Maharashtra State Electricity Distribution Company Limited vs M/s.Jyothy Fabricare Services Limited

“a. Admit the present petition and issue Rule;

b. Issue a direction calling for the papers and proceedings leading to the passing of the Impugned Order dated 17^th December 2019, passed by the Ld.EO in Review Application No.9 of 2019 and after testing legality, validity and propriety, especially in context of the Judgments of Assistant Engineer (D1), Ajmer Vidyut Vitran Nigam Ltd Vs. Rahamatullah Khan (2020) 4 SCC 650 and Prem Cottex vs. Uttar Haryana Bijli Vitran Nigam Ltd and Others (2021) SCC OnLine SC 870, be pleased to quash, set aside and/or vary the part of the Impugned Order whereby the differential bill for the period of between December 2015 to February 2016 has been set aside in totality, in the matter deemed fit;

c. Grant the Petitioner the liberty to recover the dues as elucidated in the revised Supplementary Bill dated 27.11.2018 for an amount of Rs.22,09,178/- for the period from December 2015 to February 2016 under Section 56(2) of the Electricity Act, 2003 in terms of the Judgment passed by the Hon’ble Supreme Court of India in Prem Cottex vs. Uttar Haryana Bijli Vitran Nigam Ltd and others (2021 SCC OnLine SC 870);

d. Hold that the period for deciding the present petition, the Representation before EO shall stand excluded for the purposes of calculating the limitation for recovery of the arrears in the instant case;

e. Grant cost of the petition to the Petitioner.”

a)

Recovery of tariff difference be done in six installments without interest/DPC;

b)

Petitioner was directed to take action against responsible officers for delay;

c)

Compliance report within 60 days.

“7.

I say that the Petition proceeds on the footing that the Petitioner is aggrieved by the order dated 17 December 2019 passed by the Learned Electricity Ombudsman, Mumbai, in Review Application No. 9 of 2019 in Representation No. 150 of 2019, to the extent that the Learned Electricity Ombudsman restricted the Petitioner's retrospective recovery to a period of 24 months.

8.

I say that after the passing of the impugned order and before the filing of the present Petition, the Respondent addressed a letter dated 29th November 2022 to the Superintending Engineer, MEDCL, Vashi Circle, requesting the Petitioner to inform the Respondent of all pending dues in respect of consumer no. 000119020301 and circle code 565. Thereafter, the Petitioner, by letter dated 09*h December 2022, informed the Respondent that the total dues with respect to the consumer no. 000119020301 and circle code 565 were Rs. 56,96,670/-. Annexed hereto and marked as Exhibit B and Exhibit C, respectively, are copies of the Respondent's letter dated 29th November 2022 and the Petitioner's letter dated 09th December 2022.

9.

I say that the very next day, i.e., 10th December 2022, the Respondent paid the Petitioner the aforementioned amount of Rs. 56,96,670- and the ^{2026:BHC-AS:35443} Respondent issued a no-dues certificate dated 16th December 2022. Annexed hereto and marked as Exhibit D is a copy of the said no-dues certificate.

10.

I say that, accordingly, given the settlement between the Petitioner and the Respondent, the Respondent withdrew its Writ Petition No. 12837 of 2019 fed before this Hon'ble Court, challenging, amongst others, the order impugned in the present Petition, i.e., order dated 17^th December 2019. Annexed hereto and marked as Exhibit E is a copy of the withdrawal praecipe.

11.

I say that the aforesaid facts make it clear that after the impugned order dated 17^th December 2019 and before the present Petition was filed, the Petitioner itself confirmed the pending dues, accepted payment from the Respondent, and issued a no-dues certificate in respect of the supplementary bill forming the subject matter of the present dispute.

12.

I say that the aforesaid facts are directly relevant and material to the present Petition. The entire Petition is founded on an alleged surviving right of recovery against the Respondent. However, the Petitioner has suppressed the fact that, before filing the present Petition, it had accepted payment and issued a no-dues certificate confirming that no amount was outstanding towards the supplementary bill.

13.

I say that the Petition was filed in or about February 2024. The Respondent's letters dated 29th November 2022 and 9th December 2022, and the Petitioner's no-dues certificate dated 16th December 2022 were therefore already in existence when the Petition was filed. The Petitioner was fully aware of these documents. The Petitioner has nevertheless failed to disclose the same in the Petition.”

“7.

Heard both the parties and perused the documents on record. This review has been filed by the Applicant under Regulation 19 of the CGRF Regulations which provides as below:-

"19.1

Any person oggrieved by an order of the Electricity Ombudsman, may, upon the discovery of new and important matter or evidence which, after the exercise of due diligence, was not within his knowledge or could not be produced by him at the tinte when the order was passed or on account of some mistake or error apparent from the face of the record, may apply for a review of such order, within thirty (30) days of the date of the order, as the case may be, to the Electricity Ombudsman.

19.2

An application for such review shall clearly state the matter or evidence which, after the exercise of due diligence, was not within his knowledge or could not be produced by him at the time when the order was passed or the mistake or error apparent from the face of the record. The application shall be accompanied by such documents, supporting data and statements as the Electricity Ombudsman may determine.

19.3

When it appears to the Electricity Ombudsman that there is no sufficient ground for review, the Electricity Ombudsman shall reject such review application. Provided that no application shall be rejected unless the applicant has been given an opportunity of being heard.

19.4

When the Electricity Ombudsman is of the opinion that the review application should be granted, it shall grant the same provided that no such application will be granted without previous notice to the opposite side or party to enable him to appear and to be heard in support of the order, the review of which is applied for."

8.

In this Review Application, the Applicant has raised issue with respect to proper period envisaged under Section 56 (2) of the Act as regard the retrospective recovery of 24 months. It is stated in the said order that the retrospective recovery of 24 months is allowed as per the Judgment dated 12.03.2019 of Larger Bench of Bombay High Court in Case No.10764 of 2011 & others as per Section 56(2) of the Act. There was confusion in the mind of Respondent and during the hearing, they were asked to point out where the order meant the retrospective recovery to made from the date of inspection. The Respondent was not able to point out. Finally, the Respondent agreed to issue revised supplementary bill for 24 months retrospectively, for the period March 2016 to February 2018 i.e. 24 months prior ^{2026:BHC-AS:35443} to issue of the bill in March 2018. Therefore, nothing remains as the Respondent agreed to this recovery from March 2016 and assured compliance of the impugned order in toto.” (emphasis supplied)

Relevant paragraphs of Ajmer Vidyut Vitran Nigam Ltd. (supra):

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 Electricity Act, 1910 governed the law pertaining to the use and supply of electricity in India. Section 24 of the 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 property of the licensee, through which energy may be supplied, 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.

(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 sub-section 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."

7.2.

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:

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

7.3.

In Swastic Industries v. Maharashtra SEB® this Court while interpreting Section 24 of the Electricity Act, 1910 held that : (SCC p.467, para 5)

"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)

7.4.

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.

7.5.

The period of limitation of two years would commence from the date on ^{2026:BHC-AS:35443} which the electricity charges became "first due" under subsection (2) of Section 56. This 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.

9.

Applying the aforesaid ratio to the facts of the present case, the licensee company raised an additional demand on 18-3-2014 for the period July 2009 to September 2011. The licensee company discovered the mistake of billing under the wrong Tariff Code on 18-3-2014. The limitation period of two years under Section 56(2) had by then already expired.

9.1.

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.

9.2.

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 v. State of M.P.}, this Court held that : (SCC p. 11, para 22)

"22.

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 becomes 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)

9.3.

In the present case, the period of limitation would commence from the date of discovery of the mistake i.e. 18-3-2014. 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. The present civil appeals are accordingly disposed of in the aforesaid terms. All pending applications, if any, are accordingly disposed of. Ordered accordingly.

Relevant paragraphs of Prem Cottex (supra):

11.

On the first two issues, this Court held that though the liability to pay arises on the consumption of electricity, the obligation to pay would arise only when the bill is raised by the licensee and that, therefore, electricity charges would become "first due" only after the bill is issued, even though the liability would have arisen on ^{2026:BHC-AS:35443} consumption. On the third issue, this Court held in Rahamatullah Khan?, that "the period of limitation of two years would commence from the date on which the electricity charges became first due under Section 56(2)". This Court also held that Section 56(2) does not preclude the licensee from raising an additional or supplementary demand after the expiry of the period of limitation in the case of a mistake or bona fide error. To come to such a conclusion, this Court also referred to Section 17(1)(c) of the Limitation Act, 1963 and the decision of this Court in Mahabir Kishore v. State of M.P.*

12.

Despite holding that electricity charges would become first due only after the bill is issued to the consumer (para 6.9 of the SCC Report of Rahamatulla Khan?) and despite holding that Section 56(2) does not preclude the licensee from raising an additional or supplementary demand after the expiry of the period of limitation prescribed therein in the case of a mistake or bona fide error (para 9.1 of the SCC Report of Rahamatulla Khan?), this Court came to the conclusion that what is barred under Section 56(2) is only the disconnection of supply of electricity. In other words, it was held by this Court in the penultimate paragraph that the licensee may take recourse to any remedy available in law for the recovery of the additional demand, but is barred from taking recourse to disconnection of supply under Section 56(2).

13.

But a careful reading of Section 56(2) would show that the bar contained therein is not merely with respect to disconnection of supply but also with respect to recovery. If sub-section (2) of Section 56 is dissected into two parts it will read as follows:

(i)

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; and

(ii)

the licensee shall not cut off the supply of electricity.

Therefore, the bar actually operates on two distinct rights of the licensee, namely, (i) the right to recover; and (ii) the right to disconnect. The bar with reference to the enforcement of the right to disconnect, is actually an exception to the law of limitation. Under the law of limitation, what is extinguished is the remedy and not the right.

To be precise, what is extinguished by the law of limitation, is the remedy through a court of law and not a remedy available, if any, dehors through a court of law. However, Section 56(2) bars not merely the normal remedy of recovery but also bars the remedy of disconnection. This is why we think that the second part of Section 56 (2) is an exception to the law of limitation.

14.

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 of Rahamatullah Khan}) and once it is held that the period of limitation would commence from the date of discovery of the mistake (as held in paras 9.1 to 9.3 of Rahamatullah Khan?), then the question of allowing licensee to recover the amount by any other mode but not take recourse to disconnection of supply would not arise. But Rahamatullah Khan' says in the penultimate paragraph that "the licensee may take recourse to any remedy available in law for recovery of the additional demand, but barred from taking recourse to disconnection of supply under sub-section (2) of Section 56 of the Act" (SCC p. 658, para 9).

15.

It appears from the narration of facts in para 2 of Rahamatullah Khan? that this Court was persuaded to take the view that it did, on account of certain peculiar facts. The consumer in that case was billed under a particular tariff code for the period from July-2009 to September-2011. But after audit, it was discovered that a ^{2026:BHC-AS:35443} different tariff code should have been applied. Therefore, a show-cause notice was issued on 18-3-2014 raising an additional demand for the period from July-2009 to September-2011. Then a bill was raised on 25-5-2015 for the aforesaid period. Therefore, the consumer successfully challenged the demand before the District Consumer Forum, but the order of the District Forum was reversed by the State Commission on an appeal by the licensee. The National Commission on a revision filed by the consumer, set aside? the order of the State Commission and restored the order of the District Forum. It was this order of the National Commission that was under challenge before this Court in Rahamatullah Khan?

16.

Eventually, this Court disposed of the appeals, preventing the licensee from taking recourse to disconnection of supply, but giving them liberty to take recourse to any remedy available in law for recovery of the additional demand. Therefore, the decision in Rahamatullah Khan? is distinguishable on facts.

… ….. ….. ………. …….. ….. ….. ……. ….. ..

21.

Coming to the second aspect, namely, the impact of sub-section (1) on sub-section (2) of Section 56, it is seen that the bottom line of sub-section (1) is the negligence of any person to pay any charge for electricity. Sub-section (1) starts with the words "where any person neglects to pay any charge for electricity or any some other than a charge for electricity due from him".

22.

Sub-section (2) uses the words "no sum due from any consumer under this section". Therefore, the bar under sub-section (2) is relatable to the sum due under Section 56. This naturally takes us to sub-section (1) which deals specifically with the negligence on the part of a person to pay any charge for electricity or any sum other than a charge for electricity. What is covered by Section 56, under sub-section (1), is the negligence on the part of a person to pay for electricity and not anything else nor any negligence on the part of the licensee.

…. …. …. …. …. ….. ….. ….. ….. …. ..

24.

The matter can be examined from another angle as well. Subsection (1) of Section 56 as discussed above, deals with the disconnection of electric supply if any person "neglects to pay any charge for electricity". The question of neglect to pay would arise only after a demand is raised by the licensee. If the demand is not raised, there is no occasion for a consumer to neglect to pay any charge for electricity. Sub-section (2) of Section 56 has a non obstante clause with respect to what is contained in any other law, regarding the right to recover including the 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 bill and 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. Hence the decision in Rahamatullah Khan? and Section 56(2) will not go to the rescue of the appellant.

25.

Therefore, we are of the view that the National Commission was justified in rejecting the complaint and we find no reason to interfere with the order- of the National Commission. Accordingly, the appeal is dismissed. However, since the appellant has already paid 50% of the demand amount pursuant to an interim order passed by this Court on 19-8-20143, we give eight weeks' time to the appellant to make payment of the balance amount. There shall be no order as to costs. (emphasis suppliled)

“Section 56: Disconnection of supply in default of payment :

(1)

… … … … …

(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.”