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CGHC010011912026 2026:CGHC:34373-DB

NAFR

HIGH COURT OF CHHATTISGARH AT BILASPUR

WA No. 136 of 2026

1 - Polybond Rock Fibre Pvt Ltd. A Company Duly Registered Under

Revelant Provisions Of The Companies Act 1956, Having Its Registered

Office At Chitlangia Compund Basantpur Rajnandgaon Chhattisgarh

Through Its Authorized Signatory/ Coordinator Shri Hira Swami Naidu,

S/o Late Narayan Swami Naidu Aged Aboiut 56 Years R/o Dipak Nagar

Near Nirankari Satsangh Bhawan, Durg Chhattisgarh

2 - Hira Swami Naidu S/o Late Narayan Swami Naidu Aged About 56

Years Authorized Signatory/ Coordinator R/o Dipak Nagar, Ploybond

Rock Fibre, Pvt. Ltd. Rajnandgaon And Resident Of Near Narankari

Satsangh Bhawan Durg Chhattisgarh Civil And Revenue Distirct

Rajnandgaon Chhattisgarh

... Appellants

versus

1 - Chhattisgarh State Power Distribution Company Limited (CSPDCL)

A Company Incroprated Under The Relevant Provisions Of The

Companies Act 1956 And A Power Sector Undertaking Of The State

Government Of Chhattisgarh And A Successor Of Chhattisgarh State

Electricity Board C.S.E.B. Having Its Registered Office At 4th Floor,

Vidyut Sewa Bhawan, Daganiya Raipur Chhattisgarh

2 - Chhattisgarh State Electricity Regulatory Commission C.S.E.R.C. A

Body Corporate Constituted Under Section 82 Of The Electricuty Act.

2003 Having Its Head Office At G.E. Road, Civil Lines, Raipur

Chhattisgarh

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3 - State of Chhattisgarh Through The Secretary, Ministry of Energy,

Mahanadi Bhawan, Mantralaya, Naya Raipur, Distirct Raipur

Chhattisgarh

4 - Bank of India Through Its Branch Manager, Rajnandgaon Branch

Fawwara Chowk, Digvijay College Road, Rajnandgoan Chhattisgarh

... Respondents

For Appellants : Mr. Sameer Uraon, Advocate

For Respondent No.1/CSPDCL: None

For Respondent No.2/CSERC:Ms. Meena Shastri, Advocate

For Respondent No.3/State:Mr. Sangharsh Pandey, GA

For Respondent No.4/Bank :Mr. Anand Shukla, Advocate

Hon'ble Shri Ramesh Sinha, Chief Justice

Hon'ble Shri Naresh Kumar Chandravanshi , Judge

JUDGMENT ON BOARD

Per Ramesh Sinha, Chief Justice

06 .0 8 .202 6

1.Heard Mr. Sameer Uraon, learned counsel for the appellants.

Also heard Ms. Meena Shastri, learned counsel, appearing for

respondent No.2/CSERC, Mr. Sangharsh Pandey, learned

Government Advocate, appearing for respondent No.3/State and

Mr. Anand Shukla, learned counsel, appearing for respondent

No.4/Bank.

2.By way of present writ appeal under Section 2 of Sub-Section (1)

of the Chhattisgarh High Court (Appeal to Division Bench Act,

2006, the appellants / writ petitioners have challenged the order

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dated 05.12.2025 passed by learned Single Judge in WPC

No.2752 of 2016 (Polybond Rock Fibre Pvt. Ltd. & Another Vs.

Chhattisgarh State Power Distribution Company Limited

(CSPDCL) & Others), by which the writ petition filed by the writ

petitioners/ appellants herein has been dismissed by the learned

Single Judge.

3.Brief facts, necessary for disposal of this appeal, are that earlier

Arihant Rock Wool Fibre Pvt. Ltd. Rajnandgaon (for brevity,

‘Arihant’) operates a plant over the land bearing Khasra No.887/1

& 888 total area 2.04 acres situated at village Bakal, Tehsil

Dongargaon, District Rajnandgaon. For operating the said plant,

Arihant availed loan facility from the respondent No.4/ Bank.

However, on account of default committed by Arihant in repaying

the loan amount, the respondent No.4 after following the due

process of law as enumerated under the Securitisation and

Reconstruction of Financial Assets and Enforcement of Security

Interest Act, 2002 (for short, “SARFAESI Act”), took possession of

the property of Arihant. Thereafter the auction notice dated

19/04/2012 has been published for sale of the said property. In

the said process, the writ petitioners participated wherein after

being declared successful, they paid the sale consideration of

Rs.2,62,18,000/-. Thereafter the bank handed over the sale

certificates of the movable and immovable properties of Arihant to

the writ petitioners. According to the writ petitioners, in the sale

certificate, it is clearly mentioned that ‘the sale of the schedule

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property was free from all encumbrances known to the secured

creditor’. Subsequently when the petitioners intended to start

production or run the plant, applied for electricity connection with

the respondent No.1 and at that time, they came to know that

there were outstanding dues on the part of Arihant since 2008 and

for which the electricity connection has been permanently

disconnected. The petitioners tried his level best to convince the

authorities that they are not liable to pay any electricity dues of

Arihant. Despite the said fact, the respondent No.1 asked the

petitioners to pay an amount of Rs.17,67,873/- failing which

recovery proceedings will be initiated. To get immediate electricity

connection, the petitioners paid the said amount and thereafter

running from pillar to post for getting refund of the same.

According to the petitioners, the respondent No.4/Bank has also

denied its liability and even the respondent No.1 is not acceding

the request of the petitioners in this regard. Being aggrieved by

the same, the writ petitioners approached this Court by filing writ

petition, which was registered as WPC No. 2752 of 2016 and the

said writ petition was dismissed by the learned Single Judge vide

impugned order dated 05.12.2025. Hence, this appeal.

4.Learned counsel for the appellants vehemently argued that the

learned Single Judge has erred in invoking the ratio of K.C.

Ninan v. Kerala State Electricity Board & Ors., (2023) 14 SCC

431 by relying only upon paragraphs 137 and 138 while

completely overlooking the significance of paragraph 148. He

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further argued that the Hon'ble Supreme Court has unequivocally

held in paragraph 148 that the effect of an "as is where is" ("tgkWa gS]

tSlh gS] tks gS") clause cannot be determined in isolation and that

the facts of each case, together with the precise terminology of

the auction conditions, must be examined to arrive at an equitable

conclusion. It is submitted that in the present case, the auction

notice issued by the Bank of India expressly stated that although

the purchaser would bear liabilities attached to the property, no

encumbrance or liability was presently known to the Bank

("

वर्तमान में कोई भी भार ज्ञातनहीं है

"). Acting upon this categorical

representation, the appellants participated in the auction,

purchased the property and thereafter applied for a fresh

electricity connection. He further submitted that once the secured

creditor represented that no known liability existed, the

respondents cannot subsequently compel the appellants to

discharge undisclosed electricity dues of the previous consumer.

The learned Single Judge failed to examine the auction conditions

in their entirety as mandated by paragraph 148 of K.C. Ninan,

thereby rendering the impugned judgment legally unsustainable.

5.Learned counsel for the appellants further submitted that the issue

is also governed by the settled principles laid down in Isha

Marbles v. Bihar State Electricity Board, (1995) 2 SCC 648,

wherein the Hon'ble Supreme Court categorically held that

electricity dues arise out of a contractual relationship between the

electricity supplier and the erstwhile consumer and that such

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contractual liability cannot ordinarily be enforced against a bona

fide auction purchaser. K.C. Ninan does not dilute or overrule this

principle; rather, it requires the Court to examine the applicable

statutory provisions and the specific terms governing the auction

sale. He also submitted that in the present case, Clause 10.19 of

the Chhattisgarh State Electricity Supply Code, 2005-08 further

fortifies the appellants' case by providing that no sum due from a

consumer shall be recoverable after two years from the date when

it first became due unless it has been continuously shown as

recoverable as arrears. The alleged dues pertain exclusively to

the previous consumer, no electricity was ever supplied to the

appellants under the earlier connection, and the respondents

have neither pleaded nor established that such arrears were

continuously shown as recoverable. Consequently, the claim had

become legally unrecoverable, and the respondents could not

insist upon payment of such time-barred dues as a pre-condition

for granting a fresh electricity connection. He contended that

although this specific contention was raised in paragraph 8.6 of

the writ petition, the same has remained wholly unaddressed in

the impugned judgment.

6.Learned counsel for the appellants also submitted that the

respondents' insistence upon payment of the previous consumer's

arrears is also contrary to the principles governing contracts of

adhesion. The respondent Electricity Board enjoys a statutory

monopoly in the supply of electricity, leaving a prospective

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consumer with no real bargaining power except to accept the

standard-form conditions imposed by the licensee. It is submitted

that in LIC of India v. Consumer Education & Research

Centre, (1995) 5 SCC 482, the Hon'ble Supreme Court held that

unfair, unreasonable and unconscionable clauses contained in

such standard-form or dotted-line contracts are amenable to

judicial scrutiny. In the facts of the present case, compelling a

bona fide auction purchaser to satisfy the contractual liabilities of

a previous consumer, despite the Bank's representation that no

known encumbrance existed and despite the statutory limitation

contained in Clause 10.19 of the Supply Code, is manifestly

arbitrary, inequitable and contrary to the law declared by the

Hon'ble Supreme Court. He lastly submitted that the impugned

judgment, having overlooked these vital aspects, calls for

interference, and the appellants are entitled to a declaration that

they are not liable to discharge the electricity dues of the previous

consumer and that a fresh electricity connection ought to be

granted without insisting upon payment of such arrears.

7.Per contra, learned counsel appearing for respondent No.2/

CSERC submitted that the learned Single Judge has rightly

applied the law laid down by the Hon'ble Supreme Court in K.C.

Ninan (supra). She further submitted that the appellants' reliance

on paragraph 148 is misplaced, as the said paragraph only

requires the Court to consider the facts and the terms of the

auction sale. In the present case, the auction notice specifically

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provided that "

उक्त सम्पत्तियों पर सभी देयताओंका भार क्रेता पर होगा

,"

thereby clearly placing the liability of all dues upon the auction

purchaser. The subsequent statement that no encumbrance was

known to the Bank cannot bind the respondent Distribution

Company or extinguish its statutory right to recover electricity

dues under the applicable Supply Code. It is further submitted

that the decision in Isha Marbles (supra) does not lay down an

absolute rule exempting every auction purchaser from liability. The

law has since been explained in K.C. Ninan, which recognizes

that where the applicable statutory provisions or conditions of

supply permit recovery of outstanding dues before grant of a fresh

connection, such recovery is legally sustainable. She lastly

submitted that the appellants cannot derive any benefit from

Clause 10.19 of the Chhattisgarh State Electricity Supply Code or

the doctrine of contracts of adhesion. Clause 10.19 does not

extinguish the outstanding dues; it only regulates the mode of

recovery. Likewise, the conditions for release of a fresh electricity

connection are statutory conditions framed under the Electricity

Act, 2003, and not unconscionable contractual terms. The learned

Single Judge has therefore committed no error, and the present

appeal deserves to be dismissed.

8.Learned counsel for the respondent/Bank submitted that the Bank

acted strictly in accordance with the provisions of the SARFAESI

Act and the terms of the auction notice while conducting the sale

of the secured asset. The auction notice clearly stipulated that all

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liabilities attached to the property would be borne by the

purchaser ("

उक्त सम्पत्तियों पर सभी देयताओंका भार क्रेता पर होगा

"). The

statement that no encumbrance was presently known to the

Bank was made only to the extent of the Bank's knowledge and

cannot be construed as a warranty or assurance that no statutory

dues were recoverable by any other authority. The Bank is neither

the authority maintaining records of electricity dues nor is it

competent to certify the absence of such dues. It is further

submitted that the Bank has no role in the dispute relating to

recovery of electricity dues by the Distribution Company. The

auction sale was conducted on an "as is where is, as is what is

and whatever there is" basis, and the rights and liabilities of the

appellants vis-à-vis the Electricity Distribution Company are

governed by the applicable statutory provisions and the terms of

supply. The Bank neither demanded nor recovered any electricity

dues from the appellants and, therefore, no cause of action

survives against the Bank. Accordingly, the appeal, insofar as it

concerns the Bank, deserves to be dismissed.

9.We have heard learned counsel for the parties and carefully

perused the impugned order and the materials available on

record.

10.The principal issue which arises for consideration in the present

appeal is whether the appellants, who have purchased the

property of the erstwhile consumer in an auction conducted by the

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secured creditor under the provisions of the SARFAESI Act, can

be compelled to clear the outstanding electricity dues of the

previous consumer as a condition precedent for obtaining a fresh

electricity connection, and whether the learned Single Judge has

committed any error in dismissing the writ petition.

11.The undisputed facts reveal that the appellants purchased the

assets of M/s Arihant Rock Wool Fibre Pvt. Ltd. in a public auction

conducted by the respondent-Bank under the provisions of the

SARFAESI Act. It is equally undisputed that prior to such auction,

the electricity connection standing in the name of the erstwhile

consumer had already been permanently disconnected on

account of non-payment of electricity charges and substantial

arrears were outstanding against the said consumer. It is also not

in dispute that when the appellants applied for a fresh electricity

connection, at that time the Electricity Department informed the

petitioner that there is an outstanding dues of Rs.17,67,873/- to

which the petitioner himself by letter dated 30/12/2012 (Annexure

R/2-1) submitted an undertaking that first he will pay 25% of the

dues and thereafter the remaining amount will be deposited in 10

equal installments and his request was accepted; he submitted

the cheques which were duly encashed by the electricity

company. Even for getting the electricity connection in its name;

the petitioner deposited the security amount of Rs.11,08,000/-,

which is evident from money receipt dated 18/02/2013 (Annexure

R/2-3).

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12.The principal contention of the appellants is founded upon

paragraph 148 of the decision of the Hon'ble Supreme Court in

K.C. Ninan (supra). According to the appellants, the learned

Single Judge has considered only paragraphs 137 and 138 of the

said judgment while overlooking paragraph 148, wherein it has

been observed that the effect of an "as is where is" clause has to

be examined in the light of the facts of each case and the

terminology of the auction conditions. We are unable to accept the

aforesaid submission.

13.Paragraph 148 cannot be read in isolation divorced from the ratio

of the entire judgment. The Hon'ble Supreme Court, after

considering the earlier decisions including Isha Marbles, has

authoritatively held that the liability of an auction purchaser would

depend upon the statutory framework governing the field, the

conditions of supply framed under the Electricity Act, 2003, as well

as the specific terms governing the auction sale. Paragraph 148

merely reiterates that the effect of an "as is where is" clause must

be gathered from the auction conditions and surrounding facts; it

does not lay down that an auction purchaser is automatically

absolved of all liabilities merely because the property has been

sold on such terms.

14.In the present case, the auction notice issued by the respondent-

Bank specifically stipulated in unequivocal terms that "

उक्त सम्पत्तियों

पर सभी देयताओंका भार क्रेता पर होगा।

"

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15.The above condition expressly informed every intending

purchaser that all liabilities attached to the property would be

borne by the successful bidder. The appellants participated in the

auction with full knowledge of the said condition. Merely because

the auction notice further mentioned that "no encumbrance was

presently known to the Bank", it cannot be construed as an

absolute warranty or guarantee that no statutory dues of any

authority were outstanding. The said statement was evidently

confined to the knowledge of the secured creditor and cannot

extinguish or override the independent statutory rights of the

electricity distribution licensee.

16.We also do not find any merit in the submission that the Bank's

statement regarding absence of known encumbrances stops the

Distribution Company from recovering its legitimate dues. The

respondent-Bank and the respondent-Distribution Company

operate under entirely different statutory regimes. The Bank was

exercising its powers under the SARFAESI Act for realization of

secured debts, whereas the Distribution Company exercises

statutory powers under the Electricity Act, 2003 and the applicable

Supply Code. Any representation made by the secured creditor

cannot curtail or take away statutory powers conferred upon the

Distribution Company under the governing law.

17.Much reliance has been placed by learned counsel for the

appellants upon the decision of the Hon'ble Supreme Court in

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Isha Marbles (supra). There can be no quarrel with the proposition

laid down therein that electricity dues ordinarily arise out of a

contractual relationship between the Board and the consumer.

However, as noticed by the Hon'ble Supreme Court itself in K.C.

Ninan (supra), the legal position has subsequently evolved after

enactment of the Electricity Act, 2003 and the framing of statutory

regulations and supply codes by various State Commissions. The

Supreme Court has harmonised the earlier decisions by holding

that where statutory provisions or conditions of supply authorize

recovery of previous dues before grant of a fresh connection,

such stipulations are legally enforceable. Therefore, Isha Marbles

(supra) cannot be read as laying down an absolute proposition

that under no circumstance can an auction purchaser be required

to clear outstanding electricity dues.

18.The appellants have also sought to invoke Clause 10.19 of the

Chhattisgarh State Electricity Supply Code, 2005-08. In our

considered opinion, the said provision does not advance the case

of the appellants. Clause 10.19 merely prescribes the

circumstances under which recovery of electricity charges may be

barred after expiry of two years unless the dues have

continuously been shown as recoverable. The said clause

regulates the mode and manner of recovery of electricity charges

from the consumer and cannot be interpreted to mean that the

liability itself stands extinguished after two years. The appellants

have not placed any material on record to establish that the

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statutory conditions governing release of a fresh electricity

connection prohibit the Distribution Company from insisting upon

clearance of outstanding dues before sanctioning supply.

Moreover, the issue involved in the present case is not recovery

through coercive proceedings but insistence upon compliance

with the statutory conditions governing release of a fresh

electricity connection.

19.Equally untenable is the submission founded upon the doctrine of

contracts of adhesion as explained in LIC of India v. Consumer

Education & Research Centre, (1995) 5 SCC 482. The

requirement of payment of outstanding dues before release of a

fresh electricity connection is not merely a contractual stipulation

inserted by the Distribution Company at its own discretion. Such

conditions emanate from statutory regulations framed under the

Electricity Act, 2003 and possess statutory force. A statutory

condition cannot be invalidated merely on the ground that the

consumer has little bargaining power while entering into the

agreement for supply of electricity. The doctrine of unconscionable

contracts cannot be invoked to nullify a statutory obligation or

condition having the force of law.

20.We also find no substance in the contention that paragraph 8.6 of

the writ petition has not been specifically dealt with by the learned

Single Judge. The impugned judgment demonstrates that the

learned Single Judge has considered the controversy in its

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entirety and has rightly applied the law laid down by the Hon'ble

Supreme Court in K.C. Ninan (supra). Merely because every

submission advanced on behalf of the appellants has not been

separately discussed would not render the judgment vulnerable,

once the ultimate conclusion is in consonance with the settled

legal position.

21.So far as the respondent-Bank is concerned, we find considerable

force in its submission that it has no role in the dispute relating to

recovery of electricity dues. The Bank merely exercised its

statutory powers under the SARFAESI Act to realise its secured

debt. It neither demanded nor recovered any amount towards

electricity charges from the appellants. The sale was conducted

on "as is where is", "as is what is" and "whatever there is" basis,

subject to the conditions incorporated in the auction notice.

Consequently, no independent cause of action survives against

the respondent-Bank.

22.In view of the foregoing discussion, we are of the considered

opinion that the learned Single Judge has neither misapplied the

decision of the Hon'ble Supreme Court in K.C. Ninan (supra) nor

ignored any binding principle of law. The insistence of the

Distribution Company upon clearance of the outstanding dues

before release of a fresh electricity connection is supported by the

applicable statutory framework and cannot be said to be arbitrary

or illegal. The contentions advanced on behalf of the appellants

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based upon paragraph 148 of K.C. Ninan (supra), Isha Marbles,

Clause 10.19 of the Supply Code and the doctrine of contracts of

adhesion are devoid of merit and do not warrant interference with

the impugned order.

23.Consequently, finding no merit in the present writ appeal, the

same deserves to be and is hereby dismissed. There shall be no

order as to costs.

Sd/- Sd/-

(Naresh Kumar Chandravanshi) (Ramesh Sinha)

Judge Chief Justice

Chandra