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The Supreme Court has observed that ordinarily an electricity bill needs to be raised within two years of the consumption, and if the amount is sought to be recovered beyond the two-year limitation, then the said amount needs to be continuously treated as a recoverable arrear.

A bench of Justice SVN Bhatti and Justice NV Anjaria dismissed the appeal of an Uttar Pradesh-based distribution licensee, Dakschinanchal Vidyut Vitran Nigam Ltd. appeal, which sought to recover Rs.57,74,164/- as a Minimum Consumption Guarantee Charges (“MCGC”) for the period from February, 1998 to September, 1998, with respect to the additional 2000 KVA load facility offered to be supplied by the Appellant to the consumer.

The Court upheld the Allahabad High Court's order, which had dismissed the appellant's writ petition. The High Court noted that the additional 2000 KVA load facility offered to the consumer was never actually availed by the consumer; also, the amount so claimed was not continuously treated as recoverable arrears from the consumer from 1998 until the date of the demand, i.e., 13.02.2007.

“A monthly bill was issued for consumption under the Agreement dated 24.02.1997. However, no bill was issued for the additional 2000 KVA along with the regular bills. The amount fell due when the supplier was entitled to raise the bill. The word 'due' must be read as referring to a specific point in time, not as something uncertain. Also, no material or pleading shows that the sum has been continuously treated as recoverable as arrears from Respondent No. 3. Hence, the demand raised under the bill is barred by limitation.”, the High Court's view upheld by the Supreme Court.

Background

The appellant, DVVNL, is a Distribution Licensee. Respondent No. 3 is its consumer. The dispute arose from an electricity connection applied for by Respondent No. 3 with a 4000 KVA load. Due to contemporaneous limitations, the appellant agreed to sanction and release a 2000 KVA load, leading to an Agreement dated 24.02.1997.

On 31.01.1998, the appellant offered to increase the contract load from 2000 KVA to another 2000 KVA. However, Respondent No. 3 expressed its lack of interest in accepting the additional load.

On 13.02.2007, nearly nine years later, the appellant demanded ₹57,74,164/- towards Minimum Consumption Guarantee Charges (MCGC) for the period February 1998 to September 1998, claiming that the contracted capacity for that period was 4000 KVA.

Against the demand, the Respondent No.3, consumer approached the Electricity Ombudsman, which, relying on Section 56(2) of the Electricity Act, 2003, set aside the demand, noting that neither the consumer had availed the extended load facility nor was the demand so raised after 9 years continuously treated as an arrear.

Aggrieved by the Ombudsman order, the distribution licensee filed a Writ Petition before the High Court, which had upheld the Ombudsman order, prompting the distribution licensee to move to the Supreme Court.

Decision

Refusing to interfere with the impugned findings, the judgment authored by Justice Bhatti referenced Section 56(2) of the Act, which says:

“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 Court observed that the Appellant-distribution licensee is entitled to recover the dues of the past consumption of the consumer beyond the stipulated limitation period of two years, only when it shows that the recoverable amount is continuously treated/shown as an arrear in a monthly bill.

Noting that the amount recoverable for the additional 2000 KVA load facility, which was never availed by Respondent No. 3, was sought to be recovered by the appellant beyond the limitation period, the Court held that the demand was barred by limitation.

“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 Court endorsed the High Court's view.

Reference was made to the case of KC Ninan vs Kerala State Electricity Board and others 2023 LiveLaw (SC) 453 and Assistant Engineer (D1), Ajmer Vidyut Vitran Nigam Limited and Another v. Rahamatullah Khan Alias Rahamjulla to hold against the legality of the demand made in 2007, for the alleged consumption took place in 1998.

As a result, the appeal was dismissed.

Cause Title: DAKSCHINANCHAL VIDYUT VITRAN NIGAM LTD. VERSUS VIDUT LOKPAL, UTTAR PRADESH AND OTHERS

Citation : 2026 LiveLaw (SC) 929

Click here to download judgment

Appearance:

For Appellant(s) Mr. Rakesh Uttamchandra Upadhyay, AOR Mr. Harsh Som, Adv. Ms. Aarti U. Mishra, Adv.

For Respondent(s) None

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