New Delhi, Nov. 13: The Supreme Court has held that the owner of a property cannot be compelled to pay electricity arrears of the previous owner, a ruling that could bring relief to thousands of subscribers in the country.
A bench of Justices P. Sathasivam and Ranjan Gogoi said the owner was liable for repaying the arrears only if the person had entered into a prior contract with the supplier for paying the dues of the erstwhile owner. Hence, authorities cannot set a pre-condition that a new connection will be given only subject to payment of the previous arrears, the bench added.
The order means that a power utility can seek arrears of a previous owner from the incumbent owner only if an application is made to transfer the same connection in the new property holder's name. If the incumbent seeks a fresh connection, the utility cannot withhold it on the ground that the erstwhile owner's dues are pending.
The judgment brings clarity on an issue that has been nagging buyers of property, including houses.
Utility dues are not usually checked as diligently as property liabilities and ownership. In some cases, buyers realise after a while that they have been saddled with dues run up by the previous owner and pay up to avoid harassment.
The bench passed the recent order while dismissing an appeal filed by the North Eastern Electricity Supply Company of Orissa (Nesco), which had challenged lower court rulings that said a paper mill was not liable to pay the arrears of the previous owner.
The premises for which power connection was sought belonged to Konark Paper and Industries, which went into liquidation. The property was then purchased by Raghunath Paper Mills through an auction.
When Raghunath Paper realised that the premises had no power and sought a connection, Nesco insisted that the arrears of Rs 79.02 lakh run up by Konark Papers should be cleared before supply was restored.
Echoing the high court's order, the Supreme Court bench also agreed with Raghunath Paper's contention that it had not sought transfer of the connection but a fresh one.
In the absence of any contract between Raghunath Paper and Nesco, the demand for clearance of arrears of electricity dues is not justified, the court said.
The utility's case rested on a sub-clause of the electricity supply code that holds that a connection "shall not be transferred unless the arrear charges pending against the previous occupier are cleared".
But the Supreme Court bench said: "We hold that the said clause applies to a request for transfer of service connection but not to a fresh connection."
According to the electricity code in Odisha, Orissa's new name, transfer of connection should be done within 15 days from the date of receipt of complete application and a fresh connection in 30 days.
Citing an apex court ruling in a Bihar case, the bench added: "It is impossible to impose on the purchasers a liability which was not incurred by them."