ASSISTANT ENGINEER (D1), AJMER VIDYUT VITRAN NIGAM LIMITED & ANR. versus RAHAMATULLAH KHAN ALIAS RAHAMJULLA on 18 February 2020

ASSISTANT ENGINEER (D1), AJMER VIDYUT VITRANNIGAM LIMITED & ANR.

v.

RAHAMATULLAH KHAN ALIAS RAHAMJULLA

(Civil Appeal No. 1672 of 2020)

FEBRUARY 18, 2020

[UDAY UMESH LALIT AND INDU MALHOTRA, JJ.]

Electricity Act, 2003: s. 56(2) – Disconnection of supply indefault of payment – Term ‘first due’ in s.56(2) – Meaning of –Commencement limitation period of two years, when – Held:Electricity charges would become “first due” only after the bill isissued to the consumer, even though the liability to pay may ariseon the consumption of electricity – Period of limitation of two yearswould commence from the date on which the electricity chargesbecame “first due” u/s. 56(2) – This provision restricts the right ofthe licensee company to disconnect electricity supply due to non-payment of dues by the consumer, unless such sum has been showncontinuously to be recoverable as arrears of electricity supplied, inthe bills raised for the past period – Furthermore, s. 56(2) does notpreclude the licensee company from raising an additional orsupplementary demand after the expiry of the limitation period u/s.56(2) in the case of a mistake or bona fide error – However, licenseecompany cannot take recourse to the coercive measure ofdisconnection of electricity supply, for recovery of the additionaldemand – As per s. 17(1)(c) of the Limitation Act in case of a mistake,the limitation period begins to run from the date when the mistake isdiscovered for the first time – On facts, licensee company discoveredthe mistake of billing under wrong tariff Code on 18.03.2014 andraised an additional demand on 18.03.2014 for the period July,2009 to September, 2011 – Limitation period of two years u/s. 56(2)had by then already expired – Period of limitation would commencefrom the date of discovery of the mistake – Licensee company maytake recourse to any remedy available in law for recovery of theadditional demand, but is barred from taking recourse todisconnection of supply of electricity u/s. 56(2) – Limitation Act,1963 – s. 17(1)(c).

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B

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DEF

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ADisposing of the appeals, the Court

HELD: 1.1 Section 56 of the Electricity Act, 2003 providesfor disconnection of supply in the case of default in payment ofelectricity charges. The obligation of a consumer to pay electricitycharges arises after the bill is issued by the licensee company.BThe bill sets out the time within which the charges are to be paid.If the consumer fails to pay the charges within the stipulatedperiod, they get carried forward to the next bill as arrears. [Para6.2, 6.3][938 E-H]

1.3 The proviso to Section 56(1) carves out an exceptionCby providing that the disconnection will not be effected if theconsumer either deposits the amount “under protest”, or depositsthe average charges paid during the preceding six months. Sub-section (2) of Section 56 by a non obstante clause provides thatnotwithstanding anything contained in any other law for the timebeing in force, no sum due from any consumer, shall beDrecoverable under Section 56, after the expiry of two years fromthe date when the sum became “first due”, unless such sum wasshown continuously recoverable as arrears of charges for theelectricity supplied, nor would the licensee company disconnectthe electricity supply of the consumer. [Paras 6.4 and 6.5][938-EH; 939 A-C]

Chandavarkar Sita Ratna Rao v. Ashalata S. Guram.(1986) 4 SCC 447 : [1986] 3 SCR 866 – referred to.

1.4 The liability to pay arises on the consumption ofelectricity. The obligation to pay would arise when the bill is issuedFby the licensee company, quantifying the charges to be paid.Electricity charges would become “first due” only after the bill isissued to the consumer, even though the liability to pay may ariseon the consumption of electricity. [Para 6.6][939 F-H]

1.5 Sub-section (1) of Section 56 confers a statutory rightGto the licensee company to disconnect the supply of electricity, ifthe consumer neglects to pay the electricity dues. This statutoryright is subject to the period of limitation of two years providedby sub-section (2) of Section 56 of the Act. The period of limitationof two years would commence from the date on which theH

electricity charges became “first due” under sub-section (2) ofSection 56. This provision restricts the right of the licenseecompany to disconnect electricity supply due to non-payment ofdues by the consumer, unless such sum has been showncontinuously to be recoverable as arrears of electricity supplied,in the bills raised for the past period. If the licensee companywere to be allowed to disconnect electricity supply after the expiryof the limitation period of two years after the sum became “firstdue”, it would defeat the object of Section 56(2). Section 56(2)however, does not preclude the licensee company from raising asupplementary demand after the expiry of the limitation periodof two years. It only restricts the right of the licensee to disconnectelectricity supply due to non-payment of dues after the period oflimitation of two years has expired, nor does it restrict othermodes of recovery which may be initiated by the licensee companyfor recovery of a supplementary demand. Section 56(2) does notpreclude the licensee company from raising an additional orsupplementary demand after the expiry of the limitation periodunder Section 56(2) in the case of a mistake or bona fide error. Ithowever, does not empower the licensee company to takerecourse to the coercive measure of disconnection of electricitysupply, for recovery of the additional demand. As per Section17(1)(c) of the Limitation Act, 1963 in case of a mistake, thelimitation period begins to run from the date when the mistake isdiscovered for the first time. [Para 7.3, 7.4, 8, 9][941 D-H; 942A-B; 942 D-F]

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

2. In the instant case, the licensee company raised anadditional demand on 18.03.2014 for the period July, 2009 toSeptember, 2011. The licensee company discovered the mistakeof billing under the wrong Tariff Code on 18.03.2014. Thelimitation period of two years under Section 56(2) had by thenalready expired. The period of limitation would commence fromthe date of discovery of the mistake i.e. 18.03.2014. The licenseecompany may take recourse to any remedy available in law forrecovery of the additional demand, but is barred from taking AB

C

DE

FG

H

Arecourse to disconnection of supply of electricity under sub-section(2) of Section 56 of the Act. [Para 9][942 B-C; 943 B-D]

Tata Powers v. Reliance Energy, (2008) 10 SCC 321 :[2008] 10 SCR 293; State of Andhra Pradesh v.National Thermal Power Corporation Ltd. (2002) 5 SCCB203 : [2002] 3 SCR 278; Swastic Industries v.Maharashtra State Electricity Board (1997) 9 SCC 465: [1997] 1 SCR 532 – referred to.

Case Law Reference

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1672of 2020.

From the Judgment and Order dated 28.05.2018 of the NationalConsumer Disputes Redressal Commission at New Delhi in RevisionEPetition No. 2739 of 2017.

With

Civil Appeal No. 1673 of 2020.

Devashish Bharuka, Adv. (Amicus Curiae).FPuneet Jain, Ms. Christi Jain, Harsh Jain, Harshit Khanduja, PankajSharma, Abhinav Deshwal, Ms. Pratibha Jain, Ravi Bharuka, Ms.Sarvshree, Justine George, Advs. for the appearing parties.

The Judgment of the Court was delivered by

INDU MALHOTRA, J.G

Delay condoned. Leave granted.

a) The issues which have arisen for consideration in the presentCivil Appeal are : –

b) What is the meaning to be ascribed to the term “first due”Hin Section 56(2) of the Electricity Act, 2003?

c) In the case of a wrong billing tariff having been applied onaccount of a mistake, when would the amount become “firstdue”?

A

d) Whether recourse to disconnection of electricity supply maybe taken by the licensee company after the lapse of twoyears in case of a mistake?

B

1. The factual matrix in which the aforesaid issues have arisenfor our consideration is : –

1.1 In the present case, for the period July, 2009 to September,2011, the Respondent along with other consumers werebilled by the licensee company (the Appellant herein) underTariff Code 4400 @Rs.1.65 per unit.

C

1.2 During the course of a regular audit being conducted bythe Internal Audit Party, it was discovered that in 52 cases,including that of the Respondent, the bills were raised underthe wrong Tariff Code 4400, instead of Tariff Code 9400,Dunder which the prescribed tariff rate was Rs.2.10p. perunit.

1.3 On 18.03.2014, the licensee company issued a show causenotice to various consumers, including the Respondent,raising an additional demand for consumption of electricityfor the past period from July, 2009 to September, 2011. Itwas mentioned in the notice that the amount was payablein view of the internal audit conducted by the department.

E

1.4 On 25.05.2015, the licensee company raised a billdemanding payment of Rs.29,604/- from the Respondentunder Tariff Code 9400 for the period July, 2009 toSeptember, 2011.

F

1.5 Aggrieved by the said demand, the Respondent filed aConsumer Complaint before the District Consumer Forum,Ajmer.

G

The District Forum vide Order dated 21.06.2016, allowedthe Consumer Complaint, and held that the additionaldemand was time-barred.

1.6 Thereafter, the State Commission vide Order dated30.05.2017, allowed the Appeal of the licensee company, H

934SUPREME COURT REPORTS

A

and set aside the Order dated 21.06.2016 passed by theDistrict Forum.

1.7 In the Revision Petition filed by the Respondent before theNational Consumer Disputes Redressal Commission, theOrder passed by the State Commission was set aside. TheBNational Commission held that the additional demand wasbarred by limitation under Section 56(2) of the ElectricityAct, 2003 (“the Act”).

1.8 The licensee company has filed the present Civil Appealsbefore this Court to challenge the final judgment datedC28.05.2018 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 Courton the issues raised for determination.

It was further directed that the Appellant –DCorporation would not be entitled to recover the additionaldemand from the Respondent in this case, and only thequestions of law would be determined.

2. We have heard the learned Counsel on behalf of the Appellant– Corporation and the learned Amicus Curiae.

E

3. Mr. Puneet Jain represented the licensee company, andsubmitted that the power to disconnect electricity supply underSection 56(1) of the Act may be exercised by the licenseecompany when a consumer neglects to pay the electricitycharges, or any other sums due and payable by him. The neglectFto pay the “sum due” by a consumer, necessarily requires thatthere should be a “demand” of the sum due from the consumer,which he is required to pay within the period stipulated. If thedemand is not paid within the stipulated time, then the powerof disconnection under Section 56(1) may be resorted to.

G3.1 It was furthersubmitted that when a bill or demand is raised,which is disputed by the consumer, he may raise the disputebefore the Authorities as provided by Section 42(5) or42(6) of the Act, or avail such other remedies as may beavailable in law, such as a suit for declaration andinjunction; consumer dispute before the consumer fora;Harbitration if provided by the governing agreement.

3.2 Section 56(1) of the Act confers the power ofdisconnection of electricity supply for default of paymentupon a licensee, and provides the conditions when such apower may be invoked, the procedure and manner of theexercise of such power, the period for which such powercan remain effective, and the circumstances under whichsuch a power cannot be exercised.

3.3 Sub-section (2) of Section 56 bars the remedy ofdisconnection of supply for default of payment, if theconsumer deposits the amount demanded under protest,or if the demand has been raised two years after the sumbecame “first due”, albeit the same had been continuouslyshown to be recoverable as arrears of charges.

3.4 The word “due” has been used under Section 56(1) aswell as under Section 56(2). The term “due” refers to theamount for which the demand is raised by way of a bill.The term “first due” would therefore imply when thedemand is raised for the first time. The bill raised by thelicensee company would be the starting point for theexercise of power under sub-section (1) of Section 56.

3.5 The starting point of limitation would be from the datewhen the bill is raised by the licensee company. The barof limitation is applicable only on the exercise of power ofdisconnection. As per sub-section (2) of Section 56, thebar of limitation would be two years from the date whenthe first bill is raised.

3.6 It was further submitted that in case of a mistake, thestarting point of limitation should be the date when themistake is discovered.

In the present case, during a regular internal auditconducted on 18.03.2014, it was discovered that a mistakehad occurred in 52 cases, including that of the Respondent,as the bills were raised under the wrong Tariff Code. TheAppellant–Corporation raised additional demands on25.05.2015, i.e., within two years from the discovery ofthe mistake.

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936SUPREME COURT REPORTS

A4. The learned Amicus Curiae submitted that Section 56(1) ofthe Act empowers the licensee to disconnect the electricitysupply if the consumer neglects to pay his dues. Thedisconnection would take place only after the consumer hasconsumed the electricity, and the bill has been generated. Ifthe consumer neglects to pay the bill served on him within theBstipulated period, the licensee can resort to coercive modes ofrecovery 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 quantifiedby the licensee in the bill; while the second part of sub-Csection (2) of Section 56 indicates the date when the firstbill for the supply of electricity was raised by the licenseeunder the applicable State Electricity Supply Code.

4.2 By treating the words “first due” to mean the date ofdetection of mistake, would dilute the mandate of the twoDyear limitation period provided by Section 56(2), since amistake may be detected at any point of time. Furthermore,the words “recoverable as arrears of charges” would berendered completely otiose and nugatory.

4.3 The period of limitation under Section 56(2) cannot beEextended by raising a supplementary bill. The “sum due”raised in the original bill, and not paid by the consumer,must be continuously shown as arrears of charges insubsequent bills, for it to become recoverable by takingrecourse to the coercive mode of disconnection ofFelectricity supply.

4.4 If after the expiry of two years of the original demand,any genuine or bona fide mistake is detected by thelicensee in the original bill, it would be entitled to raise asupplementary bill. The licensee company would be entitledGto resort to other modes of recovery, but not bydisconnection of supply under sub-section (1) of Section56 of the 2003 Act.

6. Findings andAnalysis

The Electricity Act, 2003 is a consumer-friendly statute.[1]HThe Statement of Objects and Reasons to the Act notes that 1 Tata Powers v. Reliance Energy, (2008) 10 SCC 321.

over a period of time, the performance of State ElectricityBoards had deteriorated on account of various factors, andthe need was felt to frame a self-contained comprehensivelegislation, which led to the enactment of the Electricity Act,2003.

6.1Electricity has been held to be “goods” by a ConstitutionBench in State of Andhra Pradesh v. National ThermalPower Corporation Ltd.[2] Under the Sale of Goods Act,1930 a purchaser of goods is liable to pay for it at the time ofpurchase or consumption. The quantum and time of paymentmay be ascertained post facto either by way of an agreementor the relevant statute.

In the case of electricity, the charges are ascertainedand recovered as per the tariff notified by the State ElectricityBoard, or under an electricity supply agreement betweenthe parties read with the tariff under Section 62(1)(d), andthe Electricity Supply Code framed under Section 50.

6.2The present Civil Appeal pertains to the interpretation ofSection 56 of the Act which reads as follows : –

“Section 56. Disconnection of supply in default ofpayment –

(1) Where any person neglects to pay any charge forelectricity or any sum other than a charge for electricitydue from him to a licensee or the generating company inrespect of supply, transmission or distribution orwheeling of electricity to him, the licensee or thegenerating company may, after giving not less than fifteenclear days’ notice in writing, to such person and withoutprejudice to his rights to recover such charge or othersum by suit, cut off the supply of electricity and for thatpurpose cut or disconnect any electric supply line orother works being the property of such licensee or thegenerating company through which electricity may havebeen supplied, transmitted, distributed or wheeled andmay discontinue the supply until such charge or other

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BCD

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SUPREME COURT REPORTS

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A

BCD

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SUPREME COURT REPORTS

A

sum, together with any expenses incurred by him in cuttingoff and reconnecting the supply, 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

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, whicheveris less, pending disposal of any dispute between him andthe licensee.

C

(2) Notwithstanding anything contained in any other lawfor the time being in force, no sum due from any consumer,under this section shall be recoverable after the periodof two years from the date when such sum became firstdue unless such sum has been shown continuously asrecoverable as arrear of charges for electricity suppliedand the licensee shall not cut off the supply of theelectricity.”

D

Section 56 provides for disconnection of supply in theEcase 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 acharge for electricity due from him to a licensee or generatingcompany, the licensee after giving 15 days’ written notice,Fmay disconnect the supply of electricity, until such chargesor other sums due, including the expenses incurred, are paid.However, the disconnection cannot continue after the amountsare paid.

E

6.3 The obligation of a consumer to pay electricity charges arisesGafter the bill is issued by the licensee company. The bill setsout the time within which the charges are to be paid. If theconsumer 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 byHproviding that the disconnection will not be effected if the consumer either deposits the amount “under protest”, ordeposits the average charges paid during the preceding sixmonths.

6.5 Sub-section (2) of Section 56 by a non obstante clause providesthat notwithstanding anything contained in any other law forthe time being in force, no sum due from any consumer, shallbe recoverable under Section 56, after the expiry of two yearsfrom the date when the sum became “first due”, unless suchsum was shown continuously recoverable as arrears ofcharges for the electricity supplied, nor would the licenseecompany disconnect the electricity supply of the consumer.

The effect of a non obstante clause was explained bythis 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 someparticular provision in the Act or in some particular Act orin any law for the time being in force, or in any contract’ ismore often than not appended to a section in the beginningwith a view to give the enacting part of the section in caseof conflict an overriding effect over the provision of theAct or the contract mentioned in the non-obstante clause.It is equivalent to saying that in spite of the provision ofthe Act or any other Act mentioned in the non-obstanteclause or any contract or document mentioned theenactment following it will have its full operation or thatthe provisions embraced in the non-obstante clause wouldnot be an impediment for an operation of the enactment.”

6.6. The liability to pay arises on the consumption of electricity.The obligation to pay would arise when the bill is issued bythe licensee company, quantifying the charges to be paid.

Electricity charges would become “first due” only afterthe bill is issued to the consumer, even though the liability topay may arise on the consumption of electricity.

3 (1986) 4 SCC 447.

A

B

C

G

H

A7.The next issue is as to whether the period of limitation of twoyears provided by Section 56(2) of the Act, would be applicableto an additional or supplementary demand.

7.1 Prior to the coming into force of the Electricity Act, 2003, theIndian Electricity Act, 1910 governed the law pertaining tothe use and supply of electricity in India. Section 24 of theIndian Electricity Act, 1910 read as follows :–

B

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

(1) Where any person neglects to pay any charge for energyor any sum, other than a charge for energy, due from himto a licensee in respect of the supply of energy to him, thelicensee may, after giving not less than seven clear days’notice in writing to such person and without prejudice tohis right to recover such charge or other sum by suit, cutoff the supply and for that purpose cut or disconnect anyelectric supply-line or other works being the property ofthe licensee, through which energy may be supplied, andmay discontinue the supply until such charger or othersum, together with ally expenses incurred by him in cuttingoff and reconnecting the supply, are paid, but no longer.

C

D

E

(2) Where any difference or dispute which by or underthis Act is required to be determined by an ElectricalInspector, has been referred to the Inspector before noticeas aforesaid has been given by the licensee, the licenseeshall not exercise the powers conferred by this section untilthe Inspector has given his decision:

F

Provided that the prohibition contained in this subsectionshall not apply in any case in which the licensee has madea request in writing to the consumer for a deposit with theElectrical Inspector of the amount of the licensee’s chargesor other sums in dispute or for the deposit of the licensee’sfurther charges for energy as they accrue, and theconsumer has failed to comply with such request.”

G

The Standing Committee of Energy in its Report dated 19.12.2002submitted to the 13[th] Lok Sabha, opined that Section 56 of the 2003 ActHis based on Section 24 of the 1910 Act.

The Standing Committee further opined that a restriction has beenadded for recovery of arrears pertaining to the period prior to two yearsfrom consumers, unless the arrears have been continuously shown inthe bills. Justifying the addition of this restriction, the Ministry of Powersubmitted that : –

A

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

B

7.2 In Swastic Industries v. Maharashtra State ElectricityBoard,[4] this Court while interpreting Section 24 of the IndianElectricity Act, 1910 held that : –

C

“5. It would, thus, be clear that the right to recover thecharges is one part of it and right to discontinue supply ofelectrical energy to the consumer who neglects to paycharges is another part of it.”

D

7.3 Sub-section (1) of Section 56 confers a statutory right to thelicensee company to disconnect the supply of electricity, ifthe consumer neglects to pay the electricity dues.

This statutory right is subject to the period of limitationof two years provided by sub-section (2) of Section 56 of theEAct.

7.4 The period of limitation of two years would commence fromthe date on which the electricity charges became “first due”under sub-section (2) of Section 56. This provision restrictsthe right of the licensee company to disconnect electricitysupply due to non-payment of dues by the consumer, unlesssuch sum has been shown continuously to be recoverable asarrears of electricity supplied, in the bills raised for the pastperiod.

F

If the licensee company were to be allowed to disconnectelectricity supply after the expiry of the limitation period oftwo years after the sum became “first due”, it would defeatthe object of Section 56(2).

G

A8.Section 56(2) however, does not preclude the licenseecompany from raising a supplementary demand after theexpiry of the limitation period of two years. It only restrictsthe right of the licensee to disconnect electricity supply dueto non-payment of dues after the period of limitation of twoyears has expired, nor does it restrict other modes of recoveryBwhich may be initiated by the licensee company for recoveryof a supplementary demand.

9. Applying the aforesaid ratio to the facts of the present case,the licensee company raised an additional demand on18.03.2014 for the period July, 2009 to September, 2011.

C

The licensee company discovered the mistake of billingunder the wrong Tariff Code on 18.03.2014. The limitationperiod of two years under Section 56(2) had by then alreadyexpired.

DSection 56(2) does not preclude the licensee companyfrom raising an additional or supplementary demand after theexpiry of the limitation period under Section 56(2) in the caseof a mistake or bona fide error. It however, does not empowerthe licensee company to take recourse to the coercive measureof disconnection of electricity supply, for recovery of theEadditional demand.

D

As per Section 17(1)(c) of the Limitation Act, 1963 incase of a mistake, the limitation period begins to run from thedate when the mistake is discovered for the first time.

In Mahabir Kishore and Ors. v. State of MadhyaPradesh,[5] this Court held that :–

F

“Section 17(1)(c) of the Limitation Act, 1963, provides thatin the case of a suit for relief on the ground of mistake, theperiod of limitation does not begin to run until the plaintiffhad discovered the mistake or could with reasonablediligence, have discovered it.In a case where payment hasbeen made under a mistake of law as contrasted with amistake of fact, generally the mistake become known tothe party only when a court makes a declaration as to the G

invalidity of the law. Though a party could, with reasonableAdiligence, discover a mistake of fact even before a courtmakes a pronouncement, it is seldom that a person can,even with reasonable diligence, discover a mistake of lawbefore a judgment adjudging the validity of the law.”

(emphasis supplied)

B

In the present case, the period of limitation wouldcommence from the date of discovery of the mistake i.e.18.03.2014. The licensee company may take recourse to anyremedy available in law for recovery of the additional demand,but is barred from taking recourse to disconnection of supplyof electricity under sub-section (2) of Section 56 of the Act.

C

10. We extend our appreciation to Mr. Devashish Bharuka,Advocate who has very ably assisted this Court as AmicusCuriae.

D

The present Civil Appeals are accordingly disposed of in theaforesaid terms.

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

Ordered accordingly.

E

Nidhi Jain

Appeals disposed of.

F

G

H