Kerala High Court Directs Regulatory Commission To Consider Mechanism For Disclosure And Settlement Of Electricity Dues At Time Of Property Transfer

The Court further directed the State Government and the distribution licensee to explore the feasibility of introducing a system requiring verification or disclosure of electricity dues at the stage of registration of property transactions, including the possibility of insisting upon a ‘No Dues Certificate’.

The Court was hearing a writ petition concerning the grant of electricity connection to a subsequent purchaser and the regulatory framework governing the recovery of arrears from previous consumers.

A Single Bench of Justice Mohammed Nias C.P., while referring to earlier observations of a Division Bench, noted: “the existing Supply Code does not contain any provision disabling a consumer from transferring premises in respect of which electricity dues remain unpaid, nor does it contain any provision disqualifying such premises from obtaining a fresh electricity connection without clearing the arrears.”

The Bench accordingly directed the Kerala State Electricity Regulatory Commission to “examine the necessity of incorporating appropriate provisions in the Kerala Electricity Supply Code, 2014, by invoking the powers available under Regulation 179, which enables the Commission to address difficulties arising in the implementation or interpretation of the Code”.

Advocate S. Ranjit appeared for the petitioner, while Standing Counsel Riji Rajendran appeared for the respondents.

Background

The case arose from a dispute relating to the grant of a fresh electricity connection in premises where the earlier connection had been dismantled due to default in payment of dues by the previous consumer. The petitioner, a subsequent occupier, challenged the insistence on deposit of such arrears and sought a refund of the amount paid pursuant to an interim order of the Court.

While adjudicating the legality of such insistence under the Kerala Electricity Supply Code, the Court also examined broader structural issues in the regulatory framework concerning electricity dues attached to premises undergoing transfer.

Court’s Observation

The Court adverted to the observations made by a Division Bench in Kerala State Electricity Board v. Kerala State Electricity Regulatory Commission, wherein the absence of adequate safeguards in the Supply Code was highlighted.

It noted that the existing regulatory framework does not prevent the transfer of properties burdened with unpaid electricity dues, nor does it mandate the clearance of such dues as a condition precedent for obtaining a fresh electricity connection.

The Court observed: “There is presently no safeguard in the Code to ensure that, prior to the transfer of property, the defaulting consumer and the purchaser make arrangements for payment of outstanding electricity dues.”

It further noted that although electricity dues could potentially have been made a statutory charge on the premises, no such legislative provision has been enacted.

In this context, the Court emphasised the need for regulatory intervention to address recurring disputes involving subsequent purchasers and outstanding electricity arrears. It was observed that mechanisms could be evolved to regulate the granting of fresh connections in such cases by linking them to clearance or disclosure of dues.

Taking note of the recurring nature of such disputes, the Court directed the Regulatory Commission to consider invoking its powers under Regulation 179 of the Supply Code to address implementation difficulties and to utilise the Electricity Supply Code Review Panel for proposing amendments.

The Court further directed examination of mechanisms for disclosure of electricity dues at the time of transfer of property, including the feasibility of mandating a ‘No Dues Certificate’ so that prospective purchasers are put on notice regarding outstanding liabilities.

Additionally, the Court directed the State Government and distribution licensee to explore the possibility of integrating such verification into the process of registration of property transactions, including incorporation of suitable provisions under the Registration Act, 1908 and relevant rules.

“The State Government and the distribution licensee shall also explore the feasibility of evolving an appropriate mechanism whereby, at the stage of registration of transfer of immovable property having an electricity connection or building with electricity supply, production or verification of a certificate or information regarding pending electricity dues from the electricity licensee is ensured”, the Court added.

Conclusion

The Court directed the Kerala State Electricity Regulatory Commission to examine and consider introducing appropriate provisions in the Supply Code to address issues arising from the transfer of properties with outstanding electricity dues.

It further directed the State Government and distribution licensee to explore mechanisms ensuring disclosure and verification of such dues at the stage of property registration, including the feasibility of requiring a ‘No Dues Certificate’.

The Registry was directed to forward a copy of the judgment to the Chief Secretary, Government of Kerala, and the Chairman of the Kerala State Electricity Board for compliance. The writ petition was disposed of accordingly.

Cause Title: Bipha Drug Laboratories Pvt. Ltd. v. Kerala State Electricity Board Ltd. & Ors. (Neutral Citation: 2026:KER:31812)

Appearances

Petitioner: S. Ranjit; Gokul Das V.V.H.; Vineetha Susan Abraham, Advocates

Respondents: Riji Rajendran, Standing Counsel; P.U. Shailajan, Standing Counsel; Devi Shri R., Government Pleader

Click here to read/download Judgment