K. C. NINAN versus KERALA STATE ELECTRICITY BOARD & ORS.

Citation: [2023] 9 S.C.R. 637 · Decided: 19-05-2023 · Supreme Court of India · Bench: D.Y. CHANDRACHUD · Disposal: Disposed off

Cited by 6 judgment(s) · cites 47 · see the full citation network in Lexace

Judgment (excerpt)

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[2023] 9 S.C.R. 637 : 2023 INSC 560
637
K. C. NINAN
v.
KERALA STATE ELECTRICITY BOARD & ORS.
(Civil Appeal No 2109-2110 of 2004)
MAY 19, 2023
[DR DHANANJAYA Y CHANDRACHUD, CJI,
HIMA KOHLI AND PAMIDIGHANTAM SRI
NARASIMHA, JJ.]
Electricity Act, 2003 – ss. 42 and 61 – Liability of subsequent
owner to pay electricity charges due on previous owner – Whether
the arrears of unpaid electricity dues outstanding from the erstwhile
owner can be claimed from the subsequent owner, who has acquired
the property in proceedings initiated to enforce mortgages or to
pay off the dues of creditors – Held: In order to provide a supply of
electricity to consumers, a distribution licensee is required to lay
down infrastructure such as electricity lines, transformers, and other
equipment – The licensees are required to maintain the infrastructure
even if the consumer does not consume electricity – The 2003 Act
has been enacted to promote the development of the electricity
industry as well as to protect the interests of the consumers and to
ensure the supply of electricity to all areas – The Supply Conditions
providing for recoupment of electricity dues of a previous consumer
from a new owner are necessary to recover the costs incurred for
laying down the infrastructure as well as the ongoing current
liabilities towards the electricity generation and transmission
companies – Apart from protecting a public good, such conditions
also have a reasonable nexus with objects of the 2003 Act, such as
a robust development of the electricity industry, protecting the
interests of consumers as well as the financial interests of the
distribution licensees – It is just and reasonable for distribution
licensees to specify conditions of supply requiring the subsequent
owner or occupier of premises to pay the arrears of electricity dues
of the previous owner or occupier as a pre-condition for the grant
of an electricity connection to protect their commercial interests, as
well as the welfare of consumers of electricity.
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SUPREME COURT REPORTS
[2023] 9 S.C.R.
Transfer of Property Act, 1882 – s.100 – Charge – Whether
arrears of electricity can become a charge or encumbrance over
the premise – Effect of statutory regulations or rules enacted by a
regulatory commission – Held: A charge cannot be enforced against
a transferee if they have no notice of the same, unless the requirement
of such notice has been dispensed with by law – The provisions of
the 1910 Act, 1948 Act, and the 2003 Act do not provide that the
arrears of electricity dues would constitute a charge on the property
or that such a charge shall be enforceable against a transferee
without notice – In Isha Marbles, the Supreme Court observed that
under the provisions of 1910 Act r/w. 1948 Act, electricity arrears
do not create a charge over the property – Consequently, in general
law, a transferee of the premises cannot be made liable for the
outstanding dues of the previous owner since electricity arrears do
not automatically become a charge over the premises – The rule
making power contained u/s. 181 r/w. s. 50 of Electricity Act, 2003
is wide enough to enable the regulatory commission to provide for
a statutory charge in the absence of a provision in the plenary statute
providing for creation of such a charge – The electricity utilities
can create a charge by framing subordinate legislation or statutory
conditions of supply enabling recovery of electricity arrears from a
subsequent transferee – Such a condition is rooted in the importance
of protecting electricity which is a public good – Public utilities
invest huge amounts of capital and infrastructure in providing
electricity supply – The failure or inability to recover outstanding
electricity dues of the premises would negatively impact the
functioning of such public utilities and licensees – Electricity Act,
2003 – ss. 50 and 181– Maharashtra Electricity Regulatory
Commission (Electricity Supply Code and other Conditions of
Supply) Regulations, 2005 – Regulation 10.5.
Electricity Act, 2003 – s. 43 – Whether the duty to supply
electricity is absolute – Held: s.43 begins with the words “Save as
otherwise provided in this Act” – Hence, the operation of s.43 will
also be subject to compliance with the other provisions of the 2003
Act – Under s.43, the distribution licensee is obligated to supply
electricity to the premises of an owner or occupier, provided that
the owner or occupier pays all charges and compl

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