Electricity Supply Cannot Be Disconnected For Recovery Of Additional Demand Raised After Expiry Of Two Years Limitation Period: SC [Read Judgment]

The Supreme Court has held that the licensee company cannot take recourse to the coercive measure of disconnection of electricity supply, for recovery of the additional demand raised after the expiry of two years limitation period.

The bench of Justices Uday Umesh Lalit and Indu Malhotra observed that the Section 56(2) of the Electricity Act does not preclude the licensee company from raising an additional or supplementary demand after the expiry of the limitation period under Section 56(2) in the case of a mistake or bona fide error.

The Law

Section 56 provides for disconnection of supply in the case of default in payment of electricity charges. Sub-section (1) of Section 56 provides that where any person "neglects" to pay "any charge" for electricity, or "any sum" other than a charge for electricity due from 12 him to a licensee or generating company, the licensee after giving 15 days' written notice, may disconnect the supply of electricity, until such charges or other sums due, including the expenses incurred, are paid. However, the disconnection cannot continue after the amounts are paid. Sub-section (2) of Section 56 by a non obstante clause provides that notwithstanding anything contained in any other law for the time being in force, no sum due from any consumer, shall be recoverable under Section 13 56, after the expiry of two years from the date when the sum became "first due", unless such sum was shown continuously recoverable as arrears of charges for the electricity supplied, nor would the licensee company disconnect the electricity supply of the consumer

The Issues

In this case, the bench was considering an appeal filed against National Consumer Commission which held that additional demand was barred by limitation under Section 56(2) of the Electricity Act. Following issues were considered: What is the meaning to be ascribed to the term "first due" in Section 56(2) of the Electricity Act, 2003? c) In the case of a wrong billing tariff having been applied on account of a mistake, when would the amount become "first due"? d) Whether recourse to disconnection of electricity supply may be taken by the licensee company after the lapse of two years in case of a mistake?

Section 56(2) did not preclude the licensee company from raising an additional or supplementary demand after the expiry of the limitation period 

Answering the first issue, the bench observed that the electricity charges would become "first due" only after the bill is issued to the consumer, even though the liability to pay may arise on the consumption of electricity. Referring to Section 56, the bench answered the other issues as follows:

Sub-section (1) of Section 56 confers a statutory right to the licensee company to disconnect the supply of electricity, if the consumer neglects to pay the electricity dues. This statutory right is subject to the period of limitation of two years provided by sub-section (2) of Section 56 of the Act. 7.4 The period of limitation of two years would commence from the date on which the electricity charges became "first due" under sub-section (2) of Section 56. This provision restricts the right of the licensee company to disconnect electricity supply due to non-payment of dues by the consumer, unless such sum has been shown continuously to be recoverable as arrears of electricity supplied, in the bills raised for the past period. If the licensee company were to be allowed to disconnect electricity supply after the expiry of the limitation period of two years after the sum became "first due", it would defeat the object of Section 56(2). 8. Section 56(2) however, does not preclude the licensee company from raising a supplementary demand after the expiry of the limitation period of two years. It only restricts the right of the licensee to disconnect electricity supply due to non-payment of dues after the period of limitation of two years has expired, nor does it restrict other modes of recovery which may be initiated by the licensee company for recovery of a supplementary demand.

The bench observed that Section 56(2) did not preclude the licensee company from raising an additional or supplementary demand after the expiry of the limitation period under Section 56(2) in the case of a mistake or bona fide error. It did not however, empower the licensee company to take recourse to the coercive measure of disconnection of electricity supply, for recovery of the additional demand, it added.

Case name: Assistant Engineer (D1), Ajmer Vidyut Vitran Nigam Limited Vs. Rahamatullah Khan alias Rahamjulla
Case no.: CIVIL APPEAL NO.1672 OF 2020
Coram: Justices Uday Umesh Lalit and Indu Malhotra 
Counsel:  Adv Puneet Jain (Appellant) and Adv Devashish Bharuka (Amicus Curiae)

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