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IN THE HIGH COURT OF JHARKHAND AT RANCHI

W.P.(C) No.2639 of 2025

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M/S Mangalam Ispat having its works at Plot no. IV-A/5(P), Industrial Area,

Balidih, Bokaro Steel City, P.O & P.S- Balidih, District- Bokaro, through its

partner Vinay Kumar Agrawal, aged about 53 years, S/O Mahabir Prasad

Agarwal, R/O L T- 53 A, Agrasen Path, Near Panchmukhi Mandir, P.O.&P.S.-

Ramgarh, District- Ramgarh, Jharkhand.

… … Petitioner

Versus

1. Damodar Valley Corporation having its registered office at DVC Towers,

VIP Road, Kolkata, P.O., P.S.- Airport Road, District- Kolkata through its

Chairman-cum-Managing Director.

2. The Chief Engineer-I (Commercial), Damodar Valley Corporation having its

registered office at DVC Towers, VIP Road, Kolkata, P.O., P.S. Airport

Road, District-Kolkata.

3. The Senior General Manager (Commercial), Damodar Valley Corporation

having its registered office at DVC Towers, VIP Road, Kolkata, P.O., P.S.-

Airport Road, District-Kolkata.

4. The Deputy General Manager (Commercial), Damodar Valley Corporation

having its registered office at DVC Towers, VIP Road, Kolkata, P.O., P.S.-

Airport Road, Dist. - Kolkata.

… … Respondents

----

W.P.(C) No. 2089 of 2019

----

M/S Mangalam Ispat having its place of business at TTT/20, Ground Floor,

Civil Township, Rourkela, Orissa, P.O.- Civil Township S.O., P.S.-

Raghunathpalli & District- Rourkela, through its partner Ankur Kumar Agrawal,

aged about 21 years, S/O Shri Kamal Kumar Agrawal, R/O Phase 4A, Plot 5

(P), Balidih Industrial Area, Bokaro Steel City, P.O., P.S.- Balidih & District-

Bokaro.

… … Petitioner

Versus

1. Damodar Valley Corporation having its registered office at DVC Towers,

VIP Road, Kolkata, P.O., P.S.- Airport Road, District- Kolkata through its

Chairman-cum Managing Director.

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2. The Chief Engineer-I (Commercial), Damodar Valley Corporation having

its registered office at DVC Towers, VIP Road, Kolkata, P.O., P.S.-

Airport Road, District- Kolkata.

3. The Senior Divisional Engineer, Damodar Valley Corporation having its

registered office at DVC Towers, VIP Road, Kolkata, P.O., P.S.- Airport

Road, District Kolkata.

----

CORAM : SRI ANANDA SEN, J.

----

For the Petitioners : Mr. Ajit Kumar, Sr. Advocate.

Mr.Dhananjay Kumar Pathak, Advocate.

Mr. Akash Ajit Kumar, Advocate.

For the Respondents: Mr. M.S. Mittal, Sr. Advocate.

Ms. Khushboo Kataruka, Advocate.

Ms. Ushma Pandey, Advocate.

----

O R D E R

RESERVED ON 13.07.2026 PRONOUNCED ON 04.08.2026

Both these writ petitions are filed by the petitioner M/S Mangalam Ispat,

a partnership firm. In W.P.(C). No. 2089 of 2019, the petitioner has prayed for

grant of fresh electric connection at its premises, which it has acquired through

auction, from Punjab National Bank. The petitioner has also prayed to quash

the demand notice contained in letter dated 24.04.2019, wherein the

respondent-Damodar Valley Corporation (DVC) demanded Rs.4,92,51,765/-

towards the outstanding electricity bills of the erstwhile consumer. In W.P.(C).

No. 2639 of 2025, the petitioner has prayed to quash the demand notice dated

01.02.2025, issued by the respondent, for arrear of bill for the period 2006-

2012. Petitioner has further prayed to quash the letter dated 07.04.2025 by

which representation of the petitioner has been rejected. Since facts of both

these applications are intertwined, both are heard together and are being

disposed in a common judgment.

PRAYER MADE IN THE WRIT PETITIONS

2. For better appreciation, prayer made in both the writ petitions are

quoted hereinbelow: -

IN W.P.(C) No. 2089 of 2019

a. For issuance of appropriate writ(s)/order(s)/direction(s) commanding

upon the Respondents to grant fresh electrical connection to the

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petitioner at its premises which the petitioner has acquired on auction

through Punjab National Bank vide sale certificate dated 12.09.2018.

b. For quashing the letter dated 24.04.2019 (Annexure 13) whereby and

whereunder the Respondent has made a demand of

Rs.4,92,51,765/- towards the outstanding bill dues in respect of the

acquired premises from the Petitioner and to declare the same as

illegal and arbitrary.

c. For commanding upon the respondent to grant the petitioner

compensation for each day’s delay in granting fresh electrical

connection to the petitioner as per the statutory provisions of Section

43 of the Electricity Act, 2003.

IN W.P.(C) No. 2639 of 2025

a. For showing the respondents cause as to why and under what

circumstances the respondents have claimed the arrear for the period

2006 to 2012 from the petitioner specially when they have entered

into agreement with the petitioner for supply of power and have

commenced the supply to the petitioner in the year 2019 itself.

b. For quashing of Demand Notice contained in letter No.

Coml./arrear/JH/2006-2012/340308 dated 01.02.2025 (Annexure 8)

issued under the signature of respondent No.4 whereby the

concerned respondent has claimed the arrear bill for the period April

2006 to March 2012 on account of the Tariff order for F.Y 2006 to

2012 published on 23

rd

July 2024 to the tune of Rs.1,34,03,401/- from

the petitioner ignoring the fact that the petitioner had no concern or

connection with the respondent during the relevant period. Neither

the petitioner has availed any power from the respondents nor there

had been any agreement for supply of power between the petitioner

and the respondents during the period in question.

c. For quashing of letter dated 07.04.2025 issued by Respondent No.3

(Annexure 10) whereby the concerned respondent has rejected the

representation of the petitioner and has claimed that the arrear is tied

with premises. Hence being the current owner of the premises, the

petitioner is liable to pay the arrears of erstwhile consumer.

d. For commanding upon the respondents not to debar the petitioner

from allowable rebates due to non-payment of the arrears for F.Y.

2006-2012 accrued against the erstwhile consumer of the

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respondents.

FACTS OF THE CASE

3. The petitioner is a registered partnership firm that purchased the

movable and immovable assets of M/s Shree Hanuman Alloys Pvt. Ltd.

through an e-auction conducted by Punjab National Bank in 2018. The

property originally belonged to M/s Shree Hanuman Alloys Pvt. Ltd, which had

taken loan from a financial institution. The loan became an NPA, thus, in a

recovery process, the assets were put to auction. After acquiring the property,

on auction, the petitioner applied for a fresh electricity connection from

Damodar Valley Corporation (in short, DVC). However, DVC refused to grant a

fresh connection till the petitioner cleared the previous owner's outstanding

electricity dues. The respondent DVC issued a letter dated 24.03.2019 to the

petitioner demanding the outstanding dues of the erstwhile company i.e. M/S

Hanuman Alloys Pvt. Ltd. in respect of the premises, which the petitioner had

purchased in auction, which was to the tune of Rs.4,92,51,765/- as arrears.

Despite the petitioner informing DVC that it is only an auction purchaser with

no connection whatsoever with the previous owner, DVC continued to insist on

payment and delayed the grant of the electricity connection. Being aggrieved

the petitioner has filed W.P.(C). No. 2089 of 2019 and prayed to quash the

impugned letter dated 24.03.2019 and prayed for grant of fresh electric

connection. In the aforesaid writ proceeding on showing willingness by the

petitioner with respect to making payment of the amount by way of monthly

installments against the demand of Rs.4,92,51,765/-, a Coordinate Bench of

this Court vide order dated 23.09.2019 fixed the monthly installment of

Rs.25,00,000/-, however, the same was dependant upon the final outcome of

the writ petition. The petitioner paid the demanded amount in installments and

was granted a fresh electricity connection under a separate agreement in

2019. However, in 2025, DVC raised a fresh demand of Rs.1.34 crore towards

electricity arrears relating to the period 2006–2012 on account of revision of

tariff for financial year 2006 to 2012. The petitioner also challenged the

aforesaid demand in W.P.(C). No. 2639 of 2025.

ARGUMENTS ON BEHALF OF THE PETITIONER

4. Mr. Ajit Kumar, learned Senior Counsel for the petitioner

submitted that the petitioner had purchased only the assets of the erstwhile

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consumer in e-auction sale and has no connection with either the business or

liabilities of the earlier consumer. He further submitted that the sale certificate

of the immovable property (Annexure-4 to the writ petition) clearly states that

there are no pending encumbrances on the property so auctioned. The List-I &

List-Il of the sale certificate was later brought on record through supplementary

affidavit which suggests that the property is free from all encumbrances. He

further submitted that the respondent DVC did not choose to take action of

disconnection of power supply of the erstwhile M/S Hanuman Alloys for a long

time and allowed the dues to accumulate and also did not take steps to

recover the said charges through other means. He argued that Clause 6.10(a)

of the of the Jharkhand State Electricity Regulatory Commission (Electricity

Supply Code) Regulations, 2015 (hereinafter referred to as the Regulations) is

applicable to the petitioner on the facts of the case, which bars recovery of

dues of erstwhile consumer. As per him, the Regulations does not empower

Damodar Valley Corporation (DVC) to recover the outstanding dues of the

erstwhile owner. While relying on the judgment of Hon’ble Supreme Court in

Isha Marbles v. Bihar SEB, (1995) 2 SCC 648, the petitioner submitted that

an auction purchaser cannot be compelled to pay the previous consumer's

electricity dues to obtain a fresh connection. He further relied on the judgments

of the Hon’ble Supreme Court in Paschimanchal Vidyut Vitran Nigam Ltd. v.

DVS Steels and Alloys (P) Ltd. [(2009) 1 SCC 210]; Haryana State

Electricity Board versus Hanuman Rice Mills, Dhanauri and Others

[(2010) 9 SCC 145]; K.C. Ninan v. Kerala SEB [(2023) 14 SCC 431] and

judgment of this Court in Om Prakash Garg v. Jharkhand Bijli Vitran Nigam

Limited, Ranchi (L.P.A No. 748 of 2019), Shivam Builders and Developers

v. Jharkhand Urja Vikas Nigam Limited [W.P.(C) No. 3650 of 2020] and

submitted that the respondents cannot legally force the petitioner to pay the

previous consumer's outstanding dues. Lastly he prayed for refund of the

amount which was deposited with DVC to get the electricity connection.

5. In relation to W.P.(C) No.2639 of 2025, he submits that the

Damodar Valley Corporation (DVC) has raised bills to the petitioner for the

period prior to auction sale. As the tariff was revised, the said demand was

raised, but, admittedly, the same relates to the period prior to the auction sale,

when admittedly, the property was in ownership and possession of the

defaulter erstwhile consumer. Since the Damodar Valley Corporation cannot

recover any amount of outstanding dues, of the defaulter erstwhile consumer,

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from the petitioner, this due is also not recoverable from the petitioner.

ARGUMENTS ON BEHALF OF THE RESPONDENTS-DAMODAR VALLEY

CORPORATION

6. Per contra, Mr. M.S. Mittal, learned Senior Counsel for

respondent-DVC submitted that the petitioner is responsible for paying the

outstanding electricity dues because it purchased the property on an "as is

where is" basis with full knowledge of the existing terms and liabilities. He

referred to Clause 5.3.3 of the Jharkhand State Electricity Regulatory

Commission (Electricity Supply Code) Regulations, 2015 and submitted that it

is the responsibility of consumer to check the electricity dues before

purchasing any property and to obtain a "No Dues Certificate" from Damodar

Valley Corporation. He further submitted that by letter dated 14.11.2018, DVC

has categorically informed the applicant that as per Clause. 5.3.3 of the

Regulations, 2015 the applicant is required to pay the outstanding electricity

dues to the tune of Rs.4,92,51,765/-, of the erstwhile consumer i.e., M/S

Hanuman Alloys Pvt. Ltd. within one month from the date of application dated

31.10.2018 in accordance with the above clause of the regulation. It is his

contention that the liability of the electricity connection of the premises is not

merely attached to the previous owner, but any subsequent purchaser also

must clear such outstanding dues. He disputes the contention of the petitioner

that Clause 6.10 of the Regulations is applicable in the facts of this case. He

contends that the appropriate clause of the Regulations applicable on the facts

of this case is Clause 5.3.3 of the Regulations. The learned Senior Counsel

also relied on the judgments of the supreme court in K.C. Ninan v. Kerala

SEB, (2023) 14 SCC 431, and submitted that both the writ petitions being

devoid of merit, are liable to be dismissed.

ADMITTED FACTS

7. From the arguments of the parties and on going through the

pleadings and records, I find that the following facts are admitted: -

(a) The moveable property earlier belonged to M/s. Shree

Hanuman Alloys Pvt. Ltd.

(b) The said asset became non-performing and was put to auction

by the bank.

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(c) In an auction, this petitioner participated and on being

successful bidder, the property was transferred to the petitioner

as an auction purchaser.

(d) There were electricity dues in respect of the property, which

dates prior to the date of auction and taking over of possession

of the property by the petitioner. Thus, the dues are of the

erstwhile owner.

(e) The petitioner does not have any connection with M/s Shree

Hanuman Alloys Pvt. Ltd. nor any one from the petitioner firm

has got any concern with M/s Shri Hanuman Alloys Pvt. Ltd.

(f) On the ground that there are electricity dues over the said

property, which is admittedly prior to the date of auction,

respondent-DVC has refused to grant electricity connection to

the petitioner and had demanded dues of erstwhile owner.

(g) Both the learned counsel appearing on behalf of the petitioner

and the DVC admit that electricity connection is supplied in

accordance with the Jharkhand State Electricity Regulatory

Commission (Electricity Supply Code) Regulations, 2015 and

the refusal can also be in terms of the said Regulations. The

conditions, which need to be fulfilled prior to grant of electricity

connection are also enumerated in the said Regulations.

Applicability of the said Regulations, on the facts of the case is

not disputed by any of the parties. The only dispute is about

the clause of the said Regulations, which would be applicable

on the facts of this case. The respondents-DVC, who has

refused electricity connection, is relying on Clause 5.3.3 of the

said Regulations, whereas the petitioner is relying on Clause

6.10(a) of the Regulations.

(h) As there was urgency and the petitioner was desperately in

need of electric connection, they had deposited the said

amount, in installments, pursuant to the order dated

23.09.2019 passed in W.P.(C) No. 2089 of 2019. However,

the said deposit was subject to the final outcome of the writ

petition.

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RELEVANT PROVISIONS OF JHARKHAND STATE ELECTRICITY

REGULATORY COMMISSION (ELECTRICITY SUPPLY CODE)

REGULATIONS, 2015

8. The main contention of both the parties relate to applicability of

two distinct clauses, i.e., Clause 5.3.3 and Clause 6.10 of the Regulations. The

petitioner relies upon Clause 6.10(a) of the Regulations whereas the Damodar

Valley Corporation relies on Clause 5.3.3 of the Regulations.

9. Considering the submissions of the parties, it is necessary to

quote both the Clauses, i.e., Clause 5.3.3 and Clause 6.10(a) of the

Regulations, which are as under: -

"5.3.3 Purchase of existing property: Where the applicant

has purchased an existing property whose electricity

connection has been disconnected, it shall be the

applicant's duty to verify that the previous owner has paid

all dues to the Distribution Licensee and obtained a "no-

dues certificate" from him. In case such "no-dues

certificate" has not been obtained by the previous owner

before change in ownership of property, the new owner

may approach the Distribution Licensee for such a

certificate. The Distribution Licensee shall acknowledge

receipt of such request and shall either intimate in writing

the dues outstanding on the premises, if any, or issue a

"no-dues certificate" within 1 month from date of receipt of

such application. In case the Distribution Licensee does

not intimate the outstanding dues or issue a "no-dues

certificate" within this time, new connection to the

premises shall not be denied on grounds of outstanding

dues of the previous consumer. In such an event, the

Distribution Licensee shall have to recover his dues from

previous consumer as per provisions of law.

6.10 During the inspection, the Distribution Licensee

shall: (a) verify that there is no outstanding due in the

applicant's name or for the premise for which the new

connection is being applied for. If the applicant, in respect

of an earlier agreement executed in his name or in the

name of a firm or company with which he was associated

either as a partner, director or managing director, has any

arrears of electricity dues or other dues for the premises

where the new connection is applied for and such dues are

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payable to the licensee, the requisition for supply may not

be entertained by the licensee until the dues are paid in

full. But if the erstwhile consumer defaulted payment of

dues and left the premises for good and the concerned

premises has come in legal possession of a new occupant

through transferor a decree / order of the court/authority

and who has no nexus with the previous owner / occupant

in any manner, applies for connection of the electrical line

in the same disconnected premises, the distribution

licensee shall provide electrical connection without

realization of the arrear/dues of the premises payable by

the erstwhile consumer, from the subsequent transferee of

the premises and he shall not be held liable to pay /

discharge the liability of the previous consumer for

securing a fresh connection ......................................."

THE RULE OF HARMONIOUS INTERPRETATION

10. It is well settled that there should be harmonious consideration of

two or more provisions of the statute or amongst the provision interse. A

provision cannot be interpreted in such a manner, which will make the other

provision or a part of the same provision nugatory.

11. It is also necessary to note that while interpreting two

clauses/sections of any statute or provisions of law, the cardinal principle is

that if two interpretations are possible, one which leads to a harmonious

reading of the entire provision is to be accepted. Any interpretation, which

renders a portion of any provision or statute, nugatory, should not be accepted.

[Reference : Paragraph 7 of the judgment of the Hon’ble Supreme Court in the

case of Borosil Glass Works Ltd. Employees’ Union versus D.D.

Bambode, reported in (2011) 1 SCC 350]. Attempt should be made to

harmonise the conflicting entries, if any. The harmony should not be limited

within the same provision, but also amongst the other provisions of the same

statute or instructions or regulations. The Hon’ble Supreme Court has held that

there should be rejection of that construction, which will rob one of the entries

of its entire content and make it nugatory. The Hon’ble Supreme Court in the

case of CIT versus Hindustan Bulk Carriers reported in (2003) 3 SCC 57

has held as under: -

14. A construction which reduces the statute to a futility

has to be avoided. A statute or any enacting provision

therein must be so construed as to make it effective and

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operative on the principle expressed in the maxim ut res

magis valeat quampereat i.e. a liberal construction should

be put upon written instruments, so as to uphold them, if

possible, and carry into effect the intention of the parties.

[See Broom's Legal Maxims (10th Edn.), p. 361, Craies on

Statutes (7th Edn.), p. 95 and Maxwell on Statutes (11th

Edn.), p. 221.]

15. A statute is designed to be workable and the

interpretation thereof by a court should be to secure that

object unless crucial omission or clear direction makes

that end unattainable. (See Whitney v. IRC [1926 AC 37 : 10

Tax Cas 88 : 95 LJKB 165 : 134 LT 98 (HL)] , AC at p. 52

referred to in CIT v. S. Teja Singh [AIR 1959 SC 352 : (1959)

35 ITR 408] and Gursahai Saigal v. CIT [AIR 1963 SC 1062 :

(1963) 48 ITR 1] .)

16. The courts will have to reject that construction which

will defeat the plain intention of the legislature even

though there may be some inexactitude in the language

used. (See Salmon v. Duncombe [(1886) 11 AC 627 : 55

LJPC 69 : 55 LT 446 (PC)] AC at p.

634, Curtis v. Stovin [(1889) 22 QBD 513 : 58 LJQB 174 : 60

LT 772 (CA)] referred to in S. Teja Singh case [AIR 1959 SC

352 : (1959) 35 ITR 408] .)

17. If the choice is between two interpretations, the

narrower of which would fail to achieve the manifest

purpose of the legislation, we should avoid a

construction which would reduce the legislation to

futility, and should rather accept the bolder construction,

based on the view that Parliament would legislate only for

the purpose of bringing about an effective result.

(See Nokes v. Doncaster Amalgamated Collieries [(1940) 3 All

ER 549 : 1940 AC 1014 : 109 LJKB 865 : 163 LT 343 (HL)]

referred to in Pye v. Minister for Lands for NSW [(1954) 3 All

ER 514 : (1954) 1 WLR 1410 (PC)] .) The principles

indicated in the said cases were reiterated by this Court

in Mohan Kumar Singhania v. Union of India [1992 Supp (1)

SCC 594 : 1992 SCC (L&S) 455 : (1992) 19 ATC 881 : AIR

1992 SC 1] .

18. The statute must be read as a whole and one

provision of the Act should be construed with reference

to other provisions in the same Act so as to make a

consistent enactment of the whole statute.

19. The court must ascertain the intention of the

legislature by directing its attention not merely to the

clauses to be construed but to the entire statute; it must

compare the clause with other parts of the law and the

setting in which the clause to be interpreted occurs.

(See R.S. Raghunath v. State of Karnataka [(1992) 1 SCC

335 : 1992 SCC (L&S) 286 : (1992) 19 ATC 507 : AIR 1992

SC 81].) Such a construction has the merit of avoiding

any inconsistency or repugnancy either within a section

or between two different sections or provisions of the

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same statute. It is the duty of the court to avoid a head-on

clash between two sections of the same Act. (See Sultana

Begum v. Prem Chand Jain [(1997) 1 SCC 373 : AIR 1997 SC

1006] .)

20. Whenever it is possible to do so, it must be done to

construe the provisions which appear to conflict so that

they harmonise. It should not be lightly assumed that

Parliament had given with one hand what it took away

with the other.

21. The provisions of one section of the statute cannot be

used to defeat those of another unless it is impossible to

effect reconciliation between them. Thus a construction

that reduces one of the provisions to a “useless lumber”

or “dead letter” is not a harmonised construction. To

harmonise is not to destroy.

ANALYSIS AND INTERPRETATION OF CLAUSE 6.10 AND CLAUSE 5.3.3

OF THE REGULATIONS

12. Now, it is necessary to analyse the aforesaid two Clauses of the

Regulations to arrive at a conclusion that on what facts and circumstances,

these two clauses operate and which one is applicable in the facts of this case.

This is being done considering the aforesaid judgments of the Hon’ble

Supreme Court. The analysis of the two clauses relevant for purposes of the

present case is being dealt with hereinafter.

13. From perusal of Clause 5.3.3 of the Regulations, it is clear that the

said clause is applied when an applicant has purchased an existing property

from the seller, whose electricity connection had been disconnected. As per

the said clause, if a purchaser wants to purchase such type of property from

the seller, where there are electricity dues and the connection has been

disconnected, then the purchaser is duty bound to verify that the previous

owner had any outstanding dues or not. As per the aforesaid clause, if a

purchaser wants to purchase a property directly from the seller, he has to

ensure that electricity dues in respect of the property is fully paid. He has to

obtain a “No Dues Certificate” from the Distribution Licencee to the effect that

there is no electricity dues in respect of the property, which he is purchasing.

Before the change of ownership by direct sale, this formality has to be

completed and only after a “No Dues Certificate” is issued, the new purchaser

can apply for fresh electricity connection. In this scenario, if there are dues and

“No Dues Certificate” is not granted by the Distribution Licencee and the

Distribution Licencee, on request, does not intimate about the outstanding

dues within the timeframe mentioned therein, then the Distribution Licencee

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cannot refuse fresh electricity connection. The dues, in that case, will be

recovered from the erstwhile owner.

Thus, from this clause, it is clear that this applies where a

purchaser approaches the seller (erstwhile owner of a property) and buys the

property directly from the seller, without any intervention of Court, Tribunal or

other Authority or institution.

14. In Clause 5.3.3 of the Regulations, 2015, the word “transfer” will

mean, transfer of the premises by the erstwhile owner to the present

purchaser/owner. This transfer will be a mutual transfer between the two

parties. In this situation, as stipulated by the Regulations, where the applicant

has purchased an existing property, whose electricity connection has been

disconnected, it shall be the applicant's duty to verify that the previous owner

has paid all dues to the Distribution Licensee and then to obtain a "no-dues

certificate" from the Distribution Licensee. In case such "no-dues certificate"

has not been obtained by the previous owner before change in ownership of

property, the new owner may approach the Distribution Licensee for such a

certificate.

The Clause 6.10(a) of the Regulations operates on a different

factual field. As per the first part of the said clause, if new applicant is related

with the company, which was in default, or is associated as a Partner or

Director or Managing Director of the defaulting company, then, if there are

dues, application for fresh connection may not be entertained by the

distribution licensee until the dues of the erstwhile consumer are paid in full.

The second part of this clause curves out an exception. The

exception provides that if the erstwhile consumer has defaulted in payment of

dues and left the premises for good and the premises, thereafter comes in

legal occupation of the new occupant through a decree or order of any Court

or authority and the new occupant applies for connection of the electrical line

in the same premises, the distribution licensee shall provide electrical

connection without realisation of the arrear/dues of the premises payable

by the erstwhile consumer, from the subsequent transferee.

15. From perusal of Clause 6.10(a) of the Regulations, it is

understood that the same operates in a situation where the property is

transferred legally through Decree of a Court or order passed by any authority

and thereafter the possession is given to the new transferee. In this scenario,

the erstwhile consumer must be a defaulter and must have left the premises

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for good.

If the property is directly purchased from the erstwhile owner by

the new purchaser, without any external intervention, this Clause 6.10 will not

be applicable. In a situation where sale and purchase is directly between the

erstwhile owner and the subsequent owner, without intervention of any Court

or Authority or any Tribunal or Financial Institution, the same will fall within the

purview of Clause 5.3.3 and not Clause 6.10(a). This is the difference in the

field of operation of Clause 5.3.3 and Clause 6.10 of the Regulations.

Thus, this interpretation will give meaning and purpose to both

Clause 5.3.3 and Clause 6.10, otherwise one of them will become nugatory.

FACTS OF THE CASE IN LIGHT OF THE INTERPRETATION AND

FINDINGS

16. In this case, admittedly, the petitioner has come in lawful

possession of the premises in question through a public auction as the

erstwhile consumer had defaulted in payment of dues and left the premises for

good. This is not a case where petitioner has purchased the property directly

from the erstwhile owner by executing a sale deed. If the petitioner would have

purchased the property from the erstwhile owner directly through a sale deed,

which is a mutual transaction between buyer and seller, it could have been

said that this petitioner is liable to pay the outstanding dues of the erstwhile

owner in terms with Clause 5.3.3 of the Regulations. Since in this case,

petitioner has got the property by way of auction and has admittedly got no

relation whatsoever with the erstwhile owner or with the company of the

erstwhile owner, in view of Clause 6.10(a), the petitioner being the subsequent

transferee of the premises, cannot be held liable to pay the dues of the

previous consumer.

RELEVANT CASE LAWS / JUDGMENTS / GUIDELINES OF THE HON’BLE

SUPREME COURT IN THE CONTEXT OF THIS CASE

17. In Isha Marbles Vs. Bihar State Electricity Board & Anr. (1995)

2 SCC 648, wherein an auction purchaser had sought fresh electrical

connection which was refused by the Electricity Board on the ground of past

arrear of the erstwhile owner, the Hon’ble Supreme Court dealt with the legal

position in the context of section 24 of the Electricity Act, 1910 and section 2(c)

of Electricity Act, held that a ‘consumer’ means any person who is supplied

with energy and since liability to pay electricity dues is fastened on the

2026:JHHC:22928

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consumer at the relevant point of time, the purchaser was not the consumer.

Paragraph No.63 the judgment reads as under:

“63. We are clearly of the opinion that there is great reason

and justice in holding as above. Electricity is public

property. Law, in its majesty, benignly protects public

property and behoves everyone to respect public property.

Hence, the courts must be zealous in this regard. But, the

law, as it stands, is inadequate to enforce the liability of

the previous contracting party against the auction-

purchaser who is a third party and is in no way connected

with the previous owner/occupier. It may not be correct to

state, if we hold as we have done above, it would permit

dishonest consumers transferring their units from one

hand to another, from time to time, infinitum without the

payment of the dues to the extent of lakhs and lakhs of

rupees and each one of them can easily say that he is not

liable for the liability of the predecessor in interest. No

doubt, dishonest consumers cannot be allowed to play

truant with the public property but inadequacy of the law

can hardly be a substitute for overzealousness......”

18. Further, in Paschimanchal Vidyut Vitran Nigam Ltd. v. DVS

Steels and Alloys (P) Ltd., (2009) 1 SCC 210the Hon’ble Supreme Court held

as under:

11. The supply of electricity by a distributor to a consumer

is “sale of goods”. The distributor as the supplier, and the

owner/occupier of a premises with whom it enters into a

contract for supply of electricity are the parties to the

contract. A transferee of the premises or a subsequent

occupant of a premises with whom the supplier has no

privity of contract cannot obviously be asked to pay the

dues of his predecessor-in-title or possession, as the

amount payable towards supply of electricity does not

constitute a “charge” on the premises. A purchaser of a

premises, cannot be foisted with the electricity dues of any

previous occupant, merely because he happens to be the

current owner of the premises. The supplier can therefore

neither file a suit nor initiate revenue recovery proceedings

against a purchaser of a premises for the outstanding

electricity dues of the vendor of the premises in the

absence of any contract to the contrary.

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19. In the case of Haryana State Electricity Board versus

Hanuman Rice Mills, Dhanauri and Others [(2010) 9 SCC 145], the Hon’ble

Supreme Court after referring to the decisions in the case of Isha Marbles

(Supra) and Paschimanchal Vidyut Vitran Nigam Limited

(Supra)summarized the position in the following manner at paragraph No.12,

which reads asunder:

“12. The position therefore 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, authorise the

supplier of electricity to demand from the purchaser of a

property claiming reconnection 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.”

20. Further, the Division Bench of this Court in the case of Om

Prakash Garg v. Jharkhand Bijli Vitran Nigam Limited, Ranchi (L.P.A No.

748 of 2019) wherein fresh electrical connection to the appellant was denied

by JBVNL on the ground of outstanding electricity dues in the premises, the

learned Division Bench having analyzed Clause 5.5 of the Regulations, 2005

vis-à-vis Regulations 5.3.3 & 6.10 of the Regulations, 2015 held that

Regulation 6.10 of the Regulations, 2015 is a parimateria to Regulation 5.5 of

the Regulations, 2005 and conjoint reading of both the provisions would

indicate that in order to deny new connection to the premises of the transferee,

there should be a nexus of the applicant with the previous owner/occupant. If

the purchaser has come in legal possession through transfer or purchase of

the concerned property and has no nexus with the previous owner/occupant or

is not connected with it in any manner, the distribution licensee is under

obligation to provide electrical connection without realization of the

arrears/dues of the premises payable by the erstwhile lessee from the new

incumbent. Paragraph Nos.20, 21 & 22 of the judgment reads as under:

20. In the present case, the property in question was

purchased without encumbrances, liens or charge and

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attachments of any kind whatsoever. Electricity arrears do

not constitute a charge over the property so long notice in

certificate proceedings are not served upon the Certificate

Debtor in terms of section 8 of Bihar and Orissa Public

Demands Recovery Act, 1914. At the time of sale of the

property to the appellant on 29.03.2011, no such notice in

the certificate proceedings were served upon the vendor /

Certificate Debtor. Under Clause 5.5 of Electricity Supply

Code Regulations, 2005 being statutory in character,

electricity could not be denied to the new occupant or

purchaser of a premises coming in legal possession

through transfer or purchase of a property even if there

were arrears of electricity dues of the previous owner and

if there was no connection of the incumbent with the

previous owner / occupant or any nexus with the previous

owner / occupant in any manner. The appellant /purchaser

was under no obligation to obtain no dues certificate from

the previous owner or verify whether he had paid all dues

to the Distribution Licensee before change in ownership of

the property as Clause 5.3.3 of Electricity Supply Code

Regulations, 2015 was not in existence at the time of

purchase. Electricity Supply Code Regulations, 2015 was

brought into force with effect from 07.09.2015.

21. It has been rightly held by the learned single Judge that

Clause 5.3.3 did not have retrospective effect. As such, the

purchaser of a property prior to coming into force of

Electricity Supply Code Regulations, 2015 (with effect from

07.09.2015) could not be denied fresh electricity

connection on the ground that he had not been able to

obtain no dues certificate from the previous owner before

change in ownership of the property. However, fresh

connection could be denied if such a purchaser had any

nexus with the previous owner / occupant in any manner

or he was associated either as a partner, director or

managing director in respect of earlier agreement executed

in his name or in the name of a Firm or a Company.

Considered thus, refusal of electricity connection to the

appellant relying upon Clause 5.3.3 of Electricity Supply

Code Regulations,2015 is unsustainable in law and on

facts.

22. Accordingly, the impugned judgment dated 14.08.2019

declining to interfere in the order dated 31.05.2017

(Annexure-4) refusing fresh electricity connection in favour

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of the petitioner / appellant is set aside. Consequently, the

order dated 31.05.2017 (Annexure-4), impugned in the writ

petition, refusing fresh electricity connection in favour of

the petitioner stands quashed. Matter is remitted to the

Respondent Company to take a fresh decision in

accordance with law within a period of four weeks from the

date of receipt of a copy of this order. Appeal stands

allowed.

21. In a similar matter the Coordinate Bench of this Court in Shivam

Builders and Developers v. Jharkhand Urja Vikas Nigam Limited [W.P.(C)

No. 3650 of 2020], relied on judgments of Supreme Court and judgment of

Division Bench of this court Om Prakash Garg (supra) held in paragraph

Nos.28, 29 & 30 as under:

28. In the case in hand, the specific claim of the petitioners

is that the premises in question have been transferred to

them by the erstwhile consumer by virtue of registered

sale deeds and they have no nexus with the erstwhile

consumer. The respondents have filed a supplementary

counter affidavit in W.P.(C) No. 3650/2020 stating that

erstwhile consumer i.e. M/s Pawan Biscuit Company

Private Limited had four Directors, namely, Pawan Kumar

Agarwal, Ramawtar Agarwal, Shraddhanand Agarwal and

Puran Chand Agarwal. The said company was acquired by

M/s Purbasha Foods Pvt. Ltd. w.e.f. 06.03.2021 and two

Directors i.e. Pawan Kumar Agarwal and Ramawtar

Agarwal were also the Directors of M/s Prubasha Foods

Pvt. Ltd. The fact narrated in the supplementary counter

affidavit does not suggest that the petitioner of the

aforesaid case has any nexus either with the erstwhile

consumer i.e. M/s Pawan Bis cuit Company Pvt. Ltd. or

with M/s Purbasha Foods Pvt. Ltd. Thus, the respondents

have failed to show any nexus between the petitioners and

theerstwhile consumer so as to make them liable to pay its

outstanding electricity dues in terms with Clause 6.10(a) of

the Regulations, 2015.

29. Both the petitioners and the respondents have relied

upon a judgment of learned Division Bench of this Court

rendered in the case of Om Prakash Garg Vs. Jharkhand

Bijli Vitran Nigam Limited, Ranchi (L.P.A No. 748 of 2019)

wherein fresh electrical connection was denied to the

appellant by JBVNL on the ground of outstanding

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electricity dues in the premises. In the said case, the

property was purchased on 29.03.2011, during which the

Electricity Supply Regulations, 2005 [hereinafter referred

to as 'the Regulations, 2005] was in force. Clause 5.5 of the

Regulations, 2005 did not speak about obtaining 'No Dues

Certificate' from the distribution licensee. However, Clause

5.3.3 of the Regulations, 2015 which was enforced w.e.f.

07.09.2015, cast a duty upon the purchaser to verify that

the previous owner had paid all the dues and obtained 'no-

dues certificate' from the distribution licensee. Learned

Division Bench held that the purchaser of a property prior

to coming into force the Regulations, 2015 cannot be

compelled to produce 'No Dues Certificate' which would

amount

to do an impossible task.

30. Learned Division Bench having analyzed Clause 5.5 of

the Regulations, 2005 viz-a-viz Regulations 5.3.3 & 6.10 of

the Regulations, 2015 held that Regulation 6.10 of the

Regulations, 2015 is a parimateria to Regulation 5.5 of the

Regulations, 2005 and conjoint reading of both the

provisions would indicate that in order to deny new

connection to the premises of the transferee, there should

be a nexus of the applicant with the previous

owner/occupant. If the purchaser has come in legal

possession through transfer or purchase of the concerned

property and has no nexus with the previous

owner/occupant or is not connected with it in any manner,

the distribution licensee is under obligationto provide

electrical connection without realization of the

arrears/dues of the premises payable by the erstwhile

lessee from the new incumbent. It was further held that the

respondent-company had resorted to statutory remedy

available to it to recover the past dues of the premises and

on that basis also, it could not have refused to grant fresh

electricity connection to the applicant.

22. The Hon’ble Supreme Court in K.C. Ninan v. Kerala SEB, (2023)

14 SCC 431, has decided nineteen appeals arising from the State - Kerala,

Maharashtra, Gujarat, Assam and West Bengal, wherein the Electric Utilities

refused to provide an electricity connection unless the auction purchaser paid

the dues of the previous owner.

23. The Hon’ble Supreme Court noticed the jurisprudence

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surrounding the liability of subsequent purchasers for electricity dues in India

has undergone a significant transformation over the years. Initially, in Isha

Marbles v. Bihar SEB, (1995) 2 SCC 648, a three-Judge Bench of the

Hon’ble Supreme Court had held that in the absence of a charge being created

over the premises by a statutory regulation, an auction-purchaser cannot be

asked to clear the past arrears of electricity dues as a condition precedent to

the grant of electricity. However, this position was revisited in Ahmedabad

Electricity Co. Ltd. v. Gujarat Inns (P) Ltd., (2004) 3 SCC 587 while

reaffirming the proposition that in a case of a fresh connection the auction-

purchasers cannot be held liable to clear the arrears incurred by the previous

owners in respect of power supplied to the premises in the absence of a

specific statutory provision in that regard, the Court acknowledged the need to

reconsider the broad principles laid down in Isha Marbles(supra). Around the

same time, in Hyderabad Vanaspathi Ltd. v. A.P. SEB, (1998) 4 SCC 470 it

was clarified that terms and conditions of supply framed under statutory

authority were not merely contractual but carried statutory force. This

recognition opened the door for Boards to impose liability through properly

framed regulations. Subsequently, In Dakshin Haryana Bijli Vitran Nigam

Ltd. v. Paramount Polymers (P) Ltd., (2006) 13 SCC 101, the Apex Court

upheld a clause in the conditions of supply that allowed recovery of dues from

transferees seeking a connection, distinguishing Isha Marbles (supra) on the

ground that it had not considered such statutory provisions. Similarly, in

Paschimanchal Vidyut Vitran Nigam Ltd. v. DVS Steels and Alloys (P)

Ltd., (2009) 1 SCC 210, the Hon’ble Supreme Court held that a licensee or an

electricity distributor can insist upon fulfillment of statutory rules, regulations or

the conditions of supply so long as they are not arbitrary and unreasonable.

24. This line of reasoning has since been consistently followed. In

Telangana State Southern Power Distribution Co. Ltd. v. Srigdhaa

Beverages, (2020) 6 SCC 404, the Hon’ble Supreme Court reaffirmed that

subsequent purchasers could indeed be made liable for past dues under

statutory regulations. The Hon’ble Supreme Court has observed as under:

“16.1. That electricity dues, where they are statutory in

character under the Electricity Act and as per the terms &

conditions of supply, cannot be waived in view of the

provisions of the Act itself more specifically Section 56 of

the Electricity Act, 2003 (in pari materia with Section 24 of

the Electricity Act, 1910), and cannot partake the character

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of dues of purely contractual nature

16.2. Where, as in cases of the E-auction notice in

question, the existence of electricity dues, whether

quantified or not, has been specifically mentioned as a

liability of the purchaser and the sale is on “AS IS WHERE

IS, WHATEVER THERE IS AND WITHOUT RECOURSE

BASIS”, there can be no doubt that the liability to pay

electricity dues exists on the respondent (purchaser)

16.3. The debate over connection or reconnection would

not exist in cases like the present one where both aspects

are covered as per clause 8.4 of the General Terms &

Conditions of Supply.”

25. The evolution thus reflects a clear doctrinal shift: from protecting

new owners against inherited liabilities in Isha Marbles(supra), to recognizing

the statutory authority of electricity boards to enforce recovery from

subsequent purchasers, provided such conditions are reasonable and non-

arbitrary.

26. In essence, the law has moved from a narrow contractual view to

a broader statutory framework, balancing consumer protection with the need to

safeguard public resources and ensure financial discipline in the electricity

sector. In K.C. Ninan(supra) the Hon’ble Supreme Court has observed that a

distribution licensee can require the subsequent owner to clear the arrears

incurred by the previous owners in respect of power supplied to the premises.

Such an action is permissible only where the statutory conditions of supply

authorise the recovery of outstanding electricity dues from a subsequent

purchaser claiming fresh connection of electricity, or if there is an express

provision of law providing for creation of a statutory charge upon the

transferee. At paragraph 107 in the case of K.C. Ninan (supra) the Hon’ble

Supreme Court held as under:

107. Consequently, in general law, a transferee of the

premises cannot be made liable for the outstanding dues

of the previous owner since electricity arrears do not

automatically become a charge over the premises. Such an

action is permissible only where the statutory conditions

of supply authorise the recovery of outstanding electricity

dues from a subsequent purchaser claiming fresh

connection of electricity, or if there is an express provision

of law providing for creation of a statutory charge upon the

transferee.

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27. Further, the Hon’ble Supreme Court on the issues of whether

arrears of electricity can become a charge or encumbrance over the premises

or not, observed at paragraph 117 in the case of K.C. Ninan (supra) as under:

117. In light of the above discussion, we are of the opinion

that the electricity utilities can create a charge by framing

subordinate legislation or statutory conditions of supply

enabling recovery of electricity arrears from a subsequent

transferee. Such a condition is rooted in the importance of

protecting electricity which is a public good. Public utilities

invest huge amounts of capital and infrastructure in

providing electricity supply. The failure or inability to

recover outstanding electricity dues of the premises would

negatively impact the functioning of such public utilities

and licensees. In the larger public interest, conditions are

incorporated in subordinate legislation whereby the

Electric Utilities can recoup electricity arrears.

Recoupment of electricity arrears is necessary to provide

funding and investment in laying down new infrastructure

and maintaining the existing infrastructure. In the absence

of such a provision, the Electric Utilities would be left

without any recourse and would be compelled to grant a

fresh electricity connection, even when huge arrears of

electricity are outstanding. Besides impacting on the

financial health of the Utilities, this would impact the wider

body of consumers.

28. The Hon’ble Supreme Court examined the facts and

statute/rules/regulations applicable in the all the nineteen appeals individually

and held in some of the cases that subsequent owner/purchaser is not liable to

pay electricity dues of earlier owners as no such provision was found in these

cases and in other cases affirmed the statute/rule/regulations which allows the

electricity company to demand the electricity dues of erstwhile owner from

subsequent owner/purchaser.

29. Finally, in K.C. Ninan (supra), following conclusions have been

arrived at by the Hon’ble Supreme Court:

342.1. The duty to supply electricity under Section 43 of

the 2003 Act is not absolute, and is subject to such

charges and compliances stipulated by the Electric

Utilities as part of the application for supply of electricity;

342.2. The duty to supply electricity under Section 43 is

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with respect to the owner or occupier of the premises. The

2003 Act contemplates a synergy between the consumer

and premises. Under Section 43, when electricity is

supplied, the owner or occupier becomes a consumer only

with respect to those particular premises for which

electricity is sought and provided by the Electric Utilities;

342.3. For an application to be considered as a

“reconnection”, the applicant has to seek supply of

electricity with respect to the same premises for which

electricity was already provided. Even if the consumer is

the same, but the premises are different, it will be

considered as a fresh connection and not a reconnection;

342.4. A condition of supply enacted under Section 49 of

the 1948 Act requiring the new owner of the premises to

clear the electricity arrears of the previous owner as a

precondition to availing electricity supply will have a

statutory character;

342.5. The scope of the regulatory powers of the State

Commission under Section 50 of the 2003 Act is wide

enough to stipulate conditions for recovery of electricity

arrears of previous owners from new or subsequent

owners;

342.6. The Electricity Supply Code providing for

recoupment of electricity dues of a previous consumer

from a new owner have a reasonable nexus with the

objects of the 2003 Act;

342.7. The rule-making power contained under Section 181

read with Section 50 of the 2003 Act is wide enough to

enable the Regulatory Commission to provide for a

statutory charge in the absence of a provision in the

plenary statute providing for creation of such a charge;

342.8. The power to initiate recovery proceedings by filing

a suit against the defaulting consumer is independent of

the power to disconnect electrical supply as a means of

recovery under Section 56 of the 2003 Act;

342.9. The implication of the expression “as-is-where-is”

basis is that every intending bidder is put on notice that

the seller does not undertake responsibility in respect of

the property offered for sale with regard to any liability for

the payment of dues, like service charges, electricity dues

for power connection, and taxes of the local authorities;

and

342.10. In the exercise of the jurisdiction under Article 142

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of the Constitution, the Electric Utilities have been directed

in the facts of cases before us to waive the outstanding

interest accrued on the principal dues from the date of

application for supply of electricity by the auction-

purchasers.

30. Now, it is settled that if the Regulation and the Law provides for

recovery of dues from the erstwhile owner, then only it can be recovered.

Further, such recovery, if the law provides, should, absolutely, be in

consonance with the provisions, conditions and procedure laid down in the law

itself. In the instant case, the provision for recovery is Clause 5.3.3 and Clause

6.10(a) of the Regulations, that too on strictly fulfilling the conditions laid down

thereunder. If the facts befits with the conditions of these two provisions, then

only there can be recovery, otherwise not.

31. On the facts of this case, as held in the foregoing paragraphs, the

petitioner is covered by Clause 6.10(a) of the Regulations, and Clause 5.3.3 is

not applicable so far as this petitioner is concerned.

32. Further, there is no provision to recover the dues of the erstwhile

owner from the auction purchaser, if the auction purchaser is not related to the

erstwhile owner or the Directors of the erstwhile owner were also not related

with the same (as per Clause 6.10).

33. Thus, it is concluded that on the facts of this case, applying

Clause 6.10(a) of the Regulations, which is applicable in this case, no recovery

of outstanding dues of the erstwhile consumer can be made from this

petitioner.

FINDINGS ON “AS IS WHERE IS” AND “NO ENCUMBRANCE” IN THE

LIGHT OF JUDGMENTS OF HON’BLE SUPREME COURT

34. Learned Senior Counsel for respondent-DVC contended that the

petitioner is responsible for paying the outstanding electricity dues because it

purchased the property on an "as is where is" basis with full knowledge of the

existing terms and liabilities. In K.C. Ninan (supra) the Hon’ble Supreme

Court held as under:

146. To conclude, all prospective auction-purchasers are

put on notice of the liability to pay the pending dues when

an appropriate “as-is-where-is” clause is incorporated in

the auction-sale agreement. It is for the intending auction-

2026:JHHC:22928

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purchaser to satisfy themselves in all respects about

circumstances such as title, encumbrances and pending

statutory dues in respect of the property they propose to

purchase. In a public auction-sale, auction-purchasers

have the opportunity to inspect the premises and ascertain

the facilities available, including whether electricity is

supplied to the premises. Information about the

disconnection of power is easily discoverable with due

diligence, which puts a prudent auction-purchaser on a

reasonable enquiry about the reasons for the

disconnection. When electricity supply to a premises has

been disconnected, it would be implausible for the

purchaser to assert that they were oblivious of the

existence of outstanding electricity dues.

147. In terms of the legal doctrine of caveat emptor, it

becomes the duty of the buyer to exercise due diligence. A

seller is not under an obligation to disclose patent defects

of which a buyer has actual or constructive notice in terms

of Section 3 of the Transfer of Property Act, 1882.

However, in terms of Section 55(1)(a), in the absence of a

contract to the contrary, the seller is under an obligation to

disclose material defects in the property or in the seller's

title thereto of which he is aware and which a buyer could

not with ordinary care discover for himself.

148. While examining the effect of an “as-is-where-is”

clause, the facts and circumstances of each case

individually, along with the terminology of the clauses

governing the auction-sales must be taken into

consideration, to arrive at an equitable decision.

35. Learned counsel for the petitioner submitted that in the auction

sale advertisement there is no averment suggesting that the auction sale is on

“as is where is” basis, whereas in the Sale Certificate of the immovable

property it is mentioned that there are “no pending encumbrances” on the

property and in List-I & List-Il of the sale certificate also mentioned that the

“property is free from all encumbrances”.

36. The Hon’ble Supreme Court in Sulochana Chandrakant

Galande v. Pune Municipal Transport, (2010) 8 SCC 467 explained that the

word “encumbrance” actually means the burden caused by an act or

omission of man and not that created by nature. It means a burden or charge

2026:JHHC:22928

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upon property or a claim or lien on the land. It means a legal liability on

property. Thus, it constitutes a burden on the title which diminishes the value

of the land. It may be a mortgage or a deed of trust or a lien of an easement.

At paragraphs 4 to 17 of the judgment, the Hon’ble Supreme Court has held as

under:

14. “Encumbrance” actually means the burden caused by

an act or omission of man and not that created by nature. It

means a burden or charge upon property or a claim or lien

on the land. It means a legal liability on property. Thus, it

constitutes a burden on the title which diminishes the

value of the land. It may be a mortgage or a deed of trust or

a lien of an easement. An encumbrance, thus, must be a

charge on the property. It must run with the property.

(Vide Collector of Bombay v. Nusserwanji Rattanji Mistri [AIR

1955 SC 298], H.P. SEB v. Shiv K. Sharma [(2005) 2 SCC

164: AIR 2005 SC 954] and AI Champdany Industries

Ltd. v. Official Liquidator [(2009) 4 SCC 486].)

15. In State of H.P. v. Tarsem Singh [(2001) 8 SCC 104], this

Court held that the terminology “free from all

encumbrances” used in Section 16 of the 1894 Act, is

wholly unqualified and would encompass the

extinguishing of “all rights, title and interests including

easementary rights” when the title vests in the State.

16. Thus, “free from encumbrances” means vesting of land

in the State without any charge or burden in it. Thus, the

State has absolute title/ownership over it.

17. In Satendra Prasad Jain v. State of U.P. [(1993) 4 SCC

369: AIR 1993 SC 2517], this Court held that once land

vests in the State free from all encumbrances, it cannot be

divested. The same view has been reiterated in Awadh

Bihari Yadav v. State of Bihar [(1995) 6 SCC 31] , U.P. Jal

Nigam v. Kalra Properties (P) Ltd. [(1996) 3 SCC 124 : AIR

1996 SC 1170] , Pratap [(1996) 3 SCC 1], Chandragauda

Ramgonda Patil v. State of Maharashtra [(1996) 6 SCC

405], Allahabad Development

Authority v. Nasiruzzaman [(1996) 6 SCC 424], State of

Kerala v. M. Bhaskaran Pillai [(1997) 5 SCC 432: AIR 1997 SC

2703] , M. Ramalinga Thevar v. State of T.N. [(2000) 4 SCC

322] , Printers (Mysore) Ltd. v. M.A. Rasheed [(2004) 4 SCC

460] , Bangalore Development Authority v. R.

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Hanumaiah [(2005) 12 SCC 508] and Govt. of A.P. v. Syed

Akbar [(2005) 1 SCC 558].

37. The Hon’ble Supreme Court in Saraswati Devi v. DDA, (2013) 3

SCC 571 held as under:

34. What is the effect of provisional possession which was

given to the appellant's husband in 1960 on approval of his

highest bid? Does it amount to creation of an

encumbrance in the property? If the provisional

possession given to the appellant's husband amounted to

creation of an encumbrance, whether the said property

could have been acquired under the LA Act although the

ownership vested in the Central Government? The fate of

the appeal significantly will depend upon answer to these

questions.

35.Concise Oxford English Dictionary (10th Edn., Revised)

defines “encumbrance”:

“encumbrance.—(1) a burden or impediment. (2) Law a

mortgage or other claim on property or assets.”

36.Webster's Comprehensive Dictionary (International

Edition, Vol. I) defines “encumbrance” as follows:

“(1) That which encumbers. (2) Law Any lien or liability

attached to real property. (3) One's wife, child or

dependant. Also spelled incumbrance. See synonyms

under impediment, load [<OF encumbrance <encombrer.

See encumber.]”

37. In P. Ramanatha Aiyar's The Law Lexicon (2nd Edn.

Reprint 2000) with reference to a decision of the Patna

High Court in Mahadeo Prasad Sahu v. Gajadhar Prasad

Sahu [AIR 1924 Pat 362], the term “encumbrance” is

explained as follows:

“Encumbrance. Burden or property; impediment; mortgage

or other claim on property. Grant of lands rent free or the

grant of the landlords zarait land to a tenant for the

purposes of cultivation does amount to an encumbrance of

the estate. Apart from mere dealings such as mortgages

which create a charge upon the land, there are other

dealings which amount to an encumbrance. Anything

which interferes with the unrestricted rights of the

proprietors as they then existed would be an encumbrance

upon the land, even the granting of a lease of zarait lands,

that is to say the lands which the landlord is entitled to

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hold in direct possession and to cultivate for his own

purposes. A lease of such lands granted to an occupier in

circumstances which would give him a right of occupancy

over the land, would amount to an encumbrance.”

38. In Collector of Bombay v. Nusserwanji Rattanji

Mistri [AIR 1955 SC 298], the term “encumbrance” as

occurring in Section 16 of the LA Act has been explained

by this Court to mean interests in respect of which a

compensation was made under Section 11 or could have

been claimed thereunder.

39. In M. Ratanchand Chordia v. Kasim Khaleeli [AIR 1964

Mad 209], a Division Bench of the Madras High Court had

an occasion to consider the meaning of the word

“encumbrances” with reference to the 1954 Act and the LA

Act in the context of the easementary right of way. The

Division Bench considered the word “encumbrances”

thus: (AIR p. 215, para 18)

“18. The word ‘encumbrances’ in regard to a person or an

estate denotes a burden which ordinarily consists of

debts, obligations and responsibilities. In the sphere of

law, it connotes a liability attached to the property arising

out of a claim or lien subsisting in favour of a person who

is not the owner of the property. Thus, a mortgage, a

charge and vendor's lien are all instances of

encumbrances. The essence of an encumbrance is that it

must bear upon the property directly and indirectly and not

remotely or circuitously. It is a right in realiena

circumscribing and subtracting from the general

proprietary right of another person. An encumbered right,

that is a right subject to a limitation, is called servient

while the encumbrance itself is designated as dominant.”

40. The word “encumbrance”, according to its ordinary

significance, means any right existing in another to use the

land or whereby the use by the owner is restricted. The

word “encumbrance” imports within itself every right or

interest in the land, which may subsist in a person other

than the owner; it is anything which places the burden of a

legal liability upon property. The word “encumbrance” in

law has to be understood in the context of the provision

under consideration but ordinarily its ambit and scope is

wide. Seen thus, it is difficult to see why a binding contract

entered into between an auction-purchaser and the

Government on approval of the highest bid relating to sale

2026:JHHC:22928

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of property, which is part of compensation pool under

Section 14 of the 1954 Act followed by provisional

possession to the auction-purchaser, should not come

within the purview of the word “encumbrance”.

38. The Hon’ble Supreme Court in K.C. Ninan (supra) also explained

the word encumbrance at paragraph 99 of the judgment as under:

99. An encumbrance means a burden or charge upon

property or a claim or lien upon an estate or on the land.

Encumbrance must be a charge on the property, which

must run with the property. In terms of the first paragraph

of Section 100, when an immovable property of one party

is pledged as security for the payment of money to

another, and the transaction does not constitute a

mortgage, the latter would acquire a charge over the

property. All provisions that apply to a simple mortgage

are applicable to a charge. A charge is neither a sale nor a

mortgage because it creates no interest in or over an

immovable property but it is only a security for the

payment of money. [Dattatreya Shanker Mote v. Anand

Chintaman Datar, (1974) 2 SCC 799] In other words, a

charge only results in the creation of a right of payment

out of the property towards the satisfaction of the debt or

obligation in question.

39. Considering the above, it is clear that the word ‘encumbrance’

means a burden or charge upon property or a claim or lien upon an estate or

on the land. Herein, in the present case, it appears from the Sale Certificate of

the immovable property (Annexure-4 to the writ petition), that there are no

pending encumbrances on the property. Further, List-I &List-Il of the sale

certificate also mentioned that the property is free from all encumbrances.

Thus, contention of the respondents cannot be accepted as auction sale of the

property in the present case does not comes under “as is where is” basis

rather the property/premises is “free from all encumbrances”.

ADDITIONAL CONSIDERATION WITH RESPECT TO W.P.(C) NO.2639

OF 2025

40. Recovery of dues, due to revision of the tariff for the period

erstwhile consumer was in possession, has been challenged in this case.

Petitioner has purchased the property in public auction and it is admitted case

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that the outstanding dues including the subsequent revision relates to the

period when the erstwhile consumer (defaulter) was in possession.

41. In view of what has been held in several foregoing paragraphs of

this judgment, once it has been held that respondent-DVC is not entitled to

recover the outstanding dues from the petitioner, the subsequent demand on

account of tariff revision, which also relates to erstwhile consumer (defaulter),

is not payable by the petitioner.

CONCLUSION

42. On the facts of this case, when the petitioner is an auction

purchaser and the purchase is not based on a direct negotiations between the

purchaser and the erstwhile owner (defaulter), rather the same is at the

instance of a financial institution, Clause 5.3.3 is not applicable. Instead

Clause 6.10(a) of the Regulations is applicable.

43. Clause 6.10(a) of the Regulations bars recovery of the

outstanding electricity dues from the petitioner (auction purchaser) on the facts

of this case.

44. Considering the findings arrived at in this judgment hereinbefore,

it is hereby held that the petitioner being the auction purchaser, having no

relationship with the erstwhile owner, neither their Director or any person so

having any relation with the erstwhile owner, is not entitled to pay the dues of

erstwhile owner.

45. The property was not transferred by auction to the petitioner on

“as is where is” basis as there is no averment in the auction sale

advertisement to suggest that the sale is on “as is where is” basis.

46. There was no pending encumbrances also over the property in

question as no where in the sale certificate of the property it has been

mentioned that there was any encumbrance, rather in List 1 and List 2 of the

Sale Certificate, it was mentioned that the property is “free from all

encumbrances”.

47. The petitioner, in view of its desperate need of electricity

connection, had deposited the outstanding dues of the erstwhile owner

pursuant to the order dated 23.09.2019 passed in W.P.(C) No.2089 of 2019.

However, the said deposit was subject to final outcome of the writ petition.

Now at this stage, when it has already been held that the petitioner is not liable

to pay the outstanding dues, the said amount needs to be refunded to the

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petitioner. This refund is the natural consequence of what has been held

above, i.e., petitioner is not liable to pay the outstanding dues of the erstwhile

owner.

48. So far as W.P.(C) No. 2089 of 2019 is concerned, the

Respondent-Damodar Valley Corporation is directed to refund the entire

amount, i.e., the outstanding dues of the erstwhile owner [which was deposited

by the petitioner in order to secure electric connection] in 5 (five) equal

quarterly installments beginning from the first day on expiry of six weeks from

today.

49. So far as W.P.(C) No.2639 of 2025 is concerned, the Demand

Notice contained in letter No.Coml./arrear/JH/2006-2012/340308 dated

01.02.2025 (Annexure 8) issued by the respondent No.4 is hereby quashed.

50. Both these writ petitions [W.P.(C) No. 2639 of 2025 and W.P.(C)

No.2089 of 2019] stand allowed. Pending interlocutory applications, if any,

also stand disposed of.

(Ananda Sen, J.)

High Court of Jharkhand, Ranchi

Dated 4

th

August, 2026

Kumar/Cp-02

AFR

Uploaded on 04.08.2026