In a significant ruling, the Supreme Court clarified that outstanding electricity dues accumulated before the enforcement of the Electricity Act, 2003, are not subject to the two-year limitation period mandated by Section 56 of the Act. The court emphasized that the limitation only applies to liabilities incurred post-2003, allowing prior debts to remain enforceable.
This decision emerged from a case involving a Madhya Pradesh-based energy consumer, Respondent No. 1, who faced a longstanding billing dispute with the state electricity utility. Initially, Respondent No. 1 had secured an electricity supply agreement dating back to 1991, which later saw increased energy demands and contract modifications, notably in 1996. A series of legal proceedings followed as the utility claimed outstanding payments under the contract, and disputes over minimum consumption charges led to a complex legal battle, spanning years and multiple court interventions.
In 2000, the utility accused Respondent No. 1 of breaching agreement terms by operating an independent power generation setup as a parallel source, leading to a series of notices and judicial orders. While the respondent resisted these charges through litigation, interim rulings required continued payment of minimum charges under the initial contract terms. In 2009, a second demand notice renewed the dispute, now scrutinized under the updated 2003 law’s Section 56 limitation clause.
The High Court initially ruled that the new Act’s two-year limitation period would apply retroactively to the old dues, citing this as grounds to quash the second demand. However, on appeal, the Supreme Court overruled this, referencing precedent cases that affirmed the 2003 Act’s limitation as non-applicable to debts incurred prior to its enactment.
The court also upheld the principle of estoppel, stating that Respondent No. 1’s failure to challenge earlier rulings barred further disputes on the same liability. Despite these findings, the court acknowledged that some payments had already been secured through a reduced demand, leaving the case effectively settled.
This ruling underscores the non-retroactive application of the 2003 Act’s limitation period, reinforcing the enforceability of pre-2003 electricity dues and clarifying that debts crystallized under earlier laws retain their validity independent of subsequent legislative updates.
