Failure to Supply Certificate and Consider Delay Vitiates OPDR Proceedings: Orissa HC Quashes ₹40.49‑Crore Electricity Duty Recovery [Read Order]

In a significant ruling reinforcing procedural fairness in recovery proceedings, the Orissa High Court has set aside the ₹40.49 Cr electricity duty demand raised through Certificate Case, holding that the Certificate Officer acted in violation of statutory procedure and natural justice.

The Court found that the Certificate Officer confirmed the certificate prematurely, before the expiry of the statutory 30‑day period under Section 8 of the Odisha Public Demands Recovery Act, 1962, (OPDR), and without supplying the certificate or supporting documents to the noticee, thereby depriving it of a meaningful opportunity to contest the demand.

The dispute arose after electricity duty arrears about Essar Power Orissa Ltd. (EPOL) were sought to be recovered from the purchaser of EPOL’s generating assets, following a SARFAESI auction.

A notice in Form‑3 was issued on 09.02.2023, which the petitioner Arcelor Mittal Nippon Steel

India Ltd received on 01.03.2023. Immediately thereafter, the petitioner wrote to the Certificate Officer on 22.03.2023, stating that the certificate and relevant documents had not been enclosed with the notice, and requested their supply so that it could file a petition denying liability under Section 8 of the OPDR Act.

Despite this written request, the Certificate Officer, on 23.03.2023, confirmed the certificate and held the amount recoverable, well before the expiry of the statutory 30‑day period from the date of service of notice.

The petitioner again wrote on 12.05.2023, reiterating that it denied liability, clarifying that the OTS application had been filed by EPOL (the previous owner), and asserting that the demand was not final due to the pending OTS process.

This communication, too, was ignored by the Certificate Officer. On 06.07.2023, the Officer passed another order confirming the certificate and directing payment with 12.5% interest, without addressing the petitioner’s written objections or the procedural lapses.

The bench of Justice Sanjay Kumar Mishra noted that this confirmation was not only premature but also internally inconsistent, as the matter was simultaneously adjourned for further hearing.

The Court observed that the Certificate Officer’s conclusion that the petitioner had orally admitted liability or expressed willingness to settle under the One‑Time Settlement (OTS) Scheme was unsupported by the record.

The Court found that the Certificate Officer failed to comply with Section 9 of the OPDR Act, which mandates that the Officer must hear the denial petition, take evidence if necessary, and then confirm, modify, or set aside the certificate.

Although the Certificate Holder filed 16 documents on 06.07.2023, including EPOL’s OTS application, the Certificate Officer neither proved these documents through evidence nor allowed the petitioner an opportunity to cross‑examine the Certificate Holder’s witnesses. The Court held that this omission amounted to a clear violation of natural justice.

A key issue before the Court was whether the Certificate Officer could reject the petitioner’s denial petition filed on 04.11.2023 solely on the ground of delay.

The Court held that Section 5 of theLimitation Act applies to OPDR proceedings by virtue of Section 64 of the OPDR Act and Section 29(2) of the Limitation Act.

Relying on the Supreme Court’s decision in Sesh Nath Singh v. Baidyabati Sheoraphuli Co‑operative Bank Ltd., the Court reiterated that a formal application for condonation of delay is not mandatory and that sufficient cause can be considered even without such an application. The Certificate Officer, therefore, had the jurisdiction to condone the delay and ought to have considered the denial petition on the merits.

The Court also relied on the Supreme Court’s decisions in Radha Krishan Industries v. State of H.P. and Godrej Sara Lee Ltd. v. ETOCAA, which clarify that the existence of an alternative remedy does not bar the High Court from exercising writ jurisdiction where there is a violation of natural justice or where the proceedings are without jurisdiction.

Given the procedural irregularities and denial of fair opportunity, the Court held that the writ petition was maintainable despite the availability of an appellate remedy under Section 60(c) of the OPDR Act.

The High Court found the Certificate Officer’s findings to be perverse, particularly the conclusion that the petitioner had admitted liability by applying for OTS, when the record clearly showed that the OTS application was filed by EPOL.

The Court also questioned why the matter was repeatedly adjourned after the certificate was allegedly “confirmed” on 23.03.2023, calling the proceedings internally contradictory and legally untenable.

Ultimately, the Court set aside the orders dated 09.02.2023 and 06.07.2023, along with all consequential actions. It remitted the matter to the Certificate Officer for fresh adjudication, directing that the petitioner’s denial petition and supporting documents be considered on merits and that the procedure under Section 9 of the OPDR Act be strictly followed.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates