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Kapil Tiwari (export executive)     20 January 2013

Liability of paying security deposit of electricity company

In the Sale Agreement of a flat in Mumbai,which my relative has purchased, it is clearly mentioned that all electricity charges are to be borne by the flat seller upto the date of transfer of property.

The electricity charges of the company (Reliance Energy, in this case) includes the following:
1)Bill amount of Rs.430 for the last month before the date of transfer
2)"Additional security deposit demanded along with March 2012 bill but still unpaid Rs.1040" which is mentioned on the last month's bill

Sirs, kindly clarify if the flat seller is liable to pay:
1)only the monthly bill amount of Rs.430,or,
2)the monthly bill amount of Rs.430 plus the unpaid security deposit of Rs.1040, that is, total Rs.1470  


 5 Replies

Dr. MPS RAMANI Ph.D.[Tech.] (Scientist/Engineer)     20 January 2013

The seller has to pay only for the electricity actually consumed by him up to the date of handing over possession of the flat to the buyer. In fact on the day he vacates the flat the seller and buyer should jointly take the meter reading and the seller should pay to the buyer the cost of electricity from last bill paid by him up to the meter reading. Any deposit with the electricity supply company is a security against default in future payment by the actual consumer. The default amount will be based on the actual consumption. It is only logical that any security deposit is the liability of the new consumer. In fact if the seller had already paid the deposit the buyer should reimburse the amount to him, unless the sale agreement clearly states that the payment made for the flat included the security deposit also.

Different electricity companies follow different procedures. I am residing in a flat in Mumbai where electric supply is from BEST. When my father was alive the flat and electric supply were in his name. When my father died the Society transferred the flat to me as his nominee. I applied for transfer of the electricity connection to my name along with the deposit. BEST wanted me to make a fresh deposit in my own name. They said that they will refund the old deposit to the heir of my father on production of necessary proof. Hence I paid a fresh deposit and collected back the old deposit after producing proof that I was the legal successor to my father.

Hence in the absence of any specific statement regarding the security deposit in the sale agreement the liability to make security deposit to cover liability for future consumption shall be on the buyer of the flat and electricity connection only. Actual consumption of energy has to be differentiated from liability for future consumption.

When my tenant at Chennai was asked to pay additional deposit for increase in energy consumption he only paid the amount. He got it reimbursed from me when he vacated the flat.

If you have any further question ask me here only and not by PM, so that other members can also see if they wish to.

1 Like

Kumar Doab (FIN)     20 January 2013

Dr. Ramani has elaborated the process and has given valuable advice. Kindly follow it.

At other location the process followed is the buyer along with seller visits the o/o Electricity Board and seller files declaration that property has been sold and attaches copy of registered sale deed. The board prepares final bill for payment. The security amount is refunded to seller or the seller can request to adjust/transfer to some other connection.

The buyer submits agreement for connection in his name at the same property and attaches copy of registered sale deed, photo, ID proof, payment of security and completes the process on the spot.

Both seller and buyer stand relieved.


1 Like

Dr. MPS RAMANI Ph.D.[Tech.] (Scientist/Engineer)     20 January 2013

I am not a lawyer nor do I know any law on the subject. My approach is use of plain common sense to know whose responsibility and liabilities are what.

1 Like

Advocate Vishnu (Advocate)     21 January 2013

The security deposit will be have to paid by the buyer of the apartment.
1 Like

Kapil Tiwari (export executive)     21 January 2013

Thank you, Sirs, for your valuable guidance and advice

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