Full Judgement
Bombay High Court
The Maharashtra State Electricity ... vs Ramchandra Madhavrao Naik And Others on 6 February, 2024
2024:BHC-AUG:3026
1 903-WP-6725-20.odt
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
BENCH AT AURANGABAD
WRIT PETITION NO. 6725 OF 2020
The Maharashtra State Electricity
Distribution Company Ltd.,
Through its Additional Executive Engineer,
Kranti Chowk Sub Division, Aurangabad .. Petitioner
Versus
1. Ramchandra s/o. Madhavrao Naik,
Age 80 years, Occu. Retired,
R/o. Flat No. A-1, Chetna Nagar,
Aurangabad
Presently residing at Flat No.301,
Building F, Tejovalay Society,
Near CIPLA Foundation, Warje,
Pune-411 058 .. (Original Appellant)
2. I-Learn Center for Competitive Exams
Through its Proprietor
Abhishek Gaike,
Age Major, Occu. Business,
R/o. Plot No.1132, Sai Nagar, N-6,
CIDCO, Aurangabad
3. Superintending Engineer,
Aurangabad Region Electrical Inspector
Circle, Industries, Energy and Labour
Department, Plot No.11, Shivdas Tarde
Center, First Floor, Trimurti Chowk,
Hedgewar Hospital Road,
Aurangabad 431 005 .. Respondents
Mr. 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.3
CORAM : S. G. MEHARE, J.
DATE : 06-02-2024
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ORAL JUDGMENT :-
1. Rule. Rule made returnable forthwith. Heard finally with
consent of the learned counsel for the parties.
2. The brief facts of the case are that the respondent No.1 was
a consumer of the petitioner. He took an electricity supply to run
his printing press. For his printing press, an Industrial tariff was
applied. He closed down the printing press. He gave his premises
to respondent No.2 on leave and licence. He opened the coaching
classes on that premises in 2010. On his application, the load was
enhanced. The petitioner's personnel visited the premises on
27.12.2017 and found that respondent No. 2 was using the electric
supply for commercial purposes without changing the tariff.
Therefore, it was unauthorized use of electricity as provided under
Explanation (b)(iv) to Section 126 of the Electricity Act, 2003 ("the
Act", for short). The officers drew the spot panchnama. There was
no dispute that on the day of the inspection, respondent No.2 was
running a coaching class on the premises with the old electric
supply under the leave and licence agreement. The petitioner
assessed the provisional bill for the changed user, and notice was
served upon the person from respondent No.2, who had sought
time to make the submissions on 28.02.2018. After receipt of the
notice, he filed a detailed reply. He contended that he possessed
premises under leave and licence agreement with respondent No.1 3 903-WP-6725-20.odt
(original appellant). He submitted that respondent No.1 authorized
him to use the premises for commercial activities. He has also
submitted that he had a registered leave and licence agreement
with respondent No.1. He allowed him to use the electricity supply.
Hence, it was not an unauthorized use. He was not privity to the
contract between the petitioner and respondent No.1. The purpose
for which electricity was supplied to respondent No.1 was not
disclosed to him by respondent No.1. Thus, no liability could be
fastened upon him. He mentioned that the application was
submitted to the office of the petitioner in 2012 for supplying 3-
phase electricity with a high load. In the said application, he has
fairly mentioned the nature of the use of electricity supply. In
pursuance of the application, 3 phase and higher load was granted
to him. He prayed to exonerate him from the prosecution.
3. After hearing the person in occupation, the order of final
assessment under Section 126 of the Act was passed and
addressed to Shri. R. M. Naik, respondent No.1 and respondent
No.2, calling upon them to deposit Rs.23,35,321/- within fifteen
days, i.e., on or before 28.03.2018. Respondent No.1 has
impugned the order of provisional assessment by Writ Petition
No.2994 of 2018. This Court, on 13.08.2019, has held that as per
Section 126(2) of the Act, the order of provisional assessment shall
be served upon the person in occupation, possession, or in charge
of the place or premises. Respondent No.2, being in occupation or 4 903-WP-6725-20.odt
in charge of the premises, was served with the provisional
assessment. Objections were invited. The objections were
considered. Finally, the Court observed that the statutory remedy
of appeal is available. Hence, it was not inclined to entertain the
writ petition. Accordingly, the writ petition was disposed of with a
liberty to avail the alternate remedy. However, the amount of
Rs.1,00,000/- which respondent No.1 had deposited was directed
to be adjusted in the amount of the assessment. Then, respondent
No.1 preferred an appeal before respondent No.3/ appellate
authority cum Superintending Engineer, Aurangabad Region
Electrical Inspection Circle, Aurangabad. Respondent No.1 was
heard, and the appellate authority calculated unauthorized use
from January 2010. However, the petitioner can, at the most,
recover the money from respondents No.1 and 2 as per Section 56
of the Act for a period of not more than two years. Accordingly,
he held that respondent Nos.1 and 2 are liable to pay
Rs.10,67,670/-. Against the said order, the petitioner is before this
Court.
4. Learned counsel for respondent No.1/appellant submits that
the appellate authority has not granted a fair hearing before
passing the impugned order. The appellant had filed a reply.
Thereafter, there is no hearing; therefore, on this count itself, the
impugned order is liable to be cancelled. He submits that it was
not disputed that, initially, the supply was only to run the printing 5 903-WP-6725-20.odt
press. He submitted that an industrial tariff was applied for
electric consumption, considering the nature of business. However,
the petitioner and respondent No.2 never intimated to the
petitioner that he changed the use of the supply from the LT-V-
industrial tariff to the commercial tariff. On the inspection day, the
Officers found that the electricity supply was used for commercial
purposes. Though the application for enhancement for the higher
load was applied, it was never informed that it was used for
commercial purposes. He submitted that provisional notice had
been correctly served upon the person in occupation of the
premises. The spot panchnama was drawn in the presence of the
person in occupation. He submits that the term ' unauthorized use'
has been explained in Explanation B(iv) of Section 126 of Act. The
person who has raised an objection to the provisional assessment
i.e. respondent No.2, admitted that it was used for commercial
purposes. The leave and licence indicate that he occupied the
premises since 2010. Therefore, the authorities exercising the
power under Section 126(5) of the Act correctly assessed the bill
for unauthorized use of electricity from the date of its use. The
plea of 'no privity of contract' would not absolve the person
concerned from the liability to pay for the unauthorized use. This
Court, in writ petition preferred by present respondent No.1, has
recorded the findings that, under Section 126(2) of the Electricity
Act, such notice/order of provisional assessment shall be served 6 903-WP-6725-20.odt
upon the person in occupation or possession or in charge of the
place or premises, in the manner as may be prescribed. So, the
provisional notice was correctly served upon the person who was
in occupation and possession. The landlord cannot be run away
from the liability. In the case at hand, the documentary evidence
shows that respondent No.2 was using the premises under leave
and licence. Referring to the impugned order, he would submit
that the appellate authority did not set aside the final assessment
order in its entirety. However, the Appellate Authority misread
Section 56 of the Act and incorrectly held that Section 126 would
not apply. Enhancing the load and changing the class of the
consumer are different issues. Sections 126 and 56 of the Act are
distinct.
5. Relying on the case of Executive Engineer and Another
vs. Sri Seetaram Rice Mill, 2012 (3) Mh.L.J. 536, he
vehemently argued that Section 56 of the Act does not apply at all
to the facts of the case. He relied on the case of Prem Cottex vs.
Uttar Haryana Bijli Vitran Nigam Limited and Others, 2021
S.C.C. Online (SC) 870, and argued that the Honourable
Supreme Court interpreted Section 56(2) of the Act and held the
person may take recourse to any remedy available in law for
recovery of additional demand, but barred from taking recourse to
disconnection of supply under sub-section (2) of Section 56 of the
Act.
7 903-WP-6725-20.odt
6. He has also vehemently argued that Section 126(5) has been
correctly applied. The papers of assessment were placed before
the appellate authority. The appellate authority has exceeded its
jurisdiction in applying Section 56 of the Act. The opportunity for a
hearing was not given to the petitioners. Therefore, the order of
the appellate authority is liable to be quashed and set aside.
7. Per contra, learned counsel for respondent No.1/landlord has
vehemently argued that the findings of the Appellate Authority
clearly reflect that the petitioner was heard. Therefore, it could not
be said that the opportunity of hearing was not granted to the
petitioner. The Load from 5 H.P. to 14 K.W. was enhanced by
application of the year 2012. At that time, G.T.L. Company was
outsourced for distribution. Before enhancing the load, the Officer
of the petitioner inspected the spot and then enhanced the load.
Since then, the petitioner has had knowledge of the change in the
use of the electricity supply. However, they deliberately did not
care to change the tariff and went on to issue bills. So, in the
circumstances, it is hard to digest that respondents No.1 and 2 are
at fault and have used and consumed electricity unauthorizedly.
Considering the facts and circumstances of the case, explanation
b(iv) of Section 126 of the Act would not apply. He also vehemently
argued that there was no concrete evidence that the use of
electricity for commercial purposes was started in 2010. Therefore,
there was no material before the assessing authority from when 8 903-WP-6725-20.odt
the so-called unauthorized use of electricity was started for the
first time. Under such circumstances, at the most, the authority
could assess the bill for unauthorized use, without admitting, for a
period not more than twelve months preceding the date of
inspection. He also vehemently argued that the materials on the
basis of which the provisional assessment of the bill was done
were not served upon the respondents. Therefore, the respondents
had no material to explain the assessment. He has placed on
record a compilation and referred to the copy of the final
assessment order. He also referred to the provisional assessment
bill and pointed out that the said bill was dated 28.02.2018, so
how could there be an assessment before that date? The rules and
procedures of panchnama have not been complied with. The
petitioner company never issued the monthly bills. The bills for
two months were charged. That indicates that the electric meter
was not in order. Therefore, the so-called assessment is incorrect
and without base. The procedure laid down in Section 126(1) of
the Act was not duly followed. The final assessment order is
without reasons. The impugned order is not passed only on the
yardstick of Section 56 of the Act; other relevant factors have also
been considered. The case laws relied upon by the petitioner are
not applicable. Respondent No.1 is in growing age. There was no
deliberate act on his part. He was fair and regular in paying the
petitioner's electricity bills as charged. He submits that the 9 903-WP-6725-20.odt
interpretation of Section 56 of the Act, as referred by the petitioner
in the case of M/s. Prem Cottex (supra) is in another context. It has
been vehemently argued that assessment had been shown in the
case of theft, and the person Mr. Abhishek Gaike, who submitted
the representation, was not a licencee. He prayed to dismiss the
petition.
8. Learned counsel for respondent No.2 adopts the arguments
of learned counsel for respondent No.1.
9. The learned A.G.P. filed an affidavit-in-reply and contended
that the government is a formal party.
10. Considering the arguments advanced by the learned counsel
for 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 of
twelve 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 for
running the printing press, and its tariff was an industrial class. It
is also not in dispute that the suit premises was given on leave and
licence to respondent No.2 by registered document. It is admitted 10 903-WP-6725-20.odt
that in 2012 an application was moved to the petitioner for
enhancing the load and supply for 3-phase electricity. The
inspection was accordingly done, and the load was enhanced. The
arguments of the learned counsel for respondent No.1 is that since
the day of moving an application for enhancing the load and
inspection, the petitioner knew that the nature of the electricity
supply had been changed. Respondent No.1 or 2 never suppressed
its user. The Officers of the petitioner were satisfied, and they had
enhanced the load. His arguments reveal that the petitioner knew
the change of user, but it did not apply the new tariff. Hence, the
respondents No.1 and 2 could not be penalized. The authority
deliberately did not produce a copy of the application to hide its
fault. For want of any such material before the Court, it is difficult
to arrive at the conclusion that no prayer for change of the use of
electricity supply was made. He supported the impugned order
and prayed to dismiss the petition.
12. Learned counsel for respondent No.1 fairly conceded that
after receiving the notice of the provisional assessment,
respondent No.2 had telephonically informed him. However, he did
not prefer to appear before the authority. Till the final assessment
of the bill for the unauthorized use was done, he never appeared.
However, for the first time, he impugned the said order by way of
appeal.
11 903-WP-6725-20.odt
13. Enhancing the load and changing the user of the electricity
supply from one class to another class are apparently distinct. The
load may be enhanced for any class of user of electricity for the
purpose for which it was supplied. The consumer is bound to
inform the supplier about any change in the class/tariff. The
respondent never had a case that they intimated to the petitioner
about the change of the class of electricity users. So, respondent
No.1 cannot say that since 2012, when the application was moved
to enhance the load, the petitioner had knowledge about the
change of the user's class, and they failed to charge for the
commercial tariff. Hence, he cannot be blamed.
Points No.2 to 4 :-
14. It has been argued that the person who has signed
submissions before the authority is not his licencee. It has also
been argued that it was not an unauthorized use of electricity. It is
indirectly argued that the right person did not submit the
representation. Hence, his representation does not bind
respondent No.1. The petitioner erred in not applying the correct
tariff. The copy of the licence was not before the authority. Without
concrete evidence, the petitioner incorrectly assessed the bill from
2010. There may be agreement, but it could not be said that
commercial use was started from its date of execution. Therefore,
the second part of Section 126(5) of the Act would apply. The
assessment was done on the surmises of the petitioner's officers.
12 903-WP-6725-20.odt
15. Section 126(2) of the Act provides for service of the notice of
the provisional assessment of a bill for unauthorized use. Such
provisional assessment bill shall be served on a person in
occupation or possession or in charge of the place or premises.
The licencee/ respondent no.2 appeared before the petitioner to
respond to the notice of provisional bill. He put his defence.
Respondent No.2 was informed about the said notice to
respondent No. 1. He never objected to the representation made
by its signatory that he has no concern with the premises. It is the
objection raised for the first time. Hence, his objection seems an
afterthought.
16. Respondent No. 2 had placed a copy of the leave and licence
agreement on record. It was a document showing that respondent
No.1 was using the premises for coaching classes, and the
electricity was used for commercial purposes.
17. Learned counsel for the petitioner has correctly pointed out
that before the final assessment was done, the notice was served
to the right person. The document of the bill revision report is
coming from the custody of respondent No. 1. The said document
is dated 05.02.2016. It is a detailed report of the assessment. The
learned counsel for respondent No.1 has correctly pointed out that
the reason code is 7- THEFT 126 in the said document. He is also
correct that the assessment of the theft bill is under different 13 903-WP-6725-20.odt
sections. However, reading the said document, it is clear that
though the reason code is mentioned as theft, ahead of it, 126 is
mentioned. It is a section under which the assessment is done.
Reading Section 126, it is an assessment of the bill for an
unauthorized use of electricity. Section 135 of the Act provides for
the assessment of the bill for theft. Examining the said document
carefully, it does not indicate that the rule of Section 135 of the
Act is applied to assess the bill. Applying the law to read the
document as a whole, to understand the real intention of the
parties, the Court, after reading the said document as a whole, is
of the opinion that merely writing incorrect reason code, the
petitioner's case cannot be doubted.
18. The petitioner had a simple case that the user class of the
electricity was changed. It is unauthorized use. Explanation, 2 (b)
(iv) of Section 126 of the Act has defined the term 'unauthorized
use'. It means the usage of electricity for a purpose other than for
which the usage of the electricity was authorized. The Explanation
simply says that where the purpose for which the supply is taken is
changed is an unauthorized use of electricity. There are various
tariffs for different kinds of electricity use. The tariffs are applied
as per the demand of the consumer for the purpose for which he
wanted to have an electric supply. Initially, respondent No.1 had
applied to run the printing press. Hence, an industrial tariff was
applied. Thereafter, there was no intimation of the change in the 14 903-WP-6725-20.odt
usage of electricity. The document of leave and licence shows that
it was used for the coaching classes, for which the commercial
tariff was applied. Therefore, the learned counsel for the petitioner
has correctly argued that the usage of electricity for a purpose
other than for which it was supplied as per demand, is
unauthorized usage. For such unauthorized usage, the petitioner is
empowered to take the action. No authority has taken any
coercive action against respondents No.1 and 2. They never
disconnected the electricity supply.
19. The bill revision report reflects that 52-LT COMM less than 20
K.B. was applied for the assessment of the bill. The bill revision
report contains various heads and lock credits were given to
respondent No.1. It was a detailed bill making the final assessment
for Rs.23,35,320.92. The learned counsel for respondent No. 1,
referring to the consumer's personal ledger, correctly pointed out
that the bills for two months were provided to him. He argued that
it is the best evidence that the electric meter was not in order.
However, there is nothing on record to show that he ever made a
complaint that the meter was not in order. If the meter was
defective, it was the duty of the consumer to inform the Board or
authority immediately and get it changed. This also has not been
done. Therefore, there appears to be no substance in objection of
respondents 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.odt
20. The very document of the bill revision report was available,
and that was a basis for the final assessment. Respondents No.1
and 2 could not point out any defect in this report. In this report,
some deductions have also been given. Therefore, it is difficult to
accept that the assessment of the bill was without any basis.
21. The Officers of the petitioner have assessed the bills for
unauthorized use since 2010. The basis for such calculations was
leave and licence agreement. Respondent No.2 represented before
the authority on the receipt of the provisional assessment. He did
not state since when he was occupying the premises. However, he
had a case that he had a leave and licence agreement with
respondent No.1. A copy of said leave and licence was produced.
It was the best evidence to ascertain the fact when he changed
the usage of electricity. Sub-section (5) of Section 126 is in two
parts. The first part provides for the assessment of the bill for the
entire period during which the electricity was used. In other words,
where the material is sufficient to believe that from a particular
date, the unauthorized use of electric supply has been started,
then the authorities have no option but to assess the bill for
unauthorized use from that date. The second part of the said
sections is for the assessment of the bill for the period where no
such date is ascertained. In such cases, the bill to be assessed
shall be for a limited period of twelve months immediately 16 903-WP-6725-20.odt
preceding the date of inspection. The cogent and reliable material
was available before the assessing authority about the date of
unauthorized use of electricity. Therefore, arguments of the
learned counsel for respondents No.1 and 2 that the assessment
could have been done for a period not more than twelve months
immediately preceding the date of inspection is unfounded.
22. The crucial question that has been raised is whether Section
56 of the Act would apply. The Honourable Apex Court, in the case
of Executive Engineer (supra) has discussed in detail Sections
126 and 56 as well as Section 127, and candid distinction has been
made in these two sections.
23. The appellate authority has observed that respondent No.1
had applied to the petitioner to increase the load, and even
thereafter, the bills of industrial use were given to him. When the
request to change the load was made, it was necessary to change
the class. However, the petitioner did not take any action and
continued to issue the electricity bills for industrial use. Then, the
Appellate Authority jumped to reproduce Section 56 of the Act. On
reproducing Section 56, without assigning reasons, how Section
56 is applied to the case in hand, directly passed the order
cancelling the final assessment bill. In fact, there were no reasons
at all in the impugned order directing to make the assessment as
per Section 56 of the Act and to refund the amount deposited with 17 903-WP-6725-20.odt
the petitioner.
24. The Honourable Supreme Court, in the case of Prem
Cottex (supra), has interpreted Section 56 of the Act and
observed in paragraph No.13 that, despite holding that electricity
charges would become first due after the bill is issued to the
consumer (para 6.9. of the SCC Report),and despite holding that
Section 56 (2) does not preclude the licencee from raising an
additional or supplementary demand after the expiry of the period
of limitation prescribed in the case of a mistake or bonafide error
(Para 9.1 of the SCC Report), this Court came to the conclusion
that what is barred under Section 52(2) is only the disconnection
of supply of electricity. In other words, it was held by this Court in
the penultimate paragraph that the licencee may take recourse to
any remedy available in law for the recovery of the additional
demand but is barred from taking recourse to disconnection of
supply under Section 56(2).
In paragraphs 15 and 16, it has been observed that thus;
"15. Therefore, the bar actually operates on two distinct rights of the licencee, namely, (i) the right to recover; and (ii) the right to disconnect. The bar with reference to the enforcement of the right to disconnect is actually an exception to the law of limitation. Under the law of limitation, what is extinguished is the remedy and not the right. To be precise, what is extinguished by the law of limitation is the remedy through a court of law and not a remedy available, if any, de hors through a court of 18 903-WP-6725-20.odt
law. However, section 56(2) bars not merely the normal remedy of recovery but also bars the remedy of disconnection. This is why we think that the second part of Section 56(2) is an exception to the law of limitation".
"16. Be that as it may, once it is held that the term "first due" would mean the date on which a bill is issued, (as held in para 6.9 of Rahamatullah Khan) and once it is held that the period of limitation would commence from the date of discovery of the mistake (as held in paragraphs 9.1 to 9.3 of Rahamatullah Khan), then the question of allowing licencee to recover the amount by any other mode but not take recourse to disconnection of supply would not arise. Rahamatullah Khan says in the penultimate paragraph that "the licencee may take recourse to any remedy available in law for recovery of the additional demand, but barred from taking recourse to disconnection of supply under subsection (2) of section 56 of the Act".
25. The Honourable Supreme Court has laid down a clear law
that Section 56 gives two distinct rights of the licencee i.e. (i) the
right to recover; and (ii) the right to disconnect. On reading the
above judgment carefully, the Court is of the view that Section 56
of the Act would not attract in the case at hand. The case against
respondents is altogether on a different footing. Therefore, the
appellate authority has incorrectly observed that Section 56 of the
Act shall be applied and that the respondents are liable to pay the
charges only for the period given thereunder. The Officers of the 19 903-WP-6725-20.odt
petitioner have correctly assessed the bill for unauthorized use
under Section 126 of the Act.
26. For the above reasons, the writ petition deserves to be
allowed. Hence, the order;
ORDER
i) The writ petition is allowed.
ii) The impugned order of respondent No.3 passed in Appeal
No.6/2919-20, dated 20.03.2022, is quashed and set aside
and the final assessment order, dated 06.03.2018, is
restored.
iii) The amount deposited by the petitioner should be adjusted
in the final assessment of the bill for an unauthorized usage
of 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 of
this 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 ) JUDGE rrd
