Electricity Dues Of Earlier Occupier Not Payable By Subsequent Occupier Without Creation Of Charge Under Transfer Of Property Act: HP High Court

Shedding light on the liability of buyers who acquire properties from auctions for inheriting the previous owner's electricity bills the Himachal Pradesh High Court has ruled that electricity dues cannot be passed on to new occupants of a property if a charge wasn't created following the Transfer of Property Act and Companies Act.In allowing a plea of one such buyer against the Electricity Board for seeking a fresh connection Justice Sandeep Sharma observed,“Since in the instant case, charge, if any, never came to be created in terms of aforesaid provision read with and Sections 77 and 78 of Companies Act, 2013. Respondent board Is estopped from claiming that respondent board is entitled to claim amount as detailed in impugned order on account of creation of charge. Since, at no point of time respondent board took steps to create charge”.Background of the Case:M/s Pure & Cure Healthcare Pvt. Ltd. purchased a property at an auction held under the SARFAESI Act after the previous owner, M/s Ankur Drug Private Ltd., defaulted on a loan. The Sale Certificate issued to M/s Pure & Cure Healthcare Pvt. Ltd. clearly stated that the property was free from all encumbrances. However, the Himachal Pradesh State Electricity Board (HPSEBL) refused to grant a new electricity connection to the new owner unless they cleared outstanding dues of ₹20,43,837 left behind by M/s Ankur Drug Private Ltd.M/s Pure & Cure Healthcare Pvt. Ltd. challenged the HPSEBL's decision in the High Court. They argued that since they were a new owner and the property was purchased free from encumbrances, they shouldn't be held liable for the previous owner's dues. The HPSEBL, on the other hand, contended that they had the right to claim the outstanding amount from the auction purchaser.Court's Observations:Citing the Supreme Court's judgment in K.C. Ninan Vs. Kerala State Electricity Board & Ors. (2023) the bench at the outset clarified that electricity dues are linked to the consumer, not the premises and added that a new owner or occupier applying for a connection is considered a fresh connection.The court further elaborated that even if the dues were to be attributed to the premises, a charge needs to be created following the Transfer of Property Act (Section 100) and the Companies Act (Sections 77 & 78) for the Electricity Board to claim them from the new owner.Highlighting that the HPSEBL failed to register any charge on the property for outstanding electricity dues, as mandated by the Companies Act the court even referred to the document downloaded from the Ministry of Corporate Affairs' website to confirm that no such charge existed.“Respondent board is estopped from claiming that respondent board is entitled to claim amount as detailed in impugned order on account of creation of charge. Since, at no point of time respondent board took steps to create charge as has been discussed in detail herein above, it cannot be permitted to recover the dues of previous occupier from the auction purchaser or subsequent occupier”, the bench reasoned.Thus, ruling in favor of M/s Pure & Cure Healthcare Pvt. Ltd the order asking them to clear previous dues was quashed. HPSEBL was accordingly directed to consider their request for a new electricity connection without insisting on payment of outstanding dues from the former owner.Case Title: M/s Pure & Cure Healthcare Pvt. Ltd V/s HPSEBLCitation: 2024 LiveLaw (HP) 15Click Here To Read/Download Judgment

Electricity Dues Of Earlier Occupier Not Payable By Subsequent Occupier Without Creation Of Charge Under Transfer Of Property Act: HP High Court

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