New Delhi: The Supreme Court has dismissed an appeal filed by a power distribution company seeking to recover Minimum Consumption Guarantee Charges from a consumer for an additional electricity load offered nearly a decade earlier, holding that the demand was barred by the two-year period of limitation prescribed under Section 56(2) of the Electricity Act, 2003.
A Bench comprising Justice S.V.N. Bhatti and Justice N.V. Anjaria was hearing a civil appeal filed by Dakschinanchal Vidyut Vitran Nigam Ltd., the Distribution Licensee, against a judgment of the Allahabad High Court's Lucknow Bench, which had dismissed the appellant's writ petition challenging an order of the Electricity Ombudsman that set aside its demand of Rs.57,74,164 raised against its consumer, Respondent No. 3.
The dispute traced back to 1997, when the consumer had applied for a 4000 KVA load but was initially sanctioned only 2000 KVA under an agreement dated 24.02.1997. In January 1998, the appellant offered to release the balance 2000 KVA, but the consumer, in a letter dated 14.09.1998, expressed its lack of interest in accepting the additional supply. Years later, on 13.02.2007, the appellant raised a demand for Minimum Consumption Guarantee Charges for the period February to September 1998, treating the consumer as liable as though the full 4000 KVA had been contracted.
The demand was contested before the Consumer Grievance Redressal Forum, which returned a split verdict, and thereafter before the Electricity Ombudsman, who set aside the demand on the findings that the consumer had never consented to the additional load, that there was nothing to show the additional 2000 KVA had in fact been released to the consumer, and that the demand raised in 2007 for dues pertaining to 1998 was barred by limitation under Section 56(2) of the Act.
Before the High Court, the appellant had also challenged Clause 8 of the U.P. Electricity Regulatory Commission (Consumer Grievance Redressal Forum and Electricity Ombudsman) Regulations, 2007 as ultra vires Sections 42(5) and 42(6) of the Act, on the ground that it permitted a representation only by a consumer and not by the Distribution Licensee. The High Court had upheld this contention in part, holding that Section 42(6) of the Act permits only a consumer to seek redressal from the Ombudsman and that the Regulations could not confer a remedy of representation on the licensee, but nonetheless dismissed the writ petition on merits.
Before this Court, counsel for the appellant did not seriously press the challenge to Regulation 8, fairly acknowledging that the point was watered down by this Court's decision in K.C. Ninan v. Kerala State Electricity Board & Ors., leaving the Court to consider only whether the demand dated 13.02.2007 conformed to the period of limitation under Section 56(2) of the Act.
Relying on its earlier decision in Assistant Engineer (D1), Ajmer Vidyut Vitran Nigam Limited and Another v. Rahamatullah Khan alias Rahamjulla, the Court reiterated that “electricity charges would become ‘first due’ only after the bill is issued to the consumer, even though the liability to pay may arise on the consumption of electricity.”
The Court held that this view disentitled the appellant from raising the 2007 demand, noting that no bill had been issued for the additional 2000 KVA along with the regular monthly bills raised under the 1997 agreement, that nothing on record showed the sum had been continuously carried forward as recoverable arrears, and that the demand, in any event, would also be barred if the residuary limitation period under the Limitation Act, 1963, or the six-year period under the U.P. Government Electrical Undertaking (Dues Recovery) Act, 1958, were applied.
Holding that the demand dated 13.02.2007 for dues pertaining to February to September 1998 was barred by limitation, the Court dismissed the appeal along with pending applications, affirming the view taken by the Electricity Ombudsman and the High Court.
Case Title: Dakschinanchal Vidyut Vitran Nigam Ltd. vs. Vidut Lokpal, Uttar Pradesh and Others, Civil Appeal No. 5099 of 2013 (2026 INSC 985).
