Holding

The appellant, as a consumer who drew electricity through its service connection, is liable to pay for all consumption, including that supplied to residential colonies, and the appeal is dismissed.

Summary

Modi Tele Fibres Ltd. had a bulk electricity supply (service connection No. 1008) for its factory and the residential colonies of its employees under an agreement dated 30 September 1994, which barred termination before two years. After permanently closing the factory in September 1995, the company continued to feed electricity to the colonies through the same connection and repeatedly requested the Uttar Pradesh State Electricity Board (UPSEB) to disconnect the supply and provide separate domestic meters, but the board could not act because the termination clause was still in force. UPSEB subsequently raised bills covering both factory and residential consumption, which the appellant contested, claiming it should not be liable for the residential usage. The High Court dismissed the writ, holding the appellant liable for the consumption, and the Supreme Court affirmed this view, stating that the appellant, as a consumer, must pay for electricity drawn through its connection and could not shift responsibility to the board. The Court also noted that the appellant could have arranged separate connections by paying the requisite costs and that new contentions on excessive billing and security deposit could not be raised for the first time at this stage. Consequently, the appeal was dismissed.

Issues considered

Whether the appellant is liable to pay electricity charges for consumption in residential colonies after the factory's closure despite its requests for disconnection.
Whether the two‑year termination clause in the supply agreement bars the appellant's request for permanent disconnection and affects liability.
Whether the appellant can raise fresh contentions (excessive billing, security‑deposit adjustment) for the first time before the Supreme Court.

Legislation cited

Electricity Act

Subjects

electricityconsumer liabilitysupply agreementtermination clauseresidential coloniesbilling disputeSupreme Courtappeal dismissed

Judgment

A MODI TELE FIBRES LTD.
v.
U.P. STATE ELECTRICITY BOARD & ORS.

DECEMBER 6, 2007
B
[R.V. RAVEENDRAN ANDP. SATHASIVAM,JJ.)

Electricity-Electric supply-To a company-Consumer-
Company using the supply for its factory as well as residential
C colonies-Under terms of supply agreement, there could not be
termination of agreement before the end of two years-In view of
closure ofits factory, company requesting discontinuance ofsupply-
After expiry of two years, no such request made-After closure of
factory, the supply used for residential colonies-Bill raised by
D Electricity Board-Liability ofthe Company-Held: Company having
consumed the electric supply, was liable to pay the bill-It cannot
escape liabilityfor electricity consumed in residential colonies since it
failed to stop supply to residential colonies and also failed in taking .
steps for separate domestic connections for residential colonies.
E
Appellant-Company had taken connection for electric supply
irom respondent-Electricity Board. The Company used to feed
electricity to its residential colonies from that connection. Appellant
decided to close down its unit and in that view made repeated
requests to the respondent-Board to discontinue permanently the
F electric supply and to provide separate domestic connection to
residential colonies. Thereafter, permanent closure of the company
was affected. Since the date of closure, Company was not using any
electric power for its factory, but the same was being given to the
residential colonies. Respondent-Board raised a bill demanding an
G amount which included electric supply to the factory, to the
residential quarters, surcharge and penalty etc. Appellant objected '
to the Bill. Sub-Divisional Magistrate directed lessee of the factory '
to deposit 50% of the rent amount with Government, as the amount
due was a Government due. Appellant filed a Writ Petition against
H 1036
-4
\

MODITELEFIBRESLTD.v. U.P.STATEELECTRICITY 1037
BOARD
'('-</
I the order. High Court dismissed the same, holding that appellant was A
liable to pay the bill as it was enjoyifig the power supply. Hence the
present appeal.

Dismissing the appeal, the Court

HELD: 1. The appellant being consumer and having consumed B
j.

1 electricity through their service connection in question, it has to pay
the amount for the same. Having failed to disconnect the electricity
supply themselves, the appellant can not blame the respondents for
not disconnecting the supply. The appellant could have taken
effective steps for providing separate power connection to the c
residential colony of their employees by approaching the
respondents depositing necessary charges, cost and by complying
with the provisions of the Electricity Act, the Electricity ('Supply)
Act', rules and regulations made therein, which they failed to do. All
i
the relevant aspects have duly been considered and rightly rejected D
- ... by the High Court. [Paras 9 and 10] (1042-G; 1043-B, C, DJ
2. Appellant cannot escape liability for electricity consumed in
the residential colony. The requests for permanent disconnection
made by appellant on three occasions could not be acted upon as
under the terms of the supply agreement dated 30.09.1994, there E
could be no request for termination before the end of two years.
Significantly there was no letter for permanent disconnection after
the two year period, that is after 30.09.1996. Insofar as letter dated
16.06.1994 requesting for electricity supply to residential quarters,
-1 it has to be ignored in view of the subsequent agreement dated F
30.09.1994 without separating supply to residential colony. [Para 8)

3. In regard to the alternative contentions relating to excessive
billing and non-adjustment of security deposit, these factual aspects
were not urged before the High Court and cannot be urged for the
G
first time before this Court. If there is any error in calculation of the
,. ) amount shown as due, it is open to the appellant to take up that issue
separately with the respondents. [Para 10] [1043-D, E]
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 5976 of
2001. H
1038 SUPREME COURT REPORTS [2007) 12 S.C.R.

A From the Judgment and final Order dated 23.09.1999 of the High r""·
Court of Judicature at Allahabad in Civil Miscellaneus Writ Petition No.
37862of1999.
Rajiv Dutta, Surbhu Sharma, Milanka Chaudhury and M.A.
Chinnasamy for the Appellant.
B
Pradeep Misra for the Respondents. r
The Judgment of the Court was delivered by
P. SATHASIVAM, J. (1) This appeal is directed against the final
c judgment and order dated 23.09.1999 passed by the Division Bench of
the High Court of Judicature at Allahabad in Civil Misc. Writ Petition No.
37862 of 1999, whereby the High Court dismissed the writ petition
preferred by the appellant-herein.
BACKGROUND FACTS:
D ). "
(2) The appellant-Modi Tele Fibres Ltd. was carrying on ousiness
of manufacturing threads at Modinagar, Dist. Ghaziabad. However, the
appellant-Company started suffering huge losses on account of various
factors such as fall in production, non-availability of capital funds for
E meeting operational expenses etc. which were beyond the control of the
appellant. The appellant on 16.06.1994, wrote a letter to respondent
No.1-U.P. State Electricity Board (hereinafter referred to as the 'UPSEB')
to provide electric supply directly to the residential colonies as the appellant
was unable to continue the payment directly on account oflack of funds.
F It is pertinent to mention here that electricity to the residential colonies is )'-

fed through Modi Tele Fibres Ltd. Service Connection No. 1008. The
appellant-company entered into an agreement on 30.09.1994 in
supersession of an earlier agreement dated 28.09.1983, with the UPSEB
for supply of electricity for 4000 KV A load of 11 KV voltage through
G the above-said Service Connection. It is also pertinent to mention that an
amount ofRs.67,46,700/- is lying with the UPSEB as security, whereas
the appellant has already been paying regularly the bills for the electricity .
consumed by the company and the residential colonies. The appellant
wrote another letter on 30.06.1995 to the UPSEB informing that an
H application has been made to t11e State Government for closing down of
--\
MODITELEFIBRESLTD.v. U.P.STATEELECTRICITY 1039
BOARD [P. SATHASIVAM,J.]

the unit and the UPSEB should discontinue pennanently the supply of A
. f-:
electrical energy to the appellant vide S.C. No. 1008 reiterating its earlier
request to provide separate domestic connection to residential colonies.
It was also reiterated that w.e.f. 01.08.1995, the appellant-company shall
not be liable for the supply made. Despite repeated requests, the UPS EB
continued to supply electricity through the service connection to the B
company as well as the residential colonies at commercial rates. In reply,
~ respondent No.2, vide letter dated 13.07.1995, infonned the appellant
that only the person who had signed the agreement with the UPSEB is
empowered to apply for pennanent disconnection and the request of the
appellant for pennanent disconnection was not being considered. c
Thereafter, on 07 .08.1995, the then Chairman of the appellant-Company
who had signed the agreement wrote a letter for pennanent disconnection
and to provide separate domestic connections to the residential colonies
reiterating that w.e.f. 06.09.1995, the Company shall not be liable for
the supply. lb.ereafter, on 04.09.1995, because of the heavy losses being D
<
..;
incurred, the appellant-company had to effect pennanent closure and a
notice of closure dated 02.09.1995 was issued to all the employees. It
is an admitted position that the company w.e.f. 04.09.1995 was not using
any electric power for its factory, but electricity was being given to the
residential colonies through service connection No. 1008. The appellant E
also brought to the notice ofUPSEB that for realizing the electricity dues
from the residents of the colony, the High Court, in a similar case, passed
an order in pursuance of which bills directly were charged from the
persons occupying the residential quarters. Under these circumstances,
the appellant again requested that it would hand over all the infrastructure F
-~
free of cost which is already used to provide separate domestic
connection to the residential colonies and asked to immediately
discontinue electric supply through the service connection. However, no
heed was paid to the request of the appellant and UPSEB kept on sending
bills including the bills of electricity consumed by the residential quarters. G
In the meantime, Punjab National Bank which extended financial
\
assistance to the appellant initiated recovery proceedings before the
)
J, Debts Recovery Tribunal. The Tribunal passed an interim order whereby
the appellant was restrained from leasing out the factory premises. Against
that order, the appellant filed a petition under Article 227 of the
H
1040 SUPREME COURT REPORTS [2007] 12 S.C.R.

A Constitution before the Delhi High Court, which vide order dated
08.03.1999 allowed the appellant to lease out the factory with a direction r-"' '
that 50% of the rent amount shall be paid directly to the Punjab National
Bank. Thereafter, 50% of the rent is being received by the Bank and 50%
rent by the appellant from the lessee.
B
(3) On 24.02.1999, UPSEB raised a bill demanding
R~.11,35,80,301/- from the appellant for the period from April, 1995 to
r
February, 1999 which includes electric supply to the factory and to the
residential quarters, surcharge, penalty etc. The appellant raised an
objection to the said bill on 24.04.1999 stating that it has repeatedly
c objected inasmuch as firstly after closure of the factory on 04.09 .1995
no electricity was being consumed and was used by the factory and the
bills pertain to consumption by the residential quarters for which it had
time and again requested for a separate connection.

D (4) On 24.07.1999 the Sub-Divisional Magistrate, Modinagar, Dist.
Ghaziabad issued an order to the lessee - Lucky Tex Spinners Pvt. Ltd.
.\. .
directing that since an amount ofRs.11,61,61,574.31 is due on the
appellant as Government dues 50% of the rent amount was attached and
further directed to pay the same by pay order every month directly to
E the Tehsildar. The UPSEB again issued a bill on 31.07.1999 for a sum
ofRs.13,40,42,018/-. In the meantime, the appellant made a reference
to the BIFR under Section 15 of the Sick Industrial Companies Act. On
20.08.1999, the appellant sent its objection reiterating the stand that they
were not liable to pay and returned the bills to the UPSEB for cancellation.
F Being aggrieved by the order passed by the Sub Divisional Magistrate,
the appellant filed a writ petition in the High Court. The Division Bench >- .
of the High Court by order dated 23.09.1999 dismissed the writ petition
on the ground that merely because the appellant had informed the UPSEB
to provide separate domestic connections to the residential colonies
knowing fully well that they were already consuming power through service
G
connection No. 1008 in accordance with the terms of the agreement, the
liability will not cease. The High Court was of the view that while on the
one hand there was a prayer for disconnection but on the other hand i.

regular consumption not for a short period, but for years, the only
conclusion was that the consumer was enjoying the power supply and
H
MODITELEFIBRESLTD.v. U.P.STATEELECTRICITY 1041
BOARD [P. SATHASIVAM, J.]
--. 'f'___, therefore the liability to pay for the power consumed must be upheld. A
Dissatisfied with the order of the High Court the appellant preferred the
above appeal.
(5) We heard Mr. Rajiv Dutta, learned counsel for the appellant and
Mr. Pradeep Misra, learned counsel for the respondents.
B
(6) The grievance of the appellant is that even after the closure of
their mill and in spite ofrequests by way of letters and reminders for
stopping the electrical supply to the residential colony and for providing
a separate metre connection to the residential quarters of their employees,
the respondent-UPSEB was unjustifiably claiming power consumption C
charges from the appellant herein. Alternatively, it was submitted that it
had made payment upto March, 1995. However, if the bills for the period
upto the date of closure (i.e. upto I0.09.1995) are to be taken into
account, then for the period from 01.04.1995 to I 0.09.1995, the total
amount of bills comes to Rs.1,14,10,734.00 Out of the above, a sum of D
Rs.49,84,894/- is on account of supply of electricity to the residential
quarters which the appellant is not liable to pay as it had sent a notice in
June, 1994. In this regard, the admitted liability of the appellant is up to
10.09.1995 which comes to Rs.64,25,840.00. The appellant bad a
security deposit ofRs.67,46,700/- with the UPSEB and after adjusting E
the same, it is entitled to receive a sum ofRs.3,20,860/- from the UPSEB.
(7) It is not in dispute that the appellant was provided electric
connection No. l 008 for supply of electrical energy and an agreement
had been executed on 30.09.1994 for supply of 4000 KVA electric load.
In the counter affidavit filed on behalf of respondent-UPSEB, it bas been F
specifically stated that the UPSEB, the predecessor in the interest of UP
Power Corporation, has no distributing means or any kind of control for
contribution and supply of electrical energy to the residential colonies of
the workers of the appellant. In fact in the counter affidavit the Board
has stated that they were not aware about arrangements made by the G
appellant for supply of power to their workers and the terms and conditions
)
for such supply as to whether it was free supply or whether the cost of
electricity consumed was being deducted from their wages. According
to them, the appellant was their consumer and bulk supply of 4000 KVA
was being given to it and no bifurcation in the connection as industrial or H
1042 SUPREME COURT REPORTS (2007] 12 S.C.R.

A residential.
(8) Learned counsel appearing for the appellant, by drawing our
attention to various clauses in the agreement and requests made by them
in the fom1 of letters seeking for dis-connection of power supply to the
B residence of their employees and providing separate meter for their
colonies, contended that the respondents were not justified in demanding
the amount as if arrears of power consumed by them. We verified the
requests made by the appellant. As rightly pointed out by the respondents
and in fact it was not disputed that electrical connection was provided to
the appellant-factory in service connection No l 008 for supply of electrical
C energy and an agreement had been executed for the same on 30.09.1994
and supply to residential colony was made by appellant under service
connection No. l 008 of appellant. Therefore, appellant cannot escape
liability for electricity consumed in the residential colony. It should also
be noted that the requests for permanent disconnection made by appellant
D on 30.06.1995, 13.07.1995 and 07.08.1995 could not be acted upon
as under the terms of the supply agreement dated 30.09.1994, there could
be no request for tennination before the end of two years. Significantly
there was no letter for pemanent disconnection after the two year period,
that is after 30.09.1996. Insofar as letter dated 16.06.1994 requesting
E for electricity supply to residential quarters, it has to be ignored in view
of the subsequent agreement dated 30.09.1994 without separating supply
to residential colony.
(9) As rightly stated in para 15 of the additional affidavit filed on
F behalf of the UP Power Corporation, in case the appellant did not want
to supply the electricity to the residential colonies of their workers they
could have switched off the supply form their distributing mains which were
in their custody and possession. Admittedly, the appellant having such a
course available, did not do so because of their anticipation that law and
G order problem would arise. Having failed to disconnect the electricity
supply themselves, the appellant can not blame the respondents for not
disconnecting the supply. It is true that pursuant to the requests made by
the appellant, the respondents/Board could have provided separate
connection for the residential connections in their colonies for the benefit
of appellant's employees. However, as pointed out in the additional
H
MODITELEFIBRESLTD.v. U.P.STATEELECTRICITY 1043
BOARD [P. SATHASIV AM, J.]

affidavit necessary charges, namely, costs and expenses for separate A
domestic connections were not paid. On the other hand, the appellant
was drawing power to their residential colonies in order to provide
uninterrupted supply to their employees. In those circumstances and in
the light of the specific information furnished in the additional affidavit
particularly in paras 4,8,12 and 15, we are unable to accept the stand B
taken by the appellant.
(10) With the materials place before us, we are satisfied that the
appellant being consumer and consumed electricity through their service
connection No. 1008 it has to pay the amount for the same. We are also C
of the view that the appellant could have taken effective steps for
providing separate power connection to the residential colony of their
employees by approaching the respondents depositing necessary charges,
cost and by complying with the provisions of the Indian Electricity Act,
the Electricity Supply Act, rules and regulations made therein, which they D
failed to do. All the relevant aspects have duly been considered and rightly
rejected by the High Court. In regard to the alternative contentions relating
to excessive billing and non-adjustment of security deposit, these factual
aspects were not urged before the High Cowt and cannot be urged for
the first time before us. If there is any error in calculation of the amount
shown as due, it is open to the appellant to take up that issue separately E
with the respondents.
(11) We do not find any ground for interference, consequently, the
appeal fails and the same is dismissed. However, there shall be no order
as to costs. F
K.K.T. Appeal dismissed.

)