In a significant ruling that underscores the critical nature of public utilities, the Telangana High Court has stated that electricity and water are not just commodities but vital and finite resources essential for both industrial progress and daily human survival. The court made these observations while dismissing a writ appeal filed by Sanghi Polymers Private Limited, ordering the company to pay over Rs 4.21 crore to the state electricity board.
Court's Emphasis on Public Resources and Responsibility
A division bench comprising Justices Moushumi Bhattacharya and Gadi Praveen Kumar delivered the judgment on December 30. The bench highlighted that the generation, transmission, and distribution of these essential resources involve massive public investment and infrastructure. Therefore, it is imperative that consumers use them responsibly and ensure that all lawful government-determined charges are paid promptly to prevent wastage.
The court noted that these utilities form the backbone of modern life and the economy. Their responsible consumption and the financial sustainability of their providers are matters of significant public interest.
The Long-Standing Dispute Over Grid Support Charges
The legal battle centers on a notice issued by the state electricity board to Sanghi Polymers, located in Hayathnagar, demanding payment of Rs 4.21 crore in Grid Support Charges and interest. These dues accumulated for the period between 2002 and 2009.
The origins of the dispute trace back to a 1991 agreement between the electricity board and Sanghi Polyesters Limited, a sister concern of Sanghi Polymers that is now undergoing liquidation. The power distribution company argued that 15 companies within the Sanghi group had originally clubbed their services and received permission to operate large diesel generators in parallel with the state grid.
Company's Arguments and Court's Findings
Sanghi Polymers contested the demand on several grounds. The company argued that it should not be held liable for the dues of a separate legal entity, even if they belonged to the same corporate group. It also contended that it did not operate a captive power plant, which is a prerequisite for levying such grid support charges. Furthermore, the company claimed the demand was legally barred due to an excessive delay, as it was raised many years after the dues first became due.
However, the High Court rejected these arguments. The bench found that Sanghi Polymers effectively assumed responsibility for the outstanding dues when it signed a fresh agreement with the electricity board in 2020. In this agreement, the company expressly undertook to comply with all government regulations and pay the required tariffs.
Regarding the delay, the court accepted the electricity board's explanation. The legality of the specific grid support charges was only conclusively determined by a Supreme Court ruling in 2019. Therefore, the exact enforceable amount crystallized only after that judgment, meaning the subsequent demand was not barred by any law of limitations.
The Final Verdict and Financial Implications
Ultimately, the bench concluded that the company was legally bound by its 2020 undertaking. The court upheld the electricity board's demand, directing Sanghi Polymers to clear the outstanding dues.
The final amount comprises a principal sum of Rs 1.03 crore and a substantial accumulated interest of Rs 3.17 crore, bringing the total liability to Rs 4.21 crore. This ruling reinforces the principle that corporate entities must honor their contractual and regulatory obligations, especially concerning the payment for essential public utilities.
The judgment serves as a crucial precedent, affirming the state's right to recover legitimate charges for utility services and emphasizing the collective duty to use scarce resources like electricity and water judiciously.
