Subsequent purchasers are liable for electricity arrears of the erstwhile owner attached to the premises.

The petitioner is the auction purchaser of Plot No. 3070, G.I.D.C. Estate, Chhatral, previously owned by M/s Ambica Plastic Industries.

The property was purchased via auction from the Gujarat State Financial Corporation (GSFC); a sale deed was executed in 1998 and the plot was transferred to the petitioner’s name in 2011.

In 2013, the petitioner sought a "No Due Certificate" (NDC) from respondent No. 1 (UGVCL) to dispose of the property.

UGVCL refused, citing outstanding dues of ₹34,28,856.43 incurred by the previous owner in 1994, for which a civil suit was pending.

The petitioner challenged this communication, arguing that an auction purchaser cannot be held liable for the electricity arrears of a previous owner.

1. Whether an electricity distribution licensee can recover the outstanding dues of a previous owner from a subsequent auction purchaser of the premises.

2. Whether the refusal to issue a "No Due Certificate" based on the previous owner's arrears is legally sustainable in light of recent judicial precedents.

The Court considered the provisions of the Electricity Act, 2003, and the Gujarat Electricity Regulatory Commission (Electricity Supply Code and Related Matters) Regulations.

Full Bench decision of the Gujarat High Court in Sanjay Balvantrai Desai v. Dakshin Gujarat Vij Company Ltd. (2013 (1) GLR 487), which held that recovery of arrears from a subsequent purchaser was ultra vires the Electricity Act.

The primary rule applied was the subsequent reversal of this position by the Hon’ble Supreme Court in K.C. Ninan v. Kerala State Electricity Board and Others (2023 (14) SCC 431), which affirmed the power of utilities to insist on the clearance of electricity arrears by a subsequent purchaser as a condition for service.

The petitioner argued that as an auction purchaser from GSFC, he should not be burdened with the 1994 liabilities of the erstwhile owner, especially since UGVCL did not object during the auction process.

The petitioner relied on the Sanjay Balvantrai Desai case, which protected subsequent purchasers from such recovery.

The High Court observed that the legal landscape changed significantly following the Supreme Court's judgment in K.C. Ninan.

The Supreme Court specifically addressed and reversed the findings recorded by the Full Bench of the Gujarat High Court, holding that electricity dues can follow the premises if the relevant regulations provide for such recovery.

The Court found that the petitioner’s reliance on the overruled Full Bench decision was no longer tenable.

The Court provided a clarification that this order would not prejudice the petitioner’s standing in the concerned Civil Court where he was not a party to the proceedings, allowing him to file appropriate applications therein if difficulties arise.

No order as to costs was made.