M/S. Radical Bio Organics Ltd vs The Southern Power Distribution ... on 24 April, 2026

Telangana High Court

M/S. Radical Bio Organics Ltd vs The Southern Power Distribution … on 24 April, 2026

Bench: Nagesh Bheemapaka

IN THE HIGH COURT OF JUDICATURE FOR THE STATE OF
                    TELANGANA
     HON'BLE SRI JUSTICE NAGESH BHEEMAPAKA

             WRIT PETITION No. 11626 OF 2021

                            24.04.2026

Between:

M/s Radical Bio Organics Ltd.,
Rep. by its Director Mr. Buyyani Srinivas Reddy
                                                            ..... Petitioner
And

The Southern Power Distribution Company of
Telangana Ltd.,
Rep. by its Chairman and Managing Director,
& others.

                                                       ..... Respondents

O R D E R:

Petitioner is a company incorporated in 2011 under

TIN No. U74999AP2010PLCD66652 and is engaged in the

SPONSORED

business of distilleries manufacturing and operates a

co-generation power plant with a capacity of 6 MW at

Jakkepally Village, Yalal Mandal, Vikarabad District. The

construction of the co-generation power plant commenced in the

year 2011 and the plant was synchronized on 30.12.2012. The

said co-generation plant supplied power to the Indian Electricity

Exchange (IEX) from January 2013 to February 2014.

Petitioner’s LT connection was upgraded to HT connection in
2

January 2013, and a High-Tension Agreement was executed on

01.04.2013 with Respondent authorities.

1.1. The specific case of Petitioner is that the 4th

Respondent-Superintending Engineer, Operation Circle, Ranga

Reddy South had issued proceedings vide Lr.

No.SE/OP/RRS/SAO/JAO/HT/D.No. 164/14 dated

31.05.2014, clearly stating that the HT supply to Petitioner’s

company was disconnected on 10.02.2013 in accordance with

the orders of the Chief General Manager (Commercial) issued for

auxiliary consumption vide Memo No. CGM(C)/SE/DE/ADE-

III/D.No.2691/2013 dated 08.10.2013. In the said letter, it is

clearly mentioned that HT Agreement dated 01.04.2013 stood

terminated with effect from 07.03.2014, as per Clause 5.9.4.2 of

the General Terms and Conditions of Supply, and that the dues

as on that date amounted to (-) Rs. 56,079/- i.e. no amount was

due from Petitioner, and rather, Petitioner was entitled to a

refundable balance after adjustment of the consumption deposit

by Respondents. The said communication also directed that no

fresh service, either LT or HT, should be released in Petitioner’s

premises until a no-dues certificate was issued, thereby

conclusively closing the account.

1.2. It is contended by Petitioner that the aforesaid

proceedings dated 31.05.2014 had attained finality and that
3

there were no pending dues or allegations of unauthorized use

of power. However, to the utter shock of Petitioner, an

inspection report dated 02.07.2014 was prepared by the 7th

Respondent-Assistant Divisional Engineer, DPE/HT, Corporate

Office, Mint Compound, Hyderabad-alleging “indicative

unauthorized drawal of power” for the period between

30.12.2012 and 12.06.2014, and levelling a wholly baseless

demand of Rs.1,17,31,158/-, and that the said report was

issued without any notice, without conducting any inspection in

the presence of Petitioner’s authorized representatives, and

without any reference to the earlier proceedings dated

31.05.2014, which declared no dues. Petitioner asserts that the

said inspection was not authorized under law and was carried

out in contravention of Section 126 of the Electricity Act, 2003,

which mandates that an assessment for unauthorized use of

electricity can be made only by an authorized assessing officer

after due notice and hearing.

1.3. It is further stated that the HT supply having been

disconnected in February, 2013 and the HT Agreement having

been terminated in March 2014, the question of unauthorized

drawl of power thereafter does not arise. Hence, the inspection

report dated 02.07.2014 and the demand raised pursuant

thereto is wholly without jurisdiction, fabricated, and contrary
4

to the factual position acknowledged by Respondents

themselves in the earlier official records. That apart, notices

dated 15.12.2015 and 21.03.2016 issued by Respondents under

Form ‘A’ and Form ‘B’ respectively were issued under Section 24

of the Indian Electricity Act, 1910, which had long been

repealed by Section 185 of the Electricity Act, 2003. Therefore,

the said notices are illegal and unsustainable in the eyes of law.

1.4. It is the further case of Petitioner that during the

period between February 2014 and November 2016, the plant

remained non-operational owing to severe financial distress and

internal disputes among directors. No power was drawn during

this period and yet Respondents continued to raise fictitious

demands. The impugned notices in Form ‘A’ and Form ‘B’,

though dated 2015 and 2016, were served only in February

2019, almost five years later and were followed by Form ‘C’

dated 02.08.2019. Petitioner immediately made a representation

dated 02.03.2019 to the 1st Respondent seeking withdrawal of

Unscheduled Interchange (UI) charges and penalty amounts,

explaining the entire factual background. However, without

considering the representation or affording an opportunity of

hearing, Respondents rejected the same vide Memo dated

19.03.2020, confirming the illegal demands.

1.5. Petitioner submits that the impugned notices are

barred by limitation under Section 56(2) of the 2003 Act, which

provides that “no sum due from any consumer shall be

recoverable after the period of two years from the date when

such sum first became due unless such sum has been shown

continuously as recoverable as arrears of charges.” The alleged

dues pertain to the period 2013-2014, while the demands were

raised and served only in 2019, without being shown

continuously as arrears in the subsequent bills. Therefore, the

demands are ex facie barred by limitation, illegal, and

unenforceable.

1.6. To substantiate this legal contention, Petitioner

relied upon the authoritative pronouncement of the Hon’ble

Supreme Court in Ajmer Vidyut Vitran Nigam Ltd. v.

Rahamatullah Khan (Civil Appeal No. 1672 of 2020), wherein,

interpreting Section 56(2) of the Act, it was held as follows:

” Sub-section (1) of Section 56 confers a statutory right to the
licensee company to disconnect the supply of electricity, if the consumer
neglects to pay the electricity dues. This statutory right is subject to the
period of limitation of two years provided by sub-section (2) of Section 56
of the Act. The period of limitation of two years would commence from
the date on which the electricity charges became first due’ under sub-
section (2) of Section 56. This provision restricts the right of the licensee
company to disconnect electricity supply due to non-payment of dues by
the consumer, unless such sum has been shown continuously to be
recoverable as arrears of electricity supplied, in the bills raised for the
past period. If the licensee company were to be allowed to disconnect
6

electricity supply after the expiry of the limitation period of two years
after the sum became “first due”, it would defeat the object of Section
56(2).”

1.7. Petitioner further relied on the judgment of the

Hon’ble Bombay High Court in Maharashtra State Electricity

Distribution Company Limited v. Electricity Ombudsman

(W.P. No. 10764 of 2011), wherein it was held that:

” Unless and until the preconditions set out in sub-section (2)
of Section 56 are satisfied, there is no question of the electricity supply
being cut-off. The recovery proceedings may be initiated seeking to
recover amounts beyond a period of two years, but the section itself
imposes a condition that the amount sought to be recovered as arrears
must, in fact, be reflected and shown in the bill continuously as
recoverable as arrears, otherwise, the claim cannot succeed The
Distribution Licensee cannot demand charges for consumption of
electricity for a period of more than two years preceding the date of the
first demand of such charges.”

1.8. Respondents acted in complete violation of Section

126 of the 2003 Act which governs cases of alleged

unauthorized use of electricity. Under Section 126(3), an

assessing officer must issue a provisional assessment, afford an

opportunity of hearing, and pass a final order within thirty days.

In the present case, no such procedure was followed; no

provisional or final assessment order was served, and no

hearing was afforded. Hence, the purported demand of

Rs.1,17,31,158/- is in direct contravention of statutory

provisions and cannot be sustained.

1.9. The letter dated 18.03.2021 issued by the 5th

Respondent to the Sub-Registrar, directing not to allow

registration of Petitioner’s properties in Survey Nos. 36, 38, 41,

and 43 of Jakkepally Village, is without any legal authority or

jurisdiction under the 2003 Act. The said letter is a coercive

step designed to pressurize the Petitioner into paying unlawful

and time-barred demands. It is brought to the notice of this

Hon’ble Court that despite the pendency of the Writ Petition and

subsistence of the interim order dated 29.04.2021 granted by

this Court staying the impugned proceedings, Respondents, in

utter disregard of judicial orders, continued to initiate fresh

coercive steps by writing to the District Collector and Tahsildar,

Yalal Mandal, to proceed under the A.P. State Electricity Board

(Recovery of Dues) Act, 1984, thereby committing contempt of

the interim orders of this Court.

1.10. Petitioners therefore, state that the entire action of

Respondents in issuing Forms ‘A’, ‘B’, and ‘C’ notices, rejecting

the representation dated 02.03.2019 by Memo dated

19.03.2020, and issuing the consequential letter dated

18.03.2021 to the Sub-Registrar is illegal, arbitrary, without

jurisdiction, violative of statutory provisions, and contrary to

principles of natural justice. The demands are barred by
8

limitation, raised without lawful authority, and based on

repealed statutory provisions.

2. Respondents 1 to 4, 6, and 7 filed a detailed

Counter Affidavit through the Superintending Engineer,

Operation Circle, Vikarabad, opposing the Writ Petition. The 5th

Respondent has also filed an Additional Counter Affidavit,

bringing on record subsequent events that transpired during the

pendency of the Writ Petition. The combined stand of the

Respondents is set out hereunder:

The answering Respondents in the Counter Affidavit

submit that the present Writ Petition is devoid of merit and is

liable to be dismissed, as the impugned demand notices were

issued strictly in accordance with the provisions of the2003 Act,

the A.P. State Electricity Board (Recovery of Dues) Act, 1984,

and the A.P. State Electricity Board (Recovery of Dues) Rules,

1985. It is asserted, Petitioner has deliberately suppressed the

material facts regarding unauthorized withdrawal of electricity

and failure to pay Unscheduled Interchange (UI) charges and

other statutory dues. Petitioner originally obtained a Low

Tension (LT) Category-III (B) connection, Service Connection No.

2418000206, with a contracted load of 149 HP, which was

released on 02.02.2011 for its distillery unit. Subsequently, they

proposed a 6 MW Biomass-based Co-generation Power Project
9

for captive use and export under open access. The said proposal

was sanctioned by NREDCAP vide Proceedings No.

NREDCAP/RBOL/Biomass Co-gen/2012/2937, dated

21.01.2012. Thereafter, Petitioner vide letter dated 23.06.2012

requested permission to utilize 51% of the installed capacity for

captive consumption and export the remaining capacity to the

grid through open access on a temporary basis. It was also

requested that the plant be synchronized with the grid. On

06.12.2012, the Petitioner once again addressed the authorities

stating that all synchronization works were completed.

2.1. Subsequently, on 07.12.2012, Petitioner furnished

a categorical undertaking stating that it would not draw any

power for start-up or auxiliary consumption from APCPDCL

(now TSSPDCL), and that it would shortly apply for an HT

connection and that on 24.12.2012, while requesting

installation of internal consumption meters, Petitioner reiterated

that it would not draw any power from the grid during or after

synchronization and would not claim any compensation for

inadvertent power injected into the grid. Contrary to these

representations, the Petitioner allegedly indulged in

unauthorized drawal of electricity from the grid.

2.2. Respondents had stated that Petitioner’s LT service

was disconnected on 10.02.2013 for non-payment of current

consumption charges. As per APERC’s Tariff Order for 2013-14,

all services above 100 HP were required to be shifted to High

Tension (HT). Accordingly, Petitioner’s LT service was converted

to HT Category-1, Service Connection No. VKB1630 (Old No.

RRS1630), with a Contracted Maximum Demand (CMD) of 130

KVA, effective 01.04.2013. Petitioner’s co-generation plant was

synchronized on 30.12.2012. It is admitted, as per Memo No.

CGM(C)/SE(C)/ADE-II/D.No.2691/2013 dated 08.10.2013, the

HT supply to Petitioner’s industry was disconnected on

10.02.2013 and the HT Agreement dated 01.04.2013 was

terminated with effect from 07.03.2014, under Clause 5.9.4.2 of

the General Terms and Conditions of Supply (GTCS). The dues

as on the date of termination were recorded as (-) Rs. 56,079/-

after adjusting the consumption deposit of Rs. 1,47,742/-

2.3. Respondents, however, state that the said

termination and no-dues statement pertained to the original

LT/HT Cat-I connection and not to the co-generation plant

operating at 33 KV under HT Category-II. Petitioner’s 33 KV line

for evacuation of power was sanctioned vide Letter No.

SE/OP/RRS/Comml/C.O.O.Ms.No.284/2012-13 D.No.3105/12

dated 15.09.2012, for an estimated cost of Rs. 8,98,203/- on a
11

turnkey basis. Petitioner’s co-generation plant was thus

synchronized on 30.12.2012 at 33 KV voltage level without any

sanction for start-up or auxiliary power supply. While so, on

12.06.2014, upon receiving a complaint from the Divisional

Engineer (Operations), Vikarabad, Petitioner was drawing power

unauthorisedly from the grid, the Assistant Divisional Engineer

(DPE/HT) inspected the premises. The inspection revealed that

Petitioner had been drawing electricity for start-up and auxiliary

consumption without permission, contrary to its own

undertaking. Accordingly, a case under Section 126 of the 2003

Act was booked for unauthorized use of electricity from

30.12.2012 to 12.06.2014, and a provisional assessment notice

dated 19.07.2014 was issued demanding Rs. 1,17,21,158/-.

Petitioner was called upon to file objections within 15 days or

pay the assessed amount. They neither paid the demanded

amount nor filed any objections. Consequently, the service

connection was disconnected on 30.07.2014 and HT agreement

was terminated on 30.11.2014 under Clause 5.9.4.3 of the

GTCS.

2.4. Respondents further contend that Petitioner

scheduled and sold power through the Indian Electricity

Exchange (IEX) from January 2013 to June 2014 without actual

generation of electricity, thereby deriving wrongful gain and
12

violating the grid code. It is stated, Unscheduled Interchange

(UI) charges were levied from 28.01.2013 to 01.06.2014

amounting to Rs. 2,42,34,007/-, out of which Petitioner paid up

to 22.12.2013 but defaulted thereafter. Several notices were

issued between October 2013 and August 2014 demanding

payment, but Petitioner failed to comply.

2.5. In view of the continued non-payment, Respondents

issued statutory Form ‘A’, Form ‘B’, and Form ‘C’ notices under

the A.P. SEB (Recovery of Dues) Rules, 1985 demanding

cumulative dues of Rs. 8,00,67,563/- as on 31.07.2019,

including surcharge for delayed payment. The detailed

calculation of arrears, surcharge, and back billing was

furnished, showing the accumulation of total dues of

Rs. 9,53,97,998/- as on 31.07.2021. It is therefore, contended

that the plea of limitation under Section 56(2) of the Act is

misconceived, as the demands were continuously raised from

2013 onwards and reflected as recoverable arrears. Petitioner’s

letter dated 02.03.2019 requesting waiver of UI charges and

offering to pay the back-billing amount in installments

constitutes a clear acknowledgment of debt.

2.6. Respondents also assert that due to non-payment,

letter dated 18.03.2021 was issued to the Sub-Registrar,

Seetharampet, Tandur Village, requesting not to register or
13

transfer any of Petitioner’s properties in Survey Nos. 36, 38, 41,

and 43 of Jakkepally Village, until the outstanding dues were

cleared. The interim order of this Court dated 29.04.2021

causes serious prejudice to the distribution company and

should be vacated. Respondents accordingly, pray that this

Court dismiss the Writ Petition and vacate the interim order

dated 29.04.2021.

3. The 5th Respondent, Superintending Engineer,

Operation Circle, Vikarabad, filed an Additional Counter

Affidavit narrating the subsequent developments that occurred

after the interim orders dated 29.04.2021. It is stated that

during the pendency of Writ Petition, Petitioner approached the

1st Respondent seeking waiver of penal and Ul charges.

Pursuant to this, vide Letter No.

SE/OP/VKB/SAO/JAO/HT/D.No.1960/21 dated 23.09.2021, a

request was made to the District Collector, Vikarabad, to initiate

action under Section 5 of the A.P. State Electricity Board

(Recovery of Dues) Act, 1984. The District Collector accordingly

directed the Tahsildar, Yalal Mandal, to initiate recovery

proceedings vide Letter No. D2/13134/2021 dated 23.11.2021,

resulting in a Demand Notice under Section 7 of the Revenue

Recovery Act, 1864 issued on 28.02.2023 (No. B/7/170/2023).
14

3.1. Subsequently, Petitioner again approached the 1st

Respondent on 09.10.2023, expressing willingness to pay the

total back-billing, penal, and UI charges in easy installments.

On such request, the Chief General Manager (Commercial), vide

Lr.No.CGM(C)/SE(C)/DE(C)-1/ADE-IV/D.No.2602/2023-24

dated 25.10.2023, permitted Petitioner to pay a total

outstanding of Rs. 10,95,64,096/- in twelve (12) monthly

installments, subject to surcharge and adherence to tariff and

GTCS conditions. It is further stated, Petitioner made payment

of the first two installments but defaulted in the third

installment due on 25.12.2023. Consequently, the Assistant

Divisional Engineer (Operations), Tandur, was instructed to

disconnect Petitioner’s linked LT service for non-payment, vide

Lr.No.CGM(C)/SE(C)/DE(C)-1/ADE-IV/D.No.9602/2023-24

dated 27.12.2023.

3.2. The 5th Respondent thus contends that in view of

Petitioner’s unconditional acceptance of the payment schedule

and part-payment thereof, the cause of action in Writ Petition

no longer survives. It is argued that Petitioner cannot now

challenge the validity of demands it has already accepted.

Consequently, Respondents initiated lawful recovery

proceedings through the Revenue Department, and therefore,

submit that Writ Petition is devoid of merit, Petitioner
15

suppressed material facts, and the interim orders have been

misused to delay recovery of legitimate dues. Respondents

therefore pray that this Court dismiss the Writ Petition, uphold

the legality of all demand and recovery proceedings, and vacate

the interim orders dated 29.04.2021.

4. Heard Sri Raja Sripathi Rao, learned Senior

Counsel assisted by Sri Rahul Kandharkar, learned counsel for

petitioner as well as Sri N. Sreedhar Reddy, learned Standing

Counsel for respondents.

5. At the time of filing of Writ Petition, I.A.No. 1 of

2021 was filed seeking stay of all further proceedings in

pursuance of the notices dated 15.12.2015 in Form ‘A’ with

demand of Rs.3,88,11,228/-, another notice dated 21.03.2016

in From-B, with demand of Rs.4,70,78,020 and the subsequent

notice dated 02.08.2019 in Form ‘C’ demanding

Rs.8,00,67,563/- issued by the 5th Respondent against the

Petitioner Company and consequential letter dated 18.03.2021

addressed by the 5th Respondent to the 8th Respondent pending

disposal of the writ petition.. This Court had passed Interim

order on 29.04.2021 in I.A.No.1 of 2021, In view of the same,

there shall be an interim stay, as prayed for.

6. The aforementioned interim order is in subsistence

till date, though Respondents have filed Counter together with

Vacate Petition. Be that as it may, as against the subsistence of

the interim order, have approached the District Collector vide

letter No. 6E/OP/VKB/SAO/JAO/HT/D.No.1960/21 dated

23.09.2021 who, in turn, directed the Thasildar, Kodangal

Tandur, Parigi and Vikarabad, Vikarabad District to initiate

action against the Petitioner Company under Section (5) if the

Andhra Pradesh State Electricity Board (Recovery of Dues) Act,

1984. That apart, it is also apparent that during the subsistence

of the interim order mentioned supra, Respondent No.5 had

issued Memo dated 01.12.2021 to the Divisional Engineer

(Operations), Respondent No.7 to follow-up with the concerned

MRO/Thasildar for recovery of the amounts from Petitioner and

the same was followed by another letter from Respondents vide

letter dated 16.02.2022 to the effect the disconnection of the

service connection, if the above payments are not made cleared,

immediately. This action of Respondents is continued by the

issuance of another letter dated 12.10.2023 requesting the

Tahsildar, Yalal Mandal, Vikarabad District to issue auction

notice to Petitioner Company for recovery of electricity dues at

early date. The afore-mentioned acts of Respondents were taken

in the back drop of the undisputed fact that the 4th
17

Respondent, through its official communication

Lr.No.SE/OP/RR/S/SAO/JAO/HT/D.No.164/14, dated

31.05.2014, had categorically recorded that the High Tension

Agreement dated 01.04.2013 stood terminated with effect from

07.03.2014 under Clause 5.9.4.2 of the General Terms and

Conditions of Supply (GTCS), and further declared that

Petitioner was not due to pay any arrears and that Rs. 56,079/-

stood refundable after adjustment of consumption deposit. Once

such a finding was recorded by the competent authority, the

same is conclusive and binding upon the department. The

subsequent issuance of Form ‘A’ notice dated 15.12.2015, Form

‘B’ notice dated 21.03.2016, and Form ‘C’ notice dated

02.08.2019, demanding Rs.3,88,11,228/-, Rs. 4,70,78,020/-,

and Rs.8,00,67,563/-respectively, stands in direct contradiction

to the Respondents’ own official record and is ex facie arbitrary

and unsustainable, thereby, the aforesaid acts of the

Respondents are acts of commission and omission which are to

be found fault with.

7. This Court observes that Respondents violated the

mandatory procedure contemplated under Section 126 of the

Act, which governs the assessment for unauthorized use of

electricity. The said provision requires that a provisional

assessment be issued by the designated assessing officer,
18

followed by an opportunity to file objections and a final order to

be passed within thirty days. In the instant case, the so-called

inspection report dated 02.07.2014, alleging “indicative

unauthorized drawal of power” and levying Rs.1,17,31,158/-,

was neither preceded nor followed by any provisional

assessment, notice, or hearing. Petitioner was never put on

notice or afforded an opportunity to explain. Consequently, the

alleged assessment and all proceedings based thereon are

rendered void ab initio, being in violation of sub-sections (2) and

(3) of Section 126 of the Act.

8. Respondents invocation of Section 24 of the Indian

Electricity Act, 1910, in the impugned Form ‘A’ and Form ‘B’

notices, is patently without jurisdiction. The said Act stood

repealed upon the enforcement of the Electricity Act, 2003, by

virtue of Section 185 thereof, which expressly repeals the Indian

Electricity Act, 1910, the Electricity (Supply) Act, 1948, and the

Electricity Regulatory Commissions Act, 1998. Any reliance

upon repealed provisions is impermissible in law and

demonstrates total non-application of mind on the part of the

authorities. The impugned notices, having been issued under a

repealed enactment, are legally non est.

9. This Court further finds that the demands raised

are clearly barred by limitation under Section 56(2) of the Act,
19

which mandates that “no sum due from any consumer shall be

recoverable after the period of two years from the date when

such sum first became due, unless such sum has been shown

continuously as recoverable as arrears.” The alleged period of

consumption and assessment pertains to 2013-14, whereas the

first demand notice was issued only in 2015, followed by further

demands in 2016 and 2019. There is no material placed on

record to demonstrate that the alleged dues were ever shown

continuously as recoverable in the subsequent billing cycles.

Therefore, the demands are ex facie time-barred and

unenforceable.

10. The position of law in this regard is no longer res

integra. The Hon’ble Supreme Court in Ajmer Vidyut Vitran

Nigam Ltd. v. Rahamatullah Khan (Civil Appeal No.1672 of

2020) categorically held that “the period of limitation of two

years would commence from the date on which the electricity

charges became first due, and any disconnection or recovery

after the expiry of that period, without showing continuous

arrears, would defeat the very object of Section 56(2).” Similarly,

the Hon’ble Bombay High Court in Maharashtra State

Electricity Distribution Co. Lad. v. Electricity Ombudsman

(W.P. No.10764 of 2011) held that “unless the amount sought to

be recovered has been continuously shown as arrears in the
20

bills, the Distribution Licensee is precluded from demanding

charges beyond two years. The ratio of these binding precedents

squarely applies to the facts of the present case.

11. Respondents’ subsequent action in issuing Memo

dated 19.03.2020, rejecting Petitioner’s detailed representation

dated 02.03.2019 without considering the factual and legal

objections, further exhibits non-application of mind and

procedural irregularity. The rejection is devoid of any reasoning

and contrary to the requirement of a speaking order under

administrative law principles. Likewise, letter dated 18.03.2021,

addressed by the 5th Respondent to the Sub-Registrar,

Seetharampet, Tandur, directing that no registration or transfer

of the Petitioner’s property in Survey Nos.36, 38, 41, and 43,

Jakkepally Village, be affected, is wholly without authority

under the Electricity Act, 2003. No provision of the Act

empowers Respondents to impose restrictions upon property

transactions of consumers. Such an action, de hors any

statutory backing, constitutes a blatant violation of Article 300-

A of the Constitution, which guarantees protection against

deprivation of property save by authority of law.

12. It is further apparent, as mentioned supra, that

during the subsistence of the interim order dated 29.04.2021,

Respondents proceeded to request the District Collector,
21

Vikarabad, through Letter dated 23.09.2021, to initiate recovery

proceedings under Section 5 of the A.P. State Electricity Board

(Recovery of Dues) Act, 1984, culminating in the issuance of

Demand Notice dated 28.02.2023, by the Tahsildar, Yalal

Mandal. Such actions, undertaken during the pendency of Writ

Petition, amount to willful disobedience of the subsisting stay

order and are in flagrant violation of judicial discipline. The

subsequent letter of Petitioner dated 09.10.2023, expressing

willingness to pay the dues in installments, followed by the

permission granted under Letter dated 25.10.2023, was

evidently issued under coercion and pressure of unlawful

recovery proceedings. Such consent obtained under duress

cannot validate an otherwise illegal and time-barred demand.

The conduct of the Petitioner is bona fide. It had made repeated

representations requesting waiver of UI charges, and their

requests have been rejected arbitrarily and Petitioner’s

subsequent request for installment facility was under the

adverse circumstances created at the instance of Respondents,

which is made under coercion of illegal recovery proceedings

and thereby the said act of Petitioner cannot be construed as an

admission of liability. The alleged acceptance of installments

was under duress and cannot extinguish Petitioner’s

substantive legal rights or render Writ Petition infructuous. At
22

this juncture, this Court is bound to follow the law laid down by

the Hon’ble Apex Court in Celir LLP v. Sumati Prasad Bafna1

case wherein it was laid down that all the acts that are down in

violation of the court orders are nullity and as a consequence of

the same, said acts are liable to be set aside. Relevant Portion

from the said order are extracted hereunder :-

“C. ISSUES FOR DETERMINATIN DETERMINATION

109. Having heard the learned counsel appearing for the parties and having
gone through the materials on record, the following questions fall for our
consideration:-

I. Whether any act of contempt could be said to have been committed by the
respondent nos. I to 4 respectively of the judgment and order dated
21.09.2023 passed by this Court in Civil Appeal Nos. 5542-5543 of 2023? In
other words, whether the respondents herein in light of the aforesaid
decision of this Court were duty bound to cancel the Release Deed dated
28.08.2023 and hand over the physical possession along with the original
title deeds of the Secured Asset to the petitioner herein?

II. Whether, the proceedings arising out of S.A. No. 46 of 2022 could have
continued after this Court’s judgment and order dated 21.09.2023 directing
the issuance of the Sale Certificate of the Secured Asset to the petitioner
herein? In other words, whether the petitioner by virtue of the Sale
Certificate dated 27.09.2023 is said to have acquired a clear title to the said
property?

III. Whether the transfer of the Secured Asset in favour of the Subsequent
Transferee by way of the Assignment Agreement dated 28.08.2023 is hit by
lis pendens? In other words, whether the absence of any registration in
accordance with Section 52 of the TPA as amended by the State of
Maharashtra renders the lis pendens inapplicable?

*****
iii. Whether any contempt is said to have been committed by the respondents
herein?

1
2024 SCC On line SC 3727
23

182. In order to decide whether the appellants are guilty of civil contempt, it
would be apposite to refer to Section 2(b) of the Act, 1971, which reads as
under:-

2.Definitions. In this Act, unless the context otherwise requires, xxx xxx xxx

(b) “civil contempt” means wilful disobedience to any judgment, decree,
direction, order, writ or other process of a court or wilful breach of an
undertaking given to a court;”

183. The Black’s Law Dictionary, Sixth Edition, at page 1599, defines
“willful” as hereunder:-

“Proceeding from a conscious motion of the will; voluntary; knowingly,
deliberate. Intending the result which actually comes to pass; designed;
intentional; purposeful; not accidental or involuntary. Premeditated;
malicious; done with evil intent, or with a bad motive or purpose, or with
indifference to the natural consequences; unlawful; without legal
justification. An act or omission is “willfully” done, if done voluntarily and
intentionally and with the specific intent to do something the law forbids, or
with the specific intent to fail to do something the law requires to be done,
that is to say, with bad purpose elther to disobey or to disregard the law. It is
a word of many meanings, with its construction often influenced by its
context. In civil actions, the word (willfully) often denotes an act which is
intentional, or knowing, or voluntary, as distinguished from accidental. But
when used in a stubbornly, obstinately, perversely.

184. In Ashok Paper Kamgar Union v. Dharam Godha, (2003) 11 SCC 1, the
expression ‘wilful disobedience in the context of Section 2 (b) of the Act, 1971
was read to mean an act or omission done voluntarily and intentionally with
the specific intent to do something, which the law forbids or with the specific
intention to fail to do something which the law requires to be done.
Wilfulness signifies deliberate action done with evil Intent and bad motive
and purpose. It should not be an act, which requires and is dependent upon,
either wholly or partly, any act or omission by a third party for compliance.

185. Hence, the expression or word “wilful” means act or omission which is
done voluntarily or intentionally and with the specific intent to do something
which the law forbids or with the specific intent to fail to do something the
law requires to be done, that is to say with bad purpose either to disobey or
to disregard the law. It signifies a deliberate action done with evil intent or
with a bad motive or purpose.

186. Article 129 of the Constitution declares this Court as a “a court of
record” and states that it shall have all the powers of such a court including
the power to punish for contempt of itself. The provisions of the Act, 1971
and the Rules framed thereunder form a part of a special statutory
Jurisdiction that is vested in courts to punish an offending party for its
contemptuous conduct. It needs no emphasis that the power of contempt
ought to be exercised sparingly with great care and caution. The
contemptuous act complained of must be such that would result in
obstruction of justice, adversely affect the majesty of law and impact the
dignity of the courts of law.

187. It must also be understood that contempt proceedings are sui generis
inasmuch as the Law of Evidence and the Criminal Procedure Code, 1973
are not to be strictly applied. At the same time, the procedure adopted during
the contempt proceedings must be fair and just that is to say the principles
governing the Rule of law must be extended to the party against whom
contempt proceedings have been initiated. The party must have every
opportunity to place its position before the Court. Such a party must not be
left unheard under any circumstances.

188. In Ram Kishan v. Tarun Bajaj, (2014) 16 SCC 204 it was held that the
contempt jurisdiction conferred on to the law courts power to punish an
offender not only for his wilful disobedience but also for contumacious
conduct or obstruction to the majesty of law. It further observed that such
power has been conferred for the simple reason that the respect and
authority commanded by the courts of law are the greatest guarantee to an
ordinary citizen that his rights shall be protected and the entire democratic
fabric of the society will crumble down if the respect of the judiciary is
undermined. The relevant observations read as under:-

“11. The contempt jurisdiction conferred on to the law courts power to
punish an offender for his wilful disobedience/contumacious conduct or
obstruction to the majesty of law, for the reason that respect and authority
commanded by the courts of law are the greatest quarantee to an ordinary
citizen that his rights shall be protected and the entire democratic fabric of
the society will crumble down if the respect of the judiciary is undermined.
Undoubtedly, the contempt jurisdiction is a powerful weapon in the hands of
the courts of law but that by itself operates as a string of caution and unless,
thus, otherwise satisfied beyond reasonable doubt, it would neither be fair
25

nor reasonable for the law courts to exercise jurisdiction under the Act. The
proceedings are quasi criminal in nature, and therefore, standard of proof
required in these proceedings is beyond all reasonable doubt. It would rather
be hazardous to impose sentence for contempt on the authorities in exercise
of the contempt jurisdiction on mere probabilities. […]”

(Emphasis supplied)

189. In Murray & Co. v. Ashok Kr. Newatia, (2000) 2 SCC 367 this Court
held that the purpose of contempt jurisdiction is to uphold the majesty and
dignity of the courts of law since the image of such a majesty in the minds of
the people cannot be led to be distorted, as any Indulgence which can even
remotely be termed to affect the majesty of law would result in the society
losing its confidence and faith in the judiciary and the law courts forfeiting
the trust and confidence of the people in general. The relevant observations
read as under:-

“9 […] The purpose of contempt jurisdiction is to uphold the majesty and
dignity of the courts of law since the image of such a majesty in the minds of
the people cannot be led to be distorted. The respect and authority
commanded by courts of law are the greatest guarantee to an ordinary
citizen and the entire democratic fabric of the society will crumble down if
the respect for the judiciary is undermined. It is true that the judiciary will
be judged by the people for what the judiciary does, but in the event of any
indulgence which can even remotely be termed to affect the majesty of law,
the society is bound to lose confidence and faith in the judiciary and the law
courts thus, would forfeit the trust and confidence of the people in general.”

(Emphasis supplied)

190. In Pushpaben v. Narandas Badiani, (1979) 2 SCC 394, it was held
that contempt of court is a special jurisdiction to be exercised sparingly and
with caution whenever an act adversely affects the administration of justice
or which tends to impede its course or tends to shake public confidence in
the judicial institutions. It further held that this jurisdiction is to be
exercised not for the protection of the dignity of an individual judge but to
protect the administration of justice from being maligned and ensure that the
authority of the courts is neither imperilled nor is the administration of
justice by it interfered with in any manner. The relevant observations read as
under:-

42. The contempt of court is a special jurisdiction to be exercised sparingly
and with caution whenever an act adversely affects the administration of
26

justice or which tends to impede its course or tends to shake public
confidence in the judicial institutions. This jurisdiction may also be exercised
when the act complained of adversely affects the majesty of law or dignity of
the courts. The purpose of contempt jurisdiction is to uphold the majesty
and dignity of the courts of law. It is an unusual type of jurisdiction
combining “the jury, the judge and the hangman” and it is so because the
court is not adjudicating upon any claim between litigating parties. This
jurisdiction is not exercised to protect the dignity of an individual judge but
to protect the administration of justice from being maligned. In the general
interest of the community it is imperative that the authority of courts should
not be imperilled and there should be no unjustifiable interference in the
administration of justice. It is a matter between the court and the contemner
and third parties cannot intervene. It is exercised in a summary manner in
aid of the administration of justice, the majesty of law and the dignity of the
courts. No such act can be permitted which may have the tendency to shake
the public confidence in the fairness and impartiality of the administration of
justice.” (Emphasis supplied)

191. In Reliance Petrochemicals Ltd. v. Proprietors of Indian Express
Newspapers, Bombay Pvt. Ltd. (1988) 4 SCC 592 it was observed that the
process of due course of administration of justice must remain unimpaired,
Public interest demands that there should be no interference with judicial
process and the effect of the judicial decision should not be pre-empted or
circumvented. The relevant observations read as under:-

“35. The question of contempt must be judged in a particular situation. The
process of due course of administration of justice must remain unimpaired.
Public interest demands that there should be no interference with judicial
process and the effect of the judicial decision should not be pre-empted or
circumvented by public agitation or publications. It has to be remembered
that even at turbulent times through which the developing countries are
passing, contempt of court means interference with the due administration of
justice.” (Emphasis supplied)

192. In Rita Markandey v. Surjit Singh Arora, (1996) 6 SCC 14, it was
observed that even if parties have not filed an undertaking before the court
but if the court was induced to sanction a particular course of action or
inaction on the representation made by a party and the court ultimately
finds that the party never intended to act on the said representation or such
27

representation was false, the party would be guilty of committing contempt.
The relevant observations read as under:-

12. Law is well settled that if any party gives an undertaking to the court to
vacate the deliberate from which he is liable to be evicted underlivres an us
of the court and there is a clear and de did n breach thereof it amounts to
civil contempt but since, in the present case, the peling punished for file any
undertaking as envisaged in the not but sings Court the question of his being
punished for breach thereof does not arise. However, in our considered view
even in a caset if the court undertaking is given, a party to a litigation may
be held liable for such contempt if the court of induced to sanction a
particular course of action or inaction on the basis of the representation of
such a party and the court ultimately finds that the party never intended to
act on such representation or such representation was false In other words,
if on the representation of the respondent herein the Court was persuaded to
pass the order dated 5-10-1995 extending the time for vacation of the suit
premises, he may be held guilty of contempt of court, notwithstanding nont
furnishing of the undertaking, if it is found that the representation was false
and the respondent never intended to act upon it. […]” (Emphasis supplied)

193. The Borrower and the Subsequent Transferee/the alleged contemnors
herein placing reliance on the decision of this Court in Patel Rajnikant
(supra) have contended that in the absence of any disobedience or wilful
breach of a prohibitory order no contempt could be said to have been
committed. It has been further canvased that this Court in the Main Appeals
never issued any specific direction either to the Borrower or the Subsequent
Transferee, & therefore no contempt could be said to have been committed.

194. In Patel Rajnikant (supra) this Court upon examining Section 2

(b) of the Act, 1971 held that to hold a person guilty of having committed
contempt, there must be a judgment, order, direction etc. by a court, there
must be disobedience of such judgment, order, direction etc and that such
disobedience must be willful. The relevant provisions read as under:-

“58. The provisions of the Contempt of Courts Act, 1971 have also been
invoked. Section 2 of the Act is a definition clause. Clause (a) enacts that
contempt of court means “civil contempt or criminal contempt. Clause (b)
defines “civil contempt” thus.

“2. (b) civil contempt” means wilful disobedience to any judgment, decree,
direction, order, wit or other process of a court or wilful breach of an
undertaking given to a court;” Reading of the above clause makes it clear
28

that the following conditions must be satisfied before a person can be held to
have committed a civil contempt:

(i) there must be a judgment, decree, direction, order, writ or other process of
a court (or an undertaking given to a court); (ii) there must be disobedience
to such judgment, decree, direction, order, writ or other process of a court (or
breach of undertaking given to a court); and (iii) such disobedience of
judgment, decree, direction, order, writ or other process of a court (or breach
of undertaking) must be wilful.”

195. However, the subsequent observations made by this Court in Patel
Rajnikant (supra) are significant. It observed that the court should not
hesitate in wielding the potent weapon of contempt, It is for the proper
administration of justice and to ensure due compliance with the orders
passed by it in order to uphold and maintain the dignity of courts and
majesty of law. The relevant observations read as under:-

“70. From the above decisions, it is clear that punishing a person for
contempt of court is indeed a drastic step and normally such action should
not be taken. At the same time, however, it is not only the power but the
duty of the court to uphold and maintain the dignity of courts and majesty of
law which may call for such extreme step. If for proper administration of
justice and to ensure due compliance with the orders passed by a court, it is
required to take strict view under the Act, it should not hesitate in wielding
the potent weapon of contempt.” (Emphasis supplied)

196. What can be discerned from the above exposition of law is that any act
of disobedience, defiance, or any attempt to malign the authority of the court
would amount to contempt because they undermine the respect and trust
that the public reposes in judicial institutions. The judicial process relies on
the confidence of society, and any act that disrupts or disrespects this
process threatens to erode the foundation of justice and order.

197. Contempt jurisdiction exists to preserve the majesty and sanctity of the
law. Courts are the guardians of justice, and their decisions must command
respect and compliance to ensure the proper functioning of society. When
Individuals or entities challenge the authority of courts through wilful
disobedience or obstructive behaviour, they undermine the rule of law and
create the risk of anarchy. Contempt serves as a mechanism to protect the
integrity of the courts, ensuring that they remain a symbol of fairness,
impartiality, and accountability.

198. When judicial orders are openly flouted or court proceedings are
disrespected, it sends a signal that the rule of law is ineffective, leading to a
loss of trust in the system. Judicial decisions must remain unimpaired, free
from external pressures, manipulation, or circumvention. Acts that attempt
to mislead the court, obstruct its functioning or frustrate its decisions distort
the process of justice and would amount to contempt.

199. The contempt jurisdiction of this court cannot be construed by any
formulaic or rigid approach. Merely because there is no prohibitory order or
no specific direction issued the same would not mean that the parties cannot
be held guilty of contempt. The Contempt jurisdiction of the court extends
beyond the mere direct disobedience of explicit orders or prohibitory
directions issued by the court. Even in the absence of such specific
mandates, the deliberate conduct of parties aimed at frustrating court
proceedings or circumventing its eventual decision may amount to contempt.
This is because such actions strike at the heart of the judicial process,
undermining its authority and obstructing its ability to deliver justice
effectively. The authority of courts must be respected not only in the letter of
their orders but also in the broader spirit of the proceedings before them.

200. Any contumacious conduct of the parties to bypass or nullify the
decision of the court or render it ineffective, or to frustrate the proceedings of
the court, or to enure any undue advantage therefrom would amount to
contempt. Attempts to sidestep the court’s jurisdiction or manipulate the
course of litigation through dishonest or obstructive conduct or malign or
distort the decision of the courts would inevitably tantamount to contempt
sans any prohibitory order or direction to such effect.

201. Thus, the mere conduct of parties aimed at frustrating the court
proceedings or circumventing its decisions, even without an explicit
prohibitory order, constitutes contempt. Such actions interfere with the
administration of justice, undermine e the respect and authority of the
judiciary, and threaten the rule of law.

202. However, at the same time, the power of contempt ought to be exercised
sparingly and with caution and care. It operates with a string of caution and
unless otherwise satisfied beyond doubt, it would neither be fair nor
reasonable for the courts to resort to such powers. The standard of proof
required before a person is held guilty of committing contempt of court must
be beyond all reasonable doubt.

203. The courts while exercising its contempt jurisdiction must remain
circumspect, more particularly, where there exists a possibility of the order
being amenable to more than one interpretation. In Jhareshwar Prasad Paul
v. Tarak Nath Ganguly reported in (2002) 5 SCC 352 it was held that if an
order does not contain any specific direction regarding a matter or if there is
any ambiguity in the directions issued therein then it would be appropriate
to direct the parties to approach the court which disposed of the matter for
necessary clarification of the order instead of the court exercising its
contempt jurisdiction thereby taking upon itself the power to decide the
original proceeding in a manner not dealt with by the court passing the
judgment or order. The relevant observations read as under:-

“The contempt jurisdiction should be confined to the question whether there
has been any deliberate disobedience of the order of the court and if the
conduct of the party who is alleged to have committed such disobedience is
contumacious. The court exercising contempt jurisdiction is not entitled to
enter into questions which have not been dealt with and decided in the
judgment or order… The court has to consider the direction issued in the
judgment or order and not to consider the question as to what the judgment
or order should have contained. At the cost of repetition, be it stated here
that the court exercising contempt jurisdiction is primarily concerned with
the question of contumacious conduct of the party, which is alleged to have
committed deliberate default in complying with the directions in the
judgment or order. If the judgment or order does not contain any specific
direction regarding a matter or if there is any ambiguity in the directions
issued therein then it will be better to direct the parties to approach the
court which disposed of the matter for clarification of the order instead of the
court exercising contempt jurisdiction taking upon itself the power to decide
the original proceeding in a manner not dealt with by the court passing the
judgment or order.

(Emphasis supplied)

204. It is true that this Court in its decision rendered in the Main Appeals
had not issued any specific direction either to the Borrower or the
Subsequent Transferee as regards the handing over of physical possession
and the original title deed to the Secured Asset, or the proceedings pending
before the DRT in S.A. No. 46 of 2022. However, the same would not mean
that the decision of this Court in the Main Appeal was bereft of any direction
as to the outcome of its findings. This Court in the operative portion of the
31

Main Appeals stated in unequivocal terms that the confirmation of the sale
by Bank under Rule 9(2) of the SARFAESI Rules had vested the petitioner
herein with a right to obtain the certificate of sale of the Secured Asset. It
further held categorically that the Borrower herein could not have redeemed
the mortgage upon publication of the 9th auction notice. Furthermore, this
Court explicitly directed the Bank to not only issue the Sale Certificate to the
petitioner herein in accordance with Rule 9(6) of the SARFAESI Rules but
also directed the refund of the amount of Rs. 129 crore paid by the Borrower.
Moreover, the impugned order of the High Court had been set aside by this
Court in toto. As already discussed in paragraph 154, the natural corollary
to the aforesaid was that the judgment and order dated 21.09.2023 of this
Court in Civil Appeals Nos. 5542-5543 of 2023 had held as under:-

(i) The auction proceedings and the sale conducted thereto in favour of the
petitioner herein pursuant to the 9th auction notice dated 12.06.2023 had
been categorically affirmed and upheld. (ii) After having directed the issuance
of the Sale Certificate in terms of Rule 9(6) of the SARFAESI Rules, nothing
remained thereafter, as issuance of sale certificate is absolute and as such
the proceedings before the DRT had been rendered infructuous. (iii) Having
directed not only the issuance of the Sale Certificate to the Secured Asset but
also the refund of the amount paid by the Borrower, towards redemption of
mortgage, necessarily entailed that the Borrower was duty bound to return
the possession and title deeds of the secured asset to the Bank for the
purpose of handing the same over to (iv) Having set aside the impugned order
passed by the High Court the petitioner in toto rendered any and all acts
done pursuant thereto as null and void, and the Borrower and the
Subsequent Transferee herein were required to get the Release Deed and the
Assignment Agreement dated 28.08.2023 cancelled.

(v) Having expressly directed the issuance of the Sale Certificate it
necessarily excluded all other inconsistent and contrary rights and reliefs
including the right to pursue the DRT proceedings in view of the maxim
Expressio Unius Est Exclusio Alterius.

205. Where a decision is rendered and the impugned order is set aside, it
behoves any logic that an express direction to act must be given in respect of
every aspect of the decision. The parties are duty bound to act in accordance
with common sense. It is axiomatic that a party should obey both the letter
and the spirit of a court order, and it is neither open for the parties to adopt
a myopic and blinkered view of such decision nor any such interpretation or
32

view that sub-serves their own interests. It is ultimately the purpose for
which the order was granted that will be the lodestar in guiding the parties
as to the true effect of the order and determination of the court.

206. If at all the parties are in doubts over the judgment and order of a court,
the correct approach is to prefer a miscellaneous application for seeking
clarification rather than proceeding to presume a self-serving interpretation
of the decision. At this stage, we may also explain the correct approach to be
adopted by the other courts and forums where a party seeks to espouse a
cause based on its own understanding or interpretation of a decision of an
higher authority. In such situations, the courts or forums should neither aid
the parties in their attempt to reinterpret the decision of a higher court nor
should they embark on an inquisitorial exercise of their own in order to
derive the scope or intent of the order in question. The courts and tribunals
should not conflate a decision of a higher court that declares a law with a
decision that declares the inter-se rights of a parties, the former only
operates as a precedent and thus, it is open for the lower courts to apply
their minds to assess whether the same is applicable to the issues before it
or what law has been laid down therein. However, the latter not only has
precedential value but also carries with it the weight of determination of the
issues directly involved between the very parties before it, the subject-matter
itself and by extension the entire cause of action. Since such decisions have
directly decided or given a finding on the inter-se rights and issues of the
same parties that are before it and as such has to a certain extent a direct
and palpable effect on the cause of action before it, in such circumstances,
the courts and tribunals should refrain from interpreting or examining the
scope or effect of such decisions on their own as the same would amount to
relitigating the very same issues and rather should relegate the parties to
seek clarification from the court that passed the order and adjourn further
proceedings sine die.

207. We further take note of the fact that both the Borrower and the
Subsequent Transferee made several attempts to prevent the effective
implementation of the judgment and order dated 21.09.2023 passed by this
Court and thereby thwart the attempts of the Bank to hand over the physical
possession and the original title deeds of the Secured Asset to the petitioner.

(i) First, both the Borrower and the Subsequent Transferee addressed a letter
to the MIDC in whose industrial area the Secured Asset was situated asking
them not to entertain any request from the Bank or the petitioner regarding
33

the transfer of the leasehold rights of the Secured Asset in favour of the
petitioner.

(ii) Secondly, the Subsequent Transferee vide its letter dated 05.10.2023 even
asked the Sub-Registrar Office, Nerul Thane not to entertain any request of
the petitioner regarding the transfer of the Secured Asset

(iii) The self-serving stance of the Borrower to initially contend that it no
longer had any role or authority over the secured asset in view of its transfer
and thus, cannot handover the physical possession and the original title
deeds to the same, yet in the same breath filing an application seeking stay
of the notice for obtaining physical possession of the Secured Asset.

(iv) The police complaint lodged by the Subsequent Transferee against the
Bank by distorting the decision of this Court in the Main Appeals and to
thwart the attempts for its implementation.

(v) The patently false contention of the Subsequent Transferee that it
instituted the suit to prevent its unlawful dispossession of the Secured Asset
due to the alleged illegal attempts of the petitioner to take the same forcefully
yet, in the said suit instead of seeking permanent injunction, the Subsequent
Transferee not only sought the relief of declaration of title in its favour but
also the Invalidation of the Sale Certificate issued to the petitioner, contrary
to the decision of this Court in the Main Appeals.

208. In the facts of the case, we are convinced that both the Borrower and
the Subsequent Transferee have committed contempt of this Court’s
judgment and order dated 21.09.2023 in the Main Appeals. The
aforementioned acts of the contemnors are nothing more than a gamble on
their part to circumvent and undermine the findings and directions passed
by this Court in the Main Appeals. Similarly, the lame excuses offered by
them for explaining their conduct are also nothing more than a calculated
attempt in the hope that they would get away with legitimizing the illegal
Assignment Agreement even after the decision of this Court, and is equally
contemptuous.

209. However, on an overall conspectus of the facts of the present case, while
the initial acts of the Borrower and the Subsequent Transferee are in
violation of this Court’s judgment and order dated 21.09.2023, yet the efforts
on their part to take steps and make amends by withdrawing the Special
Civil Suit No. 5 of 2024 along with their belated unconditional undertaking to
comply with any further order that this Court may deem fit and proper to
pass, demonstrates their effort and willingness to purge themselves of their
34

contemptuous conducts. Thus, we are inclined to provide one last order
dated 21.09.2023 passed by this Court and further comply with the
directions issued in the present contempt petition, and thus, deem it fit not
to hold them guilty of contempt for the present moment.
iv. Circumstances when a sale of property by auction or other means under
the SARFAESI Act may be set-aside after its confirmation.

210. We must also address one very important aspect as regards when the
sale of secured asset either by auction or any other method under the
SARFAESI Act may be challenged or set-aside after its confirmation.

211. In B. Arvind Kumar v. Govt of India, (2007) 5 SCC 745 this Court whilst
dealing with a plea to set aside the sale of the property therein by way of
public auction by the official receiver, it was held that when the sale is
confirmed by the court, the sale becomes absolute and therefrom the title
vests in the auction purchaser. The relevant observations read as under:-

“12. […] When a property is sold by public auction in pursuance of an
order of the court and the bid is accepted and the sale is confirmed by the
court in favour of the purchaser, the sale becomes absolute and the title
vests in the purchaser. A sale certificate is issued to the purchaser only
when the sale becomes absolute. The sale certificate is merely the evidence of
such title. It is well settled that when an auction purchaser derives title on
confirmation of sale in his favour, and a sale certificate is issued evidencing
such sale and title, no further deed of transfer from the court is
contemplated or required. In this case, the sale certificate itself was
registered, though such a sale certificate issued by a court or an officer
authorised by the court, does not require registration. Section 17(2)(xii) of the
Registration Act, 1908 specifically provides that a certificate of sale granted
to any purchaser of any property sold by a public auction by a Civil or
Revenue Officer does not fall under the category of non-testamentary
documents which require registration under subsections (b) and (c) of
Section 17(1) of the said Act. We therefore hold that the High Court
committed a serious error in holding that the sale certificate did not convey
any right, title or interest to plaintiff’s father for want of a registered deed of
transfer.”

(Emphasis supplied)

212. In LICA (P) Ltd. v. Official Liquidator, (1996) 85 Comp Cas 788 (SC)
this Court held that the purpose of an open auction is to get the most
remunerative price with the highest possible public participation, and as
35

such the courts shall exercise their discretion to interfere where the auction
suffers from any fraud or inadequate pricing or underbidding that too with
circumspection, keeping in view the facts of each case. The relevant
observations read as under:-

“The purpose of an open auction is to get the most remunerative price and it
is the duty of the court to keep openness of the auction so that the intending
bidders would be free to participate and offer higher value. If that path is cut
down or closed the possibility of fraud or to secure inadequate price or
underbidding would loom large. The court would, therefore, have to exercise
its discretion wisely and with circumspection and keeping in view the facts
and circumstances in each case.” (Emphasis supplied)

213. This Court in Valji Khimji (supra) held that once an auction is
confirmed the objections to the same should not ordinarily be allowed, except
on very limited grounds like fraud as otherwise no auction would ever be
complete. The relevant observations read as under:-

“11. It may be noted that the auction-sale was done after adequate publicity
in well-known newspapers. Hence, if any one wanted to make a bid in the
auction he should have participated in the said auction and made his bid.
Moreover, even after the auction the sale was confirmed by the High Court
only on 30-7-2003, and any objection to the sale could have been filed prior
to that date However, in our opinion, entertaining objections after the sale is
confirmed should not ordinarily be allowed, except on very limited grounds
like fraud, otherwise no auction-sale will ever be complete.
xxx 29. […] It may be mentioned that auctions are fuctiolypesub(1) where the
auction is not subject to subsequent confirmation, and (2) where the auction
is subject to subsequent confirmation by some authority after the auction
held. 30. In the first case mentioned above, le. where the auction is not
subject to confirmation by any authority, the auction is complete on the fall
of the hammer, and certain rights accrue in favour of the auction-purchaser.
However, where the auction is subject to subsequent confirmation by some
authority (under a statute or terms of the auction) the auction is not
complete and no rights accrue until the sale is confirmed by the said
authority. Once, however, the sale is confirmed by that authority, certain
rights accrue in favour of the auction-purchaser, and these rights cannot be
extinguished except in exceptional cases such as fraud.” (Emphasis supplied)

214. In Ram Kishun v. State of Uttar Pradesh reported in (2012) 11 SCC 511
this Court although held that where public money is to be recovered such
36

recovery should be done expeditiously, yet the same must be done strictly in
accordance with the procedure prescribed by law. However, this Court after
examining a plethora of other decisions further held that once the sale has
been confirmed it cannot be set aside unless a fundamental procedural error
has occurred or sale certificate had been obtained by misrepresentation or
fraud. The relevant observations read as under:-

“13. Undoubtedly, public money should be recovered and recovery should be
made expeditiously. But it does not mean that the financial institutions
which are concerned only with the recovery of their loans, may be permitted
to behave like property dealers and be permitted further to dispose of the
secured assets in any unreasonable or arbitrary manner in flagrant violation
of the statutory provisions.

28. In view of the above, the law can be summarised to the effect that the
recovery of the public dues must be made strictly in accordance with the
procedure prescribed by law. The liability of a surety is coextensive with that
of the principal debtor. In case there are more than one surety the liability is
to be divided equally among the sureties for unpaid amount of loan. Once the
sale has been confirmed it cannot be set aside unless a fundamental
procedural error has occurred or sale certificate had been obtained by
misrepresentation or fraud.” (Emphasis supplied)

215. In PHR Invent Educational Society v. UCO Bank, (2024) 6 SCC 579 it
was again reiterated that an auction-sale which stands confirmed can only
be interfered with when there was any fraud or collusion, and entertaining of
issues regarding the validity of such auction would amount to reopening
issues which have achieved finality. The relevant observations read as
under:-

“34. In our view, the High Court ought to have taken into consideration that
the confirmed auction-sale could have been interfered with only when there
was a fraud or collusion. The present case was not a case of fraud or
collusion. The effect of the order of the High Court would be again reopening
the issues which have achieved finality.

216. In V.S. Palanivel v. P. Sriram, 2024 INSC 659 this Court again
reiterated unless there are some serious flaws in the conduct of the auction
as for example perpetration of a fraud/collusion, grave irregularities that go
to the root of such an auction, courts must ordinarily refrain from setting
them aside keeping in mind the domino effect such an order would have. The
relevant observations read as under:-

“36.14. This Court must underscore the well settled legal position
that once an auction is confirmed, it ought to be interfered with on fairly
limited grounds. (Refer: Valji Khimji and Co. v. Hindustan Nitro Product
(Gujarat) Ltd. (Official Liquidator) (2008) 9 SCC 299: 2008: INSC: 925 and
Celir LLP v. Bafna Motors (Mumbai) Private Limited (2024) 2 SCC 1: 2023:

INSC: 838). Repeated interferences in public auction also results in causing
uncertainty and frustrates the very purpose of holding auctions. (Refer: K.
Kumara Gupta v. Sri Markendaya and Sri Omkareswara Swamy Temple
(2022) 5 SCC 710: 2022: INSC: 207). Unless there are some serious flaws in
the conduct of the auction as for example perpetration of a fraud/collusion,
grave irregularities that go to the root of such an auction, courts must
ordinarily refrain from setting them aside keeping in mind the domino effect
such an order would have. Given the facts noted above, we shall refrain from
cancelling the sale or declaring the Sale Deed as vold. Instead, it is deemed
appropriate to balance the equities by directing the Auction Purchaser to pay
an additional amount in respect of the subject property.”

(Emphasis supplied)

217. In the present lis, it is not the case of the Borrower herein that the 9th
auction conducted by the Bank was a result of any collusion or fraud either
at the behest of the Bank or the Successful Auction Purchaser herein. Aside
from the lack of any 15-days gap between the notice of sale and the notice of
auction, no other illegality has been imputed to the aforesaid auction
proceedings. It is also not the case of the Borrower that due to the absence of
the aforesaid statutory period, any prejudice was caused or that it was
prevented from effectively exercising its rights due to such procedural
infirmity. Despite a total of eight auctions being conducted by the Bank from
April, 2022 to June, 2023, not once did the Borrower express its desire to
redeem the mortgage. Even when the auction notice came to be issued on
12.06.2023, the Borrower never intimated that it was in process of
redeeming the mortgage with the aid of the Subsequent Transferee and that
the auction be delayed even though, as per the parties own submissions,
they started exploring the possibility of redeeming the mortgage and
thereafter transferring in June, 2023 itself. In such circumstances, given the
fact that although the S.A. No. 46 of 2022 was still pending, yet since there
was nothing before this Court to doubt the validity of the 9th auction, this
Court in the Main Appeals confirmed the sale in favour of the petitioner and
brought the auction proceedings to its logical conclusion by directing the
38

issuance of the sale certificate. The Borrower never raised the issue of the
validity of the 9th auction notice despite having sufficient opportunities to do
so even after the pronouncement of the decision in the Main Appeals, and
that such pleas are being raised only after the auction was confirmed in
favour of the petitioner, we find no good reason to interfere with the 9th
auction conducted by the Bank.

218. Any sale by auction or other public procurement methods once already
confirmed or concluded ought not to be set aside or interfered with lightly
except on grounds that go to the core of such sale process, such as either
being collusive, fraudulent or vitiated by inadequate pricing or underbidding.
Mere irregularity or deviation from a rule which does not have any
fundamental procedural error does not take away the foundation of authority
for such proceeding. In such cases, courts in particular should be mindful to
refrain entertaining any ground for challenging an auction which either could
have been taken earlier before the sale was conducted and confirmed or
where no substantial injury has been caused on account of such irregularity.

219. In the present lis, apart from the want of statutory notice period, no
other challenge has been laid to the 9th auction proceedings on the ground
of it being either collusive, fraudulent or vitlated by inadequate pricing or
underbidding, thus, the auction cannot be said to suffer from any
fundamental procedural error, and as such does not warrant the interference
of this Court, particularly when the plea sought to be raised to challenge the
same could have been raised earlier.

220. The aforesaid may be looked at from one another angle. Even if the 9th
auction were to be held illegal and bad in law by virtue of the aforesaid S.A.
No. 46 of 2022, it would not mean that the auction purchaser would by
virtue of such finding lose all its rights to the secured asset, even after
having the sale confirmed in its favour. In this regard we may refer to the
decision of this Court in Janak Raj v. Gurdilal Singh, AIR 1967 SC 608
wherein it was held that even if a decree pursuant to which auction was
previously conducted was later set aside, the successful auction purchaser’s
rights will remain unaffected and he would still be entitled to confirmation of
sale in its favour. The relevant observations read as under:-

“27. For the reasons already given and the decisions noticed, it must be held
that the appellant auction purchaser was entitled to a confirmation of the
sale notwithstanding the fact that after the holding of the sale the decree had
been set aside. The policy of the Legislature seems to be that unless a
39

stranger auction-purchaser is protected against the vicissitudes of the
fortunes of the suit, sales in execution would not attract customers and it
would be to the detriment of the interest of the borrower and the creditor
alike if sales were allowed to be impugned merely because the decree was
ultimately set aside or modified. The Code of Civil Procedure of 1908 makes
ample provision for the protection of the interest of the judgment-debtor who
feels that the decree ought not to have been passed against him. On the facts
of this case, it is difficult to see why the judgment-debtor did not take resort
to the provisions of O. XXI r. 89. The decree was for a small amount and he
could have easily deposited the decretal amount besides 5 per cent of the
purchase money and thus have the sale set aside. For reasons which are not
known to us he did not do so.

(Emphasis supplied)
E. FINALORDER

221. Before we close this judgment, we may address yet another submission
canvassed on behalf of the respondents herein. It was contended by the
Borrower and the Subsequent Transferee that the petitioner herein having
not prayed for the relief of physical possession in the original proceedings
cannot be permitted to expand the scope of the said proceedings and now
seek the relief which it previously did not. In this regard, we may only refer to
the decision of this Court in Baranagore Jute Factory Plc. Mazdoor v.
Baranagore Jute Factory Plc., AIR 2017 OnLine SC 410 wherein it was held
the court not only has a duty to issue appropriate directions for remedying or
rectifying the things done in violation of its orders but also the power to take
restitutive measures at any stage of the proceedings. The relevant
observations read as under:-

“… As held by this Court in Delhi Development Authority v. Skipper
Construction Co. (P) Ltd., and going a step further, the Court has a duty to
issue appropriate directions for remedying or rectifying the things done in
violation of the orders. In that regard, the Court may even take restitutive
measures at any stage of the proceedings. […]”

(Emphasis supplied) 222. Similarly, a Three-Judge Bench of this Court in the
case of State Bank of India v. Dr. Vijay Mallya, 2022 SCC OnLine SC SC 826,
in clear terms said that apart from punishing the contemnor for his
contumacious conduct, the majesty of law may demand that appropriate
40

directions be issued by the Court so that any advantage secured as a result
of such contumacious conduct is completely nullified. The approach may
require the Court to issue directions either for reversal of the transactions in
question by declaring said transactions to be void or passing appropriate
directions to the concerned authorities to see that the contumacious conduct
on the part of the contemnor does not continue to enure to the advantage of
the contemnor or anyone claiming under him

223. In view of the aforesaid, we pass the following orders and directions:-

(1) The legality and validity of the 9th auction proceedings conducted
pursuant to the notice of sale dated 12.06.2022 is upheld. The sale of the
Secured Asset to the petitioner is hereby confirmed and the title conferred
through the Sale Certificate dated 27.09.2023 is declared to be absolute.

(ii) The Borrower and the Bank shall immediately take steps for the
cancellation of the Release Deed dated 28.08.2023 within a period of one
week from the date of pronouncement.

(iii) The Borrower shall also unconditionally withdraw the S.A. No. 46 of 2022
pending before the DRT within a period of one week from the date of
pronouncement.

(iv) The Assignment Agreement dated 28.08.2023 is hit by lis pendens and
hereby declared void. The Subsequent Transferee shall hand over the
peaceful physical possession of the Secured Asset along with its original title
deeds to the Bank within a period of one week from the date of
pronouncement of this judgment. In the event of any further hinderance or
any obstruction that may be caused by the Borrower or the Subsequent
Transferee while taking over the possession of the property then in such
circumstances the Bank shall take the assistance of police.

(v) The Subsequent Transferee shall also withdraw the police complaint dated
17.01.2024 lodged by it within a period of one week from the date of
pronouncement of this judgment.

(vi) We clarify that the Subsequent Transferee is not entitled to recover the
amount paid by it towards redeeming the second charge over the Secured
Asset or any other dues or amount paid in respect of the same from the
petitioner herein.

vii) The Bank shall refund the amount of Rs. 129 crore paid by the Borrower
towards the redemption of mortgage without any interest only after the
aforesaid directions have been compiled to the letter and spirit.
41

(viii) The Subsequent Transferee is at liberty to recover the amount paid by it
towards the Assignment Agreement dated 28.06.2023 and any other amount
from the Borrower by availing appropriate legal remedy as may be available
under the law.

224. Let this matter be notified once again before this Bench after a period of
two weeks to report compliance of the aforesaid directions.

225. There shall be no order as to costs.”

13. The ratio laid down by the Hon’ble Apex Court is

directly applicable to the present lis inter alia, issuance of the

money recovery proceedings as against Petitioner and issuance

of notices for putting the properties of Petitioner to auction.

Under the compulsive and adverse circumstances created at the

instance/s of Respondents, Petitioner was left no option to give

a letter requesting payments to be made in installments and to

prove his bona fides had paid part of the amounts. This conduct

of Petitioner cannot be viewed and projected by Respondents

that Petitioner having accepted the payment of money under

installments cannot now turn around and contest this Writ

Petition. This argument of Respondents is to be received only to

be rejected, as the acts of commission of the Respondents is/are

during the continuation of the Interim Orders and thus are

illegal.

14. Respondents’ actions also violate Clauses 5.9.4.2

and 5.9.4.3 of the GTCS, which mandate that upon termination

of the HT Agreement, the licensee must issue a final statement
42

of account, and no further claim can be raised unless based on

fresh cause and lawful assessment. The reopening of a

terminated agreement, without statutory authority or notice,

amounts to procedural impropriety and administrative

arbitrariness.

15. The ratio laid down in the decisions, supra,

squarely applies to the present case and the impugned demands

are wholly time-barred. The invocation of Section 24 of the

repealed Indian Electricity Act, 1910, in the impugned notices is

patently illegal, as that Act stood repealed by virtue of Section

185 of the Electricity Act, 2003, which specifically provides that

the earlier enactments shall stand repealed, thereby the

impugned notices, having been issued under a repealed statute,

are void ab initio and non est in the eye of law and as a

consequence of the same are liable to be set aside.

16. Upon careful consideration of the pleadings of both

the parties, the documents placed on record and the

submissions advanced and in view of the above discussion, this

Court finds that the impugned proceedings of Respondents

suffer from serious legal infirmities, arbitrariness, and violation

of statutory provisions and principles of natural justice. The

entire action of Respondents, commencing from the alleged

inspection of Petitioner’s premises and culminating in the
43

impugned notices and recovery proceedings, is unsustainable in

law.

17. For all the reasons and discussions made supra,

this Court holds that the impugned notices dated 15.12.2015,

21.03.2016 and 02.08.2019, the consequential Memo dated

19.03.2020, and the letter dated 18.03.2021 issued by the 5th

Respondent to the Sub-Registrar are illegal, arbitrary, violative

of Sections 56(2), 126, and 185 of the Electricity Act, 2003, and

Clauses 5.9.4.2 and 5.9.4.3 of the GTCS, and contrary to the

law laid down by the Hon’ble Supreme Court and High Courts.

The same are accordingly set aside and quashed. Further,

Respondents are directed to refrain from taking any coercive

steps, including recovery proceedings under the A.P. State

Electricity Board (Recovery of Dues) Act, 1984 or

communication with revenue or registration authorities, in

respect of the subject matter of this Writ Petition. It is further

directed that any future demand or assessment, if warranted,

shall be made strictly in accordance with the Electricity Act,

2003, after issuance of a lawful notice and granting of an

opportunity of hearing to Petitioner.

18. This Court, therefore, concludes that Respondents

have acted in excess of their jurisdiction, in violation of
44

statutory provisions, and in contravention of the principles of

natural justice. The writ petition deserves to be allowed.

19. Accordingly, the Writ Petition is allowed. The

impugned notices dated 15.12.2015, 21.03.2016, and

02.08.2019, Memo dated 19.03.2020, and letter dated

18.03.2021 issued by the 5th Respondent are hereby quashed

and set aside. All consequential proceedings initiated pursuant

thereto, including those under the A.P. State Electricity Board

(Recovery of Dues) Act, 1984, are declared void. It is needless to

say that the contesting Respondents can avail the remedies

available to them in accordance with law. No costs.

20. Consequently, the miscellaneous Applications, if

any shall stand closed.

————————————-

NAGESH BHEEMAPAKA, J
24th April 2026

ksld
45

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