COMPANY CAN SUE POWER SUPPLIERS UNDER CONSUMER LAW: SUPREME COURT

The Supreme Court has ruled in Karnataka Power Transmission Corpn. & Anr. vs. Ashok Iron Works Pvt. Ltd. on 09/02/2009 that companies engaged in commercial activities can drag their electricity supplier to a consumer forum and seek damages for deficiency in services.

A bench of Justice Markandey Katju and Justice RM Lodha rejected a plea of Karnataka Power Transmission Corporation in which it had said a company using electricity for commercial purpose cannot approach a consumer forum against the utility. The sale of power to a commercial consumer for a commercial purpose was outside the scope of the Consumer Protection Act, 1986, the state utility had argued.

Ashok Iron Works had in 1991 applied an electricity connection, but it approached the district consumer forum after KPTC delayed power supply. The district forum had ruled that the matter was not under the jurisdiction of the Consumer Protection Act. The private company then approached the Karnataka State Consumer Disputes Redressal Commission, which decided in its favour. This had prompted KPTC to approach the National Consumer Disputes Redressal Commission, which quashed its plea. The utility then moved the apex court.

The apex court, while dismissing KPTC�s petition, remanded the matter back to the Consumer Disputes Redressal Forum, Belgaum, to decide whether there was any deficiency in services by the power supplier. KPTC had claimed that the complaint made by the company was not covered under the consumer law since the company was not a �person� as defined under Section 2(1)(m) and hence, not a consumer as defined under Section 2(1)(d) of the Consumer Protection Act. The state utility had also argued that the private company was not a consumer since it had purchased electricity for a commercial purpose.

Section 2(1)(d) defines "consumer" as follows:-

"Consumer" means any person who, -
(i) buys any goods for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any user of such goods other than the person who buys such goods for consideration paid or promised or partly paid
or partly promised, or under any system of deferred payment when such use is made with the approval of such person, but does not include a person who obtain such goods for resale or for any commercial purpose; or
(ii) hires any services for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any beneficiary of such services other than the person who hires the services for consideration paid or promised, or
partly paid and partly promised, or under any system of deferred payment, when such services are availed of with the approval of the first mentioned person."

According to Section2(1)(m), "person" includes :-

"(i) a firm whether registered or not;
(ii) a Hindu undivided family;
(iii) a co-operative society;
(iv) every other association of persons whether registered
under the societies Registration Act, 1860 (21 of 1860)
or not."

Section 2(1)(o) defines "service" thus:

"Service' means service of any description which is made available to potential users and includes the provision of facilities in connection with banking, financing, insurance, transport, processing, supply of electrical or other energy, board or lodging or both, entertainment, amusement or the purveying a news or other information, but does not include the rendering of any service free of charge or under a contract of personal service."

re : contention -(i)

The question that falls for determination is: is a private limited company a `person' as contemplated under Section 2(1)(d).

Section 2(1)(m) which enumerates four categories namely,

(i) a firm whether registered or not;
(ii) a Hindu undivided family;
(iii) a co-operative society; and
(iv) every other association of persons

whether registered under the Societies Registration Act, 1860 (21 of 1860) or not while defining `person' cannot be held to be restrictive and confined to these four categories as it is not said in
terms that `person' shall mean one or other of the things which are enumerated, but that it shall `include' them.

The General Clauses Act, 1897 in Section 3(42) defines `person':

"Person shall include any company or association or body of individuals whether incorporated or not."

While defining `person' in Section 2(1)(m), the Legislature never intended to exclude a juristic person like company. As a matter of fact, the four categories by way of enumeration mentioned therein is indicative, categories (i), (ii) & (iv) being un-incorporate and category (iii) corporate, of its intention to include body corporate as well as body un-incorporate. The definition of `person' in Section 2(1)(m) is inclusive and not exhaustive.

Hence the apex court said: " It does not appear to us to admit of any doubt that company is a person within the meaning of Section 2(1)(d) read with Section 2(1)(m) and we hold accordingly."

It also said KPTC could be held liable for deficiency in service under the consumer law. "...the provision of facilities in connection with supply of electrical energy is a service. Supply of electricity by the (Karnataka state electricity) Board or for that matter KPTC to a consumer would be covered under Section 2(1)(o) being 'service' and if the supply of electrical energy to a consumer is not provided in time as is agreed upon, then under Section (2)(1)(g), there may be a case for deficiency in service."