Summary
The Supreme Court restored a distribution licensee's demand for minimum guarantee charges for 1996-2000, holding that the two-year bar in Section 56(2) of the Electricity Act, 2003 does not apply to liabilities incurred before that Act came into force, and that the consumer was barred by issue estoppel from challenging a second show cause notice for the same amount after its challenge to the first notice had been rejected by unappealed High Court orders.
Issues
- Whether the two-year limitation in Section 56(2) of the Electricity Act, 2003 applies to sums due under the Indian Electricity Act, 1910 for a period before the 2003 Act came into force.
- Whether a demand under Section 24 of the 1910 Act fails for delay, and what limitation governs a licensee's suit to recover electricity charges.
- Whether the consumer was estopped from challenging a second show cause notice for the same amount when its challenge to the first notice had been rejected by orders in an earlier writ petition that it later withdrew.
Provisions considered
- Section 56(2), Electricity Act, 2003Following Kusumam Hotels and K.C. Ninan, held that the two-year bar on recovering sums due applies only to liabilities arising after the 2003 Act came into force, not to liabilities incurred earlier; the High Court erred in quashing the demand on this basis. (¶¶ 3.2, 10, 11, 12, 13)
- Section 185(5), Electricity Act, 2003Read with Section 6 of the General Clauses Act, 1897 to hold that liabilities incurred under the repealed enactments survive and are governed by the earlier framework. (¶¶ 9, 13)
- Section 6, General Clauses Act, 1897Applied through the cited precedents to preserve the consumer's liability incurred under the repealed 1910 Act. (¶¶ 11, 12, 13)
- Section 24(1), Indian Electricity Act, 1910Read as permitting disconnection, after seven clear days' notice, for neglect to pay charges, as an in terrorem measure separate from the right to sue; it prescribes no limitation for the notice, and whether a demand fails for mere delay depends on the facts of each case. (¶¶ 15, 16, 20)
- Article 15 and Section 17, Limitation Act, 1963A licensee's suit to recover the price of electricity supplied is governed by Article 15 (three years from expiry of the credit period); limitation runs from the consumer's neglect to pay a bill raised, and Section 17 may postpone it for a bona fide mistake but does not protect lack of diligence. (¶¶ 16, 17, 18, 19, 20)
Held
- The two-year bar in Section 56(2) of the 2003 Act applies to liabilities arising under that Act and not to those incurred before its enforcement, which survive by virtue of Section 185(5) read with Section 6 of the General Clauses Act. The High Court's contrary finding was set aside. (¶¶ 10, 11, 12, 13, 14)
- Section 24 of the 1910 Act prescribed no limitation, but a licensee's suit for unpaid charges is governed by Article 15 of the Limitation Act, with time running from the consumer's neglect to pay a demand raised by bill; a consumer cannot be said to neglect payment until a demand is raised. Section 17 may postpone limitation where a bona fide mistake is discovered later, but not where reasonable diligence would have revealed it earlier. (¶¶ 16, 17, 18, 19)
- No limit is prescribed for issuing a disconnection notice under Section 24(1); whether the licensee's right to claim unpaid charges lapses through delay must be decided on the facts of each case, considering the defence and the explanation for the delay. (¶ 20)
- Where interim relief is sought against a development arising after the proceeding was filed and the challenge is rejected, the rejection binds the party until reversed in appeal or review; it does not lapse on disposal of the main proceeding, and withdrawing the proceeding does not negate it. (¶¶ 30, 31, 32)
- The High Court's unappealed orders in the first writ petition holding the consumer bound to pay minimum guarantee charges whether or not energy was consumed conclusively decided that issue against it, even though interlocutory and possibly unreasoned or wrong. Issue estoppel barred the consumer from challenging the identically worded second show cause notice for the same amount, and the second writ petition ought not to have been entertained. (¶¶ 26, 27, 28, 29, 33, 34, 35, 36, 37, 39)
- As the licensee accepted the Single Judge's order reducing the demand and had recovered the revised amount by encashing the bank guarantee, the Court did not disturb the position flowing from that order. (¶ 38)
Result
Appeal allowed; the Division Bench judgment dated 13 October 2011 set aside, leaving undisturbed the position under the Single Judge's order and the recovery of the revised demand; parties to bear their own costs.