Case at a Glance
The developers of Ardee City, Sector 52, Gurugram, received power from DHBVN at a single point and charged residents about 12% over the regulated tariff, described at various times as service, upkeep, loss and maintenance charges. The Haryana Electricity Regulatory Commission (HERC) restrained the extra charge and ordered refunds. APTEL held that the HERC Single Point Supply Regulations, 2013 override inconsistent terms in residents’ agreements, so the arbitration clause was no bar. But it also held that the developer may recover reasonable costs of transformation and LT losses and of maintaining the internal network. It limited the claim to three years before the complaint, up to the date DHBVN took over, and sent the matter back to HERC to fix the amounts and order refunds.
Residents of Ardee City signed flat buyers’ agreements and separate electricity agreements with the developers, M/s Ardee Infrastructure Pvt. Ltd. and M/s Ardee Housing Pvt. Ltd. Dakshin Haryana Bijli Vitran Nigam (DHBVN) supplied power at a single point, and the developers maintained the internal distribution network and billed residents. They added 12% over the bills. This was first called admin or service charges, then upkeep charges, and from August 2016 it was split into 4% for AT&C losses and 8% for maintenance and common facilities. DHBVN’s memos of 16 August 2016 and 9 May 2017 directed that nothing above the approved tariff be charged.
A residents’ petition led by Mahesh Mathur was filed before HERC under Regulation 5.5 of the HERC Single Point Supply Regulations, 2013. HERC, by order dated 11 April 2019, restrained the extra charge and ordered refunds. Separately, the Ardee City RWA had filed a consumer complaint before the NCDRC in 2017. DHBVN took over operation and maintenance from August 2018. In appeal, the developers argued that disputes were arbitrable, that the Regulations did not apply to private developers, that limitation was ignored and that proceedings should have been stayed because of the NCDRC complaint.
The Key Question Before the Court
Can HERC adjudicate residents’ complaints against a developer’s extra electricity charges despite an arbitration clause, and is the developer barred from recovering anything above the regulated tariff?
Regulations prevail over contracts, but costs must be borne by someone
APTEL held that binding regulations prevail over inconsistent contract terms. Relying on PTC India Ltd. v. Central Electricity Regulatory Commission, (2010) 03 SC CK 0014, it held that Regulation 5.5 lets residents complain to HERC and overrides the electricity agreement, so the arbitration objection failed. It held that the 2013 Single Point Supply Regulations, being later and specific, supersede the 2004 guidelines on consumer grievance forums and the Ombudsman. Supplying power through internal infrastructure is distribution, and the Regulations treat the developer as an intermediary. It also held that the NCDRC complaint had been filed by the RWA, not by the individual residents, so the overlap alone was not forum hunting.
At the same time, APTEL observed that the costs of installing and maintaining infrastructure and of transformation and LT losses must be borne by someone, and that the Regulations are silent on how losses are treated. HERC was wrong to bar the developer from recovering these costs from residents. Applying A.P. Power Coordination Committee v. Lanco Kondapalli Power Ltd., (2015) 10 SC CK 0143, APTEL held that limitation applies to the Commission’s adjudication. It confined findings to three years before the complaint, up to the date DHBVN took over. It was not persuaded that 12% was a reasonable figure and sent the question back to HERC. Relief would extend to all similarly placed residents, and dues not related to electricity cannot be set off against refunds.
What the Court Actually Held
- The HERC Single Point Supply Regulations, 2013 override inconsistent terms in residents’ electricity agreements. The arbitration clause does not oust HERC’s jurisdiction.
- HERC’s order was set aside to the extent it barred the developers from recovering the costs of transformation and LT losses and of installing and maintaining the colony’s electrical infrastructure.
- Limitation applies: findings are confined to three years before the HERC complaint, up to the date DHBVN took over in August 2018.
- HERC must determine reasonable costs and any excess payable by the developers, and issue refund or adjustment directions for Ardee City residents. Non-electricity dues cannot be set off.
Why This Judgment Matters
- Lakhs of residents in single-point-supply colonies are billed by developers or maintenance agencies. The ruling confirms that the regulator, not a private arbitrator, decides what they can be charged.
- It also accepts that genuine losses and maintenance costs can be recovered, so residents should not expect the full 12% back automatically.
- Applying a three-year limitation window shapes how far back refund claims can go.
What Should Advocates Take Away From the Judgment?
For Residents and RWAs
- Complaints about electricity charges in single-point-supply colonies can be taken to the State Commission even if the agreement has an arbitration clause.
- Refunds are limited to excess charges within the limitation window, after allowing reasonable costs.
- A developer cannot hold back an electricity refund against unrelated maintenance or other dues.
For Counsel
- Cite PTC India Ltd. v. Central Electricity Regulatory Commission for regulations overriding contracts.
- File early. A.P. Power Coordination Committee v. Lanco Kondapalli Power Ltd. was applied to cap the claim at three years.
- Developers should keep cost records for losses and infrastructure maintenance, because HERC will now fix reasonable costs.
Key Takeaways
- The arbitration clause in electricity agreements did not bar HERC proceedings.
- Developers in single-point-supply colonies may recover reasonable loss and maintenance costs, but not an arbitrary add-on.
- Claims are limited to three years before the complaint, up to the date DHBVN took over.
- The matter returns to HERC to fix costs and order refunds for all residents.
Frequently Asked Questions
Can a builder charge more than the electricity tariff?
APTEL held that the Regulations bar charging an arbitrary amount above the tariff. But the developer can recover reasonable costs of transformation and LT losses and of maintaining the internal network, to be determined by HERC.
Does an arbitration clause stop residents from going to HERC?
No. APTEL held that the Single Point Supply Regulations override inconsistent contract terms, and Regulation 5.5 lets residents complain to HERC.
How far back can residents claim refunds?
APTEL limited findings to three years before the HERC complaint, up to the date DHBVN took over in August 2018.
Conclusion
The ruling is a split result. Residents won on jurisdiction, coverage of all households and refunds of any excess. The developer won on the principle that real costs must be recoverable. The final figure is left to HERC.
Practical takeaway: RWAs in single-point-supply colonies should approach the State Commission promptly and ask for a cost-based determination, rather than seeking a blanket refund of every rupee above tariff.
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