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M/S Prem Cottex v. Uttar Haryana Bijli Vitran Nigam Limited & Ors.

Civil Appeal · 2021 INSC 617Decided 5 Oct 2021
Civil Appeal No. 7235 of 2009
Justice Hemant Gupta · Justice V. Ramasubramanian

Background

A cotton-yarn manufacturer in Panipat was issued a "short assessment notice" by its electricity distributor three years after its connection was upgraded, claiming that the billing "multiply factor" had been wrongly applied and demanding over Rs. 1.35 crore in back-billing. The consumer argued this demand was barred because Section 56(2) of the Electricity Act, 2003 bars recovery of sums due more than two years after they first became due. The National Consumer Disputes Redressal Commission dismissed the consumer's complaint, holding it was a case of "escaped assessment," not "deficiency in service."

Decision Breakdown

The Supreme Court held that a licensee correcting its own billing error and raising an additional demand does not amount to a "deficiency in service" under the Consumer Protection Act, since the consumer never disputed that the billing factor was in fact wrongly applied. On the limitation point, the Court held that Section 56(2)'s bar applies to a consumer's "neglect to pay" once billed, not to negligence by the licensee in billing, so the licensee was not barred from raising the corrected demand, only from resorting to disconnection as a mode of recovery after two years. The appeal was accordingly dismissed, with eight weeks given to pay the balance of the already part-paid demand.

Lesson Learnt

A utility correcting its own billing mistake and asking a consumer to pay the shortfall is not automatically "deficiency in service": consumers must use ordinary legal remedies to dispute such demands, and the two-year limitation under Section 56(2) protects against disconnection, not against the corrected demand itself.

Official source (sci.gov.in)View Judgment (PDF)

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