Can electricity supply be disconnected on demand of corrected charges discovered at a later point of time? What SC held
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Can electricity supply be disconnected on demand of corrected charges discovered at a later point of time? What SC held

Meera Emmanuel

Can electricity be disconnected as a coercive measure, when a mistake in billing is discovered two years after the bill amount was first due?

The Supreme Court on Tuesday answered this question in the negative, on a reading of Section 56 of the Electricity Act, 2003, which the Bench pointed out was meant to be a consumer friendly statute. (Assistant Engineer (D1), Ajmer Vidyut Vitran Nigam Limited & Anr. v. Rahamatullah Khan alias Rahamjulla)

The judgment passed by Justices UU Lalit and Indu Malhotra states,

“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).”
Supreme Court

What the Electricity Act says

The power of companies licensing electricity to disconnect electricity supply for non-payment of due electricity charges is contained in Section 56 of Electricity Act, 2003.

Sub-clause (2) of Section 56 states that if the consumer deposits the amount due under protest, or if the bill/demand for payment has been raised two years after the sum became “first due”, then electricity supply cannot be disconnected as a coercive measure.

The Supreme Court further noted that 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.

The dispute

In this case, the licensee company found out in 2014 that it had made an error in computing electricity charges payable by the respondent for the period between July 2009 and 2011.

To rectify the error in billing, in 2015 the company raised an additional/supplementary bill for the corrected electricity charges.

On a complaint filed by the respondent, consumer forums ruled that the additional demand raised by the licensee company was time-barred and that the company could not disconnect the respondents’ electricity supply in view of Section 56 (2) of the Electricity Act.

On the company’s appeal challenging a 2018 ruling of the National consumer forum, the Supreme Court framed the following issues for consideration:

  • What is the meaning to be ascribed to the term “first due” in Section 56(2) of the Electricity Act, 2003?

  • In the case of a wrong billing tariff having been applied on account of a mistake, when would the amount become “first due”?

  • Whether recourse to disconnection of electricity supply may be taken by the licensee company after the lapse of two years in case of a mistake?

Advocate Devashish Bharuka was appointed by the Court as an Amicus Curiae to assist it in deciding on these issues.

Appearing for the licensee company, Advocate Puneet Jain argued that a new two-year limitation would run from the date of discovery of mistake in billing, in this case 2014.

On the other hand, Bharuka opined that to treat the date of detection of mistake as the date when the electricity charges were “first due” would dilute the limitation provided in Section 56 (2), since a mistake can be detected at any point of time.

What the Court held

The Supreme Court agreed with the submissions made by the amicus and held that the licensee company cannot disconnect electricity connection as a coercive measure two years after the electricity charges becomes “first due.”

Here, the electricity charges would become “first due” in terms of Section 56 of the Electricity Act, 2003, after the bill is issued to the consumer, even though the liability to pay may arise on the consumption of electricity.

Where a bonafide mistake is later discovered in estimating the charges, the licensing company may raise a supplementary demand, even after the limitation period of two yeas outlined in Section 56 (2) expires, the Court said.

However, in such a scenario, the licensing company would have to opt for other alternate modes to recover the charges, not the disconnection of electricity supply, the Court concluded. As noted in the Supreme Court’s judgment,

“Section 56(2) … 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.”

Supreme Court

In this case, the Court pointed out that the licensee company can still invoke Section 17(1)(c) of the Limitation Act, 1963, which states that a fresh limitation period runs from the date on which a mistake is discovered for the first time. In view of this, the Court disposed of the plea with the observation that,

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.”

[Read the Judgment]

Assistant Engineer (D1), Ajmer Vidyut Vitran Nigam Limited & Anr. v. Rahamatullah Khan alias Rahamjulla.pdf
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