Calcutta High Court: Shree Ramdoot Rollers not liable to pay off Electricity Dues incurred by the Company it purchased in an Auction

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The Electricity Code has always been a distinct and separate law in the Indian Legal System. One of the classic examples to prove the same is the fact that, theft of electricity will not be dealt with by the Indian Penal Code but by the Electricity Act. Keeping in mind this varied distinction, the Calcutta High Court faced a situation as to whether the new consumer would be held liable to pay off the dues incurred by the old consumer.

Facts of the case

The genesis of the case (Damodar Valley Corporation & Ors v. Shree Ramdoot Rollers Private Ltd) began with Capricorn; an electricity consumer who went into liquidation. The result of the liquidation was an e-auction that was held by State Bank of India under the SARFAESI Act, 2002 for the recovery of dues. In the e-auction, a company named Shree Ramdoot Rollers Private Ltd turned out to be the highest bidders and accordingly the sale certificate stating that Capricorn was sold to them was duly registered.

After the purchase, they had applied for a new electricity connection to Damodar Valley Corporation, the organisation responsible for dispatching electricity in that area. Despite numerous requests, the Corporation failed to comply. Failure to comply with the request forced Shree Ramdoot Rollers Private Ltd to approach the court. The matter was listed before a single judge of the Calcutta High Court, who ruled in favour of Shree Ramdoot Rollers Private Ltd, directing Damodar Valley Corporation, that they were to immediately supply electricity that was demanded.

This order was passed on 11th February 2020. Subsequently, there was an intra-court appeal filed by Damodar Valley Corporation demanding the division bench of the same High Court to look into the merits of the case. The following case was heard on 19th February and the judgement was given on April 24th 2020.

Arguments by the Counsels for Damodar Valley Corporation

Damodar Valley Corporation (DVC) is the appellants in the present case, as the intra-court appeal is raised by them. They are aggrieved by the order passed by the single learned judge, who stated that they must comply with the demand of Shree Ramdoot Rollers Private Limited, and supply electricity to them.

The Case for Damodar Valley Corporation was argued by Adv A K Mitra, who articulately put forth the following points:

He pointed out that the principal law in question concerning the case is the 2013 West Bengal Electricity Regulations 2013, which was framed by the West Bengal Electricity Regulations Commission. The Regulations of 2013 replaced the 2007 Regulations, and in the Regulations, 2 main points i.e. 3.4.2 and 4.6.4 were put forth.  With the help of these two points, Mr A K Mitra pointed out that they operate in different fields and they make the licensee, in this case, Damodar Valley Corporation eligible to recover dues of the previous and defaulting consumer from the new and subsequent consumer if a nexus between the two is established.

He further stated that the 2013’s code would throw light on the fact that, even if due nexus is failed to be established, the licensee is in a position to recover charges for electricity supplied to a deemed terminated consumer from an intending consumer of electricity in respect of the same premises.

Further the counsel brought to the notice of the court that the definition of “any consumer” cannot be limited, and if limited it would render the section 56 of the Electricity act redundant and superfluous.

Arguments by the Counsels for Shree Ramdoot Rollers Private Limited

Shree Ramdoot Rollers Private Limited, the respondents in the present case was the initial petitioners of the case and were represented by senior counsel J K Mitra. He drew the courts attention to the following points:

Section 43 of the Electricity Act was analysed in detail, where it was mentioned that if there is a request raised then it ought to be answered within 1 month of receiving the application.

The main argument put forth by the counsel was regarding point 3 and point 4 of the West Bengal Electricity Regulations code, where the emphasis is greatly laid on the point that if the provider wants to collect the pending dues from the new consumer then his relation with that is the nexus with the old consumer needs to be established.

The same was substantiated by point out the legislative intent while making the code.

Lastly, the learned counsel also pointed out that the term consumer has a similar definition as the old act there has not been any substantial change that has been made regarding the same.

The Court’s Decision

Based on the arguments presented by the counsels and a careful reading of the legislative intent, the division bench analysed it through several authorities cited by the counsels. After careful analysis, the court ruled in favour of the respondents (Shree Ramdoot Private Limited). The court stated that Shree Ramdoot Private limited does not fall within the ambit of consumer, as defined by the appellants under Section 2(15) of the electricity code, and therefore is not liable to pay off the dues incurred by the previous consumer. Keeping this in mind the order of the single judge was upheld and asked to be complied with.


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