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IN THE HIGH COURT AT CALCUTTA
M.V. MURALIDARAN, J.
Tirupati Vancom (P) Limited & Anr. – Appellants
Versus
West Bengal State Electricity Distribution Company Limited & Ors. – Respondents
W.P.A. No. 1053 of 2016
Decided on : 03-04-2024
Electricity Dues - Auction Purchaser's Liability - SARFAESI Act, 2002 - [Electricity Dues] - [Auction Purchaser's Liability] - [SARFAESI Act, 2002] - The court discussed the auction purchaser's liability to pay electricity dues of the erstwhile owner, citing relevant legal provisions and interpretations from various Supreme Court cases. The court found that the auction purchaser is not liable to pay the arrears of electricity dues of the erstwhile owner of the land when the auction purchaser has purchased the land free from all encumbrances. The court referred to specific statutory provisions and legal principles to support its decision, setting aside the demand and remanding the matter for further consideration by the respondent authority.
Fact of the Case:
The petitioner company purchased land free from encumbrances at an auction under the SARFAESI Act, 2002. The respondents demanded outstanding dues from the erstwhile owner, which the petitioner company paid under protest to obtain electricity connection. Despite issuance of a no dues certificate, the respondents made further demands, leading to the present writ petition.
Finding of the Court:
The court found that the auction purchaser is not liable to pay the arrears of electricity dues of the erstwhile owner when the purchaser has bought the land free from encumbrances. The court held that the demand for late payment surcharge was without legal authority and set it aside, remanding the matter to the respondent authority for further consideration.
Issues: The main issue was the liability of the auction purchaser to pay electricity dues of the erstwhile owner, despite purchasing the land free from encumbrances. The court also considered the legality of the demand for late payment surcharge and the petitioner's right to challenge the demand.
Ratio Decidendi: The court's decision was based on the principle that an auction purchaser is not liable to pay the arrears of electricity dues of the erstwhile owner when the purchaser has bought the land free from encumbrances. The court also emphasized that the demand for late payment surcharge was without legal authority and arbitrary.
Final Decision: The writ petition was allowed, the impugned letter/memo was set aside, and the matter was remanded back to the respondent authority for consideration of the petitioner's claim, including the refund of the amount already realized by the respondents from the petitioner company against the dues of the erstwhile owner. The respondent authority was directed to complete the exercise within twelve weeks from the date of receipt of the order.
JUDGMENT :
M.V. Muralidaran, J.
Heard Mr.U.S.Menon, learned counsel for the petitioners and Mr.Sumit Kumar Panja, learned counsel for the respondents.
2. This writ petition has been filed by the petitioners to quash the memo dated 20.6.2015 and to direct the respondents not to make any further demand with respect to the dues of the erstwhile owner-M/s.Balaji Ispat Private Limited in respect of the land now owned by the petitioners and also to direct the respondents to refund the amount already realized illegally by the respondents from the petitioners against the dues of M/s.Balaji Ispat Private Limited.
3. The case of the petitioner is as follows:-
On 23.5.2012, the petitioner company purchased the land free from all encumbrances at Dankuni, Santrapara, Hoogly through the auction under the SARFAESI Act, 2002 from Andhra Bank. The sale certificate issued by the Andhra Bank clearly stated that the sale of the property is made free from all encumbrances. The petitioner company informed the respondents of such purchase and applied for fresh supply of electricity to the said premises. The respondents informed that there are outstanding dues amounting to Rs.64,95,920/- against the erstwhile owner of the property M/s.Balaji Ispat Private Limited and the said amount is claimed by the respondents from the petitioner company. The petitioner company was made to make payment under compelling circumstances and under protest in order to start operations at its proposed factory.
3.1. Again, the respondents made further demand from the petitioner company against the dues of the erstwhile owner. Despite the petitioners repeated requests and objections, the respondents extorted the dues of a third party from the petitioner company. After making such payments, the petitioner company was issued a no dues certificate on 2.6.2012. While so, on 2.5.2014, the respondents informed the petitioner company that a further Rs.7,42,050/- is due and payable by the petitioner company against the tariff revision outstanding of the erstwhile owner, which payment also extorted by the respondents despite issuance of no dues certificate. On 20.6.2015, the respondents made a fresh demand of Rs.14,31,982/- against the purported outstanding late payment surcharge of the erstwhile owner.
3.2. The petitioner company through its letter dated 22.6.2015 informed the respondents that it had already got no dues certificate and that they are not liable to make payment of such demand of the respondents to which the respondents have till date not replied. However, the respondents are threatening the petitioner company to disconnect the electricity connection at the site. Challenging the same, the petitioners have filed the present writ petition.
4. The respondents filed affidavit-in-opposition stating that the petitioners had applied for bulk power supply on 11.11.2013 with a contract demand of 120KVA. On 20.11.2013 during joint inspection, it was directed that the premises of the petitioners is situated at a plot of land where there was a disconnected central bulk connection in the name of a consumer i.e. M/s.Balaji Ispat Private Limited. From the records, there was a outstanding dues in respect of M/s.Balaji Ispat Private Limited for a sum of Rs.7,42,000/- due to tariff revision for the year 2011-12. By a memo dated 2.5.2014, it was intimated to the petitioners with a request to pay the said. The petitioner company has failed to pay the said sum.
4.1. It is stated that by a memo dated 20.6.2014, the first respondent informed the decision of the authority to pay the said amount by six equal installments. In the said letter, it was also informed that waiver of late payment surcharge amount will be decided by the competent authority of the licensee if the petitioners pray for such waiver. The petitioners paid the first installment and the service connection was effected on 27.6.2014. After payment of six installments by the petitioner company, the proposal of waiver of LPSC was sent to
An auction purchaser is not liable to pay the arrears of electricity dues of the erstwhile owner when the purchaser has bought the land free from encumbrances. The demand for late payment surcharge m....
The auction purchaser is liable for the previous owner's electricity dues under the U.P. Electricity Supply Code 2005, as the statutory provisions impose a duty to verify such dues.
An encumbrance to be a charge must be such a burden on land which, by reason of a statutory provision diminishes value of the land and such a burden, therefore, is capable of being found out on inspe....
That electricity dues, where they are statutory in character under the Electricity Act and as per the terms and conditions of supply, cannot be waived in view of the provisions of the Act itself more....
The main legal point established in the judgment is that the electricity board cannot claim outstanding dues from the auction purchaser if no charge was created on the property, and electricity dues ....
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