Judgment:
Dipankar Datta, J.
1. The first petitioner is a private limited company of which the second petitioner is a Director. They had responded to a sale notice issued by the West Bengal Financial Corporation (hereafter the Corporation) dated 19.1.2007 in exercise of power conferred by Section 29 of the State Financial Corporations Act, 1951 (hereafter the SFC Act). By the said notice, inter alia, the fixed assets of M/s. Globe Paper Mills Limited (hereafter Globe) comprising land with shed and structures and machinery at Bhandartikuri, Post Office Purbasthali in the district of Burdwan (hereafter the said premises) was put up for sale. The petitioners had offered Rs. 1,33,00,000/-, which was accepted by the Corporation. It is claimed that on 29.1.2008 the fixed assets of Globe were handed over peacefully to the petitioners.
2. The Managing Director of the first petitioner thereafter approached the respondent distribution company (hereafter the licensee) and vide letter dated 8/12.2.2008, while informing it regarding the purchase of fixed assets of its erstwhile consumer Globe, enquired regarding necessary formalities for bulk power supply. The last two paragraphs of the said letter read as follows:
In this regard, please let us inform the dues for energy charge, if any, outstanding with your organization. As we have approached in this matter to WBIDC, we came to understand that we have to bear only part of the energy charges of the erstwhile comsumption and also it is confirmed by WBIDC that the other charges like AMGR, LPSC etc., would be waived in case of units taken over from WBIDC and/or WBFC. In view of the above, we request your goodself to kindly settle the issue to enable us to pay the energy charges, if any, at earliest and help us to restore power connection according to the power requirement to be applied for at the above site. We further request your goodself to kindly adjust the energy Charges due with the Security Deposit, if any, held with your organization.
3. Upon receipt of the aforesaid letter, the licensee by its letter dated 18/19.3.2008 responded to the petitioners' request and informed them that an amount of Rs. 17,61,385.36p is lying outstanding in respect of bulk power supply at the said premises of the erstwhile consumer Globe. The petitioners were called upon to make payment of the aforesaid sum to enable the licensee take further necessary steps to process the prayer for restoration of power supply at the said premises. A quotation was thereafter raised by the licensee on 7.4.2008 on being approached by the petitioners for temporary connection. On payment of the claimed amount, the petitioners have been enjoying supply of electricity, albeit on temporary basis.
4. In the present petition, the petitioners have questioned the demand of the licensee for payment of Rs. 17,61,385.36p as a pre-condition for effecting bulk supply of power to them.
5. Mr. Bandopadhyay, learned Senior Counsel appearing for the petitioners contended that the fixed assets of Globe having been purchased by the petitioners pursuant to auction conducted by the Corporation, they have no obligation to clear the outstanding dues of the defaulting consumer. He referred to provisions contained in Section 50 of the Electricity Act, 2003 (hereafter the 2003 Act) to contend that thereby power has been conferred on the Electricity Regulatory Commissions to specify the Electricity Supply Code and that in pursuance thereof, the West Bengal Electricity Regulatory Commission (hereafter the Commission) has framed the West Bengal Electricity Regulatory Commission (Electricity Supply Code) Regulations, 2007 (hereafter the 2007 Regulations). In terms of Regulation 3.4.2 thereof, the licensee is entitled to recover arrears of energy charges only if a nexus is established between the erstwhile consumer and the prospective consumer; the onus of establishing nexus being on the licensee. He also referred to the West Bengal Electricity Regulatory Commission (Standards of Performance of Distribution Licensees Relating To Consuming Services) Regulations, 2005 (hereafter the 2005 Regulations), being a previous regulation framed by the Commission in exercise of power conferred on it by Section 181(2), clauses (za) and (zb) of the 2003 Act read with Sections 57(1) and 59(1) thereof. Relying on Regulation 5 thereof which also provides that an applicant praying for connection would be liable to clear the dues of the erstwhile defaulting consumer if a nexus is established with it and the applicant, he submitted that in this case the licensee had miserably failed to establish nexus and hence the impugned demand cannot be sustained. It was further contended by him by referring to provisions contained in Section 56(2) of the Act that the alleged outstanding dues cannot be recovered from the petitioners since the period mentioned therein within which recovery could be made has already expired. He also contended that the object of the Act is to consolidate the laws relating to electricity and, therefore, enactments prior to introduction of the 2003 Act cannot be relied upon by the licensee to compel a prospective consumer to pay the dues left behind by the erstwhile consumer.
6. In support of his contentions, he relied on the decisions of the Apex Court in Isha Marbles v. Bihar State Electricity Board and Anr. reported in : [1995]1SCR847 and Ahmedabad Electricity Co. Ltd. v. Gujarat Inns Pvt. Ltd. and Ors. reported in : AIR2004SC217 and a decision of this Court in Nabin Agarwal and Anr. v. CESC Ltd. and Ors. reported in 2003 (4) CHN 541.
7. By referring to the order of a learned Single Judge of this Court dated 14.7.2006 made on W.P. No. 1327 (W) 2005 (annexed to the counter affidavit of the licensee), he contended that the said decision would have no application in the facts of the present case since it was rendered having regard to the facts of that particular case.
8. For the proposition that there can be no estoppel against statute and estoppel against exercise of fundamental rights, he relied on the decisions reported in : [1984]3SCR74 A.C. Jose v. Sivan Pillai; 2006 AIR SCW 3114 Groupe Chimique Tunisien SA v. Southern Petrochemicals Industries Corpn. Ltd.; : AIR2007SC1984 Southern Petrochemical Industries Co. Ltd. v. Electricity Inspector & ETIO; : (2000)ILLJ1388SC Nar Singh Pal v. Union of India and Ors.; : AIR1986SC180 Olga Tellis v. Bombay Municipal Corporation and Ors. and 29 CWN 253 Sarojini Debya and Ors. v. Lakhi Priya Guha and Ors.
9. Based on the aforesaid submissions, he prayed for relief as claimed in the petition.
10. Mr. Mitra, learned Counsel appearing for the licensee while opposing the writ petition invited the attention of the Court to the letter dated 8/12.2.2008 of the petitioners referred to hereinabove. He submitted that the contents of the said letter would reveal the knowledge of the petitioners that there were and/or are outstanding dues on account of arrears of electricity charges of the erstwhile consumer at the said premises which are to be paid by them prior to obtaining supply of electricity thereat. In fact, the petitioners had asked for waiver of AMGR and LPSC and had sought for a confirmation regarding the balance for paying it. The said letter had not been disclosed in the petition and, therefore, the petitioners are guilty of moving the Court with unclean hands and on this ground alone it is liable to be dismissed.
11. The decision in Isha Marbles (supra) was sought to be countered by him by relying on the decision of the Apex Court reported in : [1998]2SCR620 (Hyderbabad Vanaspati v. Andhra Pradesh State Electricity Board and Ors.). According to him, while in Isha Marbles (supra) electricity charges were held to be contractual dues, in Hyderabad Vanaspati (supra) the same were held to be statutory charges and dues and being later in point of time, according to him, the law declared in the latter decision should prevail over the former decision.
12. Reliance was placed on the decision of the Apex Court reported in : AIR2007SC2 (Dakshin Haryana Bijli Vitaran Nigam Ltd. v. Paramount Polymers Pvt. Limited), firstly to contend that the decision in Isha Marbles (supra) has been doubted and referred to a larger Bench on the question as to whether electricity dues constitute a charge on the property so far as the transferor or transferee of the unit are concerned, and secondly to contend that in similar circumstances, action of the licensee in seeking to recover dues of previous consumer from the purchaser for giving fresh connection was not held to be illegal.
13. He further contended that the petitioners had prayed for restoration of power supply at the said premises which was being supplied electricity and, therefore, it was not a case where an application for new or fresh connection had been made but a case where an application for restoration of power supply had been made; therefore, the petitioners are liable to clear the outstanding dues left by the erstwhile consumer if they intended to enjoy electricity.
14. Mr. Mitra next referred to the West Bengal Electrical Undertakings (Recovery of Dues) Act, 2000 (hereafter the RD Act) which provides for recovery of dues of electrical undertakings in West Bengal. According to him, Section 4 of the RD Act provides for issuance of notice of demand and Section 5 thereof provides for recovery of dues notwithstanding anything contained to the contrary therein or in any other law for the time being in force or in any instrument or agreement having effect by virtue of any law other than that Act to be recoverable as an arrear of land revenue. By virtue of provisions contained in Clause 3 of Schedule-I to the Bengal Public Demands Recovery Act, 1913 (hereafter the PDR Act), the dues recoverable under the RD Act would become a public demand under the PDR Act and constitute a charge on the said premises of the consumer and can be recovered from attachment and sale of the said premises notwithstanding transfer of the said premises in the meantime. Globe had on account of electricity charges left behind outstanding dues of Rs. 34,01,053.05p as on 19.5.2005 and the erstwhile West Bengal State Electricity Board (hereafter the Board) had duly invoked the provisions of Section 4 of the RD Act and in pursuance thereof, requisite notice under Section 5 of the RD Act was issued by the District Magistrate and Collector, Burdwan on 22.7.2005. By reason of the aforesaid provisions contained in the RD Act and in view of the provisions contained in Sections 4, 6 and 8(b) of the PDR Act, the said outstanding dues became a charge on the lands and factory premises of Globe. While taking over the factory and lands in question belonging to and owned by Globe, the Corporation was aware of the outstanding dues on account of electricity charges payable to the Board and that the same became a charge on the said factory premises and lands. Accordingly, when it took steps for sale of the same in 2007 it enquired from the Board the outstanding dues as on date thereof which would be evident from the letter dated 13.2.2007 of the Corporation. He further contended that from the said letter it would appear that the aforesaid outstanding dues with break up of the same of energy charges, AMGR and LPSC was to be included in the intended sale, finalization of which was awaiting the break-up of the said outstanding electricity dues.
15. He also contended by referring to Section 29(4) of the SFC Act that in the absence of any contract to the contrary, the sale proceeds pertaining to a sale under Sub-section (1) thereof had to be first applied to the payment of costs, charges and expenses and that 'charges' would include the charge of the licensee of its outstanding electricity dues on the said premises, which was to be paid by the Corporation first out of the said sale proceeds. In support of his submission, he relied on a Division Bench decision in Rajasthan State Industrial Development and Investment Corporation Ltd. (RIICO) v. State of Rajasthan reported in . Thus, without payment to the licensee of its aforesaid charge of outstanding electricity dues the Corporation could not apply the proceeds of sale in discharge of its debt.
16. It was in this connection, to avoid payment of the said outstanding charge of electricity dues of the Board out of the sale proceeds, that the Corporation, while selling the said factory premises and lands, in exercise of its right to contract contrary to the provisions contained in Sub-section (4) of Section 29 of the SFC Act, had made it clear to the intending purchasers that the outstanding charge of dues of electricity charges of the Board (excluding AMGR and LPSC), will have to be paid/cleared by the successful purchaser. Significantly, pursuant to request of the said Corporation in 2005, the Board by letter dated 23.05.2005 had agreed to consider waiver of AMGR and LPSC out of the outstanding dues. The same would appear from the Corporation's letter dated 19/20.02.2008 sent to the Chairman of the Board (at page 23 of the counter affidavit) to grant such waiver in the case of the purchaser who had purchased the factory premises and lands of Globe. It would thus be evident that it is only for ascertaining the payment to be made by the intending purchasers to the Board of the outstanding electricity dues, excluding AMGR and LPSC, that the letter dated 13.02.2007 (at page 22 of the counter affidavit) was given to the Board for the purpose of notifying the intending purchasers the amount to be paid by them to it. Thus the payment by the purchaser of the outstanding dues of Globe to the Board, excluding the AMGR and LPSC portions, was an implied term and condition of the sale of the said factory premises and land, and it is in this context that the purchaser, being the petitioners herein, had written the said letter dated 8/12.02.2008, which had been suppressed in the writ petition to mislead this Hon'ble Court.
17. Referring to the 2005 and 2007 Regulations, Mr. Mitra submitted that the nexus between the erstwhile defaulting consumer and the prospective consumer has to be established by a licensee for recovering the arrear dues and that in the facts and circumstances of the present case, such nexus has duly been established. According to him, payment of the outstanding electricity dues of the licensee in respect of the said premises excluding the AMGR and LPSC, was a charge on the said premises to be paid by the petitioners in the purchase of the said premises and as such was to be treated as included in the actual purchase price paid for purchase of the said premises, and payment of the amount claimed in the said letter dated 18/19.3.2008 was part of the consideration to be paid for purchase of the said premises.
18. Finally, it was contended by him that since the amount claimed by the licensee is recoverable as a charge under the PDR Act and the sum has been continuously shown by the licensee as recoverable, provisions of Section 56(2) of the 2003 Act would have no application on facts of the instant case.
19. Based on the aforesaid submissions, he contended that the writ petition ought to be dismissed.
20. In reply, Mr. Bandopadhyay reiterated that in view of Section 50 of the 2003 Act empowering the State Commission to specify an Electricity Supply Code to provide for, inter alia, recovery of electricity charges, the moment Regulations are framed by the Commission specifying the Electricity Supply Code providing for recovery of electricity charges in the manner as specified therein all other modes of recovery under earlier enactments lose their force. The licensee, therefore, cannot fall back on the RD Act to recover the electricity dues, at least from the petitioners. He disputed that the licensee had, in the instant case, discharged its onus by establishing nexus between the erstwhile defaulting consumer and the petitioners.
21. Referring to the decisions cited by Mr. Mitra, he submitted that the same were distinguishable on facts. In particular, the decision in Dakshin Haryana Bijli Vitaran Nigam Ltd. (supra) was one to which the Electricity (Supply) Act, 1948, applied. According to him, the decision approved the action of the appellant company to insert a clause in the terms and conditions of supply of electrical energy for giving fresh connection to the respondent purchaser to the effect that it would have to bear the outstanding dues of the previous consumer. There, similar provisions as in the 2005 and 2007 Regulations, which are pieces of subordinate legislation, were non-existent and, therefore, the decision of the Apex Court without having the occasion to consider such Regulations would not be binding on this Court.
22. So far as conduct of the petitioners is concerned, it was contended by him that the same per se would not disqualify them from obtaining relief from the Court. According to him, if the licensee is not entitled to claim dues left behind by the erstwhile defaulting consumer except on establishment of a nexus between it and the petitioners, and if the petitioners without being aware of the legal position initially committed to bear the burden but later on realizing that such demand is unlawful, they could very well resile from their commitment and question the demand before the Writ Court. The licensee being an Article 12 authority is bound to be fair in all its actions consistent with Article 14 of the Constitution and the fundamental right that is guaranteed to the petitioners cannot be bartered away. Hence, the petitioners are entitled in law to obtain supply of electricity in the absence of any nexus being established.
23. Learned Counsel for the parties have been heard at length. Four issues fall for determination by this Court. Apart from the first issue, the others would of course require consideration only if the respective issues preceding them are answered in the negative. They are:
(i) Whether the writ petition deserves dismissal for suppression of facts?
(ii) Whether action taken by the licensee under the RD Act would in any manner impede the petitioners' right to obtain supply of electricity without clearing the dues left behind by Globe?
(iii) Whether the licensee has been able to establish nexus between the erstwhile consumer and the petitioners, being the prospective consumers?
(iv) To what relief the petitioners are entitled on facts and in the circumstances?
ISSUE No. 1
24. This Court is of the considered view that non-disclosure of each and every fact in the bundle of facts constituting the cause of action does not per se amount to suppression. There may be non-disclosure of a fact by reason of human error, or there may be non-disclosure of a fact owing to a perception that disclosure of such fact may not be relevant for a decision. In all such cases, if by the non-disclosure a party concerned does not derive any unlawful gain or does not steal a march over the other party, the contention that a fact has been suppressed and therefore on such ground alone consequences must follow may not be accepted. It is only when a fact that is material for a decision of the case is not disclosed or a fact is not disclosed with ulterior motive of either deriving unlawful gain or for stealing a march over the other party that 'suppression of fact' could be validly raised as a ground for disentitling a party to relief.
25. In SJS Business Enterprises (P) Ltd. v. State of Bihar reported in : AIR2004SC2421 , the Apex Court ruled as follows:
As a general rule, suppression of a material fact by a litigant disqualifies such litigant from obtaining any relief. This rule has been evolved out of the need of the Courts to deter a litigant from abusing the process of Court by deceiving it. But the suppressed fact must be a material one in the sense that had it not been suppressed it would have had an effect on the merits of the case. It must be a matter which was material for the consideration of the Court, whatever view the Court may have taken.
26. There is no reason as to why the above principle of law shall not apply in the present case.
27. The test here is whether the letter dated 8/12.2.2008 written by the petitioners (not disclosed in the petition), if disclosed, would have entailed dismissal of the writ petition irrespective of any other ground that could be raised for the same result. It appears from the said letter that indeed the Managing Director of the first petitioner had enquired from the licensee the quantum of outstanding dues and that upon waiver of AMGR, LPSC, etc. had requested for settlement of the issue at the earliest for ensuring restoration of power connection. His anxiety can well be appreciated. Huge sum was invested for purchasing the assets of Globe for setting up a project of 'Kraft Paper Manufacturing Unit'. The contents of the letter do give an impression that if upon waiver of AMGR, LPSC, etc. the outstanding dues are not substantial, an effort would be made to clear it and in such circumstances a prayer was even made to adjust the dues with Security Deposit already held by the licensee. Now that a hefty sum has been demanded by the licensee as a condition precedent for supplying power in bulk and the petitioners now consider such demand to be contrary to law and have thus challenged such action, this Court does not consider non-disclosure of the said letter as a material suppression for not deciding the claim raised in the petition on merits. Assuming arguendo that the petitioners had liquidated the outstanding dues of Globe and obtained supply, that would not by itself preclude them from questioning the demand even after liquidation if the demand itself is contrary to law. Law in this regard was laid down in Amalgamated Coalfields Limited and Ors. v. Janapada Sabha, Chindwara reported in : [1962]1SCR1 . The Apex Court ruled that if a tax imposed is held to be ultra vires, relief under Article 32 of the Constitution could not be refused on the ground that the petitioner had been paying the tax without objection for years because such imposition is an encroachment on the petitioner's fundamental right to carry on business protected by Article 19 of the Constitution. The decisions cited by Mr. Bandopadhyay on the point also supports this view. So even if the petitioners had agreed to bear the burden left behind by Globe, that would not stand in their way of laying a challenge to the impugned demand and ultimately if it is held that the demand of the licensee is not in accordance with law, the petitioners would be entitled to relief ex debito justitae. It is, therefore, held that by not disclosing the said letter, the petitioners have not suppressed a material fact so as to render the writ petition not maintainable.
28. The issue is answered accordingly.
ISSUE No. 2
29. For deciding this issue, certain provisions of the RD Act require consideration. It was enacted to provide for recovery of dues of electrical undertakings in West Bengal. It is not in dispute that the Board is an electrical undertaking in view of the definition of electrical undertaking in Section 2(c)(ii). The words 'consumer' and 'dues' have been defined in Section 2 thereof as follows:
(a) 'consumer' means any person who is supplied with energy, by an electrical undertaking for commercial or industrial purposes at 6 KV and above;
(b) 'dues' means any sum payable to an electrical undertaking on account of consumption of electricity supplied;
30. Sections 3 and 5 read as follows:
3.Notice of demand for dues not paid- Where any dues are payable by a consumer to an electrical undertaking, the prescribed authority may, at any time after the expiry of a period of thirty days from the date within which such dues were payable, serve, or cause to be served, on the consumer or his authorized agent a notice of demand stating the name of the consumer, the amount payable by him and the name of the undertaking to whom the amount is due:
Provided that a notice under this section shall not be served or caused to be served on a consumer for any dues in respect of which a difference or dispute has been referred to the Electrical Inspector under Section 24 of the Indian Electricity Act, 1910.
Explanation I.- The service of the notice of demand shall be deemed-
(a) to be effected by properly addressing, prepaying and posting by registered post, a letter containing the notice of demand, and
(b) unless contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post. Explanation II.- Any dues to an electrical undertaking shall be deemed to be payable within the date specified in the bill in this behalf.
5. Recovery of dues.- If the amount of the dues for which a notice of demand has been served under Section 3 is not deposited with the prescribed authority within the period referred to in Sub-section (1) of Section 4 or within such extended period as the prescribed authority may time to time allow, the consumer shall be deemed to be a defaulter in respect of such amount, and such amount together with such penalty for being a defaulter and cost of recovery of the dues as may be prescribed, shall notwithstanding anything to the contrary contained in this act or in any other law for the time being in force or in any instrument or agreement having effect by virtue of any law other than this Act, be recoverable as any arrear of land revenue.
31. This Court does not consider it necessary to enter into the controversy as to whether the RD Act survives after enactment of the 2003 Act or not. Assuming it does, it has passed this Court's comprehension as to how the liability of Globe could be foisted on the first petitioner by referring to its provisions. On a conjoint reading of the aforesaid provisions it is clear that the RD Act permits recovery of sum payable by a person on account of consumption of electricity supplied to him, either for industrial or commercial purposes, as an arrear of land revenue. It is true that in view of Section 5, the RD Act has overriding effect and proceedings under the PDR Act could be and has been initiated against Globe for recovery of the dues payable to the licensee, but the RD Act cannot override the provisions of the 2003 Act or any subordinate legislation framed in terms thereof. On the premise that the outstanding dues form a charge on the said premises, the same cannot be recovered except in the manner provided by the Regulations framed in exercise of the 2003 Act. For that matter, provisions contained in the RD Act do not empower any authority to recover dues of an erstwhile consumer from a prospective consumer. In terms of the provisions of the RD Act, recovery of the dues from the consumer i.e. Globe is permissible but the authorities under the PDR Act would have no competence to attach or sell the premises in respect whereof the Corporation had first charge.
32. It is noticed from paragraph 7 of the decision in Dakshin Haryana Bijli Vitran Nigam Ltd. (supra) that the question as to whether electricity dues constitute a charge on the property so far as the transferor or the transferee of the unit are concerned has been referred to a Bench of three learned Judges. Decision on such question, this Court has been appraised, is awaited. However, in Paschimanchal Vidyut Vitran Nigam Ltd. and Ors. v. D.V.S. Steels & Alloys Pvt. Ltd. and Ors. reported in 2008 AIR SCW 7826, it has been held that dues of the predecessor in title or possession being the amount payable towards supply of electricity does not constitute a 'charge' on the premises. But more of that decision later.
33. Having perused the provisions contained in the RD Act, this Court is of the view that electricity dues do not constitute a charge on the said premises so far as the transferee is concerned and the dues cannot be recovered from him/it. In the absence of any contract the licensee might have entered with the Corporation, the former therefore would be at liberty to have the dues recovered from the erstwhile defaulting consumer by taking recourse to such remedy as is available to it in law.
34. Actions taken in terms of the RD Act, therefore, would not stand in the way of the first petitioner obtaining supply of electricity from the licensee in respect of the said premises.
35. Issue No. 2 is thus answered.
ISSUE No. 3
36. The assets of Globe (comprising of leasehold land with shed and structure, plants, boilers, engines, transformers, etc.) were put up for sale on 19.1.2007. The notice issued by the Corporation in this regard made it clear that it would 'not be responsible for payment of any other dues, if any, related to the borrowing units.'
37. It would be worthwhile at this stage to note provisions of the 2005 and 2007 Regulations in relation to power of the licensee to recover arrear dues of erstwhile consumers.
38. Regulation 5 of the 2005 Regulations, in so far as the same is relevant, is quoted hereunder:
Application for connection under this Regulation shall be considered only if all dues of the applicant in respect of any other service connection held in his name in the distribution licensee's area of operation have been cleared. Where there are arrears of charges outstanding for a premises, before the application is processed the applicant shall be liable for clearing the dues if nexus is established with erstwhile defaulting consumer.
39. Regulation 3.4.2 of the 2007 Regulations, to the extent applicable here, reads thus:
3.4.2. The licensee shall be eligible to recover from a new and subsequent consumer(s) the dues of the previous and defaulting consumer(s) in respect of the same premises only if a nexus between the previous and defaulting consumer(s) and the new consumer(s) in respect of the same premises is proved. The onus of proving a nexus, if claimed by a licensee, shall be on the licensee.
40. Once Regulations have been framed by the Commission which have the force of a statute, the licensee in order to recover dues of an erstwhile defaulting consumer must establish a nexus between such erstwhile defaulting consumer and the prospective consumer if it intends to recover the dues from the latter.
41. After the petitioners informed the licensee by letter dated 12.2.2008 that they have purchased the assets of Globe in an auction conducted by the Corporation and had even committed to clear the dues, if any, left behind by it upon waiver of AMGR and LPSC, the licensee in its response dated 18/19.3.2008, while demanding Rs. 17,61,385.36/-, did not discharge the onus of establishing the nexus between the erstwhile defaulting consumers and the petitioners. In the absence of discharging such onus, the petitioners, in law, were not obliged to make any payment in terms of the demand as a precondition for receiving power supply at the said premises. Onus of proving nexus not having been discharged by the licensee, the demand was illegal, unauthorized and without jurisdiction.
42. The word 'nexus' has not been defined either in the 2005 or in the 2007 Regulations. According to Concise Oxford English Dictionary, Eleventh Edition, 'nexus' means 'a link or connection, a connected group; a network'.
43. The demand of the licensee having been challenged in this writ petition, for the first time it has sought to discharge its onus of proving nexus of the present petitioners with the erstwhile defaulting consumer. To discharge such onus, the licensee has in paragraphs 6(c) and (d) and paragraph 19 of the counter affidavit stated as follows :
6(c) The business the petitioners intend to operate in and with the purchased properties in question are identical with that of the said erstwhile owner of the same.
(d) In the facts and circumstances stated hereinabove the petitioners have 'nexus' with the erstwhile consumer of the properties purchased, and are therefore bound and liable to make payment the outstanding dues of said erstwhile consumer on account of electricity charges as mentioned in the letter dated 18th/19th March, 2008 impugned in this writ petition in terms of the Regulations framed by the West Bengal Electricity Regulatory Commission under the Electricity Act, 2003, to which I crave leave to produce at the time of hearing, if so necessary.
19. With reference to paragraph 20 of the said petition it is denied that the petitioners are entitled to supply of electricity without payment of the aforesaid dues in question. In the facts and circumstances of the instant case there is a clear nexus, and the petitioners are liable for payment of the said dues for supply of electricity. It is denied that the respondent authorities ought to have granted supply of electricity without insisting upon payment of the said dues as alleged.
44. As has been noticed above, Mr. Mitra for the purpose of establishing nexus relied on the correspondences between the Corporation and the licensee to the effect that the dues left behind by the erstwhile defaulting consumer would be treated as included in the actual purchase price paid for purchase of the said premises.
45. On a wholesome appreciation of the materials on record, this Court is unable to accept the contention of Mr. Mitra that any nexus between the erstwhile defaulting consumer and the petitioners has been established. The stand in the counter affidavit that the business sought to be carried on by the petitioners is identical to that of the erstwhile owner of the said premises is not at all an acceptable ground to establish nexus. It is obvious that when the assets of a paper manufacturing unit are put up for sale and such assets are purchased in auction, the prospective purchaser in most cases would be interested in putting the unit to the same use since the plants and equipments lying at the said premises, if at all the same are worthy of use, can be pressed into service for the manufacture of paper. Intention of the purchaser to run a particular business from the unit which might be the same as the earlier one cannot, therefore, be construed as nexus. The nexus would, inter alia, be proved if the erstwhile defaulting consumer in order to evade payment of electricity dues disposes of the premises/unit by sale unscrupulously and thereby permits a known person to purchase the unit and to run it in his name or if a link or connection is established between the erstwhile and the present owners of the unit by reasonable means.
46. At this juncture the decision in Paschimanchal Vidyut Vitran Nigam Ltd. (supra) is worth consideration. In paragraph 9 of the decision, the legal position has been stated thus:
9. 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.
47. However, even after so observing, considering sub-clauses (g) and (h) of Clause 4.3 of the Electricity Supply Code which read
(g) Where the property has been legally sub-divided, the outstanding dues for the consumption of energy on such premises, if any, shall be divided on pro-rata basis.
(h) A new connection to such sub-divided premises shall be given only after the share of outstanding dues attributed to such sub-divided premises, is duly paid by the applicant. Licensee shall not refuse connection to an applicant only on the ground that, dues on the other portion(s) of such premises have not been paid, nor shall the licensee demand record of last paid bills of other portion(s) from such applicant.,
48. the Apex Court proceeded to observe as follows:
10. 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.
11. A stipulation by the distributor that the dues in regard to the electricity supplied to the premises should be cleared before electricity supply is restored or a new connection is given to a premises, cannot be termed as unreasonable or arbitrary. In the absence of such a stipulation, an unscrupulous consumer may commit defaults with impunity, and when the electricity supply is disconnected for non-payment, may sell away the property and move on to another property, thereby making it difficult, if not impossible for the distributor to recover the dues. Having regard to the very large number of consumers of electricity and the frequent moving or translocating of industrial, commercial and residential establishments, provisions similar to Clause 4.3(g) and (h) of Electricity Supply Code are necessary to safeguard the interests of the distributor. We do not find anything unreasonable in a provision enabling the distributor/supplier, to disconnect electricity supply if dues are not paid, or where the electricity supply has already been disconnected for non-payment, insist upon clearance of arrears before a fresh electricity connection is given to the premises. It is obviously the duty of the purchasers/occupants of premises to satisfy themselves that there are no electricity dues before purchasing/occupying a premises. They can also incorporate in the deed of sale or lease, appropriate clauses making the Vendor/lessor responsible for clearing the electricity dues up to the date of sale/lease and for indemnity in the event they are made liable. Be that as it may.
49. A comparative study of the Electricity Supply Code under consideration before the Apex Court in Paschimanchal Vidyut Vitran Nigam Ltd. (supra) and the 2007 Regulations specifying the Electricity Supply Code for this State reveal that the provisions are at variance and it is in view of sub-clauses (g) and (h) of Clause 4.3 of the Electricity Supply Code extracted (supra), that the appellant Nigam was held justified in making the impugned demand. Since no such provision has been incorporated in the 2007 Regulations empowering the licensee to claim the outstanding dues of the erstwhile defaulting consumer from the purchaser even without existence of nexus between them, the demand for liquidating the dues cannot be upheld as justified.
50. The decision in Dakshin Haryana Bijli Vitran Nigam Ltd. (supra) relied on by Mr. Mitra does not lend any assistance to him. There, Clause 21A was inserted in the terms and conditions of supply of electrical energy by the appellant with effect from 27.11.2001 which was held to be applicable to the first respondent. Clause 21A authorized the appellant not to give reconnection or new connection to any premises where there are arrears on any account due to the appellant Nigam unless those are cleared in advance. It was on a construction of Clause 21A that the Apex Court noted that reconnection is related to the premises and arrears again is related to the premises. While allowing the appeal filed by the appellant Nigam and directing the High Court to dispose of the writ petition afresh the Court held that since in Isha Marbles (supra) the occasion to consider the effect of a clause like Clause 21A in the terms and conditions of supply did not arise, the said decision could not have been applied to strike down the condition imposed and the first respondent had to make out a case independent of the ratio of Isha Marbles (supra), though it could rely on its ratio if it is helpful, for attacking the insertion of such a condition for supply of electrical energy.
51. In the present case, for recovery of dues of an erstwhile defaulting consumer there is no clause in absolute terms as Clause No. 21A; on the other hand, the onus is on the licensee to prove nexus. That nexus, which would entitle the licensee to demand the dues from the petitioners, unfortunately has not been established.
52. The unreported decision of this Court dated 14.7.2006 on W.P. No. 1327 of 2005 is a decision on facts of the case and does not constitute a binding precedent. The Court proceeded on the basis that it was for the petitioner to establish that there was no nexus between it and the erstwhile defaulting consumer, which it failed to establish. The Court recorded its conviction that refusal of the Board to supply electricity was not arbitrary and that 'in the facts of the case it would not be in the interest of justice to issue a mandamus'. More importantly, Regulation 3.4.2 of the 2007 Regulations did not exist when the decision was rendered. Therefore, the same lends no assistance to Mr. Mitra.
53. The contention on behalf of the licensee that the dues constituted a charge on the said premises and are required to be paid by the petitioners while purchasing the said premises thereby establishing a nexus is clearly unacceptable having regard to the legal position discussed above and relevant clauses of the 2005 and 2007 Regulations which require proving of nexus by the licensee between the previous and defaulting consumer and the new consumer in respect of the same premises.
54. In the present case in order to establish nexus, the licensee could have obtained the names of Directors of Globe and the first petitioner and establish that the same are not distinct but one and the same entity. That has not been done and, therefore, there is no scope for this Court to hold in favour of the licensee.
55. The submission of Mr. Mitra on reference to Section 29(4) of the SFC Act is also not tenable. Section 29(4) reads thus :
(4) Where any action has been taken against an industrial concern under the provisions of Sub-section (1), all costs, charges and expenses which in the opinion of the Financial Corporation have been properly incurred by it as incidental thereto shall be recoverable from the industrial concern and the money received by it shall, in the absence of any contract to the contrary, be held by it in trust to be applied firstly, in payment of such costs, charges and expenses and, secondly, in discharge of the debt due to the Financial Corporation, and the residue of the money so received shall be paid to the person entitle thereto.
56. By no stretch of imagination the word 'charges' in Section 29(4) can be construed as inclusive of the charge of the licensee of its outstanding electricity dues on the same premises. A bare perusal of Sub-section (4) makes it clear that once action is taken against an industrial concern under Sub-section (1) of Section 29, all costs, charges and expenses which in the opinion of the Financial Corporation have been properly incurred by it as incidental thereto shall be recoverable from the industrial concern, in the absence of any contract to the contrary, and the money received by it shall be held in trust to be applied firstly in payment of such costs, charges and expenses. The pronoun 'it' wherever used in Sub-section (4) refers to the Financial Corporation which might have incurred charges, which is allowed to be recovered by Sub-section (4), and not the charge of the outstanding dues of the licensee on the said premises.
57. Even otherwise, the argument that has been advanced is self-defeating. If the sale price is inclusive of the dues of the licensee, it is for the licensee to recover it from the Corporation and not from the petitioners.
58. The petitioners offered to purchase the assets of Globe on 'as is where is whatsoever there is basis as well as with the existing status of the said assets'. Whether 'existing status of the said assets' would include outstanding electricity charges, appears to be a grey area. A prospective purchaser, if he was required to shoulder the liability of outstanding dues, ought to have been told so with sufficient clarity. In the absence of any clause to the effect that the petitioners as auction purchasers shall not only have the assets of Globe but also the liability including the liability of the licensee, the stand of the latter in refusing to supply electricity unless the outstanding dues are cleared is held to be arbitrary.
59. The final submission of Mr. Mitra that the present case involves a prayer for reconnection and not fresh connection is now taken up for consideration. In Ahmedabad Electricity Company Ltd. (supra), a similar question cropped up before the Apex Court. One of the respondents in the two appeals before the Court was an auction purchaser of property pursuant to sale conducted under Section 29 of the SFC Act. The dispute was whether the respondents were liable to pay the arrears which were outstanding against the previous owners. It was held that the cases at hand were of fresh connection. The Court opined that 'in case of a fresh connection though the premises are the same, the auction- purchasers cannot be held liable to clear the arrears incurred by the previous owners in respect of power supply to the premises in the absence of there being a specific statutory provision in that regard'.
60. Though there is a statutory provision empowering the licensee to recover the arrears from the prospective consumer, the condition of proof of nexus not having been established the same cannot be pressed into service.
61. Although Mr. Mitra has forcefully tried to convince this Court that the petitioners had applied for reconnection, this Court is unable to hold so on perusal of Annexure 'R-5' to the counter affidavit. It is a requisition for high- tension power supply. The requisition was submitted on 10.3.2008 and May, 2008 had been declared to be the probable date when the installation would be ready to receive power supply. On a careful reading of the form in which application was required to be made it does not appear to this Court that any request for reconnection was made. The Technical Feasibility Report, at pages 77 and 78 of the counter affidavit, cannot also clinch the issue in favour of the licensee in the absence of any previous record of the petitioners being consumers of electricity at the same site.
62. The licensee having failed to establish nexus in terms of the 2005 and 2007 Regulations, its claim cannot sustain.
63. The issue is answered accordingly.
ISSUE No. 4
64. In view of the foregoing discussions, the impugned demand raised by the licensee, contained in Memo dated 18/19.03.2008, being Annexure 'P-3' to the writ petition, cannot be sustained in law. The same stands set aside. The petitioner shall be entitled to supply of power without being required to clear the outstanding dues of Globe. The licensee shall take expeditious steps to supply electricity to the petitioners on permanent basis as early as possible but positively within four weeks from date of compliance with all other legal formalities.
65. The issue is answered accordingly.
66. The writ petition stands allowed.
67. However, parties shall bear their own costs.
68. Urgent photostat certified copy of this judgment and order shall be furnished to the applicant as early as possible but positively within four days from putting in requisites therefor.