# RGK Industries LLP 144, New Delhi v. UPPCL Lko. & Ors

- **Citation:** (2023) 7 ILRA 848
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2023-05-08
- **Case number:** Civil Misc. Review Application No. 129 of 2023
- **Bench:** Mrs. Sunita Agarwal, Vipin Chandra Dixit
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/rgk-industries-llp-144-new-delhi-v-uppcl-lko-ors-50647
- **Pages:** 14

## Headnote

A. Civil Law - Recovery of Electricity
Arrears - Electricity Act, 2003- Section 56
- UP Government Electrical Undertaking
(Dues Recovery) Act, 1958, S. 5, Recovery
of electricity dues as arrears of land
revenue - U.P. Electricity Supply Code,
2005 - Clause 6.15; Recovery of Arrears -
Clause 4.3 (f) (i); Both seller & purchaser
will be either/or, jointly and severally
liable to pay the outstanding electricity
dues/ obtain No Dues Certificate. Issue:
Whether
an
auction
purchaser,
a
subsequent transferee of the auctioned
property (auction conducted by the Debt
Recovery Tribunal after determining the
dues of the bank), can be held liable for
payment
of
electricity
dues
of
the
erstwhile owner? Held: From a conjoint
reading of Clause 4.3 (f) (i), (ii), (iii), it is
clear that it is the duty of the purchaser to
make an inquiry into the matter of the
7 All. RGK Industries LLP 144, New Delhi Vs. UPPCL LKo. & Ors.
849
dues of electricity with respect to a
premises where electricity supply has
been made to the erstwhile owner. Clause
4.3 (f) (i) cannot be confined to private
sales. In the instant case there was an
explicit statement in the schedule of the
property that the Recovery Officer was
not
aware
of
any
dues,
claims,
encumbrances, or revenue assessed on
the property. Also, Clause 4 of the auction
notice/sale proclamation provided: "4.
The property is being sold on an 'as is
where is' basis." Meaning thereby, the
auction purchaser was required to make
necessary inquiries about the claims,
charges, or encumbrances, if any, related
to the property. The auction purchaser
was under an obligation to make inquiries
regarding the outstanding electricity dues
with respect to the property put to auction
in the proceedings under the SARFAESI
Act, 2002. Auction purchaser cannot be
allowed to contend that he was not
intimated about the electricity dues or
that there was no occasion for him to
make an inquiry. An auction sale being a
distress sale, the auction purchaser not
only purchases the property but also
purchases the liabilities attached to it.
(Para 32, 42, 43)
Dismissed. (E-5)
List of Cases cited:

## Text

_Characters 0–39,982 of 46,959. This is a partial read: ask again with offset=39982 for what follows._

848 INDIAN LAW REPORTS ALLAHABAD SERIES
take the vehicles of others on the pretext of
any work. It appears that the moped of
accused Durga Prasad would have been
taken by the rest of the accused persons in
the same manner. Hence, this appeal is
liable to be dismissed in respect of accused
Durga Prasad.

55. So far as the rest accused persons
- Devendra @ Dablu and Mahendra are
concerned, the appeal preferred by the State
is liable to be allowed. The case is proved
against them beyond reasonable doubt
under Section 392 IPC and they are liable
to
be
convicted
and
sentenced
in
accordance with law.

ORDER

56. The appeal is partly allowed in
respect of the accused Devendra @ Dablu
and Mahendra and is partly dismissed with
regard to the accused Durga Prasad and the
judgment and order of acquittal passed by
the learned trial Magistrate with regard to
him is upheld.

57. Since accused Devendra @ Dablu
and Mahendra are not present in the Court
in person, hence they are ordered to be
taken into custody. They shall be heard on
the quantum of sentence.

FURTHER ORDER

58. The accused though were directed
to remain present but they are absent. Their
advocate is also absent. Hence, we have no
other option but to issue non-bailable
warrants on the accused - Devendra @
Dablu
and
Mahendra,
returnable
on
04.08.2023, to be served through CJM,
Bulandshahar. On the said date they shall
be brought before this Court.

59. List for hearing the accused on the
quantum of sentence on 04.08.2023.
----------
(2023) 7 ILRA 848
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 08.05.2023

BEFORE

THE HON'BLE MRS. SUNITA AGARWAL, J.
THE HON'BLE VIPIN CHANDRA DIXIT, J.

Civil Misc. Review Application No. 129 of 2023
IN
Civil Misc. Writ Petition No. 23940 of 2022

RGK Industries LLP 144, New Delhi
 ...Petitioner
Versus
UPPCL Lko. & Ors. ...Respondents

Counsel for the Petitioner:
Sri Veerendra Kumar Shukla, Sri Anurag Khanna,
Sri Sandeep Arora, Sri V.K. Shukla (Sr. Advocate)

Counsel for the Respondents:
C.S.C., Sri Baleshwar Chaturvedi, Sri Krishna
Agarwal, Sri K.M. Asthana
A. Civil Law - Recovery of Electricity
Arrears - Electricity Act, 2003- Section 56
- UP Government Electrical Undertaking
(Dues Recovery) Act, 1958, S. 5, Recovery
of electricity dues as arrears of land
revenue - U.P. Electricity Supply Code,
2005 - Clause 6.15; Recovery of Arrears -
Clause 4.3 (f) (i); Both seller & purchaser
will be either/or, jointly and severally
liable to pay the outstanding electricity
dues/ obtain No Dues Certificate. Issue:
Whether
an
auction
purchaser,
a
subsequent transferee of the auctioned
property (auction conducted by the Debt
Recovery Tribunal after determining the
dues of the bank), can be held liable for
payment
of
electricity
dues
of
the
erstwhile owner? Held: From a conjoint
reading of Clause 4.3 (f) (i), (ii), (iii), it is
clear that it is the duty of the purchaser to
make an inquiry into the matter of the
7 All. RGK Industries LLP 144, New Delhi Vs. UPPCL LKo. & Ors.
849
dues of electricity with respect to a
premises where electricity supply has
been made to the erstwhile owner. Clause
4.3 (f) (i) cannot be confined to private
sales. In the instant case there was an
explicit statement in the schedule of the
property that the Recovery Officer was
not
aware
of
any
dues,
claims,
encumbrances, or revenue assessed on
the property. Also, Clause 4 of the auction
notice/sale proclamation provided: "4.
The property is being sold on an 'as is
where is' basis." Meaning thereby, the
auction purchaser was required to make
necessary inquiries about the claims,
charges, or encumbrances, if any, related
to the property. The auction purchaser
was under an obligation to make inquiries
regarding the outstanding electricity dues
with respect to the property put to auction
in the proceedings under the SARFAESI
Act, 2002. Auction purchaser cannot be
allowed to contend that he was not
intimated about the electricity dues or
that there was no occasion for him to
make an inquiry. An auction sale being a
distress sale, the auction purchaser not
only purchases the property but also
purchases the liabilities attached to it.
(Para 32, 42, 43)
Dismissed. (E-5)
List of Cases cited:
1. Isha Marbles Vs Bihar State Electricity Board
& anr., 1995 (2) SCC 648
2. Paschimanchal Vidyut Vitran Nigam Vs DVS
Steels & Alloys Pvt. Ltd. & ors., 2009 (1) SCC
210
3. Telangana State Southern Power Distribution
Company Limited & anr. Vs Srigdhaa Beverages,
2020 (6) SCC 404
4. Southern Power Distribution Company of
Telangana Limited & ors.Vs Gopal Agarwal &
Others, 2018 (12) SCC 644
5. Dakshin Haryana Bijli Vitran Nigam Ltd. Vs
Paramount Polymers (P) Ltd., 2006 (13) SCC
101
(Delivered by Hon'ble Mrs. Sunita
Agarwal, J. & Hon'ble Vipin Chandra
Dixit, J.)

1. Heard Sri Anurag Khanna learned
Senior Advocate assisted by Sri Sandeep
Arora and Sri V.K. Shukla learned
Counsels
appearing
for
the
review
applicant,
Sri
Baleshwar
Chaturvedi
learned counsel for the respondent No.2,
Sri K.M Asthana learned counsel for the
respondent No.4.

2. The present review petition has
been filed seeking for recall/review of the
judgement and order dated 30.09.2022
passed by this Court after the reviewapplicant had approached the Apex Court
in a Special Leave Petition (Civil) Diary
No.462 of 2023, decided vide judgement
and order dated 13.02.2023. On the
submission of the learned counsel for the
petitioner therein that certain error in the
judgement of the High Court with reference
to certain clauses had been made and a
view different from the division bench
decision of the very same High Court had
been taken, permission was granted to the
petitioner to withdraw the Special Leave
Petition with liberty to file review.

3. The issue raised in the review
application is about the correctness of the
decision given by us dated 30.9.2022
wherein considering the provisions of
Clause 4.3 of the U.P. Electricity Supply
Code' 2005 (hereinafter referred as Code'
2005), the challenge to the recovery of
electricity dues from the auction purchaser
namely the review applicant herein, has
been turned down. The main question
850 INDIAN LAW REPORTS ALLAHABAD SERIES
which arises for consideration in the review
application as also the writ petition is
whether the liability towards the electricity
dues in relation to the property in question
can be realized from the petitioner/review
applicant, who was an auction purchaser.

4. We have heard the learned Senior
Counsel appearing for the review applicant
at length as also the counsels appearing for
the
Electricity
Department
namely
Paschimanchal
Vidyut
Vitran
Nigam
Limited and the bank concerned.

5. Few facts of the case in brief are
relevant to be noted to examine the merit of
the dispute. The petitioner herein is an
auction purchaser of a property bearing No.
G-599 to G-623 situated at Mussoorie
Gulawati Road Industrial Area, Ghaziabad,
Uttar Pradesh. The said property was put to
auction sale and E-sale proclamation dated
14.05.2019
is
appended
with
the
supplementary affidavit in the review
application filed by the review applicant.
After purchase of the property, when the
petitioner
had
applied
for
electricity
connection in the premises in question, it
was intimated of the arrears of electricity
dues against the previous consumer namely
the owner whose property was put to
auction by the Debt Recovery Tribunal,
Delhi. The recovery citation initiating
recovery of electricity dues had been issued
in the name of the petitioner herein.

6. In the writ petition, it was argued
by learned counsel for the applicant that the
arrears of electricity charges in relation to
the property in question cannot be realized
from the petitioner, who is an auction
purchaser, as electricity dues do not
constitute the charge over the property and
a transferee of the premises cannot be held
liable for the dues of the previous
owner/occupier.

7. This argument was dealt by us in
the original judgment by reading the
provisions of clause 4.3 (f) (i) of the Code'
2005. It was held that in view of a specific
statutory
provision
dealing
with
the
dispute, general law principle that a
transferee of the premises is not liable for
the dues of the previous owner/occupier are
not applicable. It was also noted that as per
the conditions of the auction sale, the
auction purchaser was under obligation to
verify about the dues/encumbrances over
the property and while purchasing the
property in distress sale, he has also
purchased
the
liability
towards
the
electricity dues.

8. Terming this finding returned by us
in the original judgement as erroneous, it
was argued by learned Senior Counsel
appearing for the review applicant that an
error apparent on the face of the record has
been committed by us, in as much as, the
provisions of Clause 4.3(f)(i) have not been
considered in the correct perspective. Much
emphasis has been laid to Clause 4.3(f)(v) of
the Code' 2005 to assert that the said clause is
a special provision which applies for auction
sale held by a financial institution, as in the
present case. In view of the said provision,
when a financial institution has auctioned the
property without considering the charge of
the licensee on assets, claim can only be
lodged by the licensee with the concerned
financial institution with diligent pursuance
and not with the auction purchaser. It is
further argued that Clause 4.3(f)(i) applies to
private sale and does not contemplate any
liability of an auction purchaser to find out
the outstanding electricity dues upto the date
of sale.
7 All. RGK Industries LLP 144, New Delhi Vs. UPPCL LKo. & Ors.
851

9. Moreover, the said provision is
only in the form of the pre-condition for
issuance of No-Objection certificate for
obtaining new connection and does not in
any way empower the licensee to recover
the outstanding dues from the auction
purchaser. It was argued that Clause
4.3(f)(i) is traceable to clause 4.1 of the
Code' 2005, which deals with the licensee's
obligation to supply electricity to an owner
or occupier of any premises. Clause
4.1(3)(4) of the Code' 2005, the proviso to
clause 4.1, has been placed before us to
submit that the said provision only provides
that in case of arrears of electricity dues in
respect of any old consumers/premises,
where ownership has changed, the new
connection shall be released to the new
owner only after submission of the No-dues
certificate as provided in Clause 4.3(f) of
the Code' 2005. It is, thus, argued that
Clause 4.3, which is provided under the
heading "new connection/general" cannot
be invoked to assert the liability of the
auction purchaser to find out the electricity
dues at the time of sale. Further no liability
can
be
fastened
on
the
subsequent
purchaser, who was auction purchaser, to
pay the electricity dues of the previous
owner whose property was put to auction.

10. It was further argued that in case,
the licensee relies upon the provisions of
clause 4.3(f)(i) to justify the recovery being
made from the auction purchaser, the said
provision would be repugnant to the
provisions of the Electricity Act' 2003
(hereinafter referred as Act' 2003) which
were duly considered by the Apex Court in
the case of Isha Marbles Vs. Bihar State
Electricity Board & another, 1995 (2)
SCC 648 wherein it was categorically held
that the auction purchaser who is a third
party and in no way connected with the
previous owner/occupier, the liability of the
previous contracting party of the electricity
dues cannot be fastened upon the purchaser.
It was held therein that though the
purchaser asked for electricity connection
as a new connection but it cannot be
regarded as a new connection rather, it is
only a re-connection since the premises has
already been supplied with the electrical
energy. Such a supply having been
disconnected owing to the default of the
consumer,
that
consumer had bound
himself to the Board to pay the dues as he
had also agreed by the condition as
stipulated in the Act and the Rules
including the payments of the dues. It was
held that since the auction purchaser cannot
be said to be "consumer" within the
meaning of Section 2 of the Act' 2003, and
had never been benefited of electricity
supply which was disconnected for the
non-clearance of the dues, and the auction
purchaser, having purchased the property
after
dis-connection,
he
cannot
be
"consumer or occupier" within the meaning
of the provisions of the Act' 2003 till a new
contract is entered into. It was held that the
electricity dues are no charge over the
property and when the premises came to be
owned
or
occupied
by
the
auction
purchaser, when such purchaser seeks
supply of electricity energy, he cannot be
called upon to clear the past arrears as a
condition precedent to supply. What
matters is the contract entered into by the
erstwhile consumer with the Board. The
Board cannot seek the enforcement of
contractual liability against the third party.
It was held therein that bona-fides of the
sale
may
not be
relevant
in
such
circumstances.

11. Reliance has further been placed
on the decision of the Apex Court in
Paschimanchal Vidyut Vitran Nigam Vs
DVS Steels & Alloys Private Limited &
852 INDIAN LAW REPORTS ALLAHABAD SERIES
others 2009 (1) SCC 210 to read para 11
thereof wherein it was noted that the supply
of electricity by a distributor to a consumer
is `sale of goods'. The distributor as the
supplier, and the owner/ occupier of a
premises with whom it enters into a
contract for supply of electricity are the
parties to the contract. A transferee of the
premises or a subsequent occupant of a
premises with whom the supplier has no
privity of contract cannot obviously be
asked to pay the dues of his predecessor in
title or possession, as the amount payable
towards supply of electricity does not
constitute a `charge' on the premises. A
purchaser of a premises, cannot be foisted
with the electricity dues of any previous
occupant, merely because he happens to be
the current owner of the premises. No
recovery proceedings can be initiated
against the purchaser of a premises for the
outstanding electricity dues of the vendor
of the premises, in absence of any contract
to the contrary.

12. Lastly, it was argued that the
licensee having failed to file any claim with
the financial institution in accordance with
the provisions of clause 4.3(f)(v) cannot
make recovery from the petitioner, as the
Act' 2003 does not envisage the shifting of
liability upon the auction purchaser for the
electricity dues of the previous owner. It
was
also
argued
that
in
the
sale
proclamation dated 14.5.2019, the recovery
officer has stated that there exists no
encumbrance known to him. The petitioner
being bonafide auction purchaser, the
outstanding dues of the Power Corporation
cannot be recovered from him in absence of
any statutory provision in this regard.

13. A Division bench judgement of
this Court in Misc. Bench No. 971 of 2018
dated 16.01.2018 has been relied to assert
that in the similar facts and circumstances,
taking note of the provisions of clause
4.3(f)(v) of the Code, 2005, it was held that
the bank/financial institutions, who had
auctioned the property in question, without
making any enquiry from the electricity
department
regarding
the
outstanding
electricity dues, was under liability to pay
the said dues out of the surplus amount
received from auction sale. The direction
had, thus, been issued to the bank to decide
the matter after receipt of the electricity bill
and giving notice and hearing to the
borrower as also the electricity department.

14.

Sri
Baleshwar
Chaturvedi
appearing for the respondent-department
has further relied upon another Division
bench judgement of this Court dated
10.11.2021 to assert that taking note of
Clause 4.3 (i),(iii) & (v) of the Code' 2005,
it was held therein that in view of the
outstanding electricity dues with regard to
the premise in question, no fault could be
found in the decision of the electricity
department to deny fresh connection as the
above referred provisions of the Code' 2005
clearly provide that electricity connection
would not be given in case there are
outstanding dues with regard to the
premises in question.

15. A decision of the Apex Court in
Telangana
State
Sourthern
Power
Distribution
Company
Limited
&
another Vs. Srigdhaa Beverages 2020 (6)
SCC 404, has been placed before us to
demonstrate that the Apex Court has
distinguished the law laid down by it in
Isha Marbles (supra), taking note of the
contents of the auction notice, in the similar
facts and circumstances, as in the instant
case. The question adjudicated by the Apex
Court therein was whether liability towards
the previous electricity dues of the last
7 All. RGK Industries LLP 144, New Delhi Vs. UPPCL LKo. & Ors.
853
owner could be mulled on the auction
purchaser of a unit which was put to
auction under the SARFAESI Act' 2002.
The decision relied upon by the counsel for
the
petitioners
herein
have
been
distinguished
in
Telangana
State
Sourthern Power Distribution Company
Limited (supra) to hold that there may have
been some differences in facts of different cases
but there is a clear judicial thinking which
emerges from the decisions of the Apex Court
that the electricity dues, which are statutory in
character under the Act' 2003 and as per the
terms and conditions of supply, cannot be
waived in view of section 56 of the Act, 2003
and cannot partake the character of dues of
purely contractual nature. Moreover, in the said
case, the E-auction notice was clear to the effect
that the liability to pay electricity dues existed
on the purchaser. It was held that the question of
new connection or re-connection would not be
relevant in such facts and circumstances of that
case. The electricity department would be well
within its right to demand the arrears dues of the
last owner, from the respondent purchaser.

16.

Dealing
with
the
rival
submissions of the learned counsels for the
parties, we may first go through the auction
notice, i.e. the sale proclamation. In the
instant case, the specific contention in the
auction notice/sale proclamation dated
14.05.2019 can be found in Clause 4
thereof, which reads that:-

"4. The property is being sold on "as
is where is" basis."

17. The Schedule of property attached
to
the
sale
proclamation
gives
the
description of the property to be sold in the
following manner:-

Description of Revenue Detail Claims,
the property to
be sold
assessed
upon the
property
or
any
part
thereof
s
of
any
encum
brance
to
which
proper
ty
is
liable
if
any,
which
have
been
put
forward
to
the
property
,
and
any
other
known
particul
ars
bearing
on
its
nature
and
value
Property being
No. G-599 to
G-623,
Massoorie
Gulawati
Road,
Industrial
Area, U.P.
Not
Known
Not
Know
n
Not
Known

18. The property in question, in the
instant case, was put to auction in a
proceeding conducted by the DRT, Delhi
and the sale proclamation was issued by the
Recovery Officer-I, DRT-II, Delhi. A
perusal of the letter dated 23.10.2015 sent
by the Executive Engineer, Paschimancal
Vidyut Vitran Nigam Limited, Vidyut
Vitran
Khand,
Pilkhuwa
Ghaziabad
indicates that an information with regard to
the outstanding electricity dues of the
previous
owner
to
the
tune
of
Rs.1,76,00,528.00
had
been
duly
communicated to the Recovery Officer. It
was stated therein that the recovery
certificates were duly sent to the office of
854 INDIAN LAW REPORTS ALLAHABAD SERIES
the District Magistrate, Hapur but payment
had not been received and the premises-inquestion had been sealed and the auction
sale were going on.

19. It is an admitted fact that the sale
consideration, received through auction
sale, did not include the electricity dues to
the tune of Rs.1,76,00,528.00 as was due to
the previous consumer. The reliance placed
on the decision of the Division bench dated
16.1.2018 in Misc. Bench No. 971 of 2018
to assert that the bank shall be directed to
examine the bill and pay the electricity
dues to the department/respondent No.2 is,
therefore, misplaced.

20. As regards the submission of the
learned
Senior
Counsel
for
the
petitioner/review
applicant
about
the
applicability of the provisions of clause
4.3(f) of the Electricity Code, 2005, in light
of the provisions of the Act' 2003 and the
decision of the Apex Court in Isha
Marbles (supra), we are first required to
note the relevant provisions of clause 4.1
and 4.3 of the Code' 2005, which has been
framed in exercise of power under the
Electricity Act' 2003.

21. The Code' 2005 is applicable to all
distribution licensees in the respected
license area of the state. The Code enlists
the
obligations
of
the
licensee
and
consumers
vis-a-vis
each
other
and
specifies the set of practices to provide
efficient,
cost-effective
and
consumer
friendly service to the consumers. It interalia deals with the following:-

"(a) Procedure for new connection
and for enhancement or reduction of load.

(b) Recovery of electricity charges and
intervals for billing of electricity charges.

(c) Disconnection, reconnection and
restoration of supply of electricity.

(d) Tampering, distress or damage to
electrical plant, electric lines or meter.

(e) Entry of distribution Licensee or
any person acting on his behalf for
disconnecting supply and removing the
meter and / or for replacing, altering or
maintaining electric lines or electrical
plant or meter.

(f) Practices relating to payment of
bills, consumer metering and assessment of
energy.

(g) Standards of Performance for the
Licensee; and

(h)
Procedure
for
redressal
of
consumer grievances."

22. Clause 4.1 prescribes obligation
of licensee to supply electricity on an
application by the owner or a occupier of
any premises, located in his area of supply.
The obligation is of the licensee to supply
electricity to such premises within one
month after receipt of the complete
application. Clause 4.1, however, provides
that:-

"4.1 Licensee's Obligation to Supply -

The Licensee shall on an application
by the owner or occupier of any premises,
located in his area of supply, give supply of
electricity to such premises within the one
month
after
receipt
of
completed
application and payments,

Provided where such supply requires
extension
of
distribution
mains,
or
commissioning of new sub-stations, the
distribution Licensee shall supply the
electricity to such premises immediately
after such extension or commissioning or
within such period as specified by the
Commission in clause 4.8:

Provided also in case of application
for supply from a village or hamlet or area
7 All. RGK Industries LLP 144, New Delhi Vs. UPPCL LKo. & Ors.
855
wherein no provision for supply of
electricity exists, the Commission shall
extend the time period for provision of
supply appropriately on a case-to-case
basis:

Provided further that in case of
arrears of electricity dues in respect of any
of old consumers / premises where
ownership
has
changed,
the
new
connection shall be released to the new
owners only after submission of No-Dues
Certificate as provided in clause 4.3(f)

2 [And provided that if there are
arrears of electricity dues on a premises, a
new connection shall not be released to a
new applicant / or the old consumer on the
same premises. The connection shall also
not be released if], -

(i) The applicant (being an individual)
is an associate or relative (as defined in
Section 2 and 6 respectively of the
Companies Act, 1956) of the defaulting
consumer,

(ii) Or where the applicant being a
company or body corporate or association
or
body
of
individuals,
whether
incorporated or not, or artificial juridical
person, is controlled, or having controlling
interest
in
the
defaulting
consumer,
provided, the Licensee shall not refuse
electric connection on this ground, unless
an opportunity to present his case is
provided to the applicant and a reasoned
order is passed by an officer as designated
by the licensee."

23. Clause 4.3, which is the General
provision providing procedure for New
connection for supply of electricity, in
Clauses 4.3 (f)(i), (ii), (iii), (iv) & (v) reads
as under:-

"(f)(i). It will be the duty of the seller
and of the purchaser to find out the
outstanding electricity dues up to the date
of sale, and further that both seller and
purchaser will be either/or, jointly and
severally liable to pay the outstanding
electricity dues/ obtain No dues certificate.

(ii) Before sale of a premise is made,
the outstanding dues will be cleared and, in
the alternative the deed to agreement / sale
will specifically mention the outstanding
dues and the method of its payment.
"Outstanding
dues"
means
all
dues
pending on a premises including late
payment surcharge.

(iii) In case the no-dues certificate is
not obtained by the old owner, new owner
before purchase of property may approach
the licensee for no-dues certificate, by
giving the reference of the connection in
said premises. The licensee shall either
intimate the pending dues, if any, on the
premises or issue no dues certificate within
30 working days from the date of
application.

(iv) The outstanding dues will be first
charge on the assets of the company, and
the licensee shall ensure that this is entered
in an agreement with new applicant.
(v) The recovery proceedings against the
defaulting
consumer,
and
where
the
defaulting consumer is a company, from the
Directors of the company, shall be ensured.
Where a financial institution has auctioned
the property without consideration to
licensees charge on assets, claims may be
lodged with
the
concerned
financial
institution with diligent pursuance."

24. Clause 6.15 of the Code provides
that:-

"6.15 Recovery of Arrears:-

(a) The payments due to the Licensee
shall be recovered as per provision of
Section 56 of the Act, and arrears of land
revenue as per the provisions of the U.P.
Government Electrical Undertaking (Dues
856 INDIAN LAW REPORTS ALLAHABAD SERIES
Recovery) Act, 1958, as amended from time
to time.

(b)
Notwithstanding
anything
contained in any other law for the time
being in force, no sum due from any
consumer shall be recoverable after the
period of two years from the date when
such sum became first due unless such sum
has
been
shown
continuously
as
recoverable as arrear of charges of
electricity supplied, and the supply of the
electricity shall not be disconnected by
licensee for this reason.

[(Explanation: The date from which
such charges becomes 'first due', needs to
be correctly interpreted. If as a result of
regular meter reading / inspection of
installation of consumer, such charges /
penalties levied as per this code or tariff
schedule, shall become first due counted
from the due date of payment of such a bill,
and such bill shall be provided to the
consumer not later than two billing cycle
for that category of consumer." .

25. Section 56 of the Electricity Act'
2003 provides for recovery of electricity
charges in case of default on the part of any
person liable to pay the same. The UP
Government Electrical Undertaking (Dues
Recovery) Act' 1958 provides for recovery
of electricity dues as arrears of land
revenue,
notwithstanding
anything
contained in any other law or instrument or
agreement to the contrary. Section 5 of the
Act' 1958 be noted hereinunder:-

"5. Recovery of dues.- If the dues for
which notice of demand has been served
are not deposited with the prescribed
authority within thirty days from the date of
service, or such extended period as' the
prescribed authority may allow, the same
together with cost of recovery as may be
prescribed shall be recoverable as arrears
of land revenue, anything contained in any
other law or instrument or agreement to the
contrary notwithstanding"

26. A conjoint reading of Section 56
of the Act' 2003 and Section 5 of the Act'
1958 providing for recovery of electricity
dues and clause 6.15 of the Code 2005
indicates that the statutory electricity
charges, in case of default on the part of
any person liable to pay the same, can be
recovered as arrears of land revenue. The
question remains as to whether the
petitioner/review applicant being auction
purchaser, subsequent transferee of the
auctioned property can be held liable for
payment of electricity dues of the erstwhile
owner.

27. To answer this question, we are
required to note that the petitioner/review
applicant herein is a purchaser of the
property in an auction sale conducted by
the
Debt
Recovery
Tribunal
after
determining the dues of the respondent
bank in the proceeding conducted before it
against the borrower/erstwhile owner. The
E-auction notice provides the condition of
sale in clause 4 as under:-

4. The property is being sold on "as is
where is" basis."

28. The Schedule of property giving
description of the property to be sold has
already been extracted above. From a
reading of para 4 of the E-auction notice
and the description of the property in the
Schedule appended to the said notice, it is
evident that the property was put to sale on
"as is where is basis". It was clarified in the
auction notice by the Recovery Officer that
claims, if any, which have been put forward
to the property, and any other known
particulars bearing on its nature and value
7 All. RGK Industries LLP 144, New Delhi Vs. UPPCL LKo. & Ors.
857
was not known to him. The details of any
encumbrances to which the property is
liable was also not known. The revenue
assessed upon the property or any part
thereof was not known to the Recovery
Officer. On reading of the auction notice,
terms and condition on which the property
was put to auction clearly shows that the
Recovery Oficer carrying out the auction
sale, absolved himself of the liabilities
towards claims, if any, nature and value
thereof, encumbrances to the property,
revenue assessed upon the property. The
auction sale was, thus, conducted of the
property on "as is where is" basis.
Meaning, thereby the auction purchaser
was required to make necessary enquiries
about the claims, charges or encumbrance,
if any, related to the property.

29. Clause 4.3 (f) (i) which pertains to
the
provision
relating
to
supply
of
electricity, New connections, further casts
an obligation on the purchaser of the
property to find out the outstanding
electricity dues up to the date of sale and
states that in case of transfer of property,
there would be co-extensive liability of the
purchaser to pay the outstanding electricity
dues so as to obtain no-dues certificate.
Clause 4.3 (f) (iii) further states that in case
no-dues certificate is not obtained by the
old owner, new owner before purchase of
the property may approach the licensee for
no-dues certificate, by giving the reference
of the connection in the said premises. The
licensee shall then intimate the pending
dues, if any, on the premises or issue nodues Certificate to the purchaser. Clause
4.3 (f) (iv) and (v) pertains to the
outstanding dues of electricity against the
company i.e. where defaulting consumer is
a company. This provision states that
outstanding dues will be first charge on the
assets of the company and in case the
defaulting
consumer
is
a
company,
recovery proceedings from the Directors of
the company shall be ensured. It further
provides that where a financial institution
has
auctioned
the
property
without
consideration to licensees charge on assets,
claims may be lodged with the concerned
financial
institution
with
diligent
pursuance. Clause 4.3 (f)(v), thus, only
provides that in case of auction of the
property of a Company, the licensee may
put his claim with the financial institution
to pay electricity charges from the assets of
the company, and for that purpose, the
licensee may lodge its claim with the
concerned
financial
institution
with
diligent. However, as submitted by the
learned
Senior
Counsel
for
the
petitioner/applicant, the said provisions
cannot be read to mean that the claim for
discharging the liability towards electricity
dues can only be laid by the licensee before
the
financial
institution
which
has
auctioned the property and no recovery can
be made from the auction purchaser.

30. It may further be noted that clause
4.3 (f) (i) cast a duty on the purchaser of a
property to find out the outstanding
electricity dues up to the date of sale. The
contention of the learned Senior Counsel
for the writ petitioner/review applicant is
that this provision applies only in case of
private sale and an auction purchaser
cannot be held liable to pay electricity dues
of erstwhile owner and obtain no-dues
certificate by invoking this provision.

31. We may note that the provisions
contained in clause 4.3 are general
provision relating to supply of electricity to
a New consumer. In case of transfer of
property, a duty is cast on the purchaser as
well as seller to clear the electricity dues.
The liability of the purchaser has been held
858 INDIAN LAW REPORTS ALLAHABAD SERIES
to be co-extensive to pay the outstanding
electricity
dues/to
obtain
no-dues
Certificate, to obtain a new connection.
Clause 4.3 (f) (iii) further cast an obligation
on the purchaser of the property to obtain
No Dues Certificate before purchase of the
property, by giving reference of the
connection in the premises, wherein there
was an electricity connection. From a
conjoint reading of Clause 4.3 (f) (i), (ii),
(iii), it is clear that it is a duty of the
purchaser to make an inquiry into the
matter of the dues of electricity, with
respect to a premises, wherein electricity
supply has been made to the erstwhile
owner.

32. In view of these statutory
provisions, when we read the contents of
the auction sale notice extracted above, it is
evident that the auction purchaser was
under obligation to make inquiries of the
outstanding electricity dues with regard to
the property put to auction in the
proceeding under the SARFAESI Act'
2002.

33. As regards the contention of the
learned Senior Counsel for the applicant
based on the decision of this Court by
reading clause 4.3 (f) (v) that the claim
towards the electricity dues, in case of
auction of the property by financial
institution, can only be laid before it, and
no recovery can be made from the auction
purchaser, suffice it to note that Section 26E of the SARFAESI Act 2002 gives priority
to the debts due to a secured creditor, in the
proceedings initiated under the said Act for
recovery of debts by enforcement of
security
interest
in
accordance
with
Chapter-III in accordance with Section 13
to 15 of the Act 2002. It is not the case of
the auction purchaser/petitioners, that the
sale consideration paid by him in the
auction of the secured assets was beyond
the debt due to the secured creditor/bank,
and some money has been left with the
bank after settlement of its own dues, to
pay the outstanding electricity dues of the
licensee.

34. The Apex Court in Telangana
State Sourthern Power Distribution
Company Limited (supra), has examined
the similar controversy in an auction sale
conducted under the SARFAESI Act 2002,
wherein the auction purchaser had pleaded
that previous electricity dues of the
erstwhile owner cannot be recovered from
him. The writ petitions therein filed by the
auction purchaser before the High Court
seeking for quashing of the demands
towards outstanding electricity dues were
decided in his favour on the reasoning that
as a subsequent purchaser, the auction
purchaser was not responsible for the dues
of the erstwhile owner, relying upon the
decision of the Apex code in Isha Marbles
(supra)
and
Sourthern
Power
Distribution Company of Telangana
Limited & others Vs. Gopal Agarwal &
others 2018 (12) SCC 644.

35. In the said case, the Apex Court
having gone through the E-auction notice
has taken note of clauses 5.9.6 and 8.4 of
the General Terms and Conditions of
Supply of Distribution & Retail Supply
Licensees in AP. The aforesaid clauses
extracted in the judgment of the Apex
Court are pari materia to Clauses 4.3 (f),
(i), (ii), (iii) of the U.P. Electricity Supply
Code 2005 subject matter of consideration
herein. Clause 8.4 of the General Terms
and Conditions of Supply of Distribution &
Retail Supply Licensees in AP as noted by
the Apex Court therein provided that in
case the seller of the property did not clear
the dues, the company may refuse to supply
7 All. RGK Industries LLP 144, New Delhi Vs. UPPCL LKo. & Ors.
859
electricity to the premises through the
already existing connection or refuse to
give a new connection to the premises till
all dues of the electricity are cleared.

36. It was held by the Apex Court in
Telangana
State
Sourthern
Power
Distribution Company Limited (supra)
that from the reading of the provisions of
Electricity Act' 2003, read with the General
Terms and Condition of Supply therein, the
electricity dues partake the character of
statutory dues. From the reading of
language of the auction sale notice therein,
wherein property was sold on "as is where
is, what is there is and without any recourse
basis", it was held that the said clause
leaves no doubt that the liability to pay
electricity dues exists on the auction
purchaser.

37. The decision in the case of Isha
Marbles (supra) was distinguished with
the observation that in the said case sale
was in pursuance of Section 29(1) of the
State Financial Corporation Act, 1951, but
the important aspect was that there was no
Clause specifically dealing with the issue
of electricity dues or such other dues, as in
the auction notice in this case Telangana
State Sourthern Power Distribution
Company Limited (supra) before the
Apex Court. The reasoning given by the
Court in the case of Isha Marbles (supra)
that the subsequent purchaser being not the
'consumer' within the meaning of Section
2(c) of the Act' 2003, and in absence of
consumption
of
electricity
by
the
subsequent purchaser who was merely
asking re-connection without there being
any statutory dues towards consumption
charges, he cannot be saddled with the
liability of the past owner, has been
considered to note in Telangana State
Sourthern Power Distribution Company
Limited (supra) that in the E-auction
notice, there was a specific clause which
absolved the Authorized Officer of various
dues including electricity dues. In light of
the said Clause in the E-auction notice, the
subsequent
purchaser/auction
purchaser
cannot be absolved of his liability to pay
the electricity dues.

38. The Apex Court in the case of
Telangana
State
Sourthern
Power
Distribution Company Limited (supra)
has further noted the previous decision of
the Apex Court in Hyderabad Vanaspathi
Ltd. v. A.P. State Electricity Board &
Ors. 1998 (4) SSC 470 to note that the
Apex Court therein had held that the
electricity dues under the terms and
condition of supply partake the character of
statutory dues. The agreements which were
entered into with individual consumers
only serve the purpose of bringing to the
notice of the consumer the terms and
condition of supply, but did not make the
terms purely contractual. The Board in
performance of statutory duty supplied
energy on certain specific terms and
conditions framed in exercise of statutory
power.
Undoubtedly,
the
terms
and
conditions are statutory in nature and they
cannot be said to be purely contractual.

39. The Apex Court in Telangana
State Sourthern Power Distribution
Company Limited (supra) has also noted
its earlier decision in Dakshin Haryana
Bijli Vitran Nigam Ltd. v. Paramount
Polymers (P) Ltd 2006 (13) SCC 101 to
observe in paragraph 10, as under:-

"10.We can draw strength from the
observations of this Court in Dakshin
Haryana Bijli Vitran Nigam Ltd.