SC: Electricity dues of last owner can be mulled on to an auction-purchaser

The Hon’ble Supreme Court., on 1st June 2020, in the matter of Telangana State Southern Power Distribution Company Limited & Anr. v. M/s.  Srigdhaa Beverages held that liability towards previous electricity dues of the last owner could be mulled on to an auction-purchaser where it has been specifically mentioned as a liability of the purchaser and the sale is on “AS IS WHERE IS, WHATEVER THERE IS AND WITHOUT RECOURSE BASIS”.

Question before the Hon’ble Supreme Court:

Whether the liability towards previous electricity dues of the last owner could be mulled on to an auction-purchaser?

Hon’ble Court’s observations:

A condition for clearance of dues cannot per se be termed as unreasonable or arbitrary. (Para 12)

Electricity dues, where they are statutory in character under the Electricity Act and as per the terms & conditions of supply, cannot be waived in view of the provisions of the Act itself more specifically Section 56 of the Electricity Act, 2003 (in pari materia with Section 24 of the Electricity Act, 1910), and cannot partake the character of dues of purely contractual nature. (Para 15(A))

Where, as in cases of the E-auction notice, the existence of electricity dues, whether quantified or not, has been specifically mentioned as a liability of the purchaser and the sale is on “AS IS WHERE IS, WHATEVER THERE IS AND WITHOUT RECOURSE BASIS”, there can be no doubt that the liability to pay electricity dues exists on the auction-purchaser. (Para 15(B))

Copy of judgement: Judgement_01-Jun-2020

-Adv. Tushar Kaushik

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