Bombay High Court
Maharashtra State Electricity ... vs Eden Agencies And Anr on 17 February, 2025
2025:BHC-AS:7734
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO.12434 OF 2024
Maharashtra State Electricity
Distribution Company Limited
through Superintending Engineer
a Company incorporated under the
Companies Act, 1956 and the
Electricity Act, 2003 and having its
Office at MSEDCL. Vasai Mandal,
2/3 Deepshree, Navghar (E)
Vasai Road. ....Petitioner
V/S
1 M/s. Eden Agencies
C.T.S. No.55/2, Plot No.3
Village Sativali, Taluka Vasai,
Distrit Palghar
2 Chief Electrical Inspector
Maharashtra, Bandhkaam Bhavan,
3rd Floor, Administrative Building
Ramkirhn Chemburkar Marg,
Industry, Energy, Labour and
Mineral Work Department,
Mumbai. ....Respondents
_________
Mr. Nirav Shah with Mr. Kiran Gandhi and Ms. Niharika
Singh i/b M/s. Little & Co. for the Petitioner-MSEDCL.
Mr. Anil D'Souza with Mr. Mark Dbritto i/b M/s. Ernest
Tuscano for Respondent No.1.
__________
CORAM : SANDEEP V. MARNE, J.
RESERVED ON : 04 FEBRUARY 2025 &
06 FEBRUARY 2025.
PRONOUNCED ON : 17 FEBRUARY 2025.
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JUDGMENT:
1. The Petitioner-Maharashtra Electricity Distribution
Company Limited (MSEDCL) has filed this petition challenging
order dated 20 November 2023 passed by the Appellate
Authority allowing the Appeal preferred by Respondent No.1 and
setting aside the final assessment bill issued by the Petitioner-
MSEDCL for Rs.19,90,154/- with further direction to the
Petitioner-MSEDCL to refund 50% amount of Rs. 9,95,077/-
deposited by Respondent No.1.
2. Petitioner-MSEDCL is an undertaking of
Government of Maharashtra engaged in the business of
distribution of electricity in the area of supply. Respondent No.1
had applied for High Tension (HT) Power-Loom connection with
the Petitioner-MSEDCL and accordingly was granted such
connection on 1 June 1991. According to Petitioner-MSEDCL,
subsidized tariff was extended to Respondent No.1 upon
representation made by it that it was operating power-loom in
the premises. On 12 January 2016, Petitioner-MSEDCL
conducted spot inspection of the factory of Respondent No.1 and
it was noticed that though the supply was sanctioned for power-
loom purpose no manufacturing activity of power-loom was
actually carried out in the premises. It was found that
Respondent No.1 was merely purchasing readymade clothes and
only rolling and repacking the same. Petitioner-MSEDCL
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construed the action of Respondent No.1 as breach of concession
extended to it and accused Respondent No.1 of misusing the
benefit of supply of electricity at subsidized rates. Accordingly,
Petitioner-MSEDCL initiated action under provisions of Section
126 of the Electricity Act, 2003 (the Act) and made an order of
provisional assessment dated 22 February 2016 for amount of
Rs.41,26,419/-. Upon receipt of the provisional assessment order,
Respondent No.1 raised objection thereto and was accordingly
granted an opportunity of hearing. After considering objection
raised by Respondent No.1 and after hearing it, the Assessing
Officer confirmed the provisional assessment and passed final
assessment order HT-1N with revised direction demanding an
amount of Rs.19,90,154/-.
3. Respondent No.1 filed appeal before the Appellate
Authority bearing Appeal No.234 of 2016 under provisions of
Section 127 of the Act challenging the final assessment order
dated 6 April 2016. Petitioner-MSEDCL opposed the Appeal by
filing Reply. The Appellate Authority has passed order dated 20
November 2023 thereby allowing the Appeal filed by Respondent
No.1 and has set aside the order dated 6 April 2016 with further
direction to the Petitioner-MSEDCL to refund 50% of the
demanded amount to Respondent No.1.
4. Petitioner is aggrieved by the order dated 20
November 2023 passed by the Appellate Authority and has
accordingly filed the present Petition.
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5. I have heard Mr. Shah, the learned counsel appearing
for the Petitioner-MSEDCL and Mr. D'souza the learned counsel
appearing for Respondent No.1. I have gone through the findings
recorded by the Appellate Authority in the impugned order as
well as the relevant records of the case placed alongwith the
Petition.
6. There is no dispute to the position that Petitioner-
MSEDCL has sanctioned and Respondent No.1 has availed
subsidized electricity connection for operation of power-loom.
Petitioner-MSEDCL has placed on record Commercial Circular
No.11 dated 27 September 2005 on the subject of subsidy in tariff
to High Tension Power loom consumers. As per the said Circular,
Government of Maharashtra had declared subsidized rate of
Rs.1.40 p. per unit for the period from 1 June 2005 to 31 March
2006 for power-loom consumers. By Circular dated 27 September
2005, the benefit of subsidized rate was also extended to High
Tension power-loom consumers.
7. Respondent No.1 was thus enjoying electricity supply
at subsidized rates at its factory under the representation that it
was operating a power-loom thereat. However, when Petitioner-
MSEDCL conducted spot inspection on 12 October 2016, it was
noticed that the activity of fabric manufacturing was totally
stopped in the factory and Respondent No.1 was purchasing
ready-made fabric from outside and was merely checking, air
furnishing packing and delivering the same at the factory.
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Respondent No.1 does not really dispute the fact that it does not
operate power-loom at the factory. In his appeal also Respondent
No.1 specifically admitted that the power-loom was in operation
since September 2015. Therefore, there is no factual dispute
about the findings recorded in the spot inspection report. In the
provisional assessment, an amount of Rs.41,26,419/- was
assessed against Respondent No.1. However, in the final
assessment, the same was reduced to Rs.19,90,154/- vide order
dated 6 April 2016. It appears that in the provisional assessment
Petitioner-MSEDCL had charged commercial rate for the period
from December 2014 to January 2016. In the final assessment
order dated 6 April 2016, the Petitioner-MSEDCL however
applied industrial rate under tariff category HT-1N and
accordingly the demand was reduced to Rs.19,90,154/- in the
final assessment order dated 6 April 2016.
8. In Appeal the Appellate Authority has set aside the
final assessment order dated 6 April 2016 by recording following
findings:
"१. वि द्युत पुर ठ्याच्या अटी इतर शत वि वि यम, २००५ मधील बाब क्रमांक
२४.३.३ आणि" २४.४ मधील तरतुदींचा भंग केल्याचे स्पष्ट होते .
२. विद ांक १२ जा े ारी २०१६ रोजीच्या स्थळ परीक्ष" अह ाला ुसार,
अपीलकता4 यांचे परिरसरात फक्त "checking, airofinishing, packing,
rolling" इत्यादी प्रविक्रया सुरु होत्या आणि" त्या करीता लाग"ारी यंत्रे देखील
काय4 रत होती. महावि तर"चे विद ांक २७ सप्टेंबर २००५ रोजीचे ाणि"ज्यिAयक
परिरपत्रक क्रमांक ११ मध्ये मूद केल्या ुसार, अपीलकता4 यांचा ीज ापर
औद्योविगक असला तरीही यंत्रमाग बंद असल्या े ते "यंत्रमाग उद्योगां ा विमळ"ाऱ्या
अ ुदा ास/स लतीस पात्र ठरत ाहीत," त्यामुळे प्रतित ादी यां ी पारीत केले ल्या
अंतितम मूल्य वि धा4र" देयकातील औद्योविगक दरा े केले ली ग4 ारी योग्य ठरते.
३. प्रतित ादी यां ी अपीलकता4 यांचा बीज ापर औद्योविगक असल्याचे त्यांचे
अंतितम मूल्य वि धा4र" आदेशात मान्य केले असू याच ग4 ारीमध्ये मूल्य वि धा4र"
देखील केले आहे. याद्वारे, अपीलकता4 यांस मंजूर ीजदर ग4 ारी आणि" मूल्य
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वि धा4र" करते ेळी ग्राह्य धरण्यात आले ली ीज ग4 ारी एकच (HT १ N)
असल्या े ीज अतिधवि यम २००३ च्या कलम १२६ अन् ये करण्यात आले ली
काय4 ाही अ ुतिचत आणि" तरतुदीस धरू सल्याचे स्पष्ट होते.
४. अपीलकता4 यांच्या ीज दरातील फरकाची सुली करण्याकरीता ीज
अतिधवि यम २००३ च्या कलम १२६ हे माध्यम से शकत ाही.
५. रील स 4 बाबींचा वि चार करता, प्रतित ादी यां ी विद.६ एविप्रल २०१६ रोजी
अंतितम मूल्य वि धा4र" आदेशान् ये पारीत केले ले रू.१९,९०,१५४/- ए ढ्या रक्कमेचे
अंतितम वि धा4रीत ीज देयक रद्द कर"े संयविु क्तक ाटते."
9. The Appellate Authority has recorded a finding in
paragraph 2 of his conclusions that levy of electricity charges in
the final assessment bill at industrial rates is correct. However
the main reason why the final assessment bill is set aside by the
Appellate Authority is non-change of electricity category in
respect of sanctioned category and applied category at the time
of final assessment. The Appellate Authority has held that the
category under which electricity supply is sanctioned and the
one under which final assessment is made happens to be same
i.e. HT-1N and that therefore the action is not in conformity with
provisions of Section 126 of the Act.
10. Section 126 of the Electricity Act, provides thus :
126. Assessment
(1) If on an inspection of any place or premises or after inspection of
the equipments, gadgets, machines, devices found connected or used,
or after inspection of records maintained by any person, the
assessing officer comes to the conclusion that such person is
indulging in unauthorized use of electricity, he shall provisionally
assess to the best of his judgment the electricity charges payable by
such person or by any other person benefited by such use.
(2) The order of provisional assessment shall be served upon the
person in occupation or possession or in charge of the place or
premises in such manner as may be prescribed.
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[(3) The person, on whom an order has been served under sub-
section (2) shall be entitled to file objections, if any, against the
provisional assessment before the assessing officer, who shall, after
affording a reasonable opportunity of hearing to such person, pass a
final order of assessment within thirty days from the date of service
of such order of provisional assessment of the electricity charges
payable by such person.]
(4) Any person served with the order of provisional assessment, may,
accept such assessment and deposit the assessed amount with the
licensee within seven days of service of such provisional assessment
order upon him:
[***]
[(5) If the assessing officer reaches to the conclusion that
unauthorised use of electricity has taken place, the assessment shall
be made for the entire period during which such unauthorized use of
electricity has taken place and if, however, the period during which
such unauthorised use of electricity has taken place cannot be
ascertained, such period shall be limited to a period of twelve months
immediately preceding the date of inspection.]
(6) The assessment under this section shall be made at a rate equal
to [twice] the tariff applicable for the relevant category of services
specified in sub-section (5).
Explanation.- For the purposes of this section,-
(a) "assessing officer" means an officer of a State Government
or Board or licensee, as the case may be, designated as such by
the State Government;
(b) "unauthorised use of electricity" means the usage of
electricity -
(i) by any artificial means; or
(ii) by a means not authorised by the concerned person
or authority or licensee; or
(iii) through a tampered meter; or
[(iv) for the purpose other than for which the usage of
electricity was authorised; or
(v) for the premises or areas other than those for which
the supply of electricity was authorized."]
11. Thus, under provisions of sub-section (3) of Section
126 of the Act, there is outer limit of 30 days for passing final
assessment order from the date of service of order of provisional
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assessment. In the present case, the provisional assessment
order was served on the Respondent on 24 February 2016 and
final assessment order has been passed after 44 days on 6 April
2016. Thus, there appears to be a clear violation of provisions of
sub-section (3) of Section 126 of the Act.
12. Mr. Shah would attempt to salvage the situation by
inviting my attention to commercial Circular No.99 dated 24
August 2009, in which instructions have been circulated
pertaining to the provisions of Section 126 of the Act. The
relevant instructions in the said Circular are as under:
Once the provisional assessment bill is served, the person can
accept the same and deposit the amount within the period of 7
(seven) days. The person on whom the provisional bill is served
is also entitled to file his objection. In case such objection is
filed hearing is required to be given to such person and
thereafter the final order of assessment is required to be
passed within 30 (thirty) days from the date of service of the
provisional assessment order.
13. According to Mr. Shah, 30 days period is available
from the date of grant of hearing to the affected party on account
of use of the word 'thereafter'. However the above instructions do
not appear to be in conformity with provisions of sub-section (3)
of Section 126 of the Act in which the scheme appears to be that
a person, on whom provisional assessment order is served, can
file objections thereto and the Assessing Officer, after affording
the reasonable opportunity and hearing to such person is
required to pass final order of assessment within 30 days from
the date of service of such order of provisional assessment.
Section 126(3) of the Act does not use the word 'thereafter' as is
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used in the Circular. Thus, the statutory scheme of Section 126
of the Act appears to be such that the Assessing Officer shall
first provisionally assess unauthorized use of electricity and
serve the order of provisional assessment on person in
occupation or in possession or in-charge of the place or premises.
The person who is served with the provisional assessment order
can either deposit the assessed amount within a period of 7 days
or can file objection. Though no specific period is prescribed for
filing of objections, outer limit of 30 days is prescribed for
making the final assessment order. Mr. D'souza has contended
that when provisions of sub-sections (3) and (4) of Section 126 of
the Act are read in conjunction with each other, the objections
are required to be filed within a period of 7 days since the same
period is prescribed for depositing the assessed amount. He
would invite my attention to the provisional assessment order
dated 22 February 2016, which had also granted time of 7 days
for either depositing the amount or filing of objections. In any
case, the prescription of any time limit for filing of objections is
not a subject matter of dispute in the present Petition. What is
relevant is the outer limit for passing of final assessment order.
14. It appears that in the Reply filed before the Appellate
Authority, Petitioner has admitted that the final assessment
order was required to be passed within 30 days from the date of
service of provisional assessment order and that the said
provision is mandatory. It would be relevant to reproduce the
relevant portion of the Reply to the Appeal before the Appellate
Authority, which reads thus :
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B. Reply of objection raised in Appeal and rejoinder:
Sr. No. Objections of Reply of MSEDCL
Consumer
3 The procedure laid The detail procedure of
down in MSEDCL assessment has been laid down in
COS 2010 is not S.126 of EA,2003 for assessment
followed. where there was no period
prescribed for activities except
the issuance of final
assessment order within 30
days from the date of service
of provisional assessment
order. These provisions are
mandatory and shall be taken
into consideration in hearing
of Appeal against the final
assessment order passed
u/s.126 of EA, 2003. The
procedure prescribed in MSEDCL
COS 2010 is for guidance of
MSEDCL officer and did not have
mandatory in nature. Therefore,
procedural lapse would not come
to escape the consumer from the
consequence of his act.
15. However, the contention of Petitioner that the
procedure prescribed in MSEDCL COS 2010 is for guidance of
MSEDCL Officer and is not mandatory in nature appears to be
erroneous. The period of 30 days is prescribed under provisions
of sub-section (3) of Section 126 of the Act and not in any
guidelines. It may be that the guidelines also reiterate the said
outer limit. However so long as the outer limit of 30 days is
prescribed in Section 126(3) of the Act, the same will have to be
mandatorily followed.
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16. In The Executive Engineer and others vs. Seetaram
Rice Mill, (2012) 2 SCC 108, the Apex Court has considered the
ambit and scope of Section 126 of the Act, though in a different
context of construction of the words 'unauthorized use' and
'means', and has held in paragraph 23 as under :
23. Having dealt with the principle of interpretation of these
provisions and the distinction between Sections 126 and 135 of
the 2003 Act, we shall now discuss the ambit and scope of
Section 126. The provisions of Section 126 contemplate the
following steps to be taken :
(i) An assessing officer is to conduct inspection of a place or
premises and the equipments, gadgets, machines, devices
found connected or used in such place.
(ii) The formation of a conclusion that such person has
indulged in unauthorized use of electricity.
(iii) The assessing officer to provisionally assess, to the best of
his judgment, the electricity charges payable by such person.
(iv) The order of provisional assessment to be served upon the
person concerned in the manner prescribed, giving - him an
opportunity to file objections, if any, against the provisional
assessment.
(v) The assessing officer has to afford a reasonable opportunity
of being heard to such person and pass a final order of
assessment within 30 days from the date of service of
such order of provisional assessment.
(vi) The person, upon whom the provisional order of
assessment is served, is at liberty to pay the said amount
within seven days of the receipt of such order and where he
files such objections, final order of assessment shall be passed,
against which such person has a right of appeal under Section
127 of the 2003 Act within the prescribed period of limitation.
(emphasis added)
17. In my view therefore, failure to pass final assessment
order within a period of 30 days from the date of service of the
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provisional assessment is fatal in the present case. The final
assessment order deserves to be set aside on this solitary ground
and has actually been set aside by the Appellate Authority on
this ground. Since the final assessment order dated 6 April 2016
is rendered invalid on account of violation of provisions of
Section 126(3) of the Act, it is not necessary to go into the rest of
the reasonings adopted by the Appellate Authority. Therefore,
the issue as to whether consumption of electricity for industrial
purpose in respect of connection authorized for power-loom
would amount to unauthorized use of electricity is kept open to
be decided in an appropriate case.
18. I therefore, do not find any valid reason to interfere in
the order passed by the Appellate Authority. Writ Petition must
fail. It is accordingly dismissed without any order as to costs.
(SANDEEP V. MARNE, J.)
SUDARSHAN RAJALINGAM
RAJALINGAM KATKAM
KATKAM Date:
2025.02.17
14:31:48 +0530
