# The Madhya Pradesh Madhya Kshetra Vidyut Vitran Company Limited & Ors v. Bapuna Alcobrew Private Limited & Anr

- **Citation:** 2024 INSC 829
- **Court:** Supreme Court of India
- **Decided:** 2024-11-04
- **Case number:** Civil Appeal No. 1095 of 2013
- **Bench:** Dipankar Datta, Pankaj Mithal
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/the-madhya-pradesh-madhya-kshetra-vidyut-vitran-company-limited-ors-v-bapuna-37810
- **Pages:** 25

## Headnote

Issue arose as to whether s.56(2) of the Electricity Act, 2003 has
application to a demand raised by appellants-distributor on the first
respondent for recovery of sums payable under the Electricity Act,
1910 and, whether demand, if it be treated as one under the 1910
Act, is sustainable having regard to long delay.
Headnotes†
Electricity Act, 2003 - s.56(2) - Electricity Act, 1910 - Limitation
Act, 1963 - Matter pertaining to electricity consumption -
Appellants-distributor and first respondent entered into
an agreement for supply of electrical energy to the first
respondent's unit, with the first respondent guaranteeing a
minimum consumption - Also permission accorded to the
respondent to install turbo generating set on the condition
that it would be used only as a stand-by and not parallel
with the appellants' supply system - However, on failure to
abide the condition, appellant issued a notice, cancelling the
permission - Writ petition filed wherein the High Court stayed
the notice, subject to respondent depositing the minimum
guarantee charges - Thereafter, appellant issued notice
demanding Rupees seventy lakh, for not having utilised the
minimum guaranteed consumption for the period between
June 1996 and May 2000 - Respondent filed miscellaneous
petition in the first writ petition, which was disposed of holding
the first respondent liable to pay the 'minimum guarantee
charges', irrespective of electricity consumed - However,
later the respondent withdrew the writ petition - Issuance
of second show cause notice for the same amount - Writ
* Author
[2024] 11 S.C.R.
341
The Madhya Pradesh Madhya Kshetra Vidyut Vitran Company
Limited & Ors. v. Bapuna Alcobrew Private Limited & Anr.
petition thereagainst, partly allowed - Thereafter, writ appeal
allowed quashing the second show cause notice upon
application of s.56(2) of the 2003 Act, claim being time barred,
as it was issued beyond the two years period of limitation -
Sustainability:
Held: Limitation period of two years prescribed for recovery of
dues u/s.56 of the 2003 Act would apply to liabilities arising under
the 2003 Act, and not prior to the enforcement thereof - Thus,
Division Bench erred in holding that the liability incurred by the
first respondent prior to the enforcement of the 2003 Act would
still be barred by the provisions of s.56(2) thereof - Furthermore,
orders having become final, leave no room for the first respondent
to escape its statutory liability by arguing bar of limitation, when
the statute itself did not prescribe such bar - Challenge to the first
show cause notice having failed the principle of issue estoppel
operated as a bar for the first respondent to raise a challenge to
the second show cause notice, which had been issued for precisely
the same due amount - Also, point even if wrongly decided binds
the party against whom it is decided and the same point cannot
be urged in a subsequent suit or proceeding at the same level -
Issue of liability accruing to the first respondent for non-payment
of minimum guarantee charges had been decided previously and
such decision, not being subjected to any appeal, had attained
finality in the eyes of law estopping the first respondent from
reagitating the issue - Second writ petition at the instance of the
first respondent was not maintainable and, ought not to have been
entertained at all - However, since the appellants accepted the
order of the Single Judge and issued fresh demand for reduced
amount and which has since been recovered by encashing
the bank guarantee, no order made for changing the position
flowing from the said order - Thus, on conjoint reading of all the
orders, the liability of the first respondent to pay the minimum
guarantee charges is clear and such orders having attained
finality, bound the first respondent; and no submission by the
first respondent, either on delay in raising the demand or meritbased review of the action of the appellants, in the second writ
petition was open to pers

## Text

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[2024] 11 S.C.R. 340 : 2024 INSC 829
The Madhya Pradesh Madhya Kshetra Vidyut Vitran
Company Limited & Ors.
v.
Bapuna Alcobrew Private Limited & Anr.
(Civil Appeal No. 1095 of 2013)
04 November 2024
[Dipankar Datta* and Pankaj Mithal, JJ.]
Issue for Consideration
Issue arose as to whether s.56(2) of the Electricity Act, 2003 has
application to a demand raised by appellants-distributor on the first
respondent for recovery of sums payable under the Electricity Act,
1910 and, whether demand, if it be treated as one under the 1910
Act, is sustainable having regard to long delay.
Headnotes†
Electricity Act, 2003 - s.56(2) - Electricity Act, 1910 - Limitation
Act, 1963 - Matter pertaining to electricity consumption -
Appellants-distributor and first respondent entered into
an agreement for supply of electrical energy to the first
respondent's unit, with the first respondent guaranteeing a
minimum consumption - Also permission accorded to the
respondent to install turbo generating set on the condition
that it would be used only as a stand-by and not parallel
with the appellants' supply system - However, on failure to
abide the condition, appellant issued a notice, cancelling the
permission - Writ petition filed wherein the High Court stayed
the notice, subject to respondent depositing the minimum
guarantee charges - Thereafter, appellant issued notice
demanding Rupees seventy lakh, for not having utilised the
minimum guaranteed consumption for the period between
June 1996 and May 2000 - Respondent filed miscellaneous
petition in the first writ petition, which was disposed of holding
the first respondent liable to pay the 'minimum guarantee
charges', irrespective of electricity consumed - However,
later the respondent withdrew the writ petition - Issuance
of second show cause notice for the same amount - Writ
* Author
[2024] 11 S.C.R.
341
The Madhya Pradesh Madhya Kshetra Vidyut Vitran Company
Limited & Ors. v. Bapuna Alcobrew Private Limited & Anr.
petition thereagainst, partly allowed - Thereafter, writ appeal
allowed quashing the second show cause notice upon
application of s.56(2) of the 2003 Act, claim being time barred,
as it was issued beyond the two years period of limitation -
Sustainability:
Held: Limitation period of two years prescribed for recovery of
dues u/s.56 of the 2003 Act would apply to liabilities arising under
the 2003 Act, and not prior to the enforcement thereof - Thus,
Division Bench erred in holding that the liability incurred by the
first respondent prior to the enforcement of the 2003 Act would
still be barred by the provisions of s.56(2) thereof - Furthermore,
orders having become final, leave no room for the first respondent
to escape its statutory liability by arguing bar of limitation, when
the statute itself did not prescribe such bar - Challenge to the first
show cause notice having failed the principle of issue estoppel
operated as a bar for the first respondent to raise a challenge to
the second show cause notice, which had been issued for precisely
the same due amount - Also, point even if wrongly decided binds
the party against whom it is decided and the same point cannot
be urged in a subsequent suit or proceeding at the same level -
Issue of liability accruing to the first respondent for non-payment
of minimum guarantee charges had been decided previously and
such decision, not being subjected to any appeal, had attained
finality in the eyes of law estopping the first respondent from
reagitating the issue - Second writ petition at the instance of the
first respondent was not maintainable and, ought not to have been
entertained at all - However, since the appellants accepted the
order of the Single Judge and issued fresh demand for reduced
amount and which has since been recovered by encashing
the bank guarantee, no order made for changing the position
flowing from the said order - Thus, on conjoint reading of all the
orders, the liability of the first respondent to pay the minimum
guarantee charges is clear and such orders having attained
finality, bound the first respondent; and no submission by the
first respondent, either on delay in raising the demand or meritbased review of the action of the appellants, in the second writ
petition was open to persuade the High Court to hold in favour
first respondent - Thus, the impugned judgment and order of the
High Court being unsustainable in law and set aside - Electricity
(Supply) Act, 1948. [Paras 13, 24-40]
342
[2024] 11 S.C.R.
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Electricity Act, 1910 - s.24 - Discontinuance of supply to
consumer neglecting to pay charge - Limitation period:
Held: Although s.24 prescribes no period of limitation, it does allow
the licensee to discontinue supply of energy upon a consumer
neglecting to pay charges that are demanded by raising a bill,
irrespective of the fact that a suit for recovery of unpaid charges
would be barred if not instituted within three years of the liability
accruing - There appears to be no limitation as regards the period
within which notice u/s.24(1) has to be issued, evincing the intention
of the licensee to disconnect supply for non-payment of claimed
dues - However, if in case, despite the consumer not paying
the charges demanded and the notice thereunder is not issued
within a reasonable period or at any time within which a suit for
recovery could be instituted, whether the right of the licensee to
claim the unpaid charges would lapse will have to be decided by
the court before whom the lis is brought upon consideration of
the defence that is raised and the explanation for the delay - It
must depend on the facts of each particular case whether the
demand by reason of mere delay should be interdicted or not -
Furthermore, s.17 of the 1963 Act is meant to save suits from
being dismissed as time-barred, which could not be filed due to
bona fide mistakes or errors - If a suitor alleges that the suit could
not be instituted by him within the prescribed period of limitation
because of some mistake, which came to be discovered beyond
the period prescribed for institution of a suit, it is open to such
suitor to claim exemption from limitation in terms of Ord. VII r. 6
CPC and such exemption can be granted in an appropriate case -
However, if a suitor alleges to have discovered a mistake later
but it is proved on evidence being led that exercise of reasonable
diligence could have resulted in the mistake being discovered on
an earlier date, limitation would begin to count from that earlier
date; and, in case, the count from the said earlier date takes
the date of institution of the suit beyond the prescribed period of
limitation, the bar of limitation would get attracted - Mistake is,
thus, not a circumstance which can be used as a shield to save
negligence in all cases - Absence of due diligence or lack of bona
fides would not clothe suitor to take undue advantage of beneficent
provision like s.17 - Limitation Act, 1963 - s.17 - Electricity Act,
2003 - s.56(2). [Paras 16, 17, 19, 20]
[2024] 11 S.C.R.
343
The Madhya Pradesh Madhya Kshetra Vidyut Vitran Company
Limited & Ors. v. Bapuna Alcobrew Private Limited & Anr.
Case Law Cited
Raymond Limited v. State of M.P. [2000] Supp. 4 SCR 668 :
(2001) 1 SCC 534; K.C. Ninan v. Kerala SEB [2023] 9 SCR 637 :
2023 SCC OnLine SC 663; Kusumam Hotels (P) Ltd. v. Kerala
SEB [2008] 9 SCR 752 : (2008) 13 SCC 213; Ajmer Vidyut Vitran
Nigam Ltd. v. Rahamatullah Khan [2020] 2 SCR 929 : (2020) 4
SCC 650; Prem Cottex v. Uttar Haryana Bijli Vitran Nigam Ltd.
[2021] 8 SCR 645 : (2021) 20 SCC 200; State of Orissa v. Madan
Gopal Rungta [1952] 1 SCR 28 : 1951 SCC 1024; Hope Plantations
Ltd. v. Taluk Land Board [1998] Supp. 2 SCR 514 : (1999) 5 SCC
590; Bhanu Kumar Jain v. Archana Kumar [2004] Supp. 6 SCR
1104 : (2005) 1 SCC 787 - referred to.
List of Acts
Companies Act, 1956; Electricity Act, 2003; Electricity (Supply) Act,
1948; General Clauses Act, 1897; Electricity Act, 1910; Limitation
Act, 1963.
List of Keywords
Delay; Electricity consumption; Agreement for supply of electrical
energy; Guaranteed minimum consumption; Install turbo generating
set; Minimum guarantee charges; Limitation; Recovery of dues;
Liability; Estoppel; Discontinuance of supply to consumer neglecting
to pay charge; Bona fide mistakes or errors; Mistake; Absence of
due diligence or lack of bona fides.
Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1095 of 2013
From the Judgment and Order dated 13.10.2011 of the High Court of
M.P. at Gwalior in WA No.550 of 2009
Appearances for Parties
Ms. Liz Mathew, Sr. Adv., Rohit K. Singh, Uday Nath Tiwari, Prakhar
Srivastava, Advs. for the Appellants.
Jayant K. Mehta, Sr. Adv., Kuber Dewan, Ms. Anuradha Dutt,
Ms. Neeharika Aggarwal, Kaushtubh Srivastava, Raghav Dutt,
Ms. B. Vijayalakshmi Menon, Raghav Sharma, Jaskirat Pal Singh,
Pranjal Pandey, Salvador Santosh Rebello, Advs. for the Respondents.
344
[2024] 11 S.C.R.
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Judgment / Order of the Supreme Court
Judgment
Dipankar Datta, J.
THE CHALLENGE
1.
The final judgment and order dated 13th October, 20111 of the High
Court of Madhya Pradesh,2 allowing the writ appeal3 presented by
the first respondent, is under assail in the present appeal by special
leave.
BRIEF RESUME OF FACTS
2.
The factual matrix of the case, insofar as is relevant for the purpose
of deciding the present appeal, is noted hereinbelow:
I.
The first appellant is the state electricity distribution utility for
the State of Madhya Pradesh, while the second and the third
appellants are its officers. The first respondent is a company
registered under the Companies Act, 1956. It is engaged in
the business of manufacturing rectified spirit, extra neutral
alcohol and bottling of Indian made foreign liquor. The second
respondent is the Madhya Pradesh Pollution Control Board,
which had asked the first respondent to submit a proposal with
respect to its plans for a bio-gas electricity generation unit.
The first respondent did not pursue any communication with
the second respondent thereafter and, thus, no relief has been
sought in this appeal against the latter.
II.
The appellants and the first respondent entered into an
agreement dated 18th November, 1991, for supply of electrical
energy to the first respondent's unit at Gwalior, with the first
respondent guaranteeing a minimum consumption that would
yield an annual revenue of Rs. 34,747/- (Rupees thirty four
thousand seven hundred and forty seven rupees only).
III.
Thereafter, supplementary agreements were executed
between the appellants and the first respondent, increasing
1
 impugned judgment, hereafter
2
 High Court, hereafter
3
 Writ Appeal No. 550/2009
[2024] 11 S.C.R.
345
The Madhya Pradesh Madhya Kshetra Vidyut Vitran Company
Limited & Ors. v. Bapuna Alcobrew Private Limited & Anr.
the consumption of electrical energy. Vide agreement
dated 17th November, 1992, the quantum was initially increased
from 136 kVA to 169 kVA and vide agreement dated 30th March,
1995, there was a further increase to 305 kVA.
IV.
The first respondent sought permission from the appellants
to install and run an 807 kVA biogas turbo generating set4 for
captive use. On 30th May, 1996, the second appellant granted
permission to the first respondent on the condition that the TG
set does not run parallel with the appellants' supply system, and
that the TG set would be used only as a stand-by measure upon
the failure of the appellants to supply power. Most importantly,
in what would give birth to the dispute, the first respondent
was bound to a monthly minimum consumption of units, with
35% load factor in case of no power cut, and 39% load factor
in cases of power cut.
V.
A third supplementary agreement was executed by and between
the appellants and the first respondent on 01st June, 1996,
which provided for supply of an additional 560 kVA to the
first respondent thereby increasing the total contract demand
to 1170 kVA.
VI. Alleging that the first respondent was running the TG set as a
parallel source of power notwithstanding the supply of power
provided by the first appellant, a notice dated 28th March, 20005
was served by the appellants upon the first respondent
cancelling the permission accorded to the first respondent to
run the TG set.
VII. Challenging the cancellation notice, the first respondent knocked
the doors of the High Court by invoking its writ jurisdiction.
On the writ petition,6 the High Court passed an interim order
dated 04th May, 2000 staying operation of the cancellation notice,
subject to the condition, inter alia, that the first respondent would
deposit the 'minimum guarantee charges' payable as against
the load of 807 kVA to be assessed by the appellants.
4
 TG set, hereafter
5
 cancellation notice, hereafter
6
 W.P. No. 677/2000; first writ petition, hereafter
346
[2024] 11 S.C.R.
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VIII. Consequently, the appellants issued a show cause notice7
dated 14th July, 2000 to the first respondent quantifying its
liability in a sum of Rs 70,50,000/- (Rupees seventy lakh fifty
thousand only). The first show cause notice provided a time of
fifteen (15) days to the first respondent to submit a representation
with respect to the notice.
IX. The first respondent promptly challenged the first show cause
notice by filing a miscellaneous petition8 in the first writ petition.
The High Court, vide order dated 14th February, 2001, disposed
of the miscellaneous petition by holding the first respondent
liable to pay the 'minimum guarantee charges', irrespective
of whether the corresponding amount of electricity had been
consumed or not.
X.
On 21st October, 2006, the first respondent withdrew the first writ
petition, seeking to represent the matter before the appellants
themselves on account of a change in the policy of the State
Government, which no longer required a party to seek permission
to install a T.G. set.
XI. After a long interlude of two years, new life was breathed into
the dispute by the appellants vide issuance of a show cause
notice dated 07th January, 20099 through Rs 70,50,000/- (Rupees
seventy lakh fifty thousand only) was once again quantified as
the first respondent's liability for not having utilised the minimum
guaranteed consumption for the period between June 1996 and
May 2000. The second show cause notice provided a time of
thirty (30) days to the first respondent to submit a representation
in regard thereto, failing which demand would be raised without
further communication.
XII. Thereafter, demand was raised in the form of an energy bill
dated 04th March, 2009, wherein the pre-existing liability of
Rs 70,50,478/- (Rupees seventy lakhs fifty thousand four
hundred and seventy eight only) was mentioned as "Other
Chars. (sic, charges)".
7
 first show cause notice, hereafter
8
 M(W)P No. 230 of 2000; miscellaneous petition, hereafter
9
 second show cause notice, hereafter
[2024] 11 S.C.R.
347
The Madhya Pradesh Madhya Kshetra Vidyut Vitran Company
Limited & Ors. v. Bapuna Alcobrew Private Limited & Anr.
XIII.
Subsequently, the appellants issued a demand-cumdisconnection notice dated 18th March, 200910 threatening
that if the amount of Rs 70,50,478/- (Rupees seventy lakhs
fifty thousand four hundred and seventy eight only) was not
paid within 15 days, the supply would be disconnected without
prior notice.
XIV. Aggrieved by the issuance of the second show cause notice,
the first respondent invoked the jurisdiction of the High Court
yet again vide a writ petition,11 seeking quashing of the second
show cause notice.
XV.
A learned Single Judge of the High Court, vide interim order
dated 06th April, 2009, stayed operation of the second show
cause notice, conditional upon the first respondent furnishing
a bank guarantee of the equivalent amount. It is a matter
of record that bank guarantee was furnished by the first
respondent on 20th April, 2009.
XVI. The learned Single Judge of the High Court, vide order
dated 16th July, 2009,12 partly allowed the writ petition. His
Lordship held that the first respondent was obligated to
consume the monthly minimum units on the load factor
since it had agreed to the terms and conditions laid down in
the letter dated 30th May, 1996. However, the retrospective
application of the enhanced contract demand13 was struck
down and the appellants were directed to re-calculate the
demand, with the enhanced demand being applicable only
from 14th October, 1996.
XVII. Consequently, vide communication dated 13th November, 2009,
the appellants informed the first respondent that a revised
demand of Rs 56,81,977.58P (Rupees fifty six lakh eighty
one thousand nine hundred seventy seven and fifty eight
paise only) had been raised, which would be recovered
against the bank guarantee furnished by the first respondent.
On 16th November, 2009, the appellants promptly encashed
10
 disconnection notice, hereafter
11
 Writ Petition No. 1382/2009; second writ petition, hereafter
12
 writ court's 's order, hereafter
13
 560 kVA enhanced to 1170 kVA w.e.f. 14th October, 1996
348
[2024] 11 S.C.R.
Digital Supreme Court Reports
the bank guarantee and issued a cheque refunding the excess
amount. Against such encashment, the first respondent had
initiated proceedings for contempt by filing a petition14 on
18th November, 2009.
XVIII. Also, aggrieved by the writ court's order, the first respondent
carried the same to the Division Bench of the High Court by
presenting the relevant intra-court appeal. It is the judgment
and order of disposal of such appeal that has given rise to
the present civil appeal.
IMPUGNED JUDGMENT
3.
As noted at the beginning, the Division Bench allowed the writ appeal.
The second show cause notice was quashed upon application of
section 56(2) of the Electricity Act, 2003.15
3.1 On the question of whether the first respondent was liable to
pay the charges for minimum guaranteed consumption, the High
Court relied upon the decision in Raymond Limited v. State
of M.P.16 to observe that the first appellant was within its right
to demand minimum guarantee charges but there also existed
a corresponding duty upon such appellant to supply electrical
energy to such an extent, fulfilment of which duty had not been
proved in the present case.
3.2 The High Court then embarked upon the issue of limitation,
i.e., whether the appellants could recover dues for the period
between June, 1996 and May, 2000, vide the second show
cause notice. The question before the High Court was whether
the liability which accrued to the first respondent under the
Electricity (Supply) Act, 1948,17 i.e., when the first show cause
notice was issued, could be enforced after coming into effect
of the 2003 Act, i.e., when the second show cause notice was
issued. The pivotal difference between the two legislations is
that while the former did not prescribe a limitation period for the
recovery of dues, the 2003 Act specifically prescribed such a
period in the form of section 56(2), providing as follows:
14
 Contempt Petition No. 559/2009
15
 2003 Act, hereafter
16
[2000] Supp. 4 SCR 668 : (2001) 1 SCC 534
17
 1948 Act, hereafter
[2024] 11 S.C.R.
349
The Madhya Pradesh Madhya Kshetra Vidyut Vitran Company
Limited & Ors. v. Bapuna Alcobrew Private Limited & Anr.
Section 56. Disconnection of supply in default
of payment -
(1) ***
(2) Notwithstanding anything contained in any other
law for the time being in force, no sum due from any
consumer, under this section 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 for electricity supplied and the licensee
shall not cut off the supply of the electricity.
3.3 The High Court observed that since the 2003 Act had not been
enforced retrospectively, the liability would continue to accrue
to the first respondent well after the 2003 Act came into force.
However, this liability, w.e.f. 10th June, 2003 could not have
been enforced beyond a period of two (2) years, keeping in
mind section 56(2) read with section 174 of the 2003 Act.
3.4 Consequently, the High Court observed that the first respondent's
writ petition having been disposed on 21st June, 2006, a period
of two (2) years therefrom would be 09th June, 2008 whereas
the appellants had only issued the second show cause notice
on 07th January, 2009, which was evidently beyond the period
of limitation.
3.5 In the result, the Division Bench reversed the judgment and order
dated 16th July, 2009 passed by the writ court and quashed the
second show cause notice issued by the appellants.
CONTENTIONS OF THE PARTIES
4.
Ms. Liz Mathew, learned senior counsel for the appellants, in assailing
the impugned judgment, advanced the following submissions:
A.
The Division Bench erred in interpreting section 174 of the
2003 Act to extend the applicability of such Act and its limitation
clause to the existing proceedings.
B.
The Division Bench erred in applying section 174 of the 2003 Act
to the present case since this was not a case of inconsistency
with any other law, rather, it concerned the liabilities incurred
under the 1910 Act in view of section 185(5) of the 2003 Act.
350
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C.
 K.C. Ninan v. Kerala SEB18 was relied on to argue that section
56(2) of the 2003 Act would not apply to a liability which was
incurred prior to the enforcement of the 2003 Act.
D.
The High Court erred in not appreciating the purport of
section 185 of the 2003 Act which saved the application of
section 6 of the General Clauses Act, 1897.19
5.
Mr. Jayant Mehta, learned senior counsel for the first respondent,
while supporting the impugned judgment submitted as under:
A.
The first and the second show cause notices were not 'demands'
but merely notices for the purposes of quantification and raising
of demand in the future.
B.
There was nothing which prevented the appellants from raising
a demand during the pendency of the first writ petition since
the High Court had not passed any order of stay.
C.
Assuming that the 2003 Act had no application to dues arising
during a period of time prior to its enforcement w.e.f. 10th June,
2003 and even though section 24 of the Indian Electricity
Act, 191020 did not prescribe a period of limitation, the process
of recovery of dues, if any, had to be initiated within the period
for institution of a suit, i.e., three (3) years from the date of
the appellant's awareness of the sum due, and, at any rate,
must be initiated within a reasonable period, which cannot be
nine (9) years.
D.
Allowing the appellants to raise a demand nine (9) years later
would lead to injustice and arbitrariness, more so when in the
absence of any demand the question of the first respondent
neglecting to pay charges did not arise.
E.
Encashment of bank guarantee by the appellants immediately
after the revised demand was raised on the first respondent
without giving any opportunity to the first respondent to pursue
legal remedies, in the circumstances, must be held to be
arbitrary.
18
[2023] 9 SCR 637 : 2023 SCC OnLine SC 663
19
 1897 Act, hereafter
20
 1910 Act, hereafter
[2024] 11 S.C.R.
351
The Madhya Pradesh Madhya Kshetra Vidyut Vitran Company
Limited & Ors. v. Bapuna Alcobrew Private Limited & Anr.
ISSUES
6.
Not too many issues arise for decision on the facts of the present
appeal. The task before us is limited to determining whether
section 56(2) of the 2003 Act has any application to a demand raised
by the appellants on the first respondent for recovery of sums payable
under the 1910 Act and, hence, the impugned judgment is sustainable
on this score; if not, whether the demand, if it be treated as one
under the 1910 Act, is sustainable having regard to the long delay.
ANALYSIS
7.
We have heard learned senior counsel for the parties and perused
the impugned judgment as well as the other materials on record.
8.
An analysis of the enactments governing the dispute would be of profit.
9.
The 1910 Act came into force w.e.f. 01st January, 1911, with the objective
of amending the law relating to supply and use of electrical energy.
The 1948 Act, however, was enacted with the purpose of facilitating
the establishment of regional co-ordination in the development of
electricity, or as the long title of the said Act states, "to provide for
the rationalisation of the production and supply of electricity, and
generally for taking measures conducive to electrical development".
Thus, both these enactments had their own spheres of application,
and existed concurrently. However, w.e.f. 10th June, 2003, the 2003
Act came into force to "consolidate the laws relating to generation,
transmission, distribution, trading and use of electricity and generally
for taking measures conducive to development of electricity industry,
promoting competition therein, protecting interest of consumers and
supply of electricity to all areas, rationalisation of electricity tariff,
ensuring transparent policies regarding subsidies, promotion of
efficient and environmentally benign policies, constitution of Central
Electricity Authority, Regulatory Commissions and establishment of
Appellate Tribunal and for matters connected therewith or incidental
thereto".21 The 2003 Act, by virtue of section 185(1), repealed, inter
alia, the 1910 Act and the 1948 Act. The 1948 Act, since it related
primarily to the statutory powers of the central electricity authority,
state electricity authorities and generating companies, would be of
minimal relevance while deciding the present dispute.
21
 Long title of 2003 Act
352
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10. We shall first answer the issue of applicability of section 56(2) of
the 2003 Act raised by the appellants, which was the turning point
of the decision of the Division Bench, i.e., whether the limitation
period of two (2) years prescribed by section 56(2) of the 2003 Act
bars the appellants from raising demand for the period between
June 1996 and May 2000. Though the Division Bench answered
this question in the affirmative, in light of two subsequent contrary
decisions rendered by this Court precisely on the point, this finding
is rendered indefensible and would necessarily have to be set aside.
11. In Kusumam Hotels (P) Ltd. v. Kerala SEB,22 this Court, while
examining the issue of retrospective discontinuance of tariff
concessions for the tourism industry, held that the liability accruing
to the licensee being statutory in nature would continue to survive
even after the enforcement of the 2003 Act in the following terms:
"43. Whereas the bills are issued only in respect of the
dues arising in terms of the law as was applicable prior to
the coming into force of the 2003 Act, sub-section (2) of
Section 56 shall apply after the said Act came into force.
The Board could have even framed a tariff in terms of
the provisions appended to Section 61 of the Act. The
appellants incurred liability to pay the bill. The liability
to pay electricity charges is a statutory liability. The Act
provides for its consequences. Unless therefore, the 2003
Act specifically introduced the bar of limitation as regards
the liability of the consumer incurred prior to coming into
force of the said Act; in our opinion, having regard to
Section 6 of the General Clauses Act, the liability continues.
(emphasis supplied)
12. This decision has been affirmed by a decision of three (3) Judges
in K.C. Ninan (supra) and is the sheet-anchor of the argument of
Ms Mathew. There, this Court affirmed the principle that liabilities
which arose prior to the 2003 Act coming into force would escape
the limitation period prescribed by section 56(2) of the 2003 Act:
"130. Before we deal with the implication of Section 56(2)
on the civil remedies available to a licensee, it is important
22
[2008] 9 SCR 752 : (2008) 13 SCC 213
[2024] 11 S.C.R.
353
The Madhya Pradesh Madhya Kshetra Vidyut Vitran Company
Limited & Ors. v. Bapuna Alcobrew Private Limited & Anr.
to clarify that when the liability incurred by a consumer is
prior to the period when the 2003 Act came into force, then
the bar of limitation under Section 56(2) is not applicable. In
Kusumam Hotels Pvt Ltd. v. Kerala State Electricity Board,
this Court has held that Section 56(2) applies after the
2003 Act came into force and the bar of limitation under
Section 56(2) would not apply to a liability incurred by the
consumer prior to the enforcement of the Act. In terms of
Section 6 of the General Clauses Act, 1897, the liability
incurred under the previous enactment would continue
and the claim of the licensee to recover electricity would
be governed by the regulatory framework which was in
existence prior to the enforcement of the 2003 Act.
134. The period of limitation under Section 56(2) is
relatable to the sum due under Section 56. The sum due
under Section 56 relates to the sum due on account of the
negligence of a person to pay for electricity. Section 56(2)
provides that such sum due would not be recoverable after
the period of two years from when such sum became first
due. The means of recovery provided under Section 56
relate to the remedy of disconnection of electric supply.
The right to recover still subsists."
(emphasis supplied)
13. As settled by this Court, section 185(5) of the 2003 Act read with
section 6 of the 1897 Act would lead to the inescapable conclusion
that the limitation period of two (2) years prescribed for recovery of
dues under section 56 of the 2003 Act would apply to liabilities arising
under the 2003 Act, and not prior to the enforcement thereof. Thus,
we hold that the Division Bench manifestly erred in holding that the
liability incurred by the first respondent prior to the enforcement of
the 2003 Act would still be barred by the provisions of section 56(2)
thereof.
14. The first question is, thus, answered against the first respondent.
15. We now endeavour to examine, whether the demand raised by
the appellants ought to fail on the ground of delay and/or whether
the amount due is still recoverable in the manner ordained by
section 24 of the 1910 Act. Imperative for us to complete this exercise
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of analysing the legal position is to read the section itself. To the
extent relevant, it reads:
24. Discontinuance of supply to consumer neglecting
to pay charge.
(1) Where any person neglects to pay any charge for energy
or any sum, other than a charge for energy, due from him
to a licensee in respect of the supply of energy to him, the
licensee may, after giving not less than seven clear days'
notice in writing to such person and without prejudice to
his right to recover such charge or other sum by suit, cut
off the supply and for that purpose cut or disconnect any
electric supply-line or other works being the property of
the licensee, through which energy may be supplied, and
may discontinue the supply until such charger or other
sum, together with ally expenses incurred by him in cutting
off and reconnecting the supply, are paid, but no longer.
(2) ***
16. Section 24 in clear terms authorised a licensee to disconnect
supply of energy to any person, if he neglected to pay any charge
for energy or sum, other than a charge for energy, due from him.
The condition precedent for such disconnection was issuance of a
clear seven days' prior notice. This, in our opinion, is an in terrorem
measure which is apart from the right of the licensee to recover the
sum due by instituting a suit. Noticeably, section 24 did not refer to
any period of limitation as in section 56(2) of the 2003 Act. If the
licensee were to opt for institution of a suit, it cannot be contended
with any degree of conviction that since section 24 does not prescribe
a period of limitation or does not refer to the Limitation Act, 1963,23
a suit can be instituted at any time as per the convenience of the
licensee. Electrical energy is a saleable commodity or goods, which
we find usually to be sold on credit. That is, the licensee first supplies
the energy and a bill is raised by the licensee specifying the date
by which the charges are to be paid, whereafter it is the liability of
the consumer to pay it. On neglect to pay, the consequences in
section 24(1) are attracted. Having regard to such state of affairs, a
23
 1963 Act
[2024] 11 S.C.R.
355
The Madhya Pradesh Madhya Kshetra Vidyut Vitran Company
Limited & Ors. v. Bapuna Alcobrew Private Limited & Anr.
suit for recovery of the price of electrical energy supplied, or sold,
by the licensee and consumed by the consumer would be governed
by Article 15 of the 1963 Act, reading as follows:
Part II - Suits relating to Contracts
Description of suit
Period of
Limitation
Time from which period
begins to run
15. For the price of goods
sold and delivered to be
paid for after the expiry
of a fixed period of credit.
Three years
When the period of
credit expires.
17. The position in law would have been otherwise, if section 24(1) itself
had prescribed a period of limitation different from the one in Article 15
(supra). Since section 24 does not prescribe any period of limitation
than that prescribed by the 1963 Act, as is done by the new avatar
thereof in the 2003 Act, limitation would set in immediately upon the
consumer's neglect to pay the amount mentioned in the bill raised
by the licensee. This Court, in Ajmer Vidyut Vitran Nigam Ltd. v.
Rahamatullah Khan,24 followed by Prem Cottex v. Uttar Haryana
Bijli Vitran Nigam Ltd.,25 has held that a consumer can be said
to have neglected to pay any sum due to the licensee only after a
demand is raised by the licensee and if no demand is raised by the
licensee, the question of a consumer neglecting to pay any sum due
to the licensee does not and cannot arise. Thus, a licensee acquires
the right of action to institute a suit immediately after the consumer
neglects to pay the amount mentioned in the bill raised by it.
18. There could be situations like the one in Rahamatullah Khan (supra)
where the licensee might have committed a mistake. In such a case,
the period of limitation would begin only from the point of discovery
of the mistake and not earlier; and, such a case could be covered
by section 17 of 1963 Act.
19. It cannot be overemphasized that section 17 of the 1963 Act is meant
to save suits from being dismissed as time-barred, which could not
24
[2020] 2 SCR 929 : (2020) 4 SCC 650
25
[2021] 8 SCR 645 : (2021) 20 SCC 200
356
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be filed due to bona fide mistakes or errors. If a suitor alleges that
the suit could not be instituted by him within the prescribed period
of limitation because of some mistake, which came to be discovered
beyond the period prescribed for institution of a suit, it is open to
such suitor to claim exemption from limitation in terms of Order VII
Rule 6 of the Code of Civil Procedure, 1908 and such exemption
can be granted in an appropriate case. However, if a suitor alleges
to have discovered a mistake later but it is proved on evidence
being led that exercise of reasonable diligence could have resulted
in the mistake being discovered on an earlier date, limitation would
begin to count from that earlier date; and, in case, the count from
the said earlier date takes the date of institution of the suit beyond
the prescribed period of limitation, the bar of limitation would get
attracted. Mistake is, thus, not a circumstance which can be used as
a shield to save negligence in all cases. Absence of due diligence or
lack of bona fides would not clothe a suitor to take undue advantage
of a beneficent provision like section 17; it is for the relevant court
to separate the grain from the chaff.
20. The upshot of the aforesaid discussion is that although section 24
of the 1910 Act prescribes no period of limitation, it does allow the
licensee to discontinue supply of energy upon a consumer neglecting
to pay charges that are demanded by raising a bill, irrespective of the
fact that a suit for recovery of unpaid charges would be barred if not
instituted within three (3) years of the liability accruing. There appears
to be no limitation as regards the period within which notice under
section 24(1) has to be issued, evincing the intention of the licensee
to disconnect supply for non-payment of claimed dues. However, if
in case, despite the consumer not paying the charges demanded
and the notice thereunder is not issued within a reasonable period
or at any time within which a suit for recovery could be instituted,
whether the right of the licensee to claim the unpaid charges would
lapse will have to be decided by the court before whom the lis is
brought upon consideration of the defence that is raised and the
explanation for the delay. We only say that it must depend on the
facts of each particular case whether the demand by reason of mere
delay should be interdicted or not.
21. Be that as it may, in this case, no suit was instituted within the period
of limitation or beyond. We need not examine here whether the remedy
by way of a suit for the appellants stood foreclosed, because of the
[2024] 11 S.C.R.
357
The Madhya Pradesh Madhya Kshetra Vidyut Vitran Company
Limited & Ors. v. Bapuna Alcobrew Private Limited & Anr.
contention of the first respondent that no demand had been raised and
the show cause notices cannot be construed as demands. However,
did issuance of the second show cause notice (on 07th January, 2009)
afford a fresh cause of action for the first respondent to invoke the
writ jurisdiction of the High Court and did it turn out to be fatal for the
appellants? We shall endeavour to find an answer to this question
by first reading the show cause notices issued by the appellants.
22. The operative portion of the first show cause notice (dated 14th July,
2000) is extracted hereinbelow:
"On going through the past consumption, i.e. w.e.f. June
1996 to till date it is observed that units consumed by
you are not up to the mark as units worked out on 35%
or 39% load factor as and when applicable.
It shows that you fails (sic, failed) to fulfil the condition no.5
of the said permission letter dt. 30.5.96 by not consuming
units equivalent to units worked out on load factor as above.
The consumption found is on The consumption found is
on lower side in various months. The liability accrued on
this account comes to Rs. 70.50.lacs. Statement of liability
is enclosed.
Therefore, please take this as Notice of Show Cause
as to why not the supplementary demand towards less
consumption, as per statement enclosed, be raised against
your HT connection.
Your representation in this regard, may be please be
submitted within 15 days from the date of receipt of this
letter"
(emphasis supplied)
23. Thereafter, the second show cause notice was issued on 07th January,
2009, the operative portion whereof is extracted hereinbelow:
"It shows that you fails (sic, failed) to fulfil the condition
no.5 of the said permission letter dt. 30.5.96 by not
consuming units equivalent to units worked out on load
factor as above. The consumption found is on lower side
in various months. The liability accrued on this account
comes to Rs. 70.50.lacs. Statement of liability is enclosed.
358
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Therefore, please take this as Notice of Show Cause
as to why not the supplementary demand towards less
consumption, as per statement enclosed, be raised against
your HT connection.
You had earlier filed W.P. No. 677/2000 before Hon'ble
High Court in connection with some other dispute relating
to TG set permission.