NDLI: K. C. Ninan Vs. Kerala State Electricity Board & Ors.

Content Provider	Supreme Court of India
e-ISSN	30484839
Language	English
Access Restriction	NDLI
Subject Keyword	2003 – ss. 42 and 61 – Liability of subsequent owner to pay electricity charges due on previous owner Electricity Act
Content Type	Text
Resource Type	Law Judgement
Jurisdiction	India
Act(s) Referred	Transfer of Property Act, 1882 (4 of 1882) Electricity Act, 2003 (36 of 2003)
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Case Type	Appeal
Court	Supreme Court of India
Disposal Nature	Appeal Disposed Off
Headnote	Electricity Act, 2003 – ss. 42 and 61 – Liability of subsequentowner to pay electricity charges due on previous owner – Whetherthe arrears of unpaid electricity dues outstanding from the erstwhileowner can be claimed from the subsequent owner, who has acquiredthe property in proceedings initiated to enforce mortgages or topay off the dues of creditors – Held: In order to provide a supply ofelectricity to consumers, a distribution licensee is required to laydown infrastructure such as electricity lines, transformers, and otherequipment – The licensees are required to maintain the infrastructureeven if the consumer does not consume electricity – The 2003 Acthas been enacted to promote the development of the electricityindustry as well as to protect the interests of the consumers and toensure the supply of electricity to all areas – The Supply Conditionsproviding for recoupment of electricity dues of a previous consumerfrom a new owner are necessary to recover the costs incurred forlaying down the infrastructure as well as the ongoing currentliabilities towards the electricity generation and transmissioncompanies – Apart from protecting a public good, such conditionsalso have a reasonable nexus with objects of the 2003 Act, such asa robust development of the electricity industry, protecting theinterests of consumers as well as the financial interests of thedistribution licensees – It is just and reasonable for distributionlicensees to specify conditions of supply requiring the subsequentowner or occupier of premises to pay the arrears of electricity duesof the previous owner or occupier as a pre-condition for the grantof an electricity connection to protect their commercial interests, aswell as the welfare of consumers of electricity. Transfer of Property Act, 1882 – s.100 – Charge – Whetherarrears of electricity can become a charge or encumbrance overthe premise – Effect of statutory regulations or rules enacted by aregulatory commission – Held: A charge cannot be enforced againsta transferee if they have no notice of the same, unless the requirementof such notice has been dispensed with by law – The provisions ofthe 1910 Act, 1948 Act, and the 2003 Act do not provide that thearrears of electricity dues would constitute a charge on the propertyor that such a charge shall be enforceable against a transfereewithout notice – In Isha Marbles, the Supreme Court observed thatunder the provisions of 1910 Act r/w. 1948 Act, electricity arrearsdo not create a charge over the property – Consequently, in generallaw, a transferee of the premises cannot be made liable for theoutstanding dues of the previous owner since electricity arrears donot automatically become a charge over the premises – The rulemaking power contained u/s. 181 r/w. s. 50 of Electricity Act, 2003is wide enough to enable the regulatory commission to provide fora statutory charge in the absence of a provision in the plenary statuteproviding for creation of such a charge – The electricity utilitiescan create a charge by framing subordinate legislation or statutoryconditions of supply enabling recovery of electricity arrears from asubsequent transferee – Such a condition is rooted in the importanceof protecting electricity which is a public good – Public utilitiesinvest huge amounts of capital and infrastructure in providingelectricity supply – The failure or inability to recover outstandingelectricity dues of the premises would negatively impact thefunctioning of such public utilities and licensees – Electricity Act,2003 – ss. 50 and 181– Maharashtra Electrici ty RegulatoryCommission (Electricity Supply Code and other Conditions ofSupply) Regulations, 2005 – Regulation 10.5.Electricity Act, 2003 – s. 43 – Whether the duty to supplyelectricity is absolute – Held: s.43 begins with the words “Save asotherwise provided in this Act” – Hence, the operation of s.43 willalso be subject to compliance with the other provisions of the 2003Act – Under s.43, the distribution licensee is obligated to supplyelectricity to the premises of an owner or occupier, provided thatthe owner or occupier pays all charges and complies with allconditions stipulated by the distribution licensee – The proviso tos.43(2) further refers to the “price” payable by an applicant to demand or to continue to receive the supply of electricity from adistribution licensee – The term “price” has to be given a broadmeaning to include all the ‘tariffs’ and ‘charges’ that may bedetermined by the appropriate commission – Thus, the duty to supplyelectricity u/s.43 is not absolute, and is subject to the such chargesand compliances stipulated by the distribution licensees as part ofthe application.Electricity Act, 2003 – ss.2(15) and 43 – Whether duty tosupply electricity is with respect to the premises or to the consumer– Held: The definition of ‘supply’ specifically states that supplymeans the sale of electricity to a consumer – Considering the overallscheme of the 2003 Act, the supply of electricity is to the consumerand not the premises – It is the owner or occupier who has thestatutory right to “demand” electricity for the premises under theiruse or occupation – Thus, it is always the consumer who is suppliedelectricity and is held liable for defaulting on payment of dues orcharges for supply of electricityAuction – Auction sale of premises on “as in where is” basis– With or without reference to electricity arrears-Implication – Held:When a property is sold on an “as is where is” basis, encumbranceson the property stand transferred to the purchaser upon the sale –All prospective auction purchasers are put on notice of the liabilityto pay the pending dues when an appropriate “as is where is” clauseis incorporated in the auction sale agreement – While examiningthe effect of an “as is where is” clause, the facts and circumstancesof each case individually, along with the terminology of the clausesgoverning the auction sales must be taken into consideration, toarrive at an equitable decision.Interpretation of Statutes – Principle of Ejusdem Generis –Rule of Construction – Applicability of – Ingredients – Discussed.
Judge	Hon'ble Dr. Justice D.Y. Chandrachud
Neutral Citation	2023 INSC 560
Petitioner	K. C. Ninan
Respondent	Kerala State Electricity Board & Ors.
SCR	[2023] 9 S.C.R. 637
Judgement Date	2023-05-19
Case Number	2109-2110

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K. C. Ninan Vs. Kerala State Electricity Board & Ors.

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