Electricity dues cannot be recovered after two years from the date they first became due, unless the licensee has shown them continuously as recoverable arrears in the bills raised for the intervening period. On that footing the Supreme Court has dismissed a distribution licensee’s appeal over a demand of ₹57,74,164 raised in February 2007 for a period running from February to September 1998 — a gap of some nine years.
Dakschinanchal Vidyut Vitran Nigam Ltd. v. Vidut Lokpal, Uttar Pradesh was decided on 10 September 2026 by Justice S.V.N. Bhatti and Justice N.V. Anjaria, the judgment being delivered by Bhatti J.
One thing to note before citing it. The judgment is marked NON-REPORTABLE on its face. It remains binding under Article 141, but the Court has signalled that it does not regard itself as laying down new law — and it does not. The authority on Section 56(2) remains Rahamatullah Khan, which this judgment applies. If you are citing this proposition in court, cite Rahamatullah Khan and use this judgment as a recent application.
The case at a glance
| Case | Dakschinanchal Vidyut Vitran Nigam Ltd. v. Vidut Lokpal, Uttar Pradesh and Others |
| Citation | 2026 INSC 985 · 2026 LiveLaw (SC) 929 · Non-Reportable |
| Proceeding | Civil Appeal No. 5099 of 2013 |
| Bench | S.V.N. Bhatti and N.V. Anjaria, JJ. — judgment by Bhatti, J. |
| Date | 10 September 2026 |
| Order under challenge | Allahabad High Court, Lucknow Bench, order dated 06.01.2012 in Misc. Single No. 4237 of 2008 |
| Counsel | Mr. Rakesh Uttamchandra Upadhyay, AOR, with Mr. Harsh Som and Ms. Aarti U. Mishra, for the appellant. No appearance for the respondents |
| Result | Appeal dismissed. Demand of ₹57,74,164 held barred |
A note on the cause title: the appellant’s name is printed in the judgment as “Dakschinanchal” and the first respondent as “Vidut Lokpal”. The usual renderings are Dakshinanchal Vidyut Vitran Nigam and Vidyut Lokpal. Reproduce the cause title as printed when citing.
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2026 INSC 985 — seven pages. If the viewer does not load on your device, use the button above.
The provision
Section 56 of the Electricity Act, 2003 gives a licensee the power to cut off supply for non-payment. Sub-section (2) is the fetter on it:
“Notwithstanding anything contained in any other law for the time being in force, no sum due from any consumer, under this section 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.”
Three elements to hold in mind, because each of them did work in this case: the two-year period, the point at which a sum becomes “first due”, and the saving clause — “unless such sum has been shown continuously as recoverable as arrear”.
The facts
The consumer applied for a connection with a 4,000 KVA load. The licensee could sanction only 2,000 KVA at the time, and an agreement to that effect was executed on 24 February 1997. The agreement stipulated that the supplier would arrange the balance 2,000 KVA within six months.
Almost nine months later, on 31 January 1998, the licensee wrote offering to increase the contract load by the further 2,000 KVA, subject to the consumer entering into an agreement. By letter dated 14 September 1998, the consumer declined — it did not want the additional load.
Then nothing, for nearly a decade. On 13 February 2007 the licensee raised a demand of ₹57,74,164 towards Minimum Consumption Guarantee Charges for February to September 1998, on the theory that since it had been ready to supply the additional 2,000 KVA, the contracted capacity for that period was 4,000 KVA and MCGC was payable on it.
The route to the Supreme Court
- The consumer went to the Consumer Grievance Redressal Forum, which returned a split verdict and, in effect, did not redress the grievance.
- The consumer took a representation to the Electricity Ombudsman under Regulation 8.1 of the UPERC (Consumer Grievance Redressal Forum and Electricity Ombudsman) Regulations, 2007. The Ombudsman set aside the demand, holding that the consumer never consented to the additional load, that there was nothing to show the additional 2,000 KVA was ever released, and that the demand was barred by Section 56(2). Amounts already deposited were directed to be adjusted against future bills.
- The licensee then filed a writ petition, seeking certiorari and a declaration that Clause 8 of the 2007 Regulations was ultra vires Sections 42(5) and 42(6) of the Act.
- The Allahabad High Court, Lucknow Bench, dismissed it on 6 January 2012.
- Hence the appeal, filed in 2013 and decided in 2026.
The High Court holding that survives — and that nobody is reporting
Before the limitation point, there is a separate ruling in this case of real practical importance, which the Supreme Court expressly declined to disturb.
The licensee had argued that Clause 8 of the 2007 Regulations was ultra vires. The High Court took the opposite view of who it hurt. Reasoning from the text of Section 42(6) — which permits “any consumer” aggrieved by non-redressal under sub-section (5) to make a representation to the Ombudsman — it held:
- Any decision not favouring the consumer amounts to “non-redressal of grievance of Consumer”, which is what opens the door to the Ombudsman. A split verdict at the CGRF is therefore non-redressal, and the consumer’s representation was competent.
- Section 42(6) gives a remedy to a consumer only. Where a grievance is redressed, the Distribution Licensee has no remedy under sub-section (6), and the State Commission has no authority to create one.
- To that extent, Clauses 8.1 and 8.2 of the 2007 Regulations were held ultra vires and inconsistent with Section 42(6).
In the Supreme Court, counsel for the licensee did not seriously press the challenge to Regulation 8, and the Court recorded that it was therefore not re-examining the High Court’s view. The consequence is that the Allahabad High Court’s holding — that a distribution licensee has no remedy of representation before the Electricity Ombudsman — stands undisturbed, with the Supreme Court having declined to interfere.
For anyone appearing before a CGRF or an Ombudsman, that is worth more than the limitation point. It is also entirely absent from the news coverage.
The limitation reasoning
The Court decided the limitation question by applying Assistant Engineer (D1), Ajmer Vidyut Vitran Nigam Limited v. Rahamatullah Khan alias Rahamjulla, (2020) 4 SCC 650, which it set out at length. Four propositions emerge:
“6.9. The liability to pay arises on the consumption of electricity. The obligation to pay would arise when the bill is issued by the licensee company, quantifying the charges to be paid. Electricity charges would become ‘first due’ only after the bill is issued to the consumer, even though the liability to pay may arise on the consumption of electricity.”
“7.5. The period of limitation of two years would commence from the date on which the electricity charges became ‘first due’… 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 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).”
“8. Section 56(2), however, does not preclude the licensee company from raising a supplementary demand after the expiry of the limitation period of two years. 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, nor does it restrict other modes of recovery which may be initiated by the licensee company for recovery of a supplementary demand.”
On that footing the Court concluded, in a single sentence at paragraph 11:
“The above view disentitles the Appellant from raising the demand under Section 56(2) of the Act, 2003. For the above reasons and discussion, the Appeal fails and is dismissed.”
A tension worth noticing
Read side by side, paragraph 8 of Rahamatullah Khan and paragraph 11 of this judgment do not sit altogether comfortably. Rahamatullah Khan says Section 56(2) does not preclude a supplementary demand after two years; it bars disconnection, and leaves other modes of recovery open. This judgment says the same view “disentitles the Appellant from raising the demand”.
The reconciliation is that this demand failed on several independent grounds, and the Court, dismissing a fourteen-year-old appeal in seven pages, did not have to separate them. It is nonetheless an important distinction to preserve when arguing the point. The correct proposition remains the one in Rahamatullah Khan: the two-year bar in Section 56(2) is a bar on recovery through the statutory machinery of Section 56 — principally disconnection — and does not by itself extinguish the debt or foreclose a civil suit, subject always to the Limitation Act.
Why this demand was over-determined
It is worth separating the grounds, because a licensee’s demand will rarely fail on all of them at once, and a consumer resisting one should know which are available.
| Ground | Effect |
|---|---|
| No liability ever arose. The consumer never consented to the additional 2,000 KVA and there was nothing to show it was ever released | A complete answer on the merits. As the High Court put it, “the Consumer’s liability arises only when the agreed quantum of electricity is released to him, and not before” |
| Section 56(2), Electricity Act 2003 — two years from “first due” | The headline ground. No bill was ever issued for the additional load alongside the regular monthly bills |
| Not shown continuously as arrear. No material or pleading showed the sum had been continuously treated as recoverable as arrears | Closes the saving clause. This is the finding that actually did the work |
| Limitation Act, 1963 — three years at best | Independent bar, found by the High Court |
| U.P. Government Electrical Undertaking (Dues Recovery) Act, 1958, s. 5-A — six years for a suit | Even on the most generous period available, a 2007 demand for a 1998 period was out of time |
The High Court’s observation on the word “due” is worth keeping: the amount fell due when the supplier was entitled to raise the bill, and “the word ‘due’ must be read as referring to a specific point in time, not as something uncertain.” A licensee cannot create a fresh starting point for limitation simply by choosing, years later, to issue a bill it could have issued at the time.
What this means in practice
For a consumer resisting an old demand
- Find the date the sum became “first due”. Under Rahamatullah Khan that is the date the bill was issued, not the date of consumption. Where the licensee could have billed and did not, argue that it fell due when it was entitled to bill.
- Put the licensee to proof on the saving clause. The exception in Section 56(2) applies only where the sum has been shown continuously as recoverable as arrear. That means it must appear in the bills raised for the intervening period. Call for those bills. In this case there were no such entries, and that is what defeated the demand.
- Plead the Limitation Act in the alternative. Section 56(2) is not the only bar, and a demand may be out of time under the general law even where the licensee finds a way around the statutory provision.
- Attack liability itself where the supply was never given. Minimum charges on a sanctioned load presuppose that the load was released. An offer the consumer declined creates no obligation.
For a licensee
The operational lesson is narrow and entirely practical: if a sum is genuinely recoverable, carry it forward as an arrear line on every subsequent bill. The saving clause in Section 56(2) is available, but it is evidentiary — it has to be demonstrable from the billing record, not asserted at the hearing. A demand raised for the first time years later, with nothing in the intervening bills, has no way through.
What the judgment does not decide
- It does not overrule or qualify Rahamatullah Khan. It applies it.
- It does not decide whether a civil suit for a time-barred electricity demand is maintainable. Rahamatullah Khan preserves “other modes of recovery” expressly, and that survives.
- It does not examine the vires of Clause 8 of the UPERC Regulations, 2007. The Court expressly declined to re-open the High Court’s view because the point was not pressed — so the High Court’s holding stands but has not been affirmed on the merits by the Supreme Court.
- It does not address K.C. Ninan v. Kerala State Electricity Board, 2023 INSC 560, beyond recording counsel’s fair concession that his ancillary arguments on the regulations were “watered down” by it.
- And, being non-reportable, it is not intended as a statement of principle. Cite it for what it is: a recent application of settled law to a stale demand.
Disclaimer: This post is a summary and analysis prepared for the information of readers and does not constitute legal advice. The judgment is marked non-reportable. The observations on the tension between paragraph 8 of Rahamatullah Khan and paragraph 11 of this judgment, and on the separation of the several grounds on which the demand failed, are the writer’s own analysis. Readers should rely on the judgment itself and on Rahamatullah Khan. Lawizard.in accepts no responsibility for any action taken on the basis of this post.
Sources: Dakschinanchal Vidyut Vitran Nigam Ltd. v. Vidut Lokpal, Uttar Pradesh and Others, 2026 INSC 985, Civil Appeal No. 5099 of 2013, decided 10 September 2026 (Supreme Court of India); LiveLaw report, 2026 LiveLaw (SC) 929; Assistant Engineer (D1), Ajmer Vidyut Vitran Nigam Limited v. Rahamatullah Khan alias Rahamjulla, (2020) 4 SCC 650; K.C. Ninan v. Kerala State Electricity Board, 2023 INSC 560; Electricity Act, 2003, sections 42(5), 42(6), 56 and 181(2)(r) and (s); U.P. Electricity Regulatory Commission (Consumer Grievance Redressal Forum and Electricity Ombudsman) Regulations, 2007; Limitation Act, 1963; U.P. Government Electrical Undertaking (Dues Recovery) Act, 1958, section 5-A.
