Section 56(2) Electricity Act, 2003 | Disconnection Barred for Surcharge Claims Older Than Two Years Without Continuous Billing : Gauhati HC

The Gauhati High Court has clarified that electricity distributors cannot disconnect supply based on surcharge demands dating back over 15 years, reinforcing the two-year limitation under Section 56(2) of the Electricity Act, 2003. While such claims may still be pursued through civil recovery, coercive action like disconnection is categorically prohibited beyond the statutory period.

Background & Facts

The Dispute

The petitioner, M/s Rahman Properties Limited, operates Hotel Dynasty in Guwahati and has held a consumer electricity connection (Consumer No. 006000000373) with the Assam Power Distribution Company Limited (APDCL) since 1984. On 02.07.2021, APDCL issued a bill demanding Rs. 18,66,000/- as surcharge for alleged late payments between June 1991 and July 2005, citing an audit report from 2007-2008. The petitioner was not notified of any such liability during the relevant period or in any subsequent bills for over 15 years. Upon receipt of the bill, APDCL issued a notice on 22.07.2021 threatening disconnection within 15 days unless payment was made.

Key Facts

• The petitioner has consistently paid all electricity bills since 1984 without dispute.
• The original bill for energy charges of Rs. 6,22,000/- for the period 11.04.1989 to 11.10.1990 was raised in May 1991.
• The petitioner paid Rs. 6,78,000/- (including Rs. 56,000/- as surcharge) in installments during August 2005 and May 2006.
• No further surcharge demand was made by APDCL between 2006 and 2021.
• Monthly bills issued from July 2019 to June 2021 (Annexures 3 - 14) contained no reference to the Rs. 18,66,000/- surcharge.
• The surcharge was only identified during an internal audit conducted in 2021.
• The petitioner submitted a representation under the Surcharge Waiver Scheme on 17.07.2021, which remained unaddressed.

Procedural History

• 02.07.2021: APDCL issued bill for Rs. 18,66,000/- as surcharge for 1991 - 2005 period.
• 22.07.2021: APDCL issued notice demanding payment within 15 days or face disconnection.
• 23.07.2021: Writ Petition (WP(C) No. 3524/2021) filed before Gauhati High Court.
• 04.08.2021: Single Judge directed APDCL to dispose of petitioner’s representation within three weeks and restrained disconnection pending hearing.
• 21.03.2025: APDCL filed affidavit-in-opposition.
• 22.01.2026: Petitioner filed affidavit-in-reply.
• 12.05.2026: Judgment pronounced by Hon’ble Mr. Justice Devashis Barua.

The Parties' Positions

For the Petitioner: Argued that the surcharge demand was time-barred under Section 56(2) of the Electricity Act, 2003, as it was not shown as arrears in any bill for over 15 years. Disconnection would violate the consumer-friendly intent of the Act. Relied on Assistant Engineer (DI), Ajmer Vidyut Vitran Nigam Limited v. Rahamatullah Khamn.

For the Respondent (APDCL): Contended that the surcharge arose due to a bonafide error in billing, discovered only in 2021. The demand was valid under tariff rules and the Limitation Act, 1963, as the limitation period commenced upon discovery of the mistake. Argued that disconnection was lawful under Section 56(1) and that the petitioner had an alternative remedy before Consumer Forums.

Relief Sought

The petitioner sought quashing of the bill dated 02.07.2021 and a direction restraining APDCL from disconnecting power supply. Alternatively, sought declaration that the surcharge claim was time-barred and unenforceable.

The Legal Issue

Can an electricity distributor disconnect power supply under Section 56(2) of the Electricity Act, 2003, based on a surcharge demand for a period ending in 2005, when the bill was raised in 2021 and no arrears were shown in any bill for over 15 years?

Arguments Presented

For the Petitioner

The petitioner relied on Assistant Engineer (DI), Ajmer Vidyut Vitran Nigam Limited v. Rahamatullah Khamn to argue that Section 56(2) imposes a strict two-year limitation on the recovery of any sum due, unless continuously reflected as arrears in bills. The Rs. 18,66,000/- surcharge was not shown in any bill from 2006 to 2021, rendering it irrecoverable for the purpose of disconnection. The Act is consumer-centric, and allowing disconnection for dormant claims defeats its purpose. The discovery of error under Section 17(1)(c) of the Limitation Act does not revive the right to disconnect.

For the Respondent

APDCL contended that the surcharge was a supplementary demand arising from a bonafide billing error, which the law permits even after limitation. The two-year bar under Section 56(2) only restricts disconnection, not the right to raise a claim. The petitioner had paid the principal amount in 2005 - 2006, indicating awareness of liability. The audit discovery in 2021 justified the belated demand, and the petitioner could challenge the amount before Consumer Forums.

The Court's Analysis

The Court undertook a detailed interpretation of Section 56(2) of the Electricity Act, 2003, in light of the Supreme Court’s ruling in Assistant Engineer (DI), Ajmer Vidyut Vitran Nigam Limited v. Rahamatullah Khamn. The Court emphasized that the provision operates as a non-obstante clause, overriding any other law or contractual term, to protect consumers from arbitrary and delayed billing.

"Sub-section (2) of Section 56 by a non obstante clause provides that notwithstanding anything contained in any other law for the time being in force, no sum due from any consumer, shall be recoverable after the period of two years from the date when such sum became first due unless such sum has been shown continuously as recoverable as arrear of charges for electricity supplied and the licensee shall not cut off the supply of the electricity."

The Court held that the phrase "first due" refers to the date the bill was issued, not the date of consumption. The surcharge for the period 1991 - 2005 became due when the original bill was raised in May 1991. Even if the surcharge was omitted due to error, the two-year limitation began to run from that date. The absence of any reference to the surcharge in over 15 years of monthly bills meant the claim was not "shown continuously as arrears," thereby extinguishing the right to disconnection.

The Court further clarified that while Section 56(2) bars disconnection, it does not extinguish the underlying debt. APDCL retains the right to pursue recovery through civil suits or other non-coercive means. However, the discovery of a mistake under Section 17(1)(c) of the Limitation Act does not extend the limitation period for disconnection under Section 56(2). The Court explicitly declined to adjudicate whether the error was bonafide, noting that such factual disputes fall outside the writ jurisdiction.

"Section 56(2) does not preclude the licensee company from raising a supplementary demand after the expiry of the limitation period... It only restricts the right of the licensee to disconnect electricity supply due to non-payment of dues after the period of limitation of two years has expired."

The Court rejected APDCL’s argument that the petitioner had an alternative remedy before Consumer Forums, holding that the right to be free from unlawful disconnection is a statutory right enforceable through writ jurisdiction.

The Verdict

The petitioner succeeded. The Court held that APDCL cannot disconnect the electricity supply to Hotel Dynasty on the basis of the bill dated 02.07.2021. The surcharge claim of Rs. 18,66,000/- remains recoverable through civil proceedings, but disconnection is barred under Section 56(2). The Court directed that no coercive action be taken against the petitioner’s premises based on this bill. Liberty was granted to APDCL to pursue recovery through lawful non-disconnection methods, subject to the petitioner’s right to raise limitation and other defenses. No costs were awarded.

What This Means For Similar Cases

Disconnection Is Not a Default Remedy for Old Debts

• Practitioners must advise clients that utilities cannot disconnect power for surcharges or arrears older than two years, even if the debt is valid.
• Any disconnection notice based on dormant claims must be challenged immediately under Section 56(2).
• Consumers should retain all bills for at least five years to prove absence of arrear references.

Supplementary Demands Are Permissible, But Not Enforceable by Force

• Electricity distributors may raise supplementary bills for errors, but must use civil recovery methods (e.g., suits, arbitration).
• The two-year bar under Section 56(2) is absolute for disconnection; discovery of mistake does not revive the right to cut supply.
• Legal notices threatening disconnection for claims older than two years are legally untenable and actionable.

Writ Jurisdiction Is Available to Prevent Unlawful Disconnection

• Consumers need not exhaust Consumer Forum remedies before approaching High Courts to prevent disconnection.
• Courts will intervene under Article 226 to protect statutory rights against coercive utility actions.
• The burden is on the distributor to prove continuous arrear representation in bills - silence for years is fatal to disconnection claims.