Case Note & Summary
The case involved an appeal by the North Eastern Electricity Supply Company of Orissa (NESCO) against a decision by the High Court of Orissa, which had directed NESCO to provide electricity to M/s Raghunath Paper Mills Private Limited after it purchased a factory unit in liquidation. The dispute arose after Raghunath Paper Mills was asked to pay outstanding electricity dues of Rs. 79,02,262/- from the previous owner, Konark Paper & Industries Limited. The High Court ruled in favor of Raghunath Paper Mills, stating that the demand for payment of arrears was unjustified as they had purchased the property on an 'as is where is' basis and applied for a fresh connection, not a transfer of service. The Supreme Court upheld this decision, emphasizing that the relevant provisions of the Electricity Supply Code did not apply to fresh connections and that the auction purchaser should not be held liable for the previous owner's dues. The court referenced several precedents, including Isha Marbles and Paschimanchal Vidyut Vitran Nigam Ltd., to support its conclusion that electricity arrears do not constitute a charge over the property and that a new applicant cannot be made liable for the dues of the previous owner. Ultimately, the Supreme Court dismissed the appeal, affirming the lower court's ruling.
Headnote
A) Electricity Law - Liability for Electricity Dues - Auction Purchaser's Liability - Electricity Act, 2003, Section 43; Orissa Electricity Regulatory Commission Distribution (Conditions of Supply) Code, 2004, Regulation 13(10) - The court held that an auction purchaser is not liable for the electricity dues of the previous owner when applying for a fresh connection, as the liability does not transfer with the property. The interpretation of the relevant regulations was found to be correct, affirming the lower court's decision (Paras 5-21).
Issue of Consideration
Whether a Company, which purchased the property of another Company under liquidation through auction, is liable to pay the arrears of electricity dues outstanding against the erstwhile Company.
Final Decision
The Supreme Court dismissed the appeal, affirming the High Court's decision that Raghunath Paper Mills was not liable for the previous owner's electricity dues and was entitled to a fresh connection.
Law Points
- Electricity supply
- auction purchase
- liability for dues
- fresh connection
- statutory provisions
