO) ensures all citizens have access to essential communication services. The USO is a legal requirement that requires providers of electronic communications services to meet a specified level of service. This is to ensure that any user, regardless of their location or financial means, can access certain services. The Supreme Court in this case delivered a paramount judgment clarifying that USO is not absolute. The bench consisting of Dr. Dhananjaya Y Chandrachud, Hima Kohli, Pamidighantam, and Sri Narasimha ruled that the distribution licensee is obliged under Section 43 to supply electricity to the premises of an owner or occupier, provided that the owner or occupier pays all charges and complies with all conditions.
