M/S PREM COTTEX versus UTTAR HARYANA BIJLI VITRAN NIGAM LTD. & ORS. on 5 October 2021

[2021] 8 S.C.R. 645

M/S PREM COTTEX

v.

UTTAR HARYANA BIJLI VITRAN NIGAM LTD. & ORS.(Civil Appeal No. 7235 of 2009)

OCTOBER 05, 2021

[HEMANT GUPTA AND V. RAMASUBRAMANIAN, JJ.]

Consumer Protection Act, 1986 – 2(1)(g) – Deficiency inservice – When not – Additional demand raised by respondent no.3alleging short billing in view of wrong multiply factor (MF) appliedin the bills raised for particular period – Challenged by appellantinter alia pleading bar u/s.56, 2003 Act – Complaint dismissed byNational Consumer Dispute Redressal Commission – On appeal,held: Before going into the question of bar u/s.56(2), the consumerforum is obliged to find out at the threshold whether there was anydeficiency in service – Raising of an additional demand in the formof short assessment notice, on the ground that the multiply factorwas wrongly mentioned in the bills raised during particular period,does not tantamount to deficiency in service – If a licensee discoversin the course of audit or otherwise that a consumer has been shortbilled, it is entitled to raise a demand – So long as the consumerdoes not dispute the correctness of the claim made by the licenseethat there was short assessment, it is not open to the consumer toclaim that there was any deficiency – Appellant never disputed thecorrectness of the respondents’ claim that the MF to be applied was10, but it was wrongly applied as 5 – National Commission correctlypointed out that it is a case of “escaped assessment” and not“deficiency in service” – Respondents not guilty of any deficiencyin service – Complaint rightly dismissed – Electricity Act, 2003 –s.56(2).

Electricity Act, 2003 – s.56(2) – Bar under – Held: Bar u/s.56(2) operates on two distinct rights of the licensee, (i) the rightto recover (ii) the right to disconnect – Bar with reference to theenforcement of the right to disconnect, is an exception to the law oflimitation – Limitation Act, 1963.

Electricity Act, 2003 – s.56(1) – Impact of, on s.56(2) –Discussed.

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ADismissing the appeal, the Court

HELD: 1.1 The appellant never disputed the correctnessof the claim of the respondents that the multiply factor (MF) tobe applied was 10, but it was wrongly applied as 5. A carefulreading of Section 56(2), Electricity Act, 2003 would show thatBthe bar contained therein is not merely with respect todisconnection of supply but also with respect to recovery. If Sub-section (2) of Section 56 is dissected into two parts it will read asfollows :-(i) No sum due from any consumer under this Sectionshall be recoverable after the period of two years from the datewhen such sum became first due; and (ii) the licensee shall notCcut off the supply of electricity. Therefore, the bar actually operateson two distinct rights of the licensee, namely, (i) the right torecover; and (ii) the right to disconnect. The bar with referenceto the enforcement of the right to disconnect, is actually anexception to the law of limitation. Under the law of limitation,Dwhat is extinguished is the remedy and not the right. What isextinguished by the law of limitation, is the remedy through acourt of law and not a remedy available, if any, de hors through acourt of law. However, section 56(2) bars not merely the normalremedy of recovery but also bars the remedy of disconnection.The second part of Section 56(2) is an exception to the law ofElimitation. Once it is held that the term “first due” would meanthe date on which a bill is issued, (as held in para 6.9 ofRahamatullah Khan) and once it is held that the period oflimitation would commence from the date of discovery of themistake (as held in paragraphs 9.1 to 9.3 of Rahamatullah Khan),Fthen the question of allowing licensee to recover the amount byany other mode but not take recourse to disconnection of supplywould not arise. But Rahamatullah Khan says in the penultimateparagraph that “the licensee may take recourse to any remedyavailable in law for recovery of the additional demand, but barred

from taking recourse to disconnection of supply under sub-sectionG(2) of section 56 of the Act”.The decision in Rahamatullah Khanis distinguishable on facts. [Paras 9, 14-16 and 18][652-G-H;653-A-F; 654-B]

Assistant Engineer (D1), Ajmer Vidyut Vitran Nigamlimited and Anr. vs. Rahamatullah Khan alias H

Rahamjulla (2020) 4 SCC 650:[2020] 2 SCR 929 –distinguished.

1.2 Even otherwise there are two things in this case, whichcannot be overlooked. The first is that the question whether theraising of an additional demand, by itself would tantamount to anydeficiency in service, clothing the consumer fora with a power todeal with the dispute, was not raised or considered inRahamatullah Khan. The second is the impact of Sub-section (1)of Section 56 on Sub-section (2) thereto. The fora constitutedunder the Consumer Protection Act, 1986 is entitled to deal withthe complaint of a consumer, either in relation to defective goodsor in relation to deficiency in services. The word “deficiency” isdefined in Section 2(1)(g) of the Consumer Protection Act, 1986.The raising of an additional demand in the form of “shortassessment notice”, on the ground that in the bills raised duringa particular period of time, the multiply factor was wronglymentioned, cannot tantamount to deficiency in service. If alicensee discovers in the course of audit or otherwise that aconsumer has been short billed, the licensee is certainly entitledto raise a demand. So long as the consumer does not dispute thecorrectness of the claim made by the licensee that there wasshort assessment, it is not open to the consumer to claim thatthere was any deficiency. This is why, the National Commission,in the impugned order correctly pointed out that it is a case of“escaped assessment” and not “deficiency in service”. [Paras19-21][654-C-H]

1.3 In fact, even before going into the question of Section56(2), the consumer forum is obliged to find out at the thresholdwhether there was any deficiency in service. It is only then thatthe recourse taken by the licensee for recovery of the amount,can be put to test in terms of Section 56. The respondents cannotbe held guilty of any deficiency in service and hence dismissal ofthe complaint by the National Commission is perfectly in order.With respect to the second aspect, namely, the impact of Sub-section (1) on Sub-section (2) of Section 56, it is seen that thebottom line of Sub-section (1) is the negligence of any person topay any charge for electricity. Sub-section (1) starts with the words A

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A“where any person neglects to pay any charge for electricity or anysome other than a charge for electricity due from him”. Sub-section(2) uses the words “no sum due from any consumer under thisSection”.Therefore, the bar under Sub-section (2) is relatable tothe sum due under Section 56. Sub-section (1) deals specificallywith the negligence on the part of a person to pay any charge forBelectricity or any sum other than a charge for electricity. What iscovered by section 56, under sub-section (1), is the negligence onthe part of a person to pay for electricity and not anything else norany negligence on the part of the licensee. [Paras 22-24][655-A-E]

1.4 In other words, the negligence on the part of theClicensee which led to short billing in the first instance and therectification of the same after the mistake is detected, is notcovered by Sub-section (1) of Section 56. Consequently, any claimso made by a licensee after the detection of their mistake, maynot fall within the mischief, namely, “no sum due from any Dconsumer under this Section”, appearing in Sub-section (2). Sub-section (1) of Section 56 deals with the disconnection of electricsupply if any person “neglects to pay any charge for electricity”.The question of neglect to pay would arise only after a demand israised by the licensee. If the demand is not raised, there is no

occasion for a consumer to neglect to pay any charge forEelectricity. Sub-section (2) of Section 56 has a non-obstante clausewith respect to what is contained in any other law, regarding theright to recover including the right to disconnect. Therefore, ifthe licensee has not raised any bill, there can be no negligenceon the part of the consumer to pay the bill and consequently theFperiod of limitation prescribed under Sub-section (2) will not startrunning. So long as limitation has not started running, the bar forrecovery and disconnection will not come into effect. Hence thedecision in Rahamatullah Khan and Section 56(2) will not go tothe rescue of the appellant. The National Commission was justifiedin rejecting the complaint and there is no reason to interfereGwith the said Order. However, since the appellant has alreadypaid 50% of the demand amount pursuant to an interim orderpassed by this Court on 19.08.2014, eight weeks time given tothe appellant to make payment of the balance amount. [Paras 22-27][655-E-H; 656-A-C]H

Mahabir Kishore & Ors. vs. State of Madhya Pradesh(1989) 4 SCC 1 : [1989] 3 SCR 596 – referred to.

Case Law Reference

[2020] 2 SCR 929distinguishedPara 8[1989] 3 SCR 596referred toPara 12

CIVIL APPELLATE JURISDICTION: Civil Appeal No.7235 of2009

From the Judgment and Order dated 01.10.2009 of NationalConsumer Disputes Redressal Commission, New Delhi in ConsumerComplaint No.156 of 2009.K. C. Mittal, Arvind Jain, Harish Pandey, Amresh Anand, Advs.for the Appellant.

Arun Bhardwaj, Addl. AG, Rahul Kumar Sharma, Ms. GauraanBhardwaj, Abhishek Sharma, Vishwa Pal Singh, Brijender Singh Dhull,Ashish Pandey, Advs. for the Respondents.

The Judgment of the Court was delivered by

V. RAMASUBRAMANIAN, J.

1. Challenging an Order of the National Consumer DisputesRedressal Commission (for short “National Commission”), dismissingtheir consumer complaint on the ground that there was no deficiency inservice on the part of the licensee (electricity distribution company), theconsumer of electricity has come up with the above statutory appeal.

2. We have heard Sh. K.C. Mittal, learned counsel for the appellantand Mr. Arun Bhardwaj, learned Additional Advocate General for theState of Haryana, appearing for the respondents.

3. The appellant is carrying on the business of manufacturing cottonyarn in Panipat, Haryana. The appellant is having a L.S. connection,which got extended from 404.517 KW to 765 KW with C.D 449 KVAto 850 KVA, on 3.08.2006.

4. After 3 years of the grant of extension, the appellant was servedwith a memo dated 11.09.2009 by the third respondent herein, under thecaption “short assessment notice”, claiming that though the multiplyfactor (MF) is 10, it was wrongly recorded in the bills for the period A

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Afrom 3.08.2006 to 8/09 as 5 and that as a consequence there was shortbilling to the tune of Rs.1,35,06,585/-. The notice called upon the appellantto pay the amount as demanded, failing which certain consequenceswould follow.

5. Aggrieved by the said notice, the appellant gave a representationBon 22.09.2009 and then filed a consumer complaint before the NationalCommission, contending inter alia that the demand made by therespondents is the outcome of a glaring mistake and gross negligence ontheir part and that under Section 56 of the Electricity Act, 2003 (forshort “the Act”), no amount due from a customer is recoverable after aperiod of two years from the date on which it became first due.C6. By an Order dated 1.10.2009, the National Commissiondismissed the complaint on the ground that it is a case of “escapedassessment” and not a case of “deficiency in service”. Aggrieved bythe said Order, the appellant is before us.

7. While ordering notice in the above appeal on 13.11.2009, thisDCourt granted interim stay of the impugned order. However, on anapplication filed on behalf of the respondents for vacating the interimorder, this Court modified the stay Order on 19.08.2014 directing theappellant to pay to the first respondent herein, 50% of the demand amountwithin six weeks with a condition that in case the appellant succeeded, Ethe said amount shall be refunded with interest @ 9% p.a. Accordingly,the appellant has paid a sum of Rs.54,03,293/-, on 24.09.2014. Theappellant claims to have already paid a sum of Rs.13,50,000/- on 9.10.2009itself and this amount, together with the amount deposited on 24.09.2014pursuant to the interim order of this Court, constituted 50% of the amountas demanded in short assessment notice dated 11.09.2009.F8. The sheet anchor of the case of the appellant is Section 56(2)of the Act and the exposition of law made by this Court in the decision inAssistant Engineer (D1), Ajmer Vidyut Vitran Nigam limited andAnr. vs. Rahamatullah Khan alias Rahamjulla[1].

9. Before we proceed to consider the statutory provision and theGdecision of this Court relied upon by the appellant, it is relevant to takenote of the fact that the appellant never disputed the correctness of theclaim of the respondents that the multiply factor (MF) to be applied was10, but it was wrongly applied as 5. The only grievance raised by theappellant both in their representation and in their consumer complaint H1 (2020) 4 SCC 650

M/S PREM COTTEX v. UTTAR HARYANA BIJLI VITRAN NIGAMLTD [V. RAMASUBRAMANIAN, J.]

was that they cannot be made to suffer on account of the negligence onthe part of the respondents and that on the basis of the bill already raised,they have charged their customers and that it may not be possible forthem to go back to their customers with an additional demand now. Inaddition, the bar under Section 56 was also pleaded.

10. Section 56 of the Electricity Act, 2003 reads as under:- “56. Disconnection of supply in default of payment. - (1)Where any person neglects to pay any charge for electricityor any sum other than a charge for electricity due from him toa 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 notless than fifteen clear days’ notice in writing, to such personand without prejudice to his rights to recover such charge orother sum by suit, cut off the supply of electricity and for thatpurpose cut or disconnect any electric supply line or otherworks being the property of such licensee or the generatingcompany through which electricity may have been supplied,transmitted, distributed or wheeled and may discontinue thesupply until such charge or other sum, together with anyexpenses incurred by him in cutting off and reconnecting thesupply, are paid, but no longer:

Provided that the supply of electricity shall not be cutoff 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 monthcalculated on the basis of average charge for electricitypaid by him during the preceding six months, whichever is less, pending disposal of any disputebetween him and the licensee.

(2) Notwithstanding anything contained in any otherlaw for the time being in force, no sum due from any consumer,under this section shall be recoverable after the period oftwo years from the date when such sum became first due unlesssuch sum has been shown continuously as recoverable asarrear of charges for electricity supplied and the licenseeshall not cut off the supply of the electricity.”

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A11. In Rahamatullah Khan (supra), three issues arose for theconsideration of this Court. They were (i) what is the meaning to beascribed to the term “first due” in Section 56(2) of the Act; (ii) in thecase of a wrong billing tariff having been applied on account of a mistake,when would the amount become first due; and (iii) whether recourse todisconnection may be taken by the licensee after the lapse of two yearsBin the case of a mistake.

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12. On the first two issues, this Court held that though the liabilityto pay arises on the consumption of electricity, the obligation to paywould arise only when the bill is raised by the licensee and that,therefore, electricity charges would become “first due” only afterCthe bill is issued, even though the liability would have arisen onconsumption. On the third issue, this Court held in Rahamatullah Khan(supra), that “the period of limitation of two years would commencefrom the date on which the electricity charges became first due underSection 56(2)”. This Court also held that Section 56(2) does not precludeDthe licensee from raising an additional or supplementary demand afterthe expiry of the period of limitation in the case of a mistake or bonafideerror. To come to such a conclusion, this Court also referred to Section17(1)(c) of the Limitation Act, 1963 and the decision of this Court inMahabir Kishore & Ors. vs. State of Madhya Pradesh[2].

E13. Despite holding that electricity charges would become firstdue only after the bill is issued to the consumer (para 6.9 of the SCCReport) and despite holding that Section 56(2) does not preclude thelicensee from raising an additional or supplementary demand after theexpiry of the period of limitation prescribed therein in the case of amistake or bonafide error (Para 9.1 of the SCC Report), this CourtFcame to the conclusion that what is barred under Section 56(2) is onlythe disconnection of supply of electricity. In other words, it was held bythis Court in the penultimate paragraph that the licensee may takerecourse to any remedy available in law for the recovery of the additionaldemand, but is barred from taking recourse to disconnection of supplyGunder Section 56(2).

14. But a careful reading of Section 56(2) would show that thebar contained therein is not merely with respect to disconnection ofsupply but also with respect to recovery. If Sub-section (2) of Section 56is dissected into two parts it will read as follows:- H2 (1989) 4 SCC 1

(i) No sum due from any consumer under this Section shall berecoverable after the period of two years from the datewhen such sum became first due; and

(ii) the licensee shall not cut off the supply of electricity.

15. Therefore, the bar actually operates on two distinct rights ofthe licensee, namely, (i) the right to recover; and (ii) the right todisconnect. The bar with reference to the enforcement of the right todisconnect, is actually an exception to the law of limitation. Under thelaw of limitation, what is extinguished is the remedy and not the right. Tobe precise, what is extinguished by the law of limitation, is the remedythrough a court of law and not a remedy available, if any, de hors througha court of law. However, section 56(2) bars not merely the normal remedyof recovery but also bars the remedy of disconnection. This is why wethink that the second part of Section 56(2) is an exception to the law oflimitation.

16. Be that as it may, once it is held that the term “first due”would mean the date on which a bill is issued, (as held in para 6.9 ofRahamatullah Khan) and once it is held that the period of limitationwould commence from the date of discovery of the mistake (as held inparagraphs 9.1 to 9.3 of Rahamatullah Khan), then the question ofallowing licensee to recover the amount by any other mode but not takerecourse to disconnection of supply would not arise. But RahamatullahKhan says in the penultimate paragraph that “the licensee may takerecourse to any remedy available in law for recovery of theadditional demand, but barred from taking recourse to disconnectionof supply under sub-section (2) of section 56 of the Act”.

17. It appears from the narration of facts in paragraph 2 ofRahamatullah Khan (supra) that this Court was persuaded to take theview that it did, on account of certain peculiar facts. The consumer inthat case was billed under a particular tariff code for the period fromJuly-2009 to September-2011. But after audit, it was discovered that adifferent tariff code should have been applied. Therefore, a show causenotice was issued on 18.03.2014 raising an additional demand for theperiod from July-2009 to September-2011. Then a bill was raised on25.05.2015 for the aforesaid period. Therefore, the consumer successfullychallenged the demand before the District Consumer Forum, but theOrder of the District Forum was reversed by the State Commission onan appeal by the licensee. The National Commission on a revision filed A

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Aby the consumer, set aside the order of the State Commission and restoredthe order of the District Forum. It was this Order of the NationalCommission that was under challenge before this Court in RahamatullahKhan (supra).

18. Eventually, this Court disposed of the appeals, preventing theBlicensee from taking recourse to disconnection of supply, but giving themliberty to take recourse to any remedy available in law for recovery ofthe additional demand. Therefore, the decision in Rahamatullah Khan(supra) is distinguishable on facts.

19. Even otherwise there are two things in this case, which weCcannot overlook. The first is that the question whether the raising of anadditional demand, by itself would tantamount to any deficiency in service,clothing the consumer fora with a power to deal with the dispute, wasnot raised or considered in Rahamatullah Khan (supra). The second isthe impact of Sub-section (1) of Section 56 on Sub-section (2) thereto.

D20. The fora constituted under the Consumer Protection Act, 1986is entitled to deal with the complaint of a consumer, either in relation todefective goods or in relation to deficiency in services. The word“deficiency” is defined in Section 2(1)(g) of the Consumer ProtectionAct, 1986 as follows:- E“2(1)(g) “deficiency” means any fault, imperfection,shortcoming or inadequacy in the quality, nature and mannerof performance which is required to be maintained by or underany law for the time being in force or has been undertaken tobe performed by a person in pursuance of a contract orotherwise in relation to any service;F

21. The raising of an additional demand in the form of “shortassessment notice”, on the ground that in the bills raised during aparticular period of time, the multiply factor was wrongly mentioned,cannot tantamount to deficiency in service. If a licensee discovers in thecourse of audit or otherwise that a consumer has been short billed, theGlicensee is certainly entitled to raise a demand. So long as the consumerdoes not dispute the correctness of the claim made by the licensee thatthere was short assessment, it is not open to the consumer to claim thatthere was any deficiency. This is why, the National Commission, in theimpugned order correctly points out that it is a case of “escapedHassessment” and not “deficiency in service”.

22. In fact, even before going into the question of Section 56(2),the consumer forum is obliged to find out at the threshold whether therewas any deficiency in service. It is only then that the recourse taken bythe licensee for recovery of the amount, can be put to test in terms ofSection 56. If the case on hand is tested on this parameter, it will beclear that the respondents cannot be held guilty of any deficiency inservice and hence dismissal of the complaint by the National Commissionis perfectly in order.

23. Coming to the second aspect, namely, the impact of Sub-section (1) on Sub-section (2) of Section 56, it is seen that the bottomline of Sub-section (1) is the negligence of any person to pay any chargefor electricity. Sub-section (1) starts with the words “where any personneglects to pay any charge for electricity or any some other than acharge for electricity due from him”.

24. Sub-section (2) uses the words “no sum due from anyconsumer under this Section”. Therefore, the bar under Sub-section(2) is relatable to the sum due under Section 56. This naturally takes usto Sub-section (1) which deals specifically with the negligence on thepart of a person to pay any charge for electricity or any sum otherthan a charge for electricity. What is covered by section 56, undersub-section (1), is the negligence on the part of a person to pay forelectricity and not anything else nor any negligence on the part ofthe licensee.

25. In other words, the negligence on the part of the licenseewhich led to short billing in the first instance and the rectification of thesame after the mistake is detected, is not covered by Sub-section (1) ofSection 56. Consequently, any claim so made by a licensee after thedetection of their mistake, may not fall within the mischief, namely,”nosum due from any consumer under this Section”, appearing in Sub-section (2).

26. The matter can be examined from another angle as well. Sub-section (1) of Section 56 as discussed above, deals with the disconnectionof electric supply if any person “neglects to pay any charge forelectricity”. The question of neglect to pay would arise only after ademand is raised by the licensee. If the demand is not raised, there is nooccasion for a consumer to neglect to pay any charge for electricity.Sub-section (2) of Section 56 has a non-obstante clause with respect towhat is contained in any other law, regarding the right to recover including A

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Athe right to disconnect. Therefore, if the licensee has not raised any bill,there can be no negligence on the part of the consumer to pay the billand consequently the period of limitation prescribed under Sub-section(2) will not start running. So long as limitation has not started running,the bar for recovery and disconnection will not come into effect. Hencethe decision in Rahamatullah Khan and Section 56(2) will not go to theBrescue of the appellant.

27. Therefore, we are of the view that the National Commissionwas justified in rejecting the complaint and we find no reason to interferewith the Order of the National Commission. Accordingly, the appeal isdismissed. However, since the appellant has already paid 50% of theCdemand amount pursuant to an interim order passed by this Court on19.08.2014, we give eight weeks time to the appellant to make paymentof the balance amount. There shall be no order as to costs.

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Divya Pandey

Appeal dismissed.

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