2021 INSC 0610
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.7235 OF 2009
M/S PREM COTTEX      ... Appellant
Versus
UTTAR HARYANA BIJLI VITRAN NIGAM LTD. 
& ORS.        ... Respondents
 
J U D G M E N T
V.  Ramasubramanian, J.
1. Challenging   an   Order   of   the   National   Consumer   Disputes
Redressal   Commission   (for   short   “National   Commission” ),   dismissing
their consumer complaint on the ground that there was no deficiency in
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service on the part of the licensee (electricity distribution company), the
consumer of electricity has come up with the above statutory appeal.
2. We   have   heard   Sh.   K.C.   Mittal,   learned   counsel   for   the   appellant
and   Mr.   Arun   Bhardwaj,   learned   Additional   Advocate   General   for   the
State of Haryana, appearing for the respondents.
3. The appellant is carrying on the business of manufacturing cotton
yarn   in   Panipat,   Haryana.   The   appellant   is   having   a   L.S.   connection,
which got extended from  404.517 KW to  765 KW with  C.D 449 KVA to
850 KVA, on 3.08.2006.
4. After   3   years   of   the   grant   of   extension,   the   appellant   was   served
with   a   memo   dated   11.09.2009   by   the   third   respondent   herein,   under
the caption  “short assessment notice”,  claiming that though the multiply
factor (MF) is 10, it was wrongly recorded in the bills for the period from
3.08.2006   to   8/09   as   5   and   that   as   a   consequence   there   was   short
billing   to   the   tune   of   Rs.1,35,06,585/­.   The   notice   called   upon   the
appellant   to   pay   the   amount   as   demanded,   failing   which   certain
consequences would follow.
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5. Aggrieved by the said notice, the appellant gave a representation on
22.09.2009   and   then   filed   a   consumer   complaint   before   the   National
Commission,   contending   inter   alia   that   the   demand   made   by   the
respondents is the outcome of a glaring mistake and gross negligence on
their   part   and   that   under   Section   56   of   the   Electricity   Act,   2003   (for
short   “the   Act”),   no   amount   due   from  a   customer   is  recoverable  after   a
period of two years from the date on which it became first due.
6. By an Order dated 1.10.2009, the National Commission dismissed
the   complaint   on   the   ground   that   it   is   a   case   of   “escaped   assessment”
and not a case of  “deficiency in service ”. Aggrieved by the said Order, the
appellant is before us.
7. While   ordering   notice   in   the   above   appeal   on   13.11.2009,   this
Court   granted   interim   stay   of   the   impugned   order.   However,   on   an
application   filed   on   behalf   of   the   respondents   for   vacating   the   interim
order,   this   Court   modified   the   stay   Order   on   19.08.2014   directing   the
appellant   to   pay   to   the   first   respondent   herein,   50%   of   the   demand
amount   within   six   weeks   with   a   condition   that   in   case   the   appellant
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succeeded,   the   said   amount   shall   be   refunded   with   interest   @   9%   p.a.
Accordingly,   the   appellant   has   paid   a   sum   of   Rs.54,03,293/­,   on
24.09.2014.   The   appellant   claims   to   have   already   paid   a   sum   of
Rs.13,50,000/­   on   9.10.2009   itself   and   this   amount,   together   with   the
amount   deposited   on   24.09.2014   pursuant   to   the   interim   order   of   this
Court, constituted 50% of the amount as demanded in short assessment
notice dated 11.09.2009.
8. The sheet anchor of the case of the appellant is Section 56(2) of the
Act   and   the   exposition   of   law   made   by   this   Court   in   the   decision   in
Assistant   Engineer   (D1),   Ajmer   Vidyut   Vitran   Nigam   limited   and
Anr. vs. Rahamatullah Khan  alias Rahamjulla 1
.
9. Before   we   proceed   to   consider   the   statutory   provision   and   the
decision of this Court relied upon by the appellant, it is relevant to take
note of the fact that the appellant never disputed the correctness of the
claim of the respondents that the multiply factor (MF) to be applied was
10,   but   it   was   wrongly   applied   as   5.   The   only   grievance   raised   by   the
1     (2020) 4 SCC 650
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appellant both in their representation and in their consumer complaint
was that they cannot be made to suffer on account of the negligence on
the   part   of   the   respondents   and   that   on   the   basis   of   the   bill   already
raised,   they   have   charged   their   customers   and   that   it   may   not   be
possible   for   them   to   go   back   to   their   customers   with   an   additional
demand now. In addition, the bar under Section 56 was also pleaded.
10. Section 56 of the Electricity Act, 2003 reads as under:­ 
“ 56.  Disconnection   of   supply   in   default   of   payment.   ­
(1)  Where   any   person   neglects   to   pay   any   charge   for
electricity   or   any   sum   other   than   a   charge   for   electricity   due
from him to a licensee or the generating company in respect of
supply,   transmission   or   distribution   or   wheeling   of   electricity
to   him,   the   licensee   or   the   generating   company   may,   after
giving   not   less   than   fifteen   clear   days’   notice   in   writing,   to
such   person   and   without   prejudice   to   his   rights   to   recover
such   charge   or   other   sum   by   suit,   cut   off   the   supply   of
electricity   and   for   that   purpose   cut   or   disconnect   any   electric
supply line or other works being the property of such licensee
or the generating company through which electricity may have
been   supplied,   transmitted,   distributed   or   wheeled   and   may
discontinue   the   supply   until   such   charge   or   other   sum,
together with any expenses incurred by him in cutting off and
reconnecting the supply, are paid, but no longer:
Provided that the supply of electricity shall not be cut off
if such person deposits, under protest, ­ 
(a) an amount equal to the sum claimed from him, or
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(b)   the   electricity   charges   due   from   him   for   each   month
calculated   on   the   basis   of   average   charge   for   electricity
paid by him during the preceding six months, 
whichever   is   less,   pending   disposal   of   any   dispute   between
him and the licensee. 
(2) Notwithstanding anything contained in any other law
for   the   time   being   in   force,   no   sum   due   from   any   consumer,
under this section shall be  recoverable  after the  period of  two
years   from   the   date   when   such   sum   became   first   due   unless
such   sum   has   been   shown   continuously   as   recoverable   as
arrear of charges for electricity supplied and the licensee shall
not cut off the supply of the electricity.”
11. In   Rahamatullah   Khan   (supra),   three   issues   arose   for   the
consideration   of   this   Court.   They   were   (i)   what   is   the   meaning   to   be
ascribed to the term  “first due”  in Section 56(2) of the Act;  (ii)  in the case
of   a   wrong   billing   tariff   having   been   applied   on   account   of   a   mistake,
when would the amount become first due;   and   (iii)   whether recourse to
disconnection may be taken by the licensee after the lapse of two years
in the case of a mistake.
12. On the first two issues, this Court held that   though the liability
to   pay   arises   on   the   consumption   of   electricity,   the   obligation   to
pay   would   arise   only   when   the   bill   is   raised   by   the   licensee   and
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that,   therefore,   electricity   charges   would   become   “first   due”   only
after the bill is issued, even though the liability would have arisen
on consumption . On the third issue, this Court held in  Rahamatullah
Khan   (supra),   that   “the   period   of   limitation   of   two   years   would
commence from the date on which the electricity charges became first due
under   Section   56(2)” .     This   Court   also   held   that   Section   56(2)   does   not
preclude   the   licensee   from   raising   an   additional   or   supplementary
demand   after   the   expiry   of   the   period   of   limitation   in   the   case   of   a
mistake or  bonafide  error. To come to such a conclusion, this Court also
referred to Section 17(1)(c) of the Limitation Act, 1963 and the decision
of   this   Court   in   Mahabir   Kishore   &   Ors.   vs.   State   of   Madhya
Pradesh 2
.
13. Despite   holding   that   electricity   charges   would   become   first   due
only after the bill is issued to the consumer  (para 6.9 of the SCC Report)
and   despite   holding   that   Section   56(2)   does   not   preclude   the   licensee
from raising an additional or supplementary demand after the expiry of
2      (1989) 4 SCC 1
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the   period   of   limitation   prescribed   therein   in   the   case   of   a   mistake   or
bonafide   error   (Para   9.1   of   the   SCC   Report) ,   this   Court   came   to   the
conclusion   that   what   is   barred   under   Section   56(2)   is   only   the
disconnection of supply of electricity.  In other words, it was held by this
Court in the penultimate paragraph that the licensee may take recourse
to any remedy available in law for the recovery of the additional demand,
but   is   barred   from   taking   recourse   to   disconnection   of   supply   under
Section 56(2).
14. But   a   careful   reading   of   Section   56(2)   would   show   that   the   bar
contained   therein   is  not  merely  with  respect  to  disconnection  of  supply
but   also   with   respect   to   recovery.   If   Sub­section   (2)   of   Section   56   is
dissected into two parts it will read as follows:­
(i) No   sum   due   from   any   consumer   under   this   Section   shall   be
recoverable  after   the   period   of  two   years  from   the  date   when
such sum became first due;  and 
(ii)  the licensee shall not cut off the supply of electricity.
15. Therefore,   the   bar   actually   operates   on   two   distinct   rights   of   the
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licensee,  namely,   (i)  the right to recover;  and   (ii)   the right to disconnect.
The bar with reference to the enforcement of the right to disconnect, is
actually   an   exception   to   the   law   of   limitation.   Under   the   law   of
limitation,  what   is   extinguished   is   the   remedy   and   not   the   right.   To  be
precise,   what   is   extinguished   by   the   law   of   limitation,   is   the   remedy
through   a   court   of   law   and   not   a   remedy   available,   if   any,   de   hors
through   a   court   of   law.   However,   section   56(2)   bars   not   merely   the
normal   remedy   of   recovery   but   also   bars   the   remedy   of   disconnection.
This   is   why   we   think   that   the   second   part   of   Section   56(2)   is   an
exception to the law of limitation.
16. Be   that   as   it   may,   once   it   is   held   that   the   term   “first   due”   would
mean   the   date   on   which   a   bill   is   issued,   (as   held   in   para   6.9   of
Rahamatullah   Khan )   and   once   it   is   held   that   the   period   of   limitation
would   commence   from   the   date   of   discovery   of   the   mistake   (as   held   in
paragraphs   9.1   to   9.3   of   Rahamatullah   Khan ) ,   then   the   question   of
allowing licensee to recover the amount by any other mode but not take
recourse   to   disconnection   of   supply   would   not   arise.   But
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Rahamatullah   Khan   says   in   the   penultimate   paragraph   that   “ the
licensee may take recourse to any remedy available in law for recovery of
the additional demand, but barred from taking recourse to disconnection
of supply under sub­section (2) of section 56 of the Act”.   
17. It   appears   from   the   narration   of   facts   in   paragraph   2   of
Rahamatullah Khan  (supra) that this Court was persuaded to take the
view   that   it   did,   on   account   of   certain   peculiar   facts.   The   consumer   in
that   case   was   billed   under   a   particular   tariff   code   for   the   period   from
July­2009 to September­2011. But after audit, it was discovered that a
different   tariff  code  should   have   been   applied.   Therefore,  a  show   cause
notice   was   issued   on   18.03.2014   raising   an   additional   demand   for   the
period   from   July­2009   to   September­2011.   Then   a   bill   was   raised   on
25.05.2015   for   the   aforesaid   period.   Therefore,   the   consumer
successfully   challenged   the   demand   before   the   District   Consumer
Forum,   but   the   Order   of   the   District   Forum   was   reversed   by   the   State
Commission on an appeal by the licensee. The National Commission on
a   revision   filed   by   the   consumer,   set   aside   the   order   of   the   State
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Commission   and   restored   the   order   of   the   District   Forum.   It   was   this
Order of the National Commission that was under challenge before this
Court in  Rahamatullah Khan  (supra) .  
18. Eventually,   this   Court   disposed   of   the   appeals,   preventing   the
licensee   from   taking   recourse   to   disconnection   of   supply,   but   giving
them liberty to take recourse to any remedy available in law for recovery
of   the   additional   demand.   Therefore,   the   decision   in   Rahamatullah
Khan  (supra) is distinguishable on facts.  
19. Even otherwise there are two things in this case, which we cannot
overlook.   The   first   is   that   the   question   whether   the   raising   of   an
additional   demand,   by   itself   would   tantamount   to   any   deficiency   in
service,   clothing   the   consumer   fora   with   a   power   to   deal   with   the
dispute, was not raised or considered in   Rahamatullah Khan   (supra).
The second is the impact of Sub­section (1) of Section 56 on Sub­section
(2) thereto.
20. The   fora   constituted   under   the   Consumer   Protection   Act,   1986   is
entitled   to   deal   with   the   complaint   of   a   consumer,   either   in   relation   to
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defective   goods   or   in   relation   to   deficiency   in   services.   The   word
“deficiency”  is defined in Section 2(1)(g) of the Consumer Protection Act,
1986 as follows:­
“ 2(1)(g)   “deficiency”   means   any   fault,   imperfection,
shortcoming or inadequacy in the quality, nature and manner
of   performance   which   is   required   to   be   maintained   by   or
under   any   law   for   the   time   being   in   force   or   has   been
undertaken   to   be   performed   by   a   person   in   pursuance   of   a
contract or otherwise in relation to any service;
21. The   raising   of   an   additional   demand   in   the   form   of   “short
assessment   notice”,   on   the   ground   that   in   the   bills   raised   during   a
particular   period   of   time,   the   multiply   factor   was   wrongly   mentioned,
cannot tantamount to deficiency in service. If a licensee discovers in the
course of audit or otherwise that a consumer has been short billed, the
licensee is certainly entitled to raise a demand. So long as the consumer
does not dispute the correctness of the claim made by the licensee that
there was short assessment, it is not open to the consumer to claim that
there was any deficiency. This is why, the National Commission, in the
impugned   order   correctly   points   out   that   it   is   a   case   of   “escaped
assessment”  and not  “deficiency in service” .
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22. In   fact,   even   before   going   into   the   question   of   Section   56(2),   the
consumer   forum   is   obliged   to   find   out   at   the   threshold   whether   there
was any deficiency in service. It is only then that the recourse taken by
the   licensee   for   recovery   of   the   amount,   can   be   put   to   test   in   terms   of
Section   56.   If   the   case   on   hand   is   tested   on   this   parameter,   it   will   be
clear   that   the   respondents   cannot   be   held   guilty   of   any   deficiency   in
service   and   hence   dismissal   of   the   complaint   by   the   National
Commission is perfectly in order. 
23. Coming to the second aspect,  namely , the impact of Sub­section (1)
on Sub­section (2) of Section 56, it is seen that the bottom line of Sub­
section   (1)   is   the   negligence   of   any   person   to   pay   any   charge   for
electricity.   Sub­section   (1)   starts   with   the   words   “ where   any   person
neglects   to   pay   any   charge   for   electricity   or   any   some   other   than   a
charge for electricity due from him”.
24. Sub­section   (2)   uses   the   words   “no   sum   due   from   any   consumer
under   this   Section ”.   Therefore,   the   bar   under   Sub­section   (2)   is
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relatable   to   the   sum   due   under   Section   56.   This   naturally   takes   us   to
Sub­section   (1)   which   deals   specifically   with   the   negligence   on   the
part of a person to pay any charge for electricity   or any sum other
than   a   charge   for   electricity.   What   is   covered   by   section   56,   under
sub­section (1), is the negligence on the part of a person to pay for
electricity and not anything else nor any negligence on the part of
the licensee . 
25. In other words, the negligence on the part of the licensee which led
to   short   billing   in   the   first   instance   and   the   rectification   of   the   same
after the mistake is detected, is not covered by Sub­section (1) of Section
56. Consequently, any claim so made by a licensee after the detection of
their   mistake,   may   not   fall   within   the   mischief,   namely,   “no   sum   due
from any consumer  under this Section ”,  appearing in Sub­section (2).
26. The   matter   can   be   examined   from   another   angle   as   well.     Sub­
section   (1)   of   Section   56   as   discussed   above,   deals   with   the
disconnection   of   electric   supply   if   any   person   “neglects   to   pay   any
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charge   for   electricity” .     The   question   of   neglect   to   pay   would   arise   only
after   a   demand   is   raised   by   the   licensee.     If   the   demand   is   not   raised,
there   is   no   occasion   for   a   consumer   to   neglect   to   pay   any   charge   for
electricity.  Sub­section (2) of Section 56 has a non­obstante clause with
respect   to   what   is   contained   in   any   other   law,   regarding   the   right   to
recover including the right to disconnect.   Therefore, if the licensee has
not   raised   any   bill,   there   can   be   no   negligence   on   the   part   of   the
consumer   to   pay   the   bill   and   consequently   the   period   of   limitation
prescribed   under   Sub­section   (2)   will   not   start   running.     So   long   as
limitation   has   not   started   running,   the   bar   for   recovery   and
disconnection   will   not   come   into   effect.     Hence   the   decision   in
Rahamatullah Khan   and Section 56(2) will not go to the rescue of the
appellant.
27. Therefore,   we   are   of   the   view   that   the   National   Commission   was
justified   in   rejecting   the   complaint   and   we   find   no   reason   to   interfere
with   the   Order   of   the   National   Commission.   Accordingly,   the   appeal   is
dismissed.   However,   since   the   appellant   has   already   paid   50%   of   the
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demand amount pursuant to an interim order  passed by this Court on
19.08.2014, we give eight weeks time to the appellant to make payment
of the balance amount.  There shall be no order as to costs.  
 
… ..…………....................J.
      (Hemant Gupta)
.…..………......................J.
(V. Ramasubramanian)
NEW DELHI
OCTOBER 05, 2021
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