Partly allowed

M/s. Sri Sai Baba Cellulose Pvt. Ltd. v. The State of Telangana

Telangana HC25 Jan 2023WP/1859/2022

Case brief

AI extract

What is this about?

The Court held that the action of responding to dues of a lessee (M/s. Sri Sai Granite Industries) against the lessor/Petitioner under the Revenue Recovery Act was barred by the two-year limitation period under Section 56(2) of the Electricity Act, 2003. Consequently, disconnection was prohibited, though recovery proceedings under the Revenue Recovery Act remain permissible.

What did the court decide?

Petitioner directed not to disconnect the power supply connection No.SGROO2; liberty to proceed with recovery under the Revenue Recovery Act.

M/s. Sri Sai Baba Cellulose Pvt. Ltd. Vs… — Pension and Retirement Benefits | Telangana HC (2023)

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NNMN[3219J

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HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Special Originat Jurisdiction) WEDNESDAY, THE TWENTY FIFTH DAY OF JANUARY TWO THOUSAND AND TWENry THREE PRESENT THE HONOURABLE SMT JUSTICE P.MADHAVI DEVI WRIT PETITION NO: 1859 OF 2022

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Between:

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M/s. Sri Sai Baba Cellulose Pvt. Ltd, Having its regd. Office at 204, CAPITOL, Pavani Estates, Khairtabad, Hyderabad and Factory at A-9, 10 and 11, lndustrial Estate, Patancheru, Sangareddy, Medak Dist 502320 Rep., by its authorized signatory and manager Mr. Purshotham Jhanwar, S/o. Late Jagannath Jhanwar.

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...PETITIONER

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AND

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The State of Telangana, rep., by Principal Secretary, Power and Energy Department Secretariat, Tank Bund, Hyderabad

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The Managing Director, Operations, Telangana State Southern Power Dishibution Company Limited, Mint Compound, Hyderabad

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The Superintendent Engineer, Operations TSSPDCL, Sangareddy, Medak Diskict, Telangana State

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The Addl. Divisional Engineer, TSSPDCL. Patancheru, Sanga Reddy, Medak District, Telangana State

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...RESPONDENTS

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Petition under A.ticle 226 of the Constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the l{igh Court nray be pleased to pass orders, writ or direction more particularly one in the nature of writ of mandamus declaring the action of the Respondent Nos.3 and 4 in affixing the seizure notice issued in r?spect of Service Connection No.SGROO2 for recovery of Rs.7,61,557/- ?gainst M/s. Sri Sai Granite lndustries under Revenue Recovery Act as illegal, unararranted, arbitrary, malafide and in violation of the A.P. State Electricity (Arrears of Dues), Act. 1984 and Revenue Recovery Act and consequently direct the Respondents not to disconnect^power supply connection No SGROO2 of the Petiiioner company in respect of^premises No. A-9,^{10 and 11,} lndustrial Estate, Patancheru, Sangareddy, Medak^{District502 320;}

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lA NO:^'t OF 2022

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Petition under section^15'1 CPC^{prayingthat in the circumstances statedin} the affidavit filed in suppc'rt of the^{petition,the High court may be pleasedto issue} directions to the Respondent Nos.3 and^{4 not to disconnectthe power supply to} the Petitioner unit which bears^{connectionNo.sGR-002 pending disposalof the} writ petition in the interest^{,tf justice;}

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Counsel for the Petitioners: SRl. K K WAGHRAY

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Counsel for the Respondent No 1: GP FOR ENERGY

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Counsel for the Respondent Nos 2 to 4: SRI R. VINOD REDDY

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The Court made the following: OROER

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THE HON'BLE SMT. JUSTICE P.MADHAVI DEVI

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WRIT PETITION No.l859 of 2022

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ORDER:

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This Writ Petition is filed seeking a writ of mandamus declaring the action of the respondents No.3 and 4 in affixing the seizure notice dated 74.12.2021 in respect of service connection No.SGROO2 for recovery of Rs.7,61,557 l- pertaining to M/s.Sri Sai Granite Industries under the Revenue Recovery Act as illegal ald arbitrary and conscqucntly to direct the respondents not to disconnect the power supply connection of the petitioner company 1n respect of the premises No.A-9, 10 and 1 1, Industrial Estate, Patarrcheru, Sangareddy, Medak District and to pass such other order or orders.

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Brief facts leading to the filing of the present Writ Petition are that the petitioner company had let out its property to M/s.Sri Sai Granaite Industries which had obtained an electricity connection bearing No.SGR1755. It is submitted that the said service connection was disconnected in the year 2Ol4 and the lessee had also vacated the premises. However, in th.e year 2021, the respondents, by affixture of notice, have issued the notice for recovery of a sum of Rs.7,61,557 I - and the notice also stated that if the dues were not paid, coercive action such as other connections of

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t')'r'i D"-' W.P l.lo. I S5rr^,)f 20:li

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the petitioner r.vould be ciisconnected by the respondents Cltailenging rhe same, the present Writ Petitici-r has been lile<l

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Learned counsel for^-.he petitioner: submit.ted the,l the petitioner and M/s.Sri Sai Crairite Industries are l-u,r-l sr':parate entities and therefore, for the default of the lessee, the lessor c.rnnot be held responsible, though, it is admitted that one of the Director of iVI/s.Sri Sai Granite Industries is also a Director in the prcsent petitiol'ler conrpa-n],. He furt"h.'r submitted that under Section 56(2) of the Electricity Act, 2OO3 any dues of llicctricity bills can bc collr:cted or recovereci rvitirin a period of t^,o years from the date when such sullr becomes ftrst due unless such sltm has been sho<sup>,'n continuously as recoverable as; arl ear of chargcs {br elccl.ricity sr.rpplied and licenser: shall not cu1. off the suppll, of the electricity. It is submitted that after 2013, nrr action has been tieken by the respondents for recovery o[ the due:; and notice has been given only in the year 2O2l and therefore it is clearly barred bv limitation as per the period of limitation prescribed under Sectiort 56(2) of the Electricity Act. Hc further submittcd that under Section 6 (2) of the Andhra Pradesh State Electricity Board (Recoverv of Dues) Act, 1984, if the amount could not be recovered wittrin a period of limitation, then the same can bc recovered by the authorities under the Revenue Recovery Act and for the said

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PMD,J W.P.No 1859 of 2022

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purpose, the respondents can lorward the same to the collector having the territorial jurisdiction over the property and on such receipt ol the request from the respondents, the Collector would have to proceed to recover from the debtor, the amount of the demand as if it were an arrear of land revenue. He submitted that in this case, the respondents have also initiated action under the Revenue Recovery Act by forwarding the request to the Collector and therefore, the threat of disconnection of the petitioner's connection issued vide notice dated 14. l2.2o2l is not sustainable. He also placed reliance upon the decision of the Hontrle Supreme Court in the case of the Assistant Engineer, Ajmeer Vid.gut Vitran Itligam Limited and dnother u. Ro,hamo,tullah Khan alio,s Rahamjulla reported in (2O2O) 4 SCC 65O u'herein, the Hon'ble Supreme Court has considered the ambit and scope of Section 56(2) of the Electricity Act, 2003 and has held that after the expiry of the period of limitation, the respondents cannot take recourse to^coercive measures for recovery of the demand.

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Learned Standing Counsel for the^{respondents,on the other} hand, relied upon thc averments^{made in the counter affidavit and} submitted that the lessee of the^{petitioner company had obtained} the electricity connection but^{due to default committed in the} payment of Current Consumption^{(CC) charges,the power supply}

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l,N{D.,1 w l']No 1359 ol 2C22

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was disconnected on. 25. I 1 .2O i 3 and consequently^{the agreement} was terminated with eflect from 01.O1.20 14. It^{was submitted the} total amount due a-fter adjustrnent of the available^{securitydeposit} was Rs.3,91,67 1l- aaa for the said purpose, the respondents had issued notice in Form-A dated 22.08.20 14 under the Revenue Recovery (RR) Act for an amount of Rs.4,21,377 I - and the same wa,s issued to M,rs.Sri Sai Granite Industries, SGR I755 but since, the lessee failed to pa1' the dues in spite of ser'/-ice of notice in Form-A, a notice in Form-B dated 06.03.2019 for a sum ol Rs.7,6 1,557/(including interest) was issued and a later notice ir-r Forrn-C rlatcd 31.O7.2019 was also issued for realization of the arrears under [he Reverrue Reco'.rcry (RR) Act to M /s.Sri Sai Gralite Inclustries. [t is submittcd that subsequently, the respondent authorities inspected Lhe premises ancl noticed that the leased premiscs is in occupati(rn of thc petitioner ard since one of the Directors of the petitioner,s company is also a Director in M/s.Sri Sai Granite Industries u,hich had committed default in payment of CC charges, the respondents have lilted the corporate Veil and came to the conclusion that the Petitioner company is also liable to pay d ues which stand in the n'ame of M/s'Sri Sai Granite Industries. Therefore, the n,ticdemanding Rs.7,61,5 arfixed on the prernises 0f the peririoner compan-y. ,, ^1. .*t rs furthcr stated that a s Per CJause l0 of the

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PMD,J W.P.No.1859 of 2022

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Regulation 7 of 2OL3 issued by TSERC, the service connection of the petitioner shall be treated as the link service of the defaulting service connection in the name of M/s.Sri Sai Granite Industries which is located in the same premises and action could be taken under the Regulations against the petitioner herein as well. Therefore, the learned Standing Counsel justified the coercive action initiated by the respondents. He also placed reliance upon the judgment of the Hon'ble Supreme Court in the case of Amlt Products (Indir:,) Ltd. a. Chief Bngineer (O&M) Circle and another reported tn (2OOS) 7 SCC 393 wherein the Hon'ble Supreme Court upheid the action of the respondents therein in denying the electricit5r connection to the company which had changed its members of the Board of Directors of the company and previous company had committed default in making the payments.

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Having regard to the rival contentions and the material on record, this Court finds that the action initiated by the respondents in respect of the petitioner company by affixture of the notice dated 14.12.2021, admittedly is in respect of the dues oi M/s.Sri Sai Granite Industries in respect of its consumption charges in the year 2013 and the respondents have issued first notice on 22.08.2014 and thereafter, the subsequent notices on 06.03.20i9 and 31.07.2019. As per the Section 56(21 of the Electricity Act, no sum

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PMD,.' W.P.N-o.1859 of 2022

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due from arry consumer, under this Section shall be recoverable after the period of t<sup>ro years from the date when such sum became AS first due unless such sum has been shown continuously recoverable as alrears of charges for electricity supplied and the licensee shall not cut off the supply of the electricity. Since, in this case, the electricity connection has been terminated on 25.01.2013, was the agreement has been terrninated and power supply disconnected on 25.1 i.20 13 and the amount due was also adjusted against the security deposit and for balance of recoverable dues, notice^.,vas given on 22.C8.2A't 4 and there was no possibiiity of showing the balance as recoverable continuously subsequentiy as no electricity bills could be generated after the disconnection Therefore, the period of limitation would start from the 22.08.2014 and the respondents could not have recovered the same after two years from the said date of the notice as it is barred by limitation the subsequent notices dated 06.O3.2019 and 31.O7.2019 cannot enlarge or extencl the time which has already lapsed in respect of M/s.Sri Sai Granite lndustries.

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With regard to the petitioner in question, the petitioner is being treated as a- link service provider and the respondents are trying to recover the outstanding dues of its lessee from the petitioner. The above limitation period of two years under Section

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PMD,J W.P.No.l859 of 2022

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56(2) u,ould apply even to the case of the lessor/petitioner. However, as held by the Honble Supreme court in the case of the Assistcnt Engineer, AJmeer Vidgut Vitran liligam Limited. and another stated supra, Section 56(l) confers statutory right for the licensee company to disconnect the supply of electricity, if the consumer declines to pay and this statutory right is subject to the period of limitation of two years provided under Section 56(2). The Honble Supreme Court after considering the above legal position has held that Section 56(2) does not preclude 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^mistakeor bona fide error, however it^{does not empowerthe licensee company} to take recourse to the^{coercivemeasureof disconnection of} electricity supply,^{for recovery of the additional demand'In the case} before this Court, it^{is not the case of mistake of bona fide error'} which the respondent^{soughtto remedy by issuing notice to the} petitioner company.^{However, it is noticed that the respondents} have already^{initiated action against the petitioner company for} rccovery of^{the outstandingamount ofM/s'Sri Sai Granite} Industries^{bY takingrecourseto the Revenue RecoveryAct bY} referring^{the matterto theDistrict Collector' Since, the respondents} have adoPted^{the remedYavailableunder the Regulations' the}

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I'!,1D,.,I W.P.No.l859 ot^.2022

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respondents could not hanre resorted to disconnection^{of the service} connection of the petitioner company under Section^56(1). Thelefore. notice for disconnccting the senrice corinection of the petitioner for non-payment or payment of the dues of M/s.Sri Sai Granite lndustries could not be sustained. The respondents are therefore directed not to disconnect the pow-er supply connection I{o.SGROO2 of the petitioner compa_l1y in respect of the premises No.A-9, 10 & 11. Indu.strial Estate, Patancheru, Sangareddy, Medal< District However, the-v are at liberty to proceed witl-r the action thev have initiated for recoverv of dues under the Revenue Recoverv Act.

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