The apex court passed the judgement while dismissing the plea of the Haryana State Electricity Board challenging a Punjab and Haryana High Court ruling that M/s Hanuman Rice Mills, an auction purchaser was not liable to clear the dues of Rs.2,39 lakh owed by the previous owner M/s Durga Rice Mills. M/s Hanuman Rice Mills had purchased the premises of M/s Durga Rice Mills at a cost of Rs.15,25,000 on December 14, 1990 in an auction conducted by the Haryana Financial Corporation for recovery of its dues .
The State Electricity Board granted a fresh electricity supply to the Mill, but four years later issued a notice on January 16, 1995 demanding Rs 2,39,251 towards arrears of electricity charges due by the previous owner.After the new Mill owner refused to pay the dues, the Board disconnected the power supply. The High Court by its judgement dated August 8, 2006 held that the liability of a consumer to pay charges for consumption of electricity, cannot be fastened on a subsequent auction purchaser of the property and cited the apex court's earlier ruling in the Isha Marbles vs. Bihar State Electricity Board - (1995).
Aggrieved, the Board appealed in the apex court. Dismissing the appeal, the apex court said the Board could not seek the enforcement of the liability of the previous owner/occupier against a purchaser, who was a third party vis-a-vis the contract between the Board and the previous occupant. The auction purchaser who buys the property after disconnection of the electricity supply, of the previous owner could not be considered as a `consumer' within the meaning of the Electricity Act, the Bench said.
The Bench then laid certain broad guidelines for determining such disputes. "The position therefore can may be summarized thus : (i) Electricity arrears do not constitute a charge over the property. Therefore in general law, a transferee of a premises cannot be made liable for the dues of the previous owner/occupier. (ii) Where the statutory rules or terms and conditions of supply which are statutory in character, authorize the supplier of electricity, to demand from the purchaser of a property claiming re-connection or fresh connection of electricity, the arrears due by the previous owner/occupier in regard to supply of electricity to such premises, the supplier can recover the arrears from a purchaser."
Source- IBN Live