High Court
Legal Reasoning
1 903-WP-6725-20.odtIN THE HIGH COURT OF JUDICATURE AT BOMBAYBENCH AT AURANGABADWRIT PETITION NO. 6725 OF 2020The Maharashtra State ElectricityDistribution Company Ltd.,Through its Additional Executive Engineer,Kranti Chowk Sub Division, Aurangabad..PetitionerVersus1.Ramchandra s/o. Madhavrao Naik,Age 80 years, Occu. Retired,R/o. Flat No. A-1, Chetna Nagar,AurangabadPresently residing at Flat No.301,Building F, Tejovalay Society,Near CIPLA Foundation, Warje,Pune-411 058.. (Original Appellant)2.I-Learn Center for Competitive ExamsThrough its ProprietorAbhishek Gaike,Age Major, Occu. Business,R/o. Plot No.1132, Sai Nagar, N-6,CIDCO, Aurangabad3.Superintending Engineer,Aurangabad Region Electrical InspectorCircle, Industries, Energy and LabourDepartment, Plot No.11, Shivdas TardeCenter, First Floor, Trimurti Chowk,Hedgewar Hospital Road,Aurangabad 431 005..RespondentsMr. Avishkar S. Shelke, Advocate for the Petitioner;Mr. Amit A. Yadkikar, Advocate for Respondent No.1;Mr. C. V. Dharurkar, Advocate for Respondent No.2;Mrs. R. R. Tandale (Choure), A.G.P. for Respondent No.3CORAM :S. G. MEHARE, J.DATE:06-02-2024 2 903-WP-6725-20.odtORAL JUDGMENT :-1.Rule. Rule made returnable forthwith. Heard finally withconsent of the learned counsel for the parties.2.The brief facts of the case are that the respondent No.1 wasa consumer of the petitioner. He took an electricity supply to runhis printing press. For his printing press, an Industrial tariff wasapplied. He closed down the printing press. He gave his premisesto respondent No.2 on leave and licence. He opened the coachingclasses on that premises in 2010. On his application, the load wasenhanced. The petitioner's personnel visited the premises on27.12.2017 and found that respondent No. 2 was using the electricsupply for commercial purposes without changing the tariff.Therefore, it was unauthorized use of electricity as provided underExplanation (b)(iv) to Section 126 of the Electricity Act, 2003 (“theAct”, for short). The officers drew the spot panchnama. There wasno dispute that on the day of the inspection, respondent No.2 wasrunning a coaching class on the premises with the old electricsupply under the leave and licence agreement. The petitionerassessed the provisional bill for the changed user, and notice wasserved upon the person from respondent No.2, who had soughttime to make the submissions on 28.02.2018. After receipt of thenotice, he filed a detailed reply. He contended that he possessedpremises under leave and licence agreement with respondent No.1
Legal Reasoning
3 903-WP-6725-20.odt(original appellant). He submitted that respondent No.1 authorizedhim to use the premises for commercial activities. He has alsosubmitted that he had a registered leave and licence agreementwith respondent No.1. He allowed him to use the electricity supply.Hence, it was not an unauthorized use. He was not privity to thecontract between the petitioner and respondent No.1. The purposefor which electricity was supplied to respondent No.1 was notdisclosed to him by respondent No.1. Thus, no liability could befastened upon him. He mentioned that the application wassubmitted to the office of the petitioner in 2012 for supplying 3-phase electricity with a high load. In the said application, he hasfairly mentioned the nature of the use of electricity supply. Inpursuance of the application, 3 phase and higher load was grantedto him. He prayed to exonerate him from the prosecution.3.After hearing the person in occupation, the order of finalassessment under Section 126 of the Act was passed andaddressed to Shri. R. M. Naik, respondent No.1 and respondentNo.2, calling upon them to deposit Rs.23,35,321/- within fifteendays, i.e., on or before 28.03.2018. Respondent No.1 hasimpugned the order of provisional assessment by Writ PetitionNo.2994 of 2018. This Court, on 13.08.2019, has held that as perSection 126(2) of the Act, the order of provisional assessment shallbe served upon the person in occupation, possession, or in chargeof the place or premises. Respondent No.2, being in occupation or
Decision
4 903-WP-6725-20.odtin charge of the premises, was served with the provisionalassessment. Objections were invited. The objections wereconsidered. Finally, the Court observed that the statutory remedyof appeal is available. Hence, it was not inclined to entertain thewrit petition. Accordingly, the writ petition was disposed of with aliberty to avail the alternate remedy. However, the amount ofRs.1,00,000/- which respondent No.1 had deposited was directedto be adjusted in the amount of the assessment. Then, respondentNo.1 preferred an appeal before respondent No.3/ appellateauthority cum Superintending Engineer, Aurangabad RegionElectrical Inspection Circle, Aurangabad. Respondent No.1 washeard, and the appellate authority calculated unauthorized usefrom January 2010. However, the petitioner can, at the most,recover the money from respondents No.1 and 2 as per Section 56of the Act for a period of not more than two years. Accordingly,he held that respondent Nos.1 and 2 are liable to payRs.10,67,670/-. Against the said order, the petitioner is before thisCourt.4.Learned counsel for respondent No.1/appellant submits thatthe appellate authority has not granted a fair hearing beforepassing the impugned order. The appellant had filed a reply.Thereafter, there is no hearing; therefore, on this count itself, theimpugned order is liable to be cancelled. He submits that it wasnot disputed that, initially, the supply was only to run the printing 5 903-WP-6725-20.odtpress. He submitted that an industrial tariff was applied forelectric consumption, considering the nature of business. However,the petitioner and respondent No.2 never intimated to thepetitioner that he changed the use of the supply from the LT-V-industrial tariff to the commercial tariff. On the inspection day, theOfficers found that the electricity supply was used for commercialpurposes. Though the application for enhancement for the higherload was applied, it was never informed that it was used forcommercial purposes. He submitted that provisional notice hadbeen correctly served upon the person in occupation of thepremises. The spot panchnama was drawn in the presence of theperson in occupation. He submits that the term ' unauthorized use'has been explained in Explanation B(iv) of Section 126 of Act. Theperson who has raised an objection to the provisional assessmenti.e. respondent No.2, admitted that it was used for commercialpurposes. The leave and licence indicate that he occupied thepremises since 2010. Therefore, the authorities exercising thepower under Section 126(5) of the Act correctly assessed the billfor unauthorized use of electricity from the date of its use. Theplea of 'no privity of contract' would not absolve the personconcerned from the liability to pay for the unauthorized use. ThisCourt, in writ petition preferred by present respondent No.1, hasrecorded the findings that, under Section 126(2) of the ElectricityAct, such notice/order of provisional assessment shall be served 6 903-WP-6725-20.odtupon the person in occupation or possession or in charge of theplace or premises, in the manner as may be prescribed. So, theprovisional notice was correctly served upon the person who wasin occupation and possession. The landlord cannot be run awayfrom the liability. In the case at hand, the documentary evidenceshows that respondent No.2 was using the premises under leaveand licence. Referring to the impugned order, he would submitthat the appellate authority did not set aside the final assessmentorder in its entirety. However, the Appellate Authority misreadSection 56 of the Act and incorrectly held that Section 126 wouldnot apply. Enhancing the load and changing the class of theconsumer are different issues. Sections 126 and 56 of the Act aredistinct. 5.Relying on the case of Executive Engineer and Anothervs. Sri Seetaram Rice Mill, 2012 (3) Mh.L.J. 536, hevehemently argued that Section 56 of the Act does not apply at allto the facts of the case. He relied on the case of Prem Cottex vs.Uttar Haryana Bijli Vitran Nigam Limited and Others, 2021S.C.C. Online (SC) 870, and argued that the HonourableSupreme Court interpreted Section 56(2) of the Act and held theperson may take recourse to any remedy available in law forrecovery of additional demand, but barred from taking recourse todisconnection of supply under sub-section (2) of Section 56 of theAct. 7 903-WP-6725-20.odt6.He has also vehemently argued that Section 126(5) has beencorrectly applied. The papers of assessment were placed beforethe appellate authority. The appellate authority has exceeded itsjurisdiction in applying Section 56 of the Act. The opportunity for ahearing was not given to the petitioners. Therefore, the order ofthe appellate authority is liable to be quashed and set aside.7.Per contra, learned counsel for respondent No.1/landlord hasvehemently argued that the findings of the Appellate Authorityclearly reflect that the petitioner was heard. Therefore, it could notbe said that the opportunity of hearing was not granted to thepetitioner. The Load from 5 H.P. to 14 K.W. was enhanced byapplication of the year 2012. At that time, G.T.L. Company wasoutsourced for distribution. Before enhancing the load, the Officerof the petitioner inspected the spot and then enhanced the load.Since then, the petitioner has had knowledge of the change in theuse of the electricity supply. However, they deliberately did notcare to change the tariff and went on to issue bills. So, in thecircumstances, it is hard to digest that respondents No.1 and 2 areat fault and have used and consumed electricity unauthorizedly.Considering the facts and circumstances of the case, explanationb(iv) of Section 126 of the Act would not apply. He also vehementlyargued that there was no concrete evidence that the use ofelectricity for commercial purposes was started in 2010. Therefore,there was no material before the assessing authority from when 8 903-WP-6725-20.odtthe so-called unauthorized use of electricity was started for thefirst time. Under such circumstances, at the most, the authoritycould assess the bill for unauthorized use, without admitting, for aperiod not more than twelve months preceding the date ofinspection. He also vehemently argued that the materials on thebasis of which the provisional assessment of the bill was donewere not served upon the respondents. Therefore, the respondentshad no material to explain the assessment. He has placed onrecord a compilation and referred to the copy of the finalassessment order. He also referred to the provisional assessmentbill and pointed out that the said bill was dated 28.02.2018, sohow could there be an assessment before that date? The rules andprocedures of panchnama have not been complied with. Thepetitioner company never issued the monthly bills. The bills fortwo months were charged. That indicates that the electric meterwas not in order. Therefore, the so-called assessment is incorrectand without base. The procedure laid down in Section 126(1) ofthe Act was not duly followed. The final assessment order iswithout reasons. The impugned order is not passed only on theyardstick of Section 56 of the Act; other relevant factors have alsobeen considered. The case laws relied upon by the petitioner arenot applicable. Respondent No.1 is in growing age. There was nodeliberate act on his part. He was fair and regular in paying thepetitioner's electricity bills as charged. He submits that the 9 903-WP-6725-20.odtinterpretation of Section 56 of the Act, as referred by the petitionerin the case of M/s. Prem Cottex (supra) is in another context. It hasbeen vehemently argued that assessment had been shown in thecase of theft, and the person Mr. Abhishek Gaike, who submittedthe representation, was not a licencee. He prayed to dismiss thepetition.8.Learned counsel for respondent No.2 adopts the argumentsof learned counsel for respondent No.1.9.The learned A.G.P. filed an affidavit-in-reply and contendedthat the government is a formal party.10.Considering the arguments advanced by the learned counselfor the parties, the following points arise for consideration;i)Was a change of load a change of the class of the user?ii)Could the assessment have been done for a limited period oftwelve months immediately preceding the inspection date? iii)Was the assessment for unauthorized use done correctly?iv)Does Section 56 of the Act was correctly applied?Point No.1 : 11.It is admitted that the electricity supply was initially forrunning the printing press, and its tariff was an industrial class. Itis also not in dispute that the suit premises was given on leave andlicence to respondent No.2 by registered document. It is admitted 10 903-WP-6725-20.odtthat in 2012 an application was moved to the petitioner forenhancing the load and supply for 3-phase electricity. Theinspection was accordingly done, and the load was enhanced. Thearguments of the learned counsel for respondent No.1 is that sincethe day of moving an application for enhancing the load andinspection, the petitioner knew that the nature of the electricitysupply had been changed. Respondent No.1 or 2 never suppressedits user. The Officers of the petitioner were satisfied, and they hadenhanced the load. His arguments reveal that the petitioner knewthe change of user, but it did not apply the new tariff. Hence, therespondents No.1 and 2 could not be penalized. The authoritydeliberately did not produce a copy of the application to hide itsfault. For want of any such material before the Court, it is difficultto arrive at the conclusion that no prayer for change of the use ofelectricity supply was made. He supported the impugned orderand prayed to dismiss the petition.12.Learned counsel for respondent No.1 fairly conceded thatafter receiving the notice of the provisional assessment,respondent No.2 had telephonically informed him. However, he didnot prefer to appear before the authority. Till the final assessmentof the bill for the unauthorized use was done, he never appeared.However, for the first time, he impugned the said order by way ofappeal. 11 903-WP-6725-20.odt13.Enhancing the load and changing the user of the electricitysupply from one class to another class are apparently distinct. Theload may be enhanced for any class of user of electricity for thepurpose for which it was supplied. The consumer is bound toinform the supplier about any change in the class/tariff. Therespondent never had a case that they intimated to the petitionerabout the change of the class of electricity users. So, respondentNo.1 cannot say that since 2012, when the application was movedto enhance the load, the petitioner had knowledge about thechange of the user's class, and they failed to charge for thecommercial tariff. Hence, he cannot be blamed.Points No.2 to 4 :-14.It has been argued that the person who has signedsubmissions before the authority is not his licencee. It has alsobeen argued that it was not an unauthorized use of electricity. It isindirectly argued that the right person did not submit therepresentation. Hence, his representation does not bindrespondent No.1. The petitioner erred in not applying the correcttariff. The copy of the licence was not before the authority. Withoutconcrete evidence, the petitioner incorrectly assessed the bill from2010. There may be agreement, but it could not be said thatcommercial use was started from its date of execution. Therefore,the second part of Section 126(5) of the Act would apply. Theassessment was done on the surmises of the petitioner's officers. 12 903-WP-6725-20.odt15.Section 126(2) of the Act provides for service of the notice ofthe provisional assessment of a bill for unauthorized use. Suchprovisional assessment bill shall be served on a person inoccupation or possession or in charge of the place or premises.The licencee/ respondent no.2 appeared before the petitioner torespond to the notice of provisional bill. He put his defence.Respondent No.2 was informed about the said notice torespondent No. 1. He never objected to the representation madeby its signatory that he has no concern with the premises. It is theobjection raised for the first time. Hence, his objection seems anafterthought.16.Respondent No. 2 had placed a copy of the leave and licenceagreement on record. It was a document showing that respondentNo.1 was using the premises for coaching classes, and theelectricity was used for commercial purposes.17.Learned counsel for the petitioner has correctly pointed outthat before the final assessment was done, the notice was servedto the right person. The document of the bill revision report iscoming from the custody of respondent No. 1. The said documentis dated 05.02.2016. It is a detailed report of the assessment. Thelearned counsel for respondent No.1 has correctly pointed out thatthe reason code is 7- THEFT 126 in the said document. He is alsocorrect that the assessment of the theft bill is under different 13 903-WP-6725-20.odtsections. However, reading the said document, it is clear thatthough the reason code is mentioned as theft, ahead of it, 126 ismentioned. It is a section under which the assessment is done.Reading Section 126, it is an assessment of the bill for anunauthorized use of electricity. Section 135 of the Act provides forthe assessment of the bill for theft. Examining the said documentcarefully, it does not indicate that the rule of Section 135 of theAct is applied to assess the bill. Applying the law to read thedocument as a whole, to understand the real intention of theparties, the Court, after reading the said document as a whole, isof the opinion that merely writing incorrect reason code, thepetitioner's case cannot be doubted.18. The petitioner had a simple case that the user class of theelectricity was changed. It is unauthorized use. Explanation, 2 (b)(iv) of Section 126 of the Act has defined the term 'unauthorizeduse'. It means the usage of electricity for a purpose other than forwhich the usage of the electricity was authorized. The Explanationsimply says that where the purpose for which the supply is taken ischanged is an unauthorized use of electricity. There are varioustariffs for different kinds of electricity use. The tariffs are appliedas per the demand of the consumer for the purpose for which hewanted to have an electric supply. Initially, respondent No.1 hadapplied to run the printing press. Hence, an industrial tariff wasapplied. Thereafter, there was no intimation of the change in the 14 903-WP-6725-20.odtusage of electricity. The document of leave and licence shows thatit was used for the coaching classes, for which the commercialtariff was applied. Therefore, the learned counsel for the petitionerhas correctly argued that the usage of electricity for a purposeother than for which it was supplied as per demand, isunauthorized usage. For such unauthorized usage, the petitioner isempowered to take the action. No authority has taken anycoercive action against respondents No.1 and 2. They neverdisconnected the electricity supply.19.The bill revision report reflects that 52-LT COMM less than 20K.B. was applied for the assessment of the bill. The bill revisionreport contains various heads and lock credits were given torespondent No.1. It was a detailed bill making the final assessmentfor Rs.23,35,320.92. The learned counsel for respondent No. 1,referring to the consumer's personal ledger, correctly pointed outthat the bills for two months were provided to him. He argued thatit is the best evidence that the electric meter was not in order.However, there is nothing on record to show that he ever made acomplaint that the meter was not in order. If the meter wasdefective, it was the duty of the consumer to inform the Board orauthority immediately and get it changed. This also has not beendone. Therefore, there appears to be no substance in objection ofrespondents No.1 and 2 that the electric meter was not in order.Hence, the assessment of the bill is incorrect. 15 903-WP-6725-20.odt20.The very document of the bill revision report was available,and that was a basis for the final assessment. Respondents No.1and 2 could not point out any defect in this report. In this report,some deductions have also been given. Therefore, it is difficult toaccept that the assessment of the bill was without any basis.21.The Officers of the petitioner have assessed the bills forunauthorized use since 2010. The basis for such calculations wasleave and licence agreement. Respondent No.2 represented beforethe authority on the receipt of the provisional assessment. He didnot state since when he was occupying the premises. However, hehad a case that he had a leave and licence agreement withrespondent No.1. A copy of said leave and licence was produced.It was the best evidence to ascertain the fact when he changedthe usage of electricity. Sub-section (5) of Section 126 is in twoparts. The first part provides for the assessment of the bill for theentire period during which the electricity was used. In other words,where the material is sufficient to believe that from a particulardate, the unauthorized use of electric supply has been started,then the authorities have no option but to assess the bill forunauthorized use from that date. The second part of the saidsections is for the assessment of the bill for the period where nosuch date is ascertained. In such cases, the bill to be assessedshall be for a limited period of twelve months immediately 16 903-WP-6725-20.odtpreceding the date of inspection. The cogent and reliable materialwas available before the assessing authority about the date ofunauthorized use of electricity. Therefore, arguments of thelearned counsel for respondents No.1 and 2 that the assessmentcould have been done for a period not more than twelve monthsimmediately preceding the date of inspection is unfounded.22.The crucial question that has been raised is whether Section56 of the Act would apply. The Honourable Apex Court, in the caseof Executive Engineer (supra) has discussed in detail Sections126 and 56 as well as Section 127, and candid distinction has beenmade in these two sections.23.The appellate authority has observed that respondent No.1had applied to the petitioner to increase the load, and eventhereafter, the bills of industrial use were given to him. When therequest to change the load was made, it was necessary to changethe class. However, the petitioner did not take any action andcontinued to issue the electricity bills for industrial use. Then, theAppellate Authority jumped to reproduce Section 56 of the Act. Onreproducing Section 56, without assigning reasons, how Section56 is applied to the case in hand, directly passed the ordercancelling the final assessment bill. In fact, there were no reasonsat all in the impugned order directing to make the assessment asper Section 56 of the Act and to refund the amount deposited with 17 903-WP-6725-20.odtthe petitioner. 24. The Honourable Supreme Court, in the case of PremCottex (supra), has interpreted Section 56 of the Act andobserved in paragraph No.13 that, despite holding that electricitycharges would become first due after the bill is issued to theconsumer (para 6.9. of the SCC Report),and despite holding thatSection 56 (2) does not preclude the licencee from raising anadditional or supplementary demand after the expiry of the periodof limitation prescribed in the case of a mistake or bonafide error(Para 9.1 of the SCC Report), this Court came to the conclusionthat what is barred under Section 52(2) is only the disconnectionof supply of electricity. In other words, it was held by this Court inthe penultimate paragraph that the licencee may take recourse toany remedy available in law for the recovery of the additionaldemand but is barred from taking recourse to disconnection ofsupply under Section 56(2).In paragraphs 15 and 16, it has been observed that thus;"15. Therefore, the bar actually operates on two distinctrights of the licencee, namely, (i) the right to recover;and (ii) the right to disconnect. The bar with reference tothe enforcement of the right to disconnect is actually anexception to the law of limitation. Under the law oflimitation, what is extinguished is the remedy and notthe right. To be precise, what is extinguished by the lawof limitation is the remedy through a court of law and nota remedy available, if any, de hors through a court of 18 903-WP-6725-20.odtlaw. However, section 56(2) bars not merely the normalremedy of recovery but also bars the remedy ofdisconnection. This is why we think that the second partof Section 56(2) is an exception to the law of limitation”.“16. Be that as it may, once it is held that the term "firstdue" would mean the date on which a bill is issued, (asheld in para 6.9 of Rahamatullah Khan) and once it isheld that the period of limitation would commence fromthe date of discovery of the mistake (as held inparagraphs 9.1 to 9.3 of Rahamatullah Khan), then thequestion of allowing licencee to recover the amount byany other mode but not take recourse to disconnectionof supply would not arise. Rahamatullah Khan says in thepenultimate paragraph that "the licencee may takerecourse to any remedy available in law for recovery ofthe additional demand, but barred from taking recourseto disconnection of supply under subsection (2) ofsection 56 of the Act".25.The Honourable Supreme Court has laid down a clear lawthat Section 56 gives two distinct rights of the licencee i.e. (i) theright to recover; and (ii) the right to disconnect. On reading theabove judgment carefully, the Court is of the view that Section 56of the Act would not attract in the case at hand. The case againstrespondents is altogether on a different footing. Therefore, theappellate authority has incorrectly observed that Section 56 of theAct shall be applied and that the respondents are liable to pay thecharges only for the period given thereunder. The Officers of the 19 903-WP-6725-20.odtpetitioner have correctly assessed the bill for unauthorized useunder Section 126 of the Act.26.For the above reasons, the writ petition deserves to beallowed. Hence, the order;ORDERi)The writ petition is allowed.ii)The impugned order of respondent No.3 passed in AppealNo.6/2919-20, dated 20.03.2022, is quashed and set asideand the final assessment order, dated 06.03.2018, isrestored.iii)The amount deposited by the petitioner should be adjustedin the final assessment of the bill for an unauthorized usageof electricity.iv)Rule made absolute in above terms with no order as to costs.27.Learned counsel for respondent No.1 prays for the stay ofthis order for four weeks as he wishes to seek legal remedy.Considering the issue involved in this case, his prayer is accepted.This order is stayed for four weeks from today. ( S. G. MEHARE ) JUDGErrd