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PETITIONER: M/S ISHA MARBLES

       Vs.

RESPONDENT: BIHAR STATE ELECTRICITY BOARD

DATE OF JUDGMENT03/02/1995

BENCH: MOHAN, S. (J) BENCH: MOHAN, S. (J) SAWANT, P.B. PARIPOORNAN, K.S.(J)

CITATION:  1995 SCC  (2) 648        JT 1995 (2)   626  1995 SCALE  (1)721

ACT:

HEADNOTE:

JUDGMENT: 1.   Leave granted. 2.   All  these  appeals  can  be dealt  with  by  a  common judgment  since the issue that arises for our  consideration is  one and the same, namely, whether the auction  purchaser is  liable  to  meet  the  liability  of  old  consumer   or electricity to the premises which is purchased by him in the auction   sale  from  Bihar  State   Financial   Corporation (hereinafter  referred to as the Corporation) under  Section 29  (1) of the Bihar State Financial Corporation  Act,  1951 (hereinafter referred to as the Corporation Act)? Civil Appeal No. 1418 of 1995 (Arising out of     SLP    No. 617 of 1992 (M/s.Isha Marbles: 3.   In  this  case,  the appellant is a  purchaser  of  the mortgated &wets of M/s.  Patel Industries.  Daltonganj in an open  auction  sale  held  by  the  Corporation  Act.    The appellant  has  paid  a substantial  sum  towards  the  said transaction  and  thereafter  got  the  possession  of   the industry on 31.1.1991. However, the electrical connection of the  premises  was  disconnected  when  the  appellant   got possession of the said unit.  The appellant was called  upon to  the  discharge  all  the  liabilities  of  the  previous consumer.  This was challenged in C.W.J.C. No. 1536 of  1991 before  the High Court of Patna, Ranchi Bench, Ranchi.   The stand  taken  by the writ petitioner before the  High  Court was, there is a transfer of a unit; it had not been supplied with  electricity;  hence,  it had no  occasion  to  consume electricity:  and as transferee it is not liable for  energy consumed  before  such  transfer.   The  writ  petition  was dismissed by a Division Bench of the High Court holding that the  Bihar State Electricity Board (hereinafter referred  to as  the  ’Board’)  would  be  entitled  to  take  action  in accordance with law. 4.   Aggrieved by the impugned judgment the  appellant   has come in appeal before    this Court.

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Civil  Appeal No 1420 of 1995 (Arising out of SLP No.  16227 of  1992: Bihar State Electricity Board & Ors vs M/s  Waxpol Industries Ltd & Anr. 5.   In  this case, the facts arc slightly  different.   The Bihar  Financial  Corporation sanctioned loan  to  Ws.   Neo Chemicals & Metal Products (P) Ltd.for setting up a unit for manufactured  of  Graphite  Beneficiation.   The  said  unit occupied  Plot  Nos.  1818 and 1820 at  P.O.  village  Boot, District  Ranchi,  Bihar.  For  non-payment  of  electricity bills   the   electricity  was  disconnected.    They   were outstanding  to  the tune of Rs.2,35,924.78/-  against  such electricity   consumption  charges.   The  Corporation   had advanced  a  sum of Rs. 3,40,000 to M/s Neo  Chemicals.   To secure  this  loan, the properties of the  company  had   en hypotecated/mortgaged.  In order to 630 realise this sum the properties were sought to be sold under Section 29 of the Corporation Act.  The sale was through  an advertisment.  The Waxpol Industries, the respondent,  filed its   tender.   That  was  the  highest.    Therefore,   the properties were sold in favour of the respondent for a  con- sideration of Rs.2,97,578.27/-. 6.   Waxpol Industries applied for electricity connection to the Board.  After the purchase, in that application,  Column No.  6 required Waxpol Industries to state whether it  would undertake  to clear the previous dues.  As against this,  it was stated "does not apply".  Terefore, on 3.1.86, the Board informed  waxpol  Industries that it was unable  to  restore electricity as its dues had not been paid either by the con- sumer or by the subsequent occupant of the said premises. 7.   Aggrieved by this, the respondent herein     preferred C.W.J.C. No. 25 of 1980. By the    impugned  judgment,   the writ  petition  was allowed on the ground that  the  present occupants  arc  free  from  any  encumberance  or  liability towards  the  payment of outstanding electricity  dues:  Neo Chemicals  and waxpol Industries are two distinct  companies and of such two Legal entitles.  In view of the judgment  in Ram  Krishna Choudhary v. Bihar State Electricity Board  and others (C.W.J.C.No.204 of 1984 disposed of on 15th  October, 1990  unless  there is a clause that the  auction  purchaser shall  not  only  have the assets  but  also  the  liability including the liability of the Electricity Board, the latter cannot take the stand that unless the dues of the  erstwhile are  cleared,  no electric connection will be given  to  the auction purchaser. 8.  The case C.A. No., 1419 of 1995 (Arising out  of  S.L.P. (C)  No.  18244 of 1993: Chairman  Bihar  State  Electricity Board  and others vs.  Suman Packaging Private  Limited)  is identical  to  the  case in Civil Appeal No.  1420  of  1995 (arising   out   of  SLP(C)  No.  16227  of   1992:   Waxpol Industries).   The  respondent purchased the  unit  of  M/s. Sanjay  Packaging Industries in an auction sale  held  under Section  29 of the Corporation Act for a sum of Rs. 8  lacs. The  said Sanjay Packaging Industries had committed  default in payment of electricity dues amounting to Rs.87,137.34/-. 9.   On 9.6.1992, the respondent (auction purchaser) applied for electricity connection.  The appellant-Board called upon the  respondent  to clear off the dues of  Sanjay  Packaging Industries.    Therefore,  the  respondent  filed   C.W.J.C. No.5358  of  1992  for a writ of mandamus to  the  Board  to supply   electricity.   The  case  of  the   respondent   as petitioner  before  the High Court was when the  matter  was brought  to  the notice of the Corporation it wrote  to  the Board to the effect that the writ petitioner was not  liable for any dues of the erstwhile owner and application might be

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favourably  considered.   Further, the Board  had  issued  a circular  on 19.1.72 that in a case of genuine  purchase  if the old consumer had committed default and the purchaser has no  connection  with the old consumer it  would  neither  be legal nor proper to insist on the realisation of the arrears due for giving re-connection.  The High Court took the  view that remedy under Section 24 of the Electricity Act could be to  file a suit to recover the dues from a  consumer.   That Section  merely enables the disconnection of electricity  it arrears are not paid by the consumer.  Therefore, Section 24 cannot  apply  in  a case where, a  transferee  who  had  no connection with the 631 original  consumer and purchases the property bona fide  and in good faith. 10.  The  Board  is  under statutory  obligation  to  supply electrical energy to any pawn whenever a requisition is made subject  to the fulfilment of conditions under Clause VI  of Schedule 1 of the Electricity Act.  It is in this background the  circular  of  the Board dated 19.1.72 has  to  be  con- sidered. 11.  The Board is a ’State within the meaning of Article  12 of  the  Constitution. Therefore, its action must  pass  the test  of fairness and reasonableness. A purchaser  like  the writ petitioner was not expected to make an enquary from the Board so as to know whether may dues were outstanding to the card  from  the previous consumer: nor is  it  possible  for auction purchaser to find out the personal liability of  the debtor.   The  Division  Bench  went on  to  hold  that  the previous  decisions  on the High Court in  Isha  Marbles  v. Bihar  State Electricity Board and another in  C.W.J.C.  No. 1538  of 1991 and Dani Mordhwaj Cold Storage Pvt.   Ltd.  v. Bihar State Electricity Board and others in C.W.J.C. No.6437 of  1992  must  be held to be  per  incuriam  because  those decisions had not considered the important legal aspects. 12.  Besides, the writ petitioner was a bona fide  purchaser under a statutory sale.  The agreement entered into between, the  consumer  and  the Board  contained  personal  bond  as between  the  parties to the agreement.  In any  event,  the Board cannot take advantage of its own wrong in allowing the arrears  to  get  accumulated without  either  resorting  to Section  24  or  by calling upon  the  consumer  to  furnish additional  security.  In this view, the writ petition  came to be allowed and a writ of mandamus was issued to the Board to   provide  electricity  connection  on  the   terms   and conditions laid down in class of Schedule to the Electricity Act. C.A.  No.  1422 of 1995 (arising out of SLP (C)  No.  10253: Bihar State Electricity Board vs.  Abhay Kumar and others): Under   identical  circumstances,  following   the   earlier decision  in  C.W.J.C.  No. 5358 of  1992  (suman  packaging Private Limited) the High Court allowed the writ petition in this case. 13.  Similar  is the case in Civil Appeal No. 1421  of  1994 (arising out of SLP (c) No. 11806 of 1994. 14.  Mr.   Gopal  Subramaniam,  learned  counsel   for   the appellant urges the following: The appellant is a bona fide purchaser of the assess of  the mortgaged  assets  of Ws.  Patel Industries  in  an  auction sale.  Such an auction was held under the Corporation Act by the  respondent-Corporation.  The appellant is  neither  the transferee  nor the successor to the previous owner  of  the premises.  It is an independent buyer under the Bihar Public Demands  Recovery (Amendment) Act, 1982.  The  dues  towards the  consumption of electricity could be recovered  only  if

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the  appellant  was a consumer.  He cannot be held to  be  a consumer since, factually, the appellant is yet to be  given electricity connection. 15.The  electricity  dues  by the  previous  industry  is  a contractual liability be- 632 tween  the  industry and the respondent Board.   It  is  not statutory  in  nature  since  electricity  is  consumed   by consumer on the basis of a written contract as prescribed in Form EB-70 approved by Section 26 of the Indian  Electricity Act.  1910  (hereinafter  referred to  as  the  ’Electricity Act’). 16.Section  24  of the Electricity Act  has  no  application since  that  presupposes  an  electricity  connection  which connection the appellant is yet to be given.  Therefore, the appellant cannot be held liable for any default committed by the previous consumer.  In support of this submission  reli- ance is placed on Sauriyar Luka. v. Kerala Electricity Board AIR  1959  Kerala 199.  In that case, the test  applied  was whether  the applicant seeking electricity connection  is  a legal representative of the defaulter.  Further, the payment of  arrears  due  form the  defaulting  consumer  cannot  be insisted for the supply of electricity to the premises  used by the erstwhile consumer. 17.Similarly,  in National Textile Corporation (M.P.)  Ltd., Bhopal  v.  MP.  Electricity Board AIR 1980 M.P. 32  it  was held  that  any  liability of a  former  owner  of  National Textile  Undertaking  prior to the appointed day  cannot  be fastened on the successors by mere inference. 18.In Civil Appeal No. 1420 of 1995 (arising out of SLP  (C) No. 16227 of 1992 and Civil Appeal No. 1422 of 1995 (arising out  of  SLP (C) No. 10253 of 1994 the  written  submissions filed  by Mr. Muralidhar, learned advocate on behalf on  the respondent No. 1, Abhay Kumar inter alia run as under: Section  24 of the Electricity Act could be invoked only  as against the person to whom energy has been supplied.   Under Section  2(C) of the Electricity Act "consumer"  means  "any person who is supplied with energy" Therefore, the liability to  pay electricity dues is obviously fastened only  to  the consumer. 19. Neither under the scheme of the Electricity Act nor  the Electricity  (Supply) Act 1948 (hereinafter referred  to  as the  ’Supply Act’) is there any concept of the  premises  of the  consumer being liable for the electricity dues de  hors the consumer, whose premises it is. 20.No doubt, by reason of the amendment made on 28th  April. 1982  to the Bihar and Orissa Public Demands  Recovery  Act, 1914 electricity dues are recovered by bringing the property of   the   consumer  concerned  to   sale   in   certificate proceedings.   Such a provision cannot be invoked against  a subsequent bona fide auction purchaser of the assets. 21.This  Court had held in Bihar State Electricity Board  v. Green Rubber Industries 1990 1 SCC 731 that the relationship between the Board and consumer is purely contractual. 22.In   so   far  as  this  respondent  had   not   consumed electricity,  it was merely seeking re-connection and  there being  no  statutory dues towards consumption  charges,  the Board  cannot insist upon the respondent to pay the  arrears owing by the erstwhile consumer, is a condition precedent to provide  electricity connection.  On the contrary, there  is an  obligation under Section 3(2) (f) and Section 22 of  the Electricity Act read with Clause VI of the Scheme 1  thereof to supply electricity.  The 633 said  Clause VI Schedule 1 contains conditions  under  which

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supply  can  be  discontinued.   These  conditions  do   not stipulate  that  the  supply will  be  discontinued  if  the arrears of the electricity owing by an erstwhile consumer in the  premises are not paid first.  Such a  pre-condition  is illegal and ultra vires both the Acts.  In Sanjay Dhinora  & Anr.  vs.  M.P Faculty Board, Jabalpur 1990 M.P. LJ  48  the High  Court  laid  stress on a  specific  clause  viz.  22A. Without  such a specific provision, it will not be  possible to  foist  any such obligation to pay dues on  a  subsequent bona fide purchaser of assets like the present respondent. 23.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. 24.In  Abhay  Kumar’s case (SLP (C) No. 12253  of  1994  the further  point which is raised is, the Board  has  initiated certain  proceedings  against  the erstwhile  owner  of  the assets,  namely, Allied Paper and Chemical  Industries  Pvt. Limited  under the Bihar and Orissa Public Demands  Recovery Act, 1994.  By an order dated 2.7.94 the Certificate Officer dismissed the case of the Board.  The Board has filed an ap- peal  before  the Collector.  The said  appeal  is  pending. Hence,  the  Board  is  now  estopped  from  demanding  that Respondent  No. 1 should pay to the Board the dues owing  to it by Allied Papers and Chemical Industries Private Limited. 25.  Mr. Pramod Swarup, learned counsel for the Board  urges as under: The  Board,  after  giving notice under Section  24  of  the Electricity  Act to the previous consumer for not  receiving payment   towards  electricity  bills  in  respect  of   the premises,  had  disconnected/cut  off  the  supply  to   the premises.   ’Mat  premises  was  sold  in  auction  by   the Corporation  to the appellant in Isha Marbles case (SLP  (C) No.617 of 1992) and the respondents in other cases. 26.  Section  24 confers a statutory right to the  Board  to cut  off the supply and for that purpose cut  or  disconnect any  electricity  supply  line  or  other  works  being  the property  of the licensee (the Board) through  which  energy may be supplied and may discontinue the supply and surcharge or  other sum together with any expenses incurred by him  in cutting  off  and reconnecting the Supply  are  paid.   This right is without prejudice to the right of the Board to file a  suit.   Therefore, the Board need not  necessary  file  a suit.  When the Board has exercised its statutory right  un- der  Section  24 it cannot be forced  to  reconnect  supply, unless the entire charges due in respect of the building arc paid off to the Board. 27.  The Corporation has not given any notice to the  Board. The  auction purchasers could have easily  ascertained  the. availability of the electricity to the premises. 28.  The bona fides of the purchaser could have no relevance to the issue.  Nor again, the circular of the Board could be relied on to find a cause for reconnection When the Division Bench  decided the case of Suman Packaging  Private  Limited (C.W.J.C. No.5358 of 1992) it chose to 634 differ  from the ruling in Isha Marbles’s case  (C.W.J.C.No. 1536 of 1991).  It should have referred the matter to a full bench  since by the law of precedent previous ruling of  the Division Bench was building on it. 29.Electrical  connection was already given to the  premises in question in each of the cases.  Therefore, no new connec- tion  could be given under Section 24 of the Act unless  the

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previous  arrears had been cleared off.  The  transferee  by purchasing  the unit in the auction sale held under  Section 29 of the Corporation Act cannot be said to have  discharged the  liabilities  of the transferor who was  in  arrears  of electricity  due under the Act.  For not making payment  for electricity,  connection had been cut -off in the  premises. It  is  not correct to urge that the  contractual  liability between the Board and the previous consumer is sought to  be enforced against the third party like the auction purchaser. The  Board is exercising a statutory right under Section  24 of the Electricity Act.  If the contentions of the Appellant is  Isha  Marbles  (SLP  (C)  No.  617  of  1992,  and   the respondents  in other cases were to be accepted, as  rightly pointed out by the High Court in Isha Marbles (C.W.J.C.  No. 1536  of  1991)  the previous consumer  could  always  avoid payment of his arrears by transfering the unit in favour  of the  third  party.  The proper test is to  see  whether  the arrears  are  due  in  relation to  the  premises  to  which electricity was supplied. 30.In order to determine the question as to the liability of the   auction  purchaser  (the  subsequent  transferee)   to discharge  the arrears of consumption charges in respect  of electricity supplied to that premises (the subject -  matter of  transfer)  we,  will  have to  refer  to  the  important provisions of the Indian Electricity Act, 1910 and the Elec- tricity (Supply) Act, 1948. 31.  The   law  relating  to  electricity   is   principally contained in these two Acts: (1)  The Electricity Act: This provides for grant of license in  relation to supply and electricity and the  purchase  of the   undertakings.    It  also  provides  for   supply   of electricity including the protective clauses. (11) The  supply Act: It provides for constitution of  State Electricity Boards, the powers and duties of such Boards. 32.  Section 2 of the Electricity Act in clause   (C) defines a "consumer" thus:               consumer" means by person who is supplied with               energy  by a licenses or the Government or  by               any  other person engaged in the  business  of               supplying energy to the public under this  Act               or any other law for the time being in  force,               and includes any person whose premises are for               time  being  connected  for  the  purpose   of               receiving energy with the works of a licensee.               the  Government or such other person,  as  the               case may be:               (Emphasis supplied)               33.   Undoubtedly,   this  is   an   inclusive               definition.  It consists of two parts:               (i)   The person who is supplied with energy,,               and               (ii)It  includes  within it any  person  whose               premises  are  connected for  the  purpose  of                             receiving energy with the works of a licensee.               635               34.Rule 2A(f) defines an "occupier" as under:               "  "  occupier"  means    the  owner  or  per-               son in occupation of the premises where  energy               is used or proposed to be used."               35.      Section  22 of  the  Electricity  Act               runs:               "Obligation on licensee to supply energy:-               Where  energy is supplied by a licensee  every               person within the area of supply shall  except               in so far as is otherwise provided by the term

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             and  conditions  of the licensee  entitled  on               application, to a supply on the same as  those               on which any other person in the same area  is               entitled   in  similar  circumstances   to   a               corresponding supply.  Provided that no person shall be entitled  to               demand,  or  to continue to  receive,  from  a               licensee  a supply of energy for any  premises               having a separate supply unless he has  agreed               with  the licensee to pay to him such  minimum               annual  sum  as will give  him   a  reasonable               return  on the capital expenditure,  and  will               cover  other standing charges incurred by  him               in  order to meet the possible maximum  demand               for  those  premises, the sum  payable  to  be               determined in case of difference or dispute by               arbitration."      36.  Section 26 of the supply Act provides that subject to  the provisions of this Act, the Board shall, in  respect of the whole State, have all the powers and obligation of  a licensee under the electricity Act. 37.  The  requisition for supply to owners or  occupiers  is contained  in Clause VI of Schedule to the Electricity  Act. That reads: VI.  Requisition  for  supply  to  owners  or  occupiers  in vicinity:- (Where, (after distributing mains have been laid down  under the  provisions of Clause VI or Clause V and the  supply  of energy  through those mains or any of them has commenced)  a requisition is made by the owner or occupier of any premises situate  within (the area of supply) requiting the  licensee to  supply  energy for such premises,  the  licensee  shall, within  one  month from the making of the  requisition,  (or within  such longer period as the Electrical  Inspector  may allow),  supply, and, save in so far as he is prevented from doing  so by cyclones, floods, storms of  other  occurrences beyond his control, continue to supply, energy in accordance with the requisition."                           (Emphasis supplied)      (The  rest of Clause VI of the Schedule is  omitted  as not necessary for our purposes). 38. Section 3(2) (f) of the electricity Act reads: "the provisions contained in the Schedule shall be deemed to be  incorporated with, and to form part of,  every  licensee granted  under  this  part,  save in  so  far  as  they  are expressly  added to, varied or expected by the license,  and shall   subject  to  any  such  additions,   variations   or exceptions which the State Government is hereby empowered to make, apply to the undertaking authorised by the licence." 39.  In  Requisition VI the form prescribed by the Rules  in contained in Annexure "A" to the Rules. 40. The Inter-connection between 636 Section    22    of   the   Electricity   Act    and    Sec- tion  26  of the Supply Act came to be dealt  with  by  this Court  in  State of UP. and others  v.  Hindustan  Aluminium Corporation and others 1979 (3) SCC 229 at paragraphs 19  to 21 at pages 239-240: "Clause (h) of Section 2 of the Act defines a "Licensee"  to mean  any  person licensed under Part 11 to  supply  energy. Section  26  of the Act of 1948 provides. Inter  alia,  that subject to the provisions of that Act, the Electricity Board shall  in respect of the whole states, have all  the  powers and obligations of a lincensee under the Indian  Electricity Act,  1910  and the Act of J948 ’shall be deemed to  be  the

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licence  of  the Board" for purposes of the Act  (of  1910). The first proviso to the section excludes the application of some  sections,  including Section 22 of the  Act,  and  the second  proviso states that the provisions of Clause  VI  of the Scheduled to the Act shall apply to the Board in respect of that area only where distribution mains have been laid by the  Board and the supply of energy through any of them  has commenced. While,  therefore, the UPSEB is a licensee under the Act  it will  be sufficient, for  purpose of the controversy  before us,  to say that Section 22 of the Act is not applicable  to it,  and  Clause  VI of the Schedule  is  applicable  to  it subject  to the restriction contained in the second  proviso Section 26 of the Act of 1948.  So even though the Board  is a  licensee, the obligation under Section 22 of the  Act  to supply energy to every person within the area of its  supply is not fastened on it. The  provisions of the Schedule to the Act are deemed to  be incorporated in, and to form part of, every licence  granted under Part II. Clause VI of that Schedule states  that where after distributing mains have been laid down and the  supply of energy through them has commenced, a requisition is  made by the owner or occupier of any premises situate within  the area  of supply requiring the licensee to supply energy  for such premises, the licensee shall make the supply and  shall continue  to do so in accordance with the requisition.  But, as has been pointed out, the second proviso to Section 26 of the Act of 1948 places a restriction on that obligation  for it says that the provisions of Clause VI shall apply to  the Board in respect of that      area only "where  distribution mains  have been laid by the Board and the supply of  energy through any of them has commenced." 41.  As  to  the manner for getting electricity  supply  for premises  the following requirements have to  be  fulfilled. They  are succintly stated in Shiva Gopal’s law relating  to Electricity Sixth Edition at page 359. (1)  A prospective consumer shall make an sign a requisition in  the form prescribed  by the rules (Annexure VII  to  the Rules)  for a connection of his premises for the  supply  of energy. (2)  The  licensee  shall  then  serve  on  the  prospective consumer a notice requesting him in writing to tender to him a written contract (in such form as the State Government may have approved). (3)  The  prospective consumer shall within 14 days  of  the receipt of such notice tender the contract duly executed by with  sufficient  security, binding him self  thereunder  to take a supply of energy for not less than two years to  such amount as will secure to the licensee at the cur rent  rates charged  by bun in annual revenue not exceeding fifteen  per centum  of the cost of the service line required  to  comply with the requisition. (4)   In addition to the security, the 637 licensee may also require the prospective consumer to pay to him  the cost of so much of any service line as may be  laid down  or  placed  for the purposes of the  supply  upon  the premises  required  to be connected, and of so much  of  any service  line as may be laid down or placed for the  purpose of the supply upon the premises required to be connected and or  so much of any services line as it may be necessary  for the  said purposes to -lay down or place beyond one  hundred feet from the licensee’s distributing main, although not  on that premises. (5)  If the prospective consumer fails to tender the written

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contract  duly executed, fails to give  sufficient  security and  fails to give the cost demanded within the said  period of  14  days, the licensee shall be under no  obligation  to make the connection. (6)  But  if these formalities have been complied  with  the licensee shall be bound to make the supply within one  month or such extended time as the.Electrical Inspector may allow, the  period to the counted from the date of receipt  by  the licensee of the requisition. (7)  And  after  the connection has been made  the  licensee shall be bound to continue the supply unless he is prevented from   doing  so  by  cyclone,  floods,  storms   or   other occurrences beyond his control. 42.  Next comes the important Section under the  Electricity Act, namely, Section 24. 43.  Section 24(1) provides where a consumer neglects to pay any  charge  for  energy of any sum other  than  charge  for energy-the  licensee, after the requisite noticed  shall  be entitled  to stop supply of electrical energy.   Of  course, this power of disconnection Is subject to sub-section (2) of the said Section.  Thus, Section 24 relieves the licensee of its  obligation  under section 22 to supply  energy  if  the consumer  has  not  paid  to  the  charges  for  electricity supplied or where the consumer neglects to pay the name. 44.  Now,  we  will  set  out, by  means  of  the  following tabulated statement, as to what the factual position is: --------------------------------------------------------------- Sl. SLP No.  Parties filed Date of Datewhen   Date of appli- No.               against  discon- sale/      cation for                            nection parchase   re-connection                            to the  took                            previous                            consumer --------------------------------------------------------------- 1. 617/92    M/s.Isha Judg  No conn-  6-1-90   4-3-91              Marbles  ment  ection              vs.      dt.   at the              BSEB     5-9-91 time of                       in CWJC  delivery                       No1536/91 of possession 2. 16227/92  BSEB     dt.   14-7-84   7/8.5.85 after              Vs       28.7.92                  possession 638              Waxpol   in CWJC              Indus.   No.25/86 3.18224/93   BSWB     dt.   17.7.91   29.11.91   9.6.92              Vs.      27.7.93              Suman    in CWJC              Pack-    No.5358/92              Aging              P.Ltd. 4. 10253/94  BSWB     dt.   no conne-  5.1.93    5.10.93              vs.      4.2.94    ction              Abhay    in CWJC              Kumar    No.11330/93 5. 11806/94  BSEB     dt.      -do-    5.4.91    23.11.91              vs.      29.7.93              North    in CWJC              East     No.7299/92              fert-              lisers              P.Ltd. ---------------------------------------------------------- 45   The indisputable facts are: 1.The previous units had the benefit of electricity supply.

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2.The   previous   units/owners  had   borrowed   from   the corporation. 3.To secure those loans they had mortgaged/hypothecated the properties. 4.   The electricity     arrears   in  relation   to   those premises had fallen due since they had neglected to pay 5.   By   exercise  of  power  under  Section  24   of   the Electricity Act the electricity supply was disconnected. 6.For  recovery  of  the  loans  the  mortgaged/hypothecated Properties  were  brought to sale under Section  28  of  the Corporation Act. 46.  The appellant in Isha Marble (SLP(C)    No.   617    of 1992) and the respondents in other civil appeals became  the auction  purchases.  They applied for supply of  electricity for  the  same  premises to which  already  electricity  was supplied and disconnected for the non-clearance  of the dues on account of such supply. 47.  We may, by way of a sample, quote the relevent portions of  the requisition term filled in by Isha Marbles (SLP  (C) 617 of 1992: "Form No. E.B-70 BIHAR STATE ELECTRICITY BOARD REQUISITION FORM THE ASSISTANT ELECTRICAL ENGINEER, ELECTRIC SUPPLY SUB-DIVISION DOLTONGANJ, RURAL NO.1 Sir, 639 I/We  hereby require you to supply energy for  the  premises owned/occupied by me/us and situated within the area  supply of the Bihar State Electricity Board. I/We further require you to supply me/us with the  necessary meter/meters  on hire in terms of Section 26 of  the  Indian Electricity Act, 191 0. I/We agree to give YOU such security as  may  be  required for the period  of  the  meter/meters, whenever called upon to do so. xxx           xxx      xxx      xxx Particulars of the premises  where supply is required. (a)Holding  No. with name of the premises, if any  93/  Plot No.2727 Ward No.x Khara No.2 Mohalla/-Village Bhimgarhi P.O. Dottonganj  P.S. Dottonganj.  Sub Divn.   Doltanganj  Distt. Palanpur (Strike out the words not applicable). xxx           xxx         xxx         xxx (4)   whether  the applicant undertakes to  clear  the  past liability on the previous connection in these premises No. xxx           XXX        xxx         xxx I/We  further hereby as agreed to pay every sum that may  be come due from me us for the energy, or other charges of  the Board  to the officer authorized by the Board to receive  it and in the event of nonpayment of the said sum, it shall  be recoverable from menus as public demand under the Bihar  and Orissa Public Demands Recovery Act. 1914. (Emphasis supplied) 48.       It is important to note that though the  purchaser asked  for  electricity connection as a  new  connection  it cannot  be  regarded as a new connection. It is only  a  re- connection since the premises had already been supplied with electrical energy. Such a supply had been disconnected owing to  the  default of the consumer.  That consumer  had  bound himself  to  the Board to pay the dues.  He also  agreed  to abide  by  the condition as stipulated in the  Act  and  the Rules including the payment of dues. 49.  Under  Section 79 Clause (i) read with Section  of  the Supply  Act it is open to the Board to make  Regulations  to

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stipulate the terms and. conditions of supply of  electrical energy.   One  such  stipulation  is  that  the  consumption charges  must be paid.  In Ferro Alloys Corporation Ltd.  v. A.P.  State Electricity Board and another 1993 Supp (4)  SCC 136 at page 171 (to which one of Us was a party) it was held thus.               ".....   Under the regulations framed  by  the               Board In exercise of powers of section 49 read               with  Section  79  (j) the  consumer  is  only               entitled  and the Board has an  obligation  to               supply energy to the consumer upon such  terms               and   conditions   as   laid   down   in   the               regulations.   If therefore   the  regulations               prescribed a security deposit  that will  have               to  be  complied wit, it also requires  to  be               noticed under Clause VI of the Schedule to the               Electricity  Act  that  the  requisition   for               supply  of energy by the Board is to  be  made               under  proviso (a)after a written contract  is               duly executed with sufficient security. 50.What  then  are  the remedies of the  Board,  should  the consumer  fail to pay?  Undoubtedly, resort could be had  to Section  24 of the Electricity Act.  The provisions of  this Section come into play when; (a)  the consumer neglects to pay any charge for energy  due from him to a  licensee, or 640 (b)the consumer neglects to pay sums other than a charge for energy due from him to the licensee. 51.  In  these circumstances, the licensee may after  giving the  consumer a written notice of not less than seven  clear days cut off the supply and continue to keep the supply  cut off till the consumer shall have paid the sum or sums due. 52.  We  want to make it clear that resorting Section 24  is not the only remedy available.  The general remedy to file a suit will always be available to the Board. 53.  Besides, in the case of Bihar State Electricity  Board, by reason of an amendment of Bihar and Orissa Public Demands and  Recovery Act, 1914 (46 of 1982) electricity dues  could be  recovered  by  bringing the  property  of  the  consumer concerned  to  sale  in certificate  proceedings.   This  is because Rule 15 of Schedule I specifically mentions that any money payable to the; (i)  .................. (ii)................... (iii)................... (iv) Bihar State Electricity Board in  respect  of which the person liable to pay the  same  as agreed by a written instrument that it shall be  recoverable as public demand. 54.  In all the present cases the supply of electricity to a particular  premises  which  had  the  benefit  of  enjoying electricity  had been disconnected under Section 24  of  the Electricity Act.  The auction purchasers want  reconnection. The Board says no; unless and until the consumption  charges in  relation  to  that property which came  to  be  incurred during  the ownership of the previous incumbent are  cleared off.  Is the stand of the Board correct?  The High Court, in the  main judgment in Suman Packaging (C.W.J.C. No. 5358  of 1972) gives the following reasons for answering the question against the Board: 1.Section   24  stipulates  discontinuance  of   supply   of electrical  energy to the consumer in respect of a  sum  due from him.  We are afraid the High Court had not read Section 24  in  conjunction with other statutory  provisions  though

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they  had been noted, namely, Section 26 of the Supply  Act; Section 22 of the Electricity Act and Clause VI of  Schedule of the Electricity Act.  They clearly postulate the  obliga- tion  to  supply energy for such premises.  At the  risk  of repetition  we hold the premises had enjoyed the benefit  of electricity.  The owner of the premises or even the occupier of  the premises, as stated under Rule 2(af) of  the  Indian Electricity  Rules,  becomes liable to pay  the  consumption charges  together  with  other dues,  in  other  words,  the liability  is  in respect of the dues of  electricity  which came to be supplied pursuant to the contract with the former owner.   The  discharge of such Liability will  be  on  such owner or occupier. 55.  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. 641 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. 56.The  form of requisition relating to the contract  is  in Annexure VIII prescribed under Clause VI of the Schedule  to the Electricity Act.  They cannot make the auction purchaser liable.   In  the  case  of Isha  Marbles  we  have  already extracted the relevant clause wherein the consumer was asked to  state his willingness to clear off the arrears to  which the  answer was in the negative.  Therefore, the High  Court has  rightly held that the auction purchaser,  namely,  "the writ petitioner before us is ready and willing to enter into a now contract that the auction purchaser does not intend to obtain the continuance of supply of electrical energy on the basis  of  the old agreement".  It Is true that it  was  the same  premises  to  which  reconnection  is  to  be   given. Otherwise,   with   the  change  of  every   ownership   new connections  have  to be issued does not appear  to  be  the correct  line  of approach as such a  situation  is  brought about  by  the  inaction of the  Electricity  Board  in  not recovering  the  arrears as and when they fall  due  or  not providing itself by adequate deposits. 57.This  is  a  case  of  sale  under  Section  29  of   the Corporation  Act.  Of course, what the Corporation seeks  to recover are the loans advanced by enforcement of a mortgage. Such sale cannot affect the right of the Board to  rev\cover the  dues as and when such dues arose, is a point to be  put against it. 58.  Turning  to the instruction issued by the  Chairman  of the  Board  and a Circular dated 19.1.72 on which  the  High Court  had  relied, in our considered view, is again  to  be weighed against the Electricity Board. 59.  In view of the above, we hold that the decision in  the Souriyar  Luka  (supra) on which reliance is placed  by  Mr. Gopal  Subramaniam  is  correct.   The  ruling  of  National Textile  Corporation (M.P.) Ltd., Bhopal (supra)  rested  on the interpretation. of the provisions of Sick Textile Under- takings  (Nationalisation)  Act (57 of 1974).  That  is  not relevant,  The question with which we are concerned did  not directly  arise in Bihar State Electricity Board, Patna  and others v. M/s.  Green Rubber Industries and others 1990  (1) SCC 73 1. We do not think it is necessary for us to refer to

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Rant Chandra Prasad Sharma and others v. State of Vihar  and another AIR 1967 SC 349 since that case related to co-owner. 60.What  we  have  discussed  above  pears  to  be  the  law gatherable  from  the  various  provisions  which  we   have detailed  out  above.   It is impossible to  impose  on  the purchasers a liability which was not incurred by them. 61.  No  doubt, from the tabulated statement above set  out, the  auction purchasers came to purchase the property  after disconnection  but  they cannot be  ’consumer  or  occupier’ within  the meaning of the above provisions till a  contract is entered into. 62.  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,  behighly  protects public property and behoves everyone to 642 respect  public  property.  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 lacs and lacs 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.   The relevant portions of the  details  of Directorship  of  Waxpol  Industries and  Promoters  of  Neo Chemical  and Metal Products Pvt.  Ltd. from 1. 1.83  as  on date   of  purchase  of  mortgaged  assets  by  Waxpol   and thereafter  (filed as Annexure ’D’ to the counter  affidavit on behalf of Waxpol Industries) are extracted below: Names of promoters               Names of Directors of M/s.  Neo Chemicals           of Waxpol Industries 1. Indu Gupta w/o                1. R.P. Gupta    R.P. Gupta 2. Kusum Garg w/o                2.Parmanand Garg    Parmanand Garg 3. Smt.  S. Natarajan w/o        3. G. Natarajan    G. Natarajan 63.  Factually,  it  appears that there is  no  new  entity. Hence, in this case M/s Neo Chemical and Metal Products Pvt. Ltd. would be liable for the past arrears. 64. In view of the foregoing, we upheld the judgment of  the High  Court  in  Waxpol Industries (CWJC No.  25  of  1986). However, in view of the peculiar facts, the judgments of the High  Court  in Suman Packaging (CWJC  No.  5358/92),  Abhay Kumar  (CWJC No. 11330/93) and North East  Fertilizers  Pvt. Ltd. (CWJC No. 7299 of 1992) are also upheld. 65   As regards M/s.  Isha Marbles  (CWJC No. 1536 of  1991) we set aside the judgment of the High Court. 66.  Civil  Appeal No. 1418 of 1995 (arising out  of  SLP(C) No.  617 of 1992 (Isha Marbles) is allowed accordingly  with costs.   Civil Appeal Nos. 1420, 1419, 1422 & 1421  of  1995 (arising  out of SLP (C) Nos. 16227/92 -  Waxpol  Industries Pvt. Ltd., SLP (C) No. 18224 of 1993 - Suman Packaging  Pvt. Ltd., SLP(C) No. 10253 of 1994 - Abhay Kumar and SLP(C)  No. II  806  of  1994  -  North  East  Fertilizers  Pvt.    Ltd. respectively) are dismissed with costs. 643

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