Haryana firm fined

The Punjab and Haryana high court has imposed ₹5 lakh fine on a Haryana firm for filing a “mischievous” plea against the electricity bill liability notice slapped by the distribution company.
The firm, M/S Maanjali Cotex Pvt Ltd, had approached high court against the recovery notice of ₹44.21 lakh issued in October 2021.
As per the plea, the initial recovery notice was of ₹30.38 lakh against the firm, Shyam Costpin, a Samalkha-based firm, stating that if not paid, it would be added in the petitioner firm’s (M/S Maanjali Cotex Pvt Ltd) electricity account, which is being run from Israna town. It was argued that these are two different legal entities registered as private limited companies and have no concern or relation with each other.
On the other hand, the power distribution company had argued that both the companies are situated at the same address and electricity connection in both the cases is in the name of same person, Vijay Kumar. The firm is trying to avoid liability despite agreeing to discharge the same in a settlement agreement with the landlord in Samalkha. Even the landlord suffered immensely due to act of the firm, it was submitted.
The bench of justice Vinod S Bhardwaj observed that when the same set of persons are found to be operating under different corporate names in the form of different corporate entities, it is possible and sometimes even necessary to “lift the corporate veil”. “Once it is found that there is a necessity to lift the corporate veil and once it is found after the lifting of the corporate veil that the same persons are behind all these entities, then there is no escape from the conclusion that the expression used to define a consumer (would cover all concerned entities)” it observed.
The court held that both the firms are being run and controlled by one family/ person and therefore the decision of the distribution company in transferring the liability is “valid”.
“Institution of the present petition is mischievous and dishonest act on the part of the petitioner to avoid payment of contractual liability. The petitioner tried to create a facade of corporate entity to avoid payment of an admitted liability. I am of the opinion that such dishonest attempt and tendencies need to be curbed and stern order needs to be passed,” the bench said while dismissing the plea and imposing a cost of ₹5 lakh on the firm, out of which one lakh is to be paid to the Samalkha landlord and four lakh to the poor patients welfare fund of PGIMER.
The court referred to the Supreme Court decision in one Amit Products case of 2005, where an issue arose when the electricity connection application of a firm was rejected on the ground that its sister company was in arrears of electricity.