Court rules in favour of property buyer: New owners not liable for previous electricity dues

In a legal victory, M/s Pure & Cure Healthcare Pvt. Ltd. secured relief from the Himachal Pradesh High Court against the Himachal Pradesh State Electricity Board (HPSEBL). The court’s ruling clarifies the obligations of new property owners regarding outstanding electricity dues left by previous occupants.

The case stemmed from M/s Pure & Cure Healthcare Pvt. Ltd.’s acquisition of a property at an auction conducted under the SARFAESI Act. Despite the Sale Certificate explicitly stating the property was free from all encumbrances, the HPSEBL demanded payment of ₹20,43,837 in outstanding dues left behind by the property’s former owner, M/s Ankur Drug Private Ltd.

Challenging the HPSEBL’s demand in court, M/s Pure & Cure Healthcare Pvt. Ltd. argued that as the new owner, they should not be held liable for the previous owner’s debts, especially since the property was purchased free from encumbrances.

The High Court, presided over by Justice Sandeep Sharma, referred to the Supreme Court’s precedent in K.C. Ninan Vs. Kerala State Electricity Board & Ors. (2023) to make its ruling. The bench emphasized that electricity dues are linked to the consumer, not the premises. Furthermore, it stated that a new owner or occupier seeking an electricity connection is considered a fresh connection.

The court underscored the importance of creating a charge on the property under the Transfer of Property Act (Section 100) and the Companies Act (Sections 77 & 78) for the Electricity Board to claim outstanding dues from the new owner. In this case, the HPSEBL failed to register any charge on the property for outstanding electricity dues, as required by law.

Justice Sandeep Sharma’s judgment highlighted that the HPSEBL’s failure to create a charge, as mandated by the Companies Act, barred them from claiming the outstanding dues from the new property owner. The court even verified the absence of any such charge by referencing documents from the Ministry of Corporate Affairs’ website.

Consequently, the High Court ruled in favor of M/s Pure & Cure Healthcare Pvt. Ltd., quashing the order demanding payment of previous dues. The HPSEBL was directed to consider the petitioner’s request for a new electricity connection without insisting on the clearance of outstanding dues from the former owner.

This landmark judgment sets a precedent, affirming the rights of new property owners and clarifying the obligations of electricity boards regarding outstanding dues.