SC on when do electricity charges become first due u/s56(2), Electricity Act

The Hon’ble Supreme Court, on 18th February 2020, in the matter of Assistant Engineer (D1), Ajmer Vidyut Vitran Nigam Limited & Anr. v. Rahamatullah Khan alias Rahamjulla observed that 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.

The Hon’ble Supreme Court observed that:

The Electricity Act, 2003 is a consumer-friendly statute. The Statement of Objects and Reasons to the Act notes that over a period of time, the performance of State Electricity Boards had deteriorated on account of various factors, and the need was felt to frame a self-contained comprehensive legislation, which led to the enactment of the Electricity Act, 2003. (Para 6)

Electricity has been held to be “goods” by a Constitution Bench in State of Andhra Pradesh v. National Thermal Power Corporation Ltd. [(2002) 5 SCC 203] Under the Sale of Goods Act, 1930 a purchaser of goods is liable to pay for it at the time of purchase or consumption. The quantum and time of payment may be ascertained post facto either by way of an agreement or the relevant statute. (Para 6.1)

In the case of electricity, the charges are ascertained and recovered as per the tariff notified by the State Electricity Board, or under an electricity supply agreement between the parties read with the tariff under Section 62(1)(d), and the Electricity Supply Code framed under Section 50. (Para 6.1)

The obligation of a consumer to pay electricity charges arises after the bill is issued by the licensee company. The bill sets out the time within which the charges are to be paid. If the consumer fails to pay the charges within the stipulated period, they get carried forward to the next bill as arrears. (Para 6.3)

The liability to pay arises on the consumption of electricity. The obligation to pay would arise when the bill is issued by the licensee company, quantifying the charges to be paid. (Para 6.6)

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. (Para 6.6)

Section 56(2) of the Electricity Act, 2003 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. (Para 8)

Section 56(2) 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. It does not however, empower the licensee company to take recourse to the coercive measure of disconnection of electricity supply, for recovery of the additional demand. (Para 9)

Copy of judgement: Judgement_18-Feb-2020

-Adv. Tushar Kaushik

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