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REPORTABLE  

IN THE SUPREME COURT OF INDIA  CIVIL APPELLATE JURISDICTION  

 CIVIL APPEAL NO.1672 OF 2020  

(Arising out of SLP (Civil) No. 5190 of 2019)    

Assistant Engineer (D1), Ajmer Vidyut      …Appellant(s)  

Vitran Nigam Limited & Anr.  

versus  

Rahamatullah Khan alias Rahamjulla     …Respondent(s)  

WITH C.A.NO.1673/2020 @ SLP©NO.4721/2020 @  

D.NO.33892/2018  

J U D G M E N T  

INDU MALHOTRA, J.  

Delay condoned.  Leave granted.  

a) The issues which have arisen for consideration in the  

present Civil Appeal are : –

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b) What is the meaning to be ascribed to the term “first due”  

in Section 56(2) of the Electricity Act, 2003?  

c) In the case of a wrong billing tariff having been applied on  

account of a mistake, when would the amount become “first  

due”?  

d) Whether recourse to disconnection of electricity supply may  

be taken by the licensee company after the lapse of two  

years in case of a mistake?  

1. The factual matrix in which the aforesaid issues have arisen  

for our consideration is : –  

1.1 In the present case, for the period July, 2009 to  

September, 2011, the Respondent along with other  

consumers were billed by the licensee company (the  

Appellant herein) under Tariff Code 4400 @Rs.1.65 per  

unit.  

1.2 During the course of a regular audit being conducted by  

the Internal Audit Party, it was discovered that in 52  

cases, including that of the Respondent, the bills were  

raised under the wrong Tariff Code 4400, instead of

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Tariff Code 9400, under which the prescribed tariff rate  

was Rs.2.10p. per unit.  

1.3 On 18.03.2014, the licensee company issued a show  

cause notice to various consumers, including the  

Respondent, raising an additional demand for  

consumption of electricity for the past period from July,  

2009 to September, 2011. It was mentioned in the notice  

that the amount was payable in view of the internal  

audit conducted by the department.  

1.4 On 25.05.2015, the licensee company raised a bill  

demanding payment of Rs.29,604/- from the  

Respondent under Tariff Code 9400 for the period July,  

2009 to September, 2011.  

1.5 Aggrieved by the said demand, the Respondent filed a  

Consumer Complaint before the District Consumer  

Forum, Ajmer.  

The District Forum vide Order dated 21.06.2016,  

allowed the Consumer Complaint, and held that the  

additional demand was time-barred.   

1.6 Thereafter, the State Commission vide Order dated  

30.05.2017, allowed the Appeal of the licensee

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company, and set aside the Order dated 21.06.2016  

passed by the District Forum.  

1.7 In the Revision Petition filed by the Respondent before  

the National Consumer Disputes Redressal  

Commission, the Order passed by the State Commission  

was set aside. The National Commission held that the  

additional demand was barred by limitation under  

Section 56(2) of the Electricity Act, 2003 (“the Act”).  

1.8 The licensee company has filed the present Civil Appeals  

before this Court to challenge the final judgment dated  

28.05.2018 passed by the National Commission.  

1.9 This Court vide Order dated 05.03.2019 appointed   Mr.  

Devashish Bharuka as Amicus Curiae to assist this  

Court on the issues raised for determination.  

It was further directed that the Appellant –  

Corporation would not be entitled to recover the  

additional demand from the Respondent in this case,  

and only the questions of law would be determined.  

2. We have heard the learned Counsel on behalf of the Appellant  

– Corporation and the learned Amicus Curiae.

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3. Mr. Puneet Jain represented the licensee company, and  

submitted that the power to disconnect electricity supply  

under Section 56(1) of the Act may be exercised by the licensee  

company when a consumer neglects to pay the electricity  

charges, or any other sums due and payable by him. The  

neglect to pay the “sum due” by a consumer, necessarily  

requires that there should be a “demand” of the sum due from  

the consumer, which he is required to pay within the period  

stipulated. If the demand is not paid within the stipulated  

time, then the power of disconnection under Section 56(1) may  

be resorted to.  

3.1 It was further submitted that when a bill or demand is  

raised, which is disputed by the consumer, he may raise  

the dispute before the Authorities as provided by Section  

42(5) or 42(6) of the Act, or avail such other remedies as  

may be available in law, such as a suit for declaration  

and injunction; consumer dispute before the consumer  

fora; arbitration if provided by the governing agreement.  

3.2 Section 56(1) of the Act confers the power of  

disconnection of electricity supply for default of

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payment upon a licensee, and provides the conditions  

when such a power may be invoked, the procedure and  

manner of the exercise of such power, the period for  

which such power can remain effective, and the  

circumstances under which such a power cannot be  

exercised.  

3.3 Sub-section (2) of Section 56 bars the remedy of  

disconnection of supply for default of payment, if the  

consumer deposits the amount demanded under  

protest, or if the demand has been raised two years after  

the sum became “first due”, albeit the same had been  

continuously shown to be recoverable as arrears of  

charges.  

3.4 The word “due” has been used under Section 56(1) as  

well as under Section 56(2). The term “due” refers to the  

amount for which the demand is raised by way of a bill.  

The term “first due” would therefore imply when the  

demand is raised for the first time. The bill raised by the  

licensee company would be the starting point for the  

exercise of power under sub-section (1) of Section 56.

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3.5 The starting point of limitation would be from the date  

when the bill is raised by the licensee company. The bar  

of limitation is applicable only on the exercise of power  

of disconnection. As per sub-section (2) of Section 56,  

the bar of limitation would be two years from the date  

when the first bill is raised.  

3.6 It was further submitted that in case of a mistake, the  

starting point of limitation should be the date when the  

mistake is discovered.  

In the present case, during a regular internal audit  

conducted on 18.03.2014, it was discovered that a  

mistake had occurred in 52 cases, including that of the  

Respondent, as the bills were raised under the wrong  

Tariff Code. The Appellant–Corporation raised  

additional demands on 25.05.2015, i.e., within two  

years from the discovery of the mistake.  

4. The learned Amicus Curiae submitted that Section 56(1) of the  

Act empowers the licensee to disconnect the electricity supply  

if the consumer neglects to pay his dues. The disconnection  

would take place only after the consumer has consumed the

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electricity, and the bill has been generated. If the consumer  

neglects to pay the bill served on him within the stipulated  

period, the licensee can resort to coercive modes of recovery  

provided in the Act.  

4.1 The words “first due” used in the first part of sub-section  

(2) of Section 56 is used in the context of the sum  

quantified by the licensee in the bill; while the second  

part of sub-section (2) of Section 56 indicates the date  

when the first bill for the supply of electricity was raised  

by the licensee under the applicable State Electricity  

Supply Code.  

4.2 By treating the words “first due” to mean the date of  

detection of mistake, would dilute the mandate of the  

two year limitation period provided by Section 56(2),  

since a mistake may be detected at any point of time.  

Furthermore, the words “recoverable as arrears of  

charges” would be rendered completely otiose and  

nugatory.  

4.3 The period of limitation under Section 56(2) cannot be  

extended by raising a supplementary bill. The “sum due”  

raised in the original bill, and not paid by the consumer,

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must be continuously shown as arrears of charges in  

subsequent bills, for it to become recoverable by taking  

recourse to the coercive mode of disconnection of  

electricity supply.  

4.4 If after the expiry of two years of the original demand,  

any genuine or bona fide mistake is detected by the  

licensee in the original bill, it would be entitled to raise  

a supplementary bill. The licensee company would be  

entitled to resort to other modes of recovery, but not by  

disconnection of supply under sub-section (1) of Section  

56 of the 2003 Act.  

6. Findings and Analysis  

The Electricity Act, 2003 is a consumer-friendly statute.1 The  

Statement of Objects and Reasons to the Act notes that over a  

period of time, the performance of State Electricity Boards had  

deteriorated on account of various factors, and the need was  

felt to frame a self-contained comprehensive legislation, which  

led to the enactment of the Electricity Act, 2003.  

 1 Tata Powers v. Reliance Energy, (2008) 10 SCC 321.

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6.1 Electricity has been held to be “goods” by a Constitution  

Bench in State of Andhra Pradesh v. National Thermal  

Power Corporation Ltd.2 Under the Sale of Goods Act,  

1930 a purchaser of goods is liable to pay for it at the  

time of purchase or consumption. The quantum and  

time of payment may be ascertained post facto either by  

way of an agreement or the relevant statute.  

In the case of electricity, the charges are  

ascertained and recovered as per the tariff notified by  

the State Electricity Board, or under an electricity  

supply agreement between the parties read with the  

tariff under Section 62(1)(d), and the Electricity Supply  

Code framed under Section 50.  

6.2 The present Civil Appeal pertains to the interpretation  

of Section 56 of the Act which reads as follows : –  

“Section 56. Disconnection of supply in  default of payment –     (1) Where any person neglects to pay any  charge for electricity or any sum other than a  charge for electricity due from him to a licensee  or the generating company in respect of supply,  transmission or distribution or wheeling of  electricity to him, the licensee or the generating  company may, after giving not less than fifteen  clear days’ notice in writing, to such person and  

 2 (2002) 5 SCC 203.

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without prejudice to his rights to recover such  charge or other sum by suit, cut off the supply  of electricity and for that purpose cut or  disconnect any electric supply line or other  works being the property of such licensee or the  generating company through which electricity  may have been supplied, transmitted,  distributed or wheeled and may discontinue  the supply until such charge or other sum,  together with any expenses incurred by him in  cutting off and reconnecting the supply, are  paid, but no longer:    Provided that the supply of electricity shall not  

be cut off if such person deposits, under  protest, -  a) an amount equal to the sum claimed from  him, or  b) the electricity charges due from him for each  month calculated on the basis of average  charge for electricity paid by him during the  preceding six months,  whichever is less, pending disposal of any  dispute between him and the licensee.    (2) Notwithstanding anything contained in any  other law for the time being in force, no sum due  from any consumer, under this section shall be  recoverable after the period of two years from  the date when such sum became first due  unless such sum has been shown continuously  as recoverable as arrear of charges for  electricity supplied and the licensee shall not  cut off the supply of the electricity.”  

(emphasis supplied)  

Section 56 provides for disconnection of supply in  

the case of default in payment of electricity charges.  

Sub-section (1) of Section 56 provides that where any  

person “neglects” to pay “any charge” for electricity, or  

“any sum” other than a charge for electricity due from

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him to a licensee or generating company, the licensee  

after giving 15 days’ written notice, may disconnect the  

supply of electricity, until such charges or other sums  

due, including the expenses incurred, are paid.  

However, the disconnection cannot continue after the  

amounts are paid.  

6.3 The obligation of a consumer to pay electricity charges  

arises after the bill is issued by the licensee company.  

The bill sets out the time within which the charges are  

to be paid. If the consumer fails to pay the charges  

within the stipulated period, they get carried forward to  

the next bill as arrears.  

6.4 The proviso to Section 56(1) carves out an exception by  

providing that the disconnection will not be effected if  

the consumer either deposits the amount “under  

protest”, or deposits the average charges paid during the  

preceding six months.  

6.5 Sub-section (2) of Section 56 by a non obstante clause  

provides that notwithstanding anything contained in  

any other law for the time being in force, no sum due  

from any consumer, shall be recoverable under Section

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56, after the expiry of two years from the date when the  

sum became “first due”, unless such sum was shown  

continuously recoverable as arrears of charges for the  

electricity supplied, nor would the licensee company  

disconnect the electricity supply of the consumer.  

The effect of a non obstante clause was explained  

by this Court in Chandavarkar Sita Ratna Rao v.  

Ashalata S. Guram.3 It was held that : –   

“69. A clause beginning with the expression  ‘notwithstanding anything contained in this Act  or in some particular provision in the Act or in  some particular Act or in any law for the time  being in force, or in any contract’ is more often  than not appended to a section in the beginning  with a view to give the enacting part of the  section in case of conflict an overriding effect  over the provision of the Act or the contract  mentioned in the non-obstante clause. It is  equivalent to saying that in spite of the  provision of the Act or any other Act mentioned  in the non-obstante clause or any contract or  document mentioned the enactment following it  will have its full operation or that the provisions  embraced in the non-obstante clause would not  be an impediment for an operation of the  enactment.”  

(emphasis supplied)  

6.6. The liability to pay arises on the consumption of  

electricity. The obligation to pay would arise when the  

 3 (1986) 4 SCC 447.

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bill is issued by the licensee company, quantifying the  

charges to be paid.  

Electricity charges would become “first due” only  

after the bill is issued to the consumer, even though the  

liability to pay may arise on the consumption of  

electricity.  

7. The next issue is as to whether the period of limitation of two  

years provided by Section 56(2) of the Act, would be applicable  

to an additional or supplementary demand.  

7.1 Prior to the coming into force of the Electricity Act, 2003,  

the Indian Electricity Act, 1910 governed the law  

pertaining to the use and supply of electricity in India.  

Section 24 of the Indian Electricity Act, 1910 read as  

follows :–  

“24. Discontinuance of supply to consumer  neglecting to pay charge.    

(1) Where any person neglects to pay any  charge for energy or any sum, other than a  charge for energy, due from him to a licensee in  respect of the supply of energy to him, the  licensee may, after giving not less than seven  clear days’ notice in writing to such person and  without prejudice to his right to recover such  charge or other sum by suit, cut off the supply  and for that purpose cut or disconnect any  electric supply-line or other works being the

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property of the licensee, through which energy  may be supplied, and may discontinue the  supply until such charger or other sum, together  with ally expenses incurred by him in cutting  off and reconnecting the supply, are paid, but  no longer.    (2) Where any difference or dispute which by or  under this Act is required to be determined by  an Electrical Inspector, has been referred to the  Inspector before notice as aforesaid has been  given by the licensee, the licensee shall not  exercise the powers conferred by this section  until the Inspector has given his decision:  

Provided that the prohibition contained in this  subsection shall not apply in any case in which  the licensee has made a request in writing to  the consumer for a deposit with the Electrical  Inspector of the amount of the licensee’s  charges or other sums in dispute or for the  deposit of the licensee’s further charges for  energy as they accrue, and the consumer has  failed to comply with such request.”  

The Standing Committee of Energy in its Report  

dated 19.12.2002 submitted to the 13th Lok Sabha,  

opined that Section 56 of the 2003 Act is based on  

Section 24 of the 1910 Act.  

The Standing Committee further opined that a  

restriction has been added for recovery of arrears  

pertaining to the period prior to two years from  

consumers, unless the arrears have been continuously  

shown in the bills. Justifying the addition of this  

restriction, the Ministry of Power submitted that : –  

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“It has been considered necessary to provide  for such a restriction to protect the consumers  from arbitrary billings.”  

7.2 In Swastic Industries v. Maharashtra State Electricity  

Board,4 this Court while interpreting Section 24 of the  

Indian Electricity Act, 1910 held that : –  

 “5. It would, thus, be clear that the right to  

recover the charges is one part of it and right to  discontinue supply of electrical energy to the  consumer who neglects to pay charges is  another part of it.”  

(emphasis supplied)  

 7.3 Sub-section (1) of Section 56 confers a statutory right to  

the licensee company to disconnect the supply of  

electricity, if the consumer neglects to pay the electricity  

dues.  

This statutory right is subject to the period of  

limitation of two years provided by sub-section (2) of  

Section 56 of the Act.  

7.4 The period of limitation of two years would commence  

from the date on which the electricity charges became  

“first due” under sub-section (2) of Section 56. This  

 4 (1997) 9 SCC 465.

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provision restricts the right of the licensee company to  

disconnect electricity supply due to non-payment of  

dues by the consumer, unless such sum has been  

shown continuously to be recoverable as arrears of  

electricity supplied, in the bills raised for the past  

period.  

If the licensee company were to be allowed to  

disconnect electricity supply after the expiry of the  

limitation period of two years after the sum became “first  

due”, it would defeat the object of Section 56(2).  

8. Section 56(2) however, does not preclude the licensee company  

from raising a supplementary demand after the expiry of the  

limitation period of two years. It only restricts the right of the  

licensee to disconnect electricity supply due to non-payment  

of dues after the period of limitation of two years has expired,  

nor does it restrict other modes of recovery which may be  

initiated by the licensee company for recovery of a  

supplementary demand.

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9. Applying the aforesaid ratio to the facts of the present case,  

the licensee company raised an additional demand on  

18.03.2014 for the period July, 2009 to September, 2011.  

The licensee company discovered the mistake of billing  

under the wrong Tariff Code on 18.03.2014. The limitation  

period of two years under Section 56(2) had by then already  

expired.  

Section 56(2) did not preclude the licensee company from  

raising an additional or supplementary demand after the  

expiry of the limitation period under Section 56(2) in the case  

of a mistake or bona fide error. It did not however, empower  

the licensee company to take recourse to the coercive measure  

of disconnection of electricity supply, for recovery of the  

additional demand.  

As per Section 17(1)(c) of the Limitation Act, 1963, in case  

of a mistake, the limitation period begins to run from the date  

when the mistake is discovered for the first time.  

In Mahabir Kishore and Ors. v. State of Madhya Pradesh,5  

this Court held that :–  

 5 (1989) 4 SCC 1.

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“Section 17(1)(c) of the Limitation Act, 1963,  provides that in the case of a suit for relief on  the ground of mistake, the period of limitation  does not begin to run until the plaintiff had  discovered the mistake or could with  reasonable diligence, have discovered it. In a  case where payment has been made under a  mistake of law as contrasted with a mistake of  fact, generally the mistake become known to  the party only when a court makes a  declaration as to the invalidity of the law.  Though a party could, with reasonable  diligence, discover a mistake of fact even before  a court makes a pronouncement, it is seldom  

that a person can, even with reasonable  diligence, discover a mistake of law before a  judgment adjudging the validity of the law.”  

(emphasis supplied)      

In the present case, the period of limitation would  

commence from the date of discovery of the mistake i.e.  

18.03.2014. The licensee company may take recourse to any  

remedy available in law for recovery of the additional demand,  

but is barred from taking recourse to disconnection of supply  

of electricity under sub-section (2) of Section 56 of the Act.  

10. We extend our appreciation to Mr. Devashish Bharuka,  

Advocate who has very ably assisted this Court as Amicus  

Curiae.  

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The present Civil Appeals are accordingly disposed of in the  

aforesaid terms.  

All pending Applications, if any, are accordingly disposed of.  

Ordered accordingly.  

.....................................J.  (UDAY UMESH LALIT)  

.…...............………………J.  (INDU MALHOTRA)  

 New Delhi,  February 18, 2020