M/s. Khaitan Electricals Linlited v. contrary to Clause 8 of the A.P. Electricity

Counsel for the Petitioner: SMT. K.JAYASREE FOR SRI D.V.NAGARJUNA Counsel for the Respondents: SRt N.SREEDHAR REDDY, SC FOR TELANGANA TRANSCO BABU The Court made the following: ORDER THE HON'BLE SRI JUSTI E PULLA KARTHIK UIRIT PETITION No. 2 l7a of 2Ol2 ORDER: This Writ Petition, under Article 2 6 of the Constitution of India, is liled seeking the following relief: "...to issnrc a wil or order of dtre n more particlllarlg oae in the nature of Wit of Mandamus (a) ng the Condition No. 9.3.2.9 of the Generol Term-s and. Conditions o Supplg of the lst respondent os ultra virus of Section 126 of the Ele rtcttA Act, 2003 and (b) the order passed bg the 3,a respondent in ter No. SEA/ HYD/ SAH. No 10934 D.No. 82/11-12 dated 9.4.2012 and as modified bg the 2",1 respondent vid.e Proceediigs No M/ MZ/ Hyd/ U&M/ F.SC.No 52008494/ d.No. 259/ 12 ddted 3.8.2Oj as illegat, arbitrary, unjust, irrationqle and contrary to Clause 8 of A.P. Electicitg Regulatory Commission (Consumers' Right to Info ation) Reqtlation, 2000 and Section 26 of the DlecticitA Act, 2003 a con-sequentlA, set astde the same and. pass..."

2. The brief facts of the case are at the petitioner is a private limited company incorporated under the provision of the Companies Act,

1956. It had established a smali scale i dustrial unit, which is engaged in manufacture of fans and related componcnts, for which, the petitioner company had obtained an L.T Category-lll (lndustrial) Service Connection bearing No.52OO8494 from spondent No. 1 licensee, under the provisions of the Electricity Act, 2

3. The petitioner's industrial unit has been subjected to periodic nspections by the ofhcia-ls of respondent No. 1 at frequent intervals of time, i.e., at least once in every month, for the purpose of taking meter r ading in the first week of every 2 PK, J W. P. No.28178 of 2O 12 month. Thc strid ir-rspections were conducted till Dccember, 20 1 1 , and until then, thcre was no dispute whatsoever about thcir service cqnnection. Whilc so, one more inspection had taken place on

06.Ol.2O12. Lr pursuarcc thereof, respondent No.4 issued a provisional assessment notice vide letter No.ADE /OP /D-XVI/BLNG/ D.No.25a8/ 1l dated 24.O1.2O12, alleging that at the time of inspection on 06.O1.2O12, it was found that the petitioner was having three phase healthy electrical supplv under L.T. Category-Ill and that the petitioner had connected a load of 41 HP for the office and godown, an-d 37 HP for the industrial activitv, which comes under the commercieil category. On the said premise, rcspondent No.4 assessed the value of cnergr said to have been put to unauthorized use as Rs.23,42,217 l-. Thereafter, the petitioner Company had filed its objections on thc sard provisional assessment notice before respondent No.3. Subsequently, respondent No.3 passed a final assessmellt notice dated 09.04.2012 by modifying the value of alleged cnergy said to have been put to unauthorized use by the office oi thc pctitioner Rs. 11,2O,456/-. Assailir-rg the same, the petitioner herein had prelerred an appeal before respondent No.2 on

18.05.20I2, and respondent No.2 vide order dated O3.O8.2012, hxed the liability at Rs.LO,25,220 I -, for the period from 06.01.2009 to

06.O1.2O12 (three years period). Hence, the present writ petition. / 3 PK, J W.P.No.28l78 of 2012

3. Heard Smt. K. Jayasree, learn counsel appea-ring for the petitioner and Sri N. Sreedhar Redd learned Standing Counsel appearing on behalf of the respondents.

4. Learned counsei for the petitione contended that respondents errcd in not taking into consideration th t the petitioner Company is an industrial unit, having obtained appro als from competent statutory authorities like the Ministry of Industri , Government of India, which issued proceedings No. 164 1 / SIA/ IMO/ 9 dated 19.08.1999, and the Commercial Taxes Department, Govern issued a Certificate of Registration ( ent of Andhra Pradesh, which orm-B) CST No.HYR/05/ 1/ 1029 / 77 -7 8 under the Centra-l Sa.les T Act, 1956, is engaged in rhe manufacture of fans and its related omponents. It was further contended that the respondents failed to ppreciate that the petitioner's industrial activity involves ma:rufac ring fans and its related components, with the finished goods bei g stored in a godown, which is a parl and parcel of the industrial shed ere manufacturing operations are conducted. Further, there is a s I office within the industrial shed premises that monitors these man facturing activities. As such, the respondents ought not to have se egated the petitioner's service connection load into industrial and co ercial categories, which is per se illegai and arbitrary. It was further c ntended that thc respondents 1 4 PK, J W.P.No.28178 of 2012 failed to appreciatc that no notice, as mandated under clause g of the Electricity Rcgulatory Comrnission (Consumers, Right to Information) Regulation, 2O00, rvas evcr issued to the petitioner before changing the category of the petitioner's service connection. As such, the impugned orders are vitiated and are liable to be set aside for violating mandatory regulatory provision s.

5. It was rurthe. contended that even assuming the respondents had the authority lo sprit the petilioner's road into industrial and commercial categories without a proper enquiry, the maximum period of assessment that could bc madc is only onc year preceding the date of inspection, i.e., 07.Ol.2O I 1 to 06.Ot.2O12. However, the action of the respondents in adopting the assessment for a three_year period is wholly impermissible under Section 126 of the Electricity Act, 2003. It was also contended that the respondents adopted a penal rate at thrice the normal tariff, *.hich is contrary to Section 126(5) of the Electricity Act, 2O03, which ma,,dittcs that a penal rate of twice the normal tariff shall be adopted while making the assessments. However, the reliance of the respondents on Clause 9.3.2.9 of the General Terms and Conditions of Supply is misplaced, as this condition runs contrary to the statutorv mandate under Section 126(5) of the Electricity Act, 20O3. It was further contencled that Clause 9 .3.2.9 of the General Terms and 5 PK, J W.P.No.28178 of 20r2 Conditions of Supply, which provides normal tariff, is ultra_vires of Section 1 as the General Terms and Condition Regulatory Commission under Section statutory force and it shall yield to the 126(5) of rhe Elecrricity Acr, 2003. highcr penal rate is illegal, arbitrarv an counse[ for the petitioner prayed this Co the present u,rit petition. lery of a penalty at thrice the 6(5) of the Electricity Act, 2003, , approved by the Electricity 16 of the Act, does not have datory provisions of Section such, the application of the irrational. Therefore, learned rt to pass necessary orders in 6 Per contra, learned Standing submitted that the petitioner Company i Act, 1948, for marufacture of fans and electricity connection was provided t Category-ltIA, which stipulates that the for industrial purposes only. However, a power supply was being utilized for god from the industrial purposes. The e lighting for L.T. Category_Ill consumers as total contracted load, i.e., 2.3 Hp/5445 w HP), but in the petitioner,s case, the othe HP /3O2OO watts, which exceeds the eligi ounsel for the respondents a factory under the Factories related components. Thus, the petitioner under L.T. wer. supply has to be utilized per the inspection notes, the and office purposes apart bility criteria of incidental per Tariff Order is 10% of the ts only (contracted load is 73 than industrial toad is 4O. S ilit5z norms as per the Tariff t\ 6 PK, J W.P.No.2817a of 2012 .t Order. I{ence, the excess lo.rd o[ power consumptjon for godown and office comes under commercial activity only, as it cloes not fulfill the requisite criteria required for availing supply of electricity under L.T. Category-IIIA. It was further contended that the peritioner,s claim that the godou,n and office are integral part of its industrial activities is untenable, as the inspection notes clearly shows that the godown was used for storing the products rrot manufactured at their factory, such as rice cookers, water heaters, CFLs, etc., both new atrd rejected. Thus, the godown does not qualify ers an intcgral part of thc industrial shed. Further, though the petitioner claims it is a small office, it actually comprises of two floors, which include branch, sa1es, purchase, EDp, accounts, ald other offices. As per the connected load particulars recorded by thc Inspection Officcr, in the presence of Mr. Vrj ay Kumar, Assistant General Manager (Finance) of the petitioner Company, a total of 12 Air Conditioners were running in the ofhce, besides lighting and other 1oads, totaling approxinrately 40 Hp, exceeding the permissible incidental lighting load of 7 .3 ttP (|Oyo of the contract.ed load of 73 Hp) under the tariff order for LT Category-IIIA consumers. As such, the activities of the petitioner Company are categorized as commercia-l activities, and since the petitioner had unauthorizedly extended the power supply to purposes other than the 7 PK, J W.P.No.28178 of 2012 sanctioned indusrrial usc, rvithout prior intimation to lhe authorities, it is liable to pa\. thc zrsscsscd .lnrounts s per thc General Terms and Conditions of Suppl-v (ti'l'CS) tbr rlrc un:r thorizcd u se. 7 . Il u'as lurthcr su bnrittcd rhat duri g thc inspcction, the slatement of Mr. Vqay liumar. AGtul (F-inance) as also rccorded, wherein, he admittcd that thc ollicc br.rilding rvas m o ificd and utilized for the last 6- 7 years, thus. the lo:rcl consLuncd rs ore than thc carlicr load. As such, the asscssmcnt pcriod adoptcd is orrc-ct and the asscssment was rightly made lirr the r:ntirt: periocl ol un uthorizcd use. Irurther, as per Section L 26(6) Ol thr: l,llcctricitr. Acr, 2 )3, the pcnal tariff was rightly imposcd at t\\'icc th<: rrorrnal r:rlt:. ar-rcl ot at thricc the ratc as alleged by the pctitioncr. It r,",i-rs lu rthc r conte ded thnt Clausc 9.3.2.9 of the GTCS is not u ltra virr:s of Scr:tion l2C> I the Elecrr-icity Act, 2003, and thus, the asscssrncnt rvzrs made stricrly i accordance with the statu tory provisions. As such, thc rcspondcnts re lully justificd in booking a case against tlle pctiLioltcr. ais tltc clcctricity was being utilized unauthorizedl_v lbr comnrcrcir.rl pu rposr: , which is cstablished by the Inspection Olllcr-.r and tltc steltolncLtt o thc pctit.ioncr's representative, Mr. Vijay Kum;rr, r\GI\,1 (lrinancc), ancl rh s, thc pctitioner is liable to pay the entire asscssed amollnL. 'l'ltcrefor , rt uras prayed to dismiss the prescnt rvrrL pctitron 8 PK, J tt' 1,.\o 28178 of 2012

8. This corrrr has tar<cn n.tc .r thc rir ^l s.l)rnrssr.r.rs macrc bv thc learned counscl for thc rcspcctiv(, partics and pi,ruscrl thc rnaterial available on record

9. Admittedll,, rcspondcnt No.2 lras passed tht, prcscnt impugncd order dated 03.0U.2012, confir,i,g tht: lirral ass(,ssmc.I noticc issued by respondent No.3 darccl Og.Oq.,2Ol2. fixing rhc liability on the petitioner at Rs.10,25,22O I -, lcn thc .naLrtlr.rizccl rLs:rgc ol.clcctricity for a period of thrcc ycars, i.,r., Iiorn C)().01.2()09 ro 06.01..2012. Ikrrvcver. the petitioncr I'rcrcin conLcndcd tlr.rt as per Se<,.1[r|r 126 (5) of the Electricitlu Act, 2o03, the period of :rsscssnrcnr rrirs r. l,c limited to one year preccding thc datc ol insllcctlon. In lhis col]tc\t i1 ls pertincnt to refer to thc Section r 26 (s) of Lrrc Acr, *-hich is cxLr-.rcLcd l-rr.rcunder: " 12e>. Asscssment. (5) If thc assessing olhccr rcar:hcs to Ihc, coLrclrrsion that unauthoriscd usc of clcctricilv has tal<cn plar:c. the alssc:isment shall bc madc lbr the crrtirr' pr:riorl cluring !\.hich such unauthoriscd usc of r:lcctricil-r, has Lrrl<crr placc ar.rcl if. horvever, thc period during w.hich such rrnauthor-isccl rrsc ol clcctricity has taken piace cannot bc ascrrrtaincrl. such periocl shall be Iimiled to:r pcriod of twclr-e rnonths immcdi:rtell,prcceding thc date of inspcction." F-rorn tlte .l>ovc, it is clcar tl)at thc ltcriod o[ u)sscssmcnl has to be restricted to onc ycar prr:ct:cling thc ciatc of inspccLion, only if the authority is unablc [o ascertitin r)tc pcriod oI rrr.r itu Lho rized usage. 9 PK, ,I W. P.No.2B17A of 20 12 However, in the instant c:lsc, it is to bc oted that the Assistant General Manager (Iiinancc) ol thc pctiLroncr. Mr. ijalr Kumar, in whose presence the inspcction took placc. lrirlsi ll- gavc a writtcn statcmcnt admitting that the ofltce building hzrtl bccn modili d six l-o seven years ago, and is in usage since then. Iiurthcr. thc pctiLi ncr has not filcd any rejoinder or rcply to deny this adnrission. In thc bsr:ncc of such denial, it can be inlerred that thc period ol unautlrorizcd usage spanncd for almost six to seven years. As such, thc ;rrtthonlies ,crc \.\.'ell within their powers to carr), out assessmenl for tlrc r:ntirc riod. [lowcvcr, the appellate authority has rcason:rbl\ r'cstr iL tccl tlt pr:riod of asscssment to three years only. Thus, the contcl-rtion o[ t c petitioncr with regard to the asscssment period of onc ,\:('ar- cannot b countenanccd.

10. F'urther, thc pc'titronrrr :rlso con cnclccl [hat the authority has imposed a penal ratc ol' ll-u rce thc tarilf, in contravcntion of Section 126 (6) of the Act, which is cxtractc(l hcrcun CT "(6) The assessmcnt urrdc r this s rate equal to t\\,i('( tlr( L.lrill laLcs category of scr',ic:cs sptcrticcl rn su[r ctron shall be made at a applicablc- for thc rclevant scctio n {51. "

11. In this regard, rt is pe'rtinc|rt to ote that th(i respondents have categorically clarificd, in thcir' counLcr a l'iclavit, that thc assessment rMas carried out at t\\'icc thc i.rpplica.blc [rr iff, in stri<:t compliance of the I I I I 10 PK, .] tt: l' \o )E17t3 of 2012 'I statutory requircmcltt ultdcr Scction 126 (6) ol thc, ,\( I [,.rr rthcr, there is no material on record to support the contcntioa or rll(. r)olitiolrer that thc authority-has rn'rposcd 2r highcr penal r.lto. 12- In the rigrrt or trrc forcgoing discussion. rlrs Corlrt rs or the considered vicrv tltzrt rcspondenL No.2, rathe r rlr;rn mcchanically confirming the cntirc liability <tf ..s.23,42,211 / , has r rslrtlv cxcrcised its quasi-judicial cliscrcLion and catcgoricallr. :rss<,sslrl tltc casc and imposcd a liability or Its.ro,2r,22ol, up.n lrrc [](.lrr(,.(,r.. -r.]_rcre[ore. this Court docs noI lind any infirmities in tlrc intJr rgrrc,d ordcr. and thus, the u,rit pctition is liablc ro be clismissccl. 13 Accordingly. thc Writ l)ctition is clisrnisscd Miscellaneous applicntions, if any, pcnrling in tlris \\,rit pe tiLion. shall stand closcd. No costs. /iTRUE COPY// SD/.Nt M. OSMAN ALI BAIG ISTANT REGISTRAR SECTION OFFICER One CC to SRI D.V.NAGARJUNA BABU, Advocate [OPUC] One CC to SRI N,SREEDHAR REDDY, SC FOR TELANGANA TRANSCO toPUcl Two CD Copies To 1 2 J PSK. BM HIGH COURT DATED:1 1lO7l2O25 ORDER WP.No.28178 ot 2012 t" \t :;, 12 i'UE M 'i.. 4\. D i:4 !) * <t ..r' DISMISSING THE WRIT PETITION WITHOUT COSTS 2e