Supreme Court: Electricity dues older than two years can be recovered only if shown continuously as arrears
THE JHARKHAND STORY NETWORK New Delhi, September 12: The Supreme Court has held that electricity dues cannot ordinarily be recovered after two…
THE JHARKHAND STORY NETWORK
New Delhi, September 12: The Supreme Court has held that electricity dues cannot ordinarily be recovered after two years from the date they first became payable unless the amount has been continuously shown as recoverable arrears in the consumer’s electricity bills.
A bench of Justice SVN Bhatti and Justice NV Anjaria dismissed an appeal filed by Uttar Pradesh-based distribution licensee Dakshinanchal Vidyut Vitran Nigam Ltd. (DVVNL), which sought to recover ₹57,74,164 as Minimum Consumption Guarantee Charges (MCGC) for the period from February 1998 to September 1998.
The demand related to an additional 2,000 KVA load facility that the distribution company had offered to the consumer.
Supreme Court upholds Allahabad High Court order
The Supreme Court upheld the Allahabad High Court’s decision dismissing DVVNL’s writ petition.
The High Court had noted that the additional 2,000 KVA load facility was never actually availed by the consumer. It also found that the amount claimed in 2007 had not been continuously shown or treated as recoverable arrears from 1998 onwards.
The Supreme Court agreed with the High Court’s reasoning and held that the demand raised nearly nine years after the period to which it related was barred by limitation.
What Section 56(2) of Electricity Act says
The case centred on Section 56(2) of the Electricity Act, 2003, which provides a two-year limitation for recovery of electricity dues, subject to an exception where the amount has been continuously shown as recoverable arrears.
The provision states:
“Notwithstanding anything contained in any other law for the time being in force, no sum due from any consumer, under this section shall be recoverable after the period of two years from the date when such sum became first due unless such sum has been shown continuously as recoverable as arrear of charges for electricity supplied and the licensee shall not cut off the supply of the electricity.”
The Supreme Court observed that a distribution licensee can recover electricity dues beyond the two-year period only if the amount continues to be shown as an arrear in the consumer’s monthly bills.
Demand raised nine years later held time-barred
The dispute originated from an electricity connection sought by the consumer with a proposed 4,000 KVA load. Due to limitations at the time, the distribution licensee initially sanctioned and released a 2,000 KVA load under an agreement dated February 24, 1997.
On January 31, 1998, the licensee offered to increase the contract load by another 2,000 KVA. However, the consumer expressed no interest in accepting the additional load.
Nearly nine years later, on February 13, 2007, DVVNL raised a demand of ₹57,74,164 towards MCGC for the period between February 1998 and September 1998, claiming that the contracted capacity during that period was 4,000 KVA.
The consumer challenged the demand before the Electricity Ombudsman, which set it aside by relying on Section 56(2) of the Electricity Act.
The Ombudsman noted that the consumer had neither availed the additional load facility nor had the disputed amount been continuously shown as an arrear for the intervening period.
DVVNL then approached the Allahabad High Court, which upheld the Ombudsman’s decision. The distribution licensee subsequently moved the Supreme Court.
Supreme Court refers to earlier electricity dues rulings
The Supreme Court also referred to its earlier decisions in KC Ninan vs Kerala State Electricity Board and Others and Assistant Engineer (D1), Ajmer Vidyut Vitran Nigam Limited and Another v. Rahamatullah Khan alias Rahamjulla while examining the legality of the demand.
The bench found no reason to interfere with the findings of the High Court.
“Even if applied, the demand raised for the first time on 13.02.2007 for an event covered by the period February 1998 to September 1998 is barred by limitation,” the Supreme Court said, endorsing the High Court’s view.
The Court consequently dismissed the appeal filed by DVVNL.
The ruling reiterates that electricity distribution companies cannot ordinarily seek recovery of old dues after the statutory two-year period unless the amount has been continuously reflected as recoverable arrears in the consumer’s bills.
