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TMI Blog2023 (1) TMI 691X X X X Extracts X X X X X X X X Extracts X X X X ..... ational Company Law Tribunal (NCLT), by its order dated September 6, 2019, recorded that the resolution process had failed and appointed a liquidator under Section 33 (4) of the Insolvency and Bankruptcy Code, 2016 (in brief, "the IBC"). On November 21, 2019 the resolution professional moved an application for a direction on the DVC to reconnect electricity supply for the corporate debtor, which was turned down by the NCLT. 3. On December 10, 2020 an order was passed directing the entire land of the borrower's property to be sold. Accordingly, the liquidator published an e- auction notice for sale of certain assets, including the land, of the corporate debtor as identified by the liquidator. A corrigendum was issued subsequently, amending Clause 6 of the terms and conditions of the e-sale notice, excluding any liability of the auction purchaser for the electricity dues. 4. The present petitioner no. 1 purchased the property in the e-auction sale, a letter of intent was issued to the purchaser, who accepted the same. The certificate of sale was duly issued on July 8, 2021. 5. Meanwhile, on June 29, 2021 the petitioner/auction-purchaser made an application to the DVC for a new ele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a mechanism for recovery of dues, including electricity dues of the respondent no. 1 as a claim made from the liquidation estate, from which there can be no deviation. 11. Even in cases of deemed termination of supply, it is contended, recovery of outstanding dues is under Regulation 3.4.2. 12. Regulation 4.6.4 of the Supply Code ought not to be exercised as a blanket provision but where it is necessary to do so. Regulations 3.4.2 and 4.6.4 cannot be read in isolation to one another but must be read harmoniously, so as not to fall foul of the objectives of the IBC. 13. The learned Senior Advocate submits that the petitioner no. 1, being an auction purchaser under the IBC, cannot be unfairly classified as 'any consumer' as contemplated in Regulation 4.6.4 on the basis of the fact that the petitioner has purchased the 'same premises' for which the erstwhile company in liquidation was in default. Such an application would be discriminatory, unreasonable and opposed to the equal protection afforded to the petitioner under Article 14 of the Constitution. 14. It is argued that Regulation 4.6.4 must be read down to hold that it is not applicable to an auction purchaser under the IBC a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such purpose, obtained necessary licenses, permits, environmental clearances, consent to establish and to operate and GST documentation for operating the plant. 20. The learned Senior Advocate argues that the actions of the respondents are without authority of law and have deprived the petitioners from utilizing its immovable property and have thus breached the Constitutional right to property of the petitioners. 21. Thus, it is submitted that the respondent no. 1 be directed to grant fresh electricity connection to the factory site at Tulsiberia Road, Kulgachia, Howrah acquired by the petitioner no. 1 as an auction purchaser under e- auction dated May 18, 2021. 22. The learned Senior Advocate appearing for the DVC contends that the sale of the assets of the borrower to the writ petitioner was not as a going concern but on "as is where is", "as is what is", "whatever there is" and "without recourse" basis. The sale notice itself clarified that the liquidator does not take or assume any responsibility for any shortfall or defect or shortcoming in the movable/immovable assets of the company. Learned counsel relies on the e-sale notice dated May 13, 2021, the letter of intent date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which the DVC succeeded before the NCLT and the petitioner's application was dismissed. 27. However, the writ petitioner, despite having preferred a challenge before the NCLAT against the order of the NCLT, thus proceeding on the premise that it has jurisdiction, has invoked the jurisdiction of this court under Article 226 of the Constitution of India and seeks to initiate parallel proceedings on the self-same cause of action in two different forums, thereby indulging in forum shopping. Hence, the later proceedings, that is, the present writ petition should be stayed. 28. The DVC next relies on the principle of caveat emptor and contends that the first notice of sale published by the liquidator on May 13, 2021 indicated that the sale was on 'as is where is' basis and also pointed out that there is no production or operation that is taking place at the factory. The sale notice also clearly indicated that the purchaser has to pay the dues of electricity and other statutory dues. However, this was amended by the liquidator by a corrigendum, where "electricity charges" have been deleted, without any further clarification. 29. The liquidator, despite having full knowledge that he had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s whether the Regulation is violative of Articles 14, 19 (1) (g), 21 and 300A of the Constitution of India. 35. The Regulation, it is submitted, has been made in public interest and as part of public policy, which is mainly to ensure that the licensees realize their dues. Failure to do so impacts society as the operating loss of the licensees has a cascading effect on the revision of tariff by the Regulator, who has to adjust such loss by passing it off to other non-defaulting consumers. 36. There is a reasonable classification between defaulting and non-defaulting consumers. The subordinate legislation extends to the latter, so that they are not burdened with the dues of defaulters. Therefore, it is argued, there is no violation of Article 14 or Article 19 (1) (g) or other provisions of the Constitution. In this regard, learned senior counsel places reliance on the following judgments of the Supreme Court: i) (1984) 4 SCC 27 [Maharashtra State Board of Secondary and Higher Secondary Education and another Vs. Paritosh Bhupeshkumar Sheth and others]; ii) (2017) 9 SCC 1 [Shayara Bano Vs. Union of India and others]; and iii) (2017) 10 SCC 800 [Independent Thought Vs. Union of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as a going concern where assets and liabilities were both transferred. The said case is fully covered by Regulation 32A and 32 (e) and (f) of the 2016 Regulations and thus, it is argued, has no manner of application in the facts of the instant case. Moreover, the Division Bench judgment in Ramdoot Rollers (supra) was not brought to the notice of the court at that stage. Hence, Nanu Tradecom has no manner of application here. 42. The learned Senior Advocate appearing for the West Bengal Electricity Regulatory Commission (for short, "WBERC") contends at the outset that insofar as the WBERC is concerned, the challenge in the writ petition is confined to the vires of Regulation 4.6.4 of the Supply Code, 2013. 43. The first argument made on behalf of the WBERC is that Regulation 4.6.4 was made in accordance with the delegated legislative power conferred on the WBERC under Section 181(1) and Section 181 (2) (x) of the Electricity Act, 2003 (for short, "the 2003 Act"). Section 50 of the 2003 Act provides the subject-matter of the Supply Code. 44. Moreover, under Section 181 (2) (zp), the Commission is also empowered to make any regulation in respect of any other matter which is to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f outstanding dues, it is required to be read together with the impugned Regulation 4.6.4. 51. Hence, the WBERC submits that there is also no requirement of reading down Regulation 4.6.4 since, as far as recovery of outstanding dues is concerned, the licensee has got no other alternative but to take into account the Regulation 3.4, including Regulation 3.4.2, as the very heading of the same is "Recovery of Outstanding Dues". 52. The learned Senior Advocate for the WBERC, however, for abundant caution, next addresses the issue of conflict between the 2003 Act and the IBC, as raised by the petitioner, although if the previous arguments are upheld the said question, according to learned senior counsel, could become redundant. 53. It is submitted that the electricity law is equally a special law in the subject of electricity whereas the IBC is also a special law in its own subject. 54. In view of the Telangana State judgment, electricity dues are statutory in nature. Hence, how the same is required to be recovered can always be prescribed by the Commission, being the authority to frame regulations in that sphere. Neither Regulation 4.6.4 nor Regulation 3.4.2 are in conflict with an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lates that the licensee may discontinue the supply until such charge or other sum, together with expenses incurred in cutting-off and reconnecting supply are paid, but no longer. 60. The principle implicit in the said provision is that the discontinuance shall continue only until "such charge or other sum" is paid, but no longer. The term "such" relates to the first limb of Section 56(1) which provides that the charge will be for electricity or any sum other than a charge for electricity "due from him to a licensee". 61. The use of the expression "due from him" acquires considerable importance in the present context. 62. The dues, as per the plain language of Section 56(1), should subsist at the juncture when it is claimed for the purpose of reconnecting the electricity supply. 63. An examination of the facts in the present case indicates that upon the erstwhile company/borrower having gone into liquidation, its assets, including the land and property, were sold under the provisions of the IBC, read with allied Rules and Regulations. 64. It is important to note that the present petitioner, that is, the auction purchaser did not purchase the company or its goodwill as a whole. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny "consumer" new service connection can only be provided if the outstanding dues are cleared along with late payment surcharge. 73. It can very well be seen even on a cursory perusal that the expressions used in Regulations 3.4.2 and 4.6.4 are, respectively, 'new and subsequent consumer' and 'any consumer'. 74. The term 'consumer' has been defined in Section 2(15) of the 2003 Act to mean any person who is supplied with electricity and includes any person whose premises are for the time being connected for the purpose of receiving electricity. 75. Hence, the use of the present tense in the said definition clearly excludes intending consumers who are yet to apply for electricity. 76. However, the use of the expression "new and subsequent consumer" in Regulation 3.4.2 can only denote an intending consumer, as opposed to the expression 'consumer' as used in Regulation 4.6.4, which has been defined in the 2003 Act as an existing consumer. Thus, the fields of operation of the two Regulations have their subtle differences. 77. Insofar as new and subsequent (or intending) consumers are concerned, Regulation 3.4.2 is the Regulation which applies and not Regulation 4.6.4. Regulation 4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case of the auction purchaser in an asset sale, because it is not possible for an auction purchaser to have a prior idea of any existing liability which, in any event, was not there. Even the sale notice admittedly did not include "electricity dues". 81. The right of discontinuance of electricity conferred on the licensee under Section 56(1) is restricted till the time when "such dues" that is the dues of electricity and other charges are paid. 82. At the juncture when the auction sale took place and/or when the new electricity connection was sought by the writ petitioner, there were no "dues" as such, to justify the 'discontinuance' of electricity supply. 83. In any event, the question of 'discontinuance' does not arise in the present case, since the auction purchaser/petitioner has sought for a new electricity connection without having any nexus whatsoever with the default of the previous consumer. 84. The provisions of Regulations 3.4.2 and 4.6.4 have to be tested on the anvil of the parent right conferred under Section 56(1) of the 2003 Act and cannot be divorced from the scheme of the parent Act itself. Since there was no subsisting due from the auction purchaser, partic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... default and becoming a party to the evasion, applies for a fresh connection in the said third party's name at the same premises. In such case, Section 56(1) does not apply strictly, since the licensee's act no longer remains the continuance of the previous disconnection but becomes refusal of a new connection; nor does Regulation 4.6.4 apply, since the new consumer is not a 'consumer' within the definition of Section 2(15) of the2003 Act, which is also the term used in Regulation 4.6.4. However, in such a case Regulation 3.4.2 applies squarely, since the applicant is a 'new and subsequent' consumer having nexus with the defaulting consumer, as stipulated in Clause 3.4.2. 92. In the fourth instance, an entirely innocent third person having no nexus with the defaulting consumer applies for a fresh connection after coming to acquire the 'same' premises. In that event, none of the above-discussed provisions apply, despite the premises being the same as where the default occurred. Section 56 is ruled out because the new applicant was not negligent in committing the default. Regulation 3.4.2 is also not attracted as, although the applicant is a 'new and subsequent' consumer, no nexus be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect of the other, nor does the decision of either of the forums directly affect or debar the remedy before the other. 98. Hence, the writ petitioner cannot be said to pursue the same remedy before two parallel forums and there does not arise any question of the writ petition being stayed on the principle of Section 10 of the Code of Civil Procedure. 99. The ratio of the decisions cited by the DVC on such score, that is, Gujarat Urja (supra) and Tata Consultancy (supra) are, thus, not applicable in the present case. 100. The judgments cited by the DVC on the question of non-violation of Articles 14, 19 and 300A of the Constitution are apt and there cannot be any quarrel with the propositions laid down therein. However, since there is no contravention of any Constitutional provision in the impugned Regulation, those judgments need not be discussed threadbare. 101. The Division Bench judgment of Shree Ramdoot Rollers Case has been cited by the DVC. In the said case, the premises for the time being was connected for the purpose of receiving electricity with the works of a licensee. In the present case, however, the DVC itself has contended that, after the expiry of 180 days, the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... new or subsequent consumer if a nexus is established by the licensee between the new consumer and the erstwhile defaulter-consumer. Since no such nexus has been proved by the licensee in the present case, mere subsistence of the licensee's right to claim outstanding dues from the erring consumer cannot justify shifting of such burden on the auction-purchaser and, for all practical purposes, there is no statutory provision to claim the amount from the writ petitioner. The position, in a sense, reverts back to the Isha Marbles scenario, where there is no statutory provision to cast the burden of payment on the auction- purchaser. Since the writ petitioner does not have the liability to pay the outstanding amount, which liability is inextricably linked with the right of the DVC to withhold new connection, the present insistence of the DVC for payment of the amount by the petitioner for giving new connection is palpably illegal and de hors the law. 106. Hence, the impugned claim of the DVC is not tenable in the eye of law and cannot survive the scrutiny of judicial review under Article 226 of the Constitution of India. 107. Accordingly, W.P.A. No.12683 of 2022 is allowed on contest, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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