[Cites 6, Cited by 0]
Bombay High Court
M/S. The Kothari Wheels Ltd. And Anr vs Executive Engineer Maharashtra State ... on 27 March, 2026
2026:BHC-AS:14837
12 WP 4588-2023.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO. 4588 OF 2023
1. M/s. The Kothari Wheels Ltd.
24B, Hadapsar Industrial Estate, Hadapsar
Pune 411 013.
2. M/s. The Maharashtra Light Industries
24B, Hadapsar Industrial Estate, Hadapsar ... Petitioners.
Pune 411 013
Versus
1. Executive Engineer
Maharashtra State Electricity Distribution
Company Ltd. (MSEDCL)
Bund Garden Division
St. Mary's substation premises,
Exhibition Road, opposite Bishop School,
Camp, Pune - 411 011
2. The Addl. Executive Engineer,
M.S.E.D.C.Ltd., ... Respondents.
Hadapsar Sub - Div. (4603)
Dist. - Pune 411 013
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Mr. Abhishek Pungliya, Advocate for the Petitioners.
Mr. Rahul Sinha a/w. Mr.Soham Bhalerao and Harshit Tyagi i/by DSK
Legal for the Respondents.
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Coram : Sharmila U. Deshmukh, J.
Reserved on : March 23, 2026
Pronounced on : March 27, 2026
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JUDGMENT :
1. Rule. With consent of parties, Rule made returnable forthwith
and taken up for final hearing.
2. By the present Petition filed under Article 227 of the
Constitution of India, the challenge is to the judgment and order
dated 15th May, 2019 passed by the Electricity Ombudsman (Mumbai),
the order dated 7th February, 2019 passed by the Consumer Grievance
Redressal Forum ("CGRF") and order dated 12th June, 2018 issued by
the Additional Executive Engineer of the Respondents' Flying Squad
only to the extent that it directs retrospective recovery from
Petitioner No.2.
3. The facts necessary to be exposited is that the flying squad of
the Respondent visited the Petitioner's premises on 15 th May, 2018
and the report was that the tariff being applied was for industrial use
whereas the activity being carried out was of automobile repairs
workshop/maintenance centre of Maruti Suzuki. Pursuant to the spot
inspection as communication dated 18th May, 2018 was addressed by
the flying squad to the Additional Executive Engineer to issue bills
under Section 126 of Electricity Act, 2003 ("Electricity Act").
4. Accordingly, the Additional Executive Engineer issued
provisional assessment bill of Rs.23,65,340/- on 21st May, 2018 to
which a detailed reply was submitted by the Petitioner on 7 th June,
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2018. After hearing the Petitioners, the Additional Executive Engineer
on 7th June, 2018 in his capacity as Assessing Officer ordered that the
bill issued under Section 126 be cancelled and plain tariff difference
for the period of one year prior to the date of change of tariff by
charged from the consumer.
5. Accordingly, revised bill of Rs.3,61,320/- was issued to the
Petitioner No.1 towards the difference in tariff between industrial and
commercial category for the period June 2017 to June 2018 which
was paid under protest. The Petitioners filed grievance with the
Consumer Grievance Redressal Forum on 13 th November, 2018 which
dismissed the grievance. The order of dismissal came to be challenged
before the Electricity Ombudsman and was dismissed vide impugned
order dated 15th May, 2018. Hence, the present Petition has been
filed.
6. Learned counsel appearing for the Petitioners submit that by
order of 12th June, 2018, as the Assessing Authority cancelled the bill
issued under Section 126 of Electricity Act, there could not have any
retrospective imposition of tariff difference of one year. He would
submit that the CGRF has held that the consequence of the order of
12th June, 2018 is that the revised bill was required to be issued
considering the actual activity carried out by the consumer without
noticing that the issuance of revised bill for one year was under
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Section 126(5) of Electricity Act. He would further point out the order
of the Electricity Ombudsman and would submit that the impugned
order of 15th May, 2019 erroneously records that the case involves an
error through oversight in not making the appropriate changes in the
system.
7. He would further submit that the present case is not a case of
raising additional or supplementary demand beyond the period of
limitation due to mistake or negligence. He would point out the order
of this Court passed on 1st April, 2014 in the petition filed by
Petitioner No.1 against the Respondents where this Court had held
that the activities of Petitioner No.1 is manufacturing activity and
that the finding of the Superintendent Engineer therein that the
Respondent No.1 had used electricity for commercial purposes cannot
be faulted with. He submits that the Respondents did not initiate any
proceedings under Section 126 of the EC Act and did not change the
applicable tariff after the spot inspection which was conducted on 9 th
August, 2016 by reason of the order of this Court dated 1 st April, 2014.
He submits that the same is confirmed by the fact that the second
spot inspection dated 15th May, 2018 led to Section 126 proceedings
only after the commercial Circular No.302 was made applicable from
1st April, 2018. He submits that as the amount of Rs.3,61,320/- was
paid under protest, the said amount be refunded.
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8. Per contra, learned counsel appearing for the Respondents
submits that the challenge before the Bombay High Court in Writ
Petition No.11197 of 2013 was by reason of categorising the
Petitioners' Chinchwad plan which is unrelated to the subject petition.
He submits that as per commercial Circular No.284 dated 3 rd
November, 2016, the Petitioners' activities namely automobile and
other types of repairs fall under the commercial category. He submits
that by way of commercial Circular No.302 dated 31 st March, 2018,
there was a revision in tariff order by MERC and that the circular did
not make any changes in reference to the tariff category and the
Petitioners' activity remained under commercial category as
applicable from 1st April, 2017. He submits that order of 12th June,
2018 was issued by the statutory Assessing Authority under Section
126 of the EC Act, who also assumes the role of an officer of the
Respondent-Company having designation as Additional Executive
Engineer and that both the directions though issued in a single
document are liable to be read separately and independently.
9. He further submits that a supplementary bill for the period of
June, 2017 till June, 2018 came to be issued by the Respondents as
per the said order dated 12th June, 2018. He submits that the
Additional Executive Officer acting as an Assessing Officer ordered
cancellation of the bill issued under Section 126 of the EC Act holding
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it to not be an unauthorized use of electricity however, as an
Additional Executive Engineer, he had all the powers to issue
differential bill for the period preceding the date of knowledge. He
submits that it was always the case of the Respondents that the
Additional Executive Engineer has considered the commercial Circular
No.284 dated 3rd November, 2016 whereby the Petitioners' activity
was categorized under the commercial tariff category and accordingly,
the Petitioners were issued the supplementary bill dated 6 th July,
2018 for the amount of Rs.3,61,320/- for a period from June, 2017 to
June, 2018.
10. He submits that under the provisions of Section 56(2) of the EC
Act, it is permissible to recover the differential arrears within a period
of two years from when it is first due i.e. the date of raising a valid bill
upon a consumer. He would submit that although the Assessing
Authority would not have the power to direct issuance of a
differential bill without a case of unauthorized usage, the directions
appears to be stray remark in the order dated 12 th June, 2018 and the
supplementary bill has been issued under Section 56(2) of the
Electricity Act. He submits that the proceedings pertaining to issuance
of tariff difference bill operates independently from the proceedings
under Section 126 of which is well settled. He would submit that the
contentions raised now were not raised before the CGRF as well as
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the Electricity Ombudsman. He submits that there is no embargo on
the Respondents to issue a fresh supplementary bill for the applicable
period independent of the assessment proceedings under Section 126
of the Electricity Act and accordingly liberty be allowed.
11. Rival contentions now fall for determination.
12. It is an undisputed position that the Petitioners connection was
classified as industrial by the Respondents. Though the learned
counsel for the Petitioners would refer to the spot inspections of the
year 2016, perusal of the impugned orders does not indicate any
reference to the earlier spot inspections. The order of Electricity
Ombudsman records the submission of the Petitioners as regards the
order passed by this Court in Writ Petition No.11197 of 2013, which
was also not pressed before the Electricity Ombudsmen.
13. The issue is therefore required to be considered on the basis of
spot inspection of 15th May, 2018 and the order of Assessing Authority
dated 12th June, 2018.
14. The Assessing Authority by order of 12 th June, 2018 considered
the spot inspection report of 15th May, 2018 as well as the commercial
Circular No.302 of 31st May, 2018.The Assessing Authority vide order
dated 12th June, 2018 noted that the premises was taken on rent by
the Petitioner No 1 from the Petitioner No.2 and there is no
agreement placed on record. It noted that the Petitioner No.2 was
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carrying out manufacturing activities whereas the Petitioner No.1 is
carrying on business of service and repairs of automobiles alongwith
fixing of new spare parts and denting and painting. It noted that there
is no authorisation letter as regards the Petitioner No.1 being
authorised service station of Maruti Suzuki. It was held by the
Assessing Authority that though the premises of the consumer was
behind the MSEDCL Sub Division Office of Hadapsar Industrial Sub
Division till date of inspection by Flying Squad no action for tariff
change or under Section 126 was initiated. The Assessing Authority's
conclusion reads as under:
"Thus, the exact date of, period of occupying said premises by
M/s Kothari Wheels cannot be concluded. Hence, I as an
assessing officer comes to a conclusion that the tariff of the
said consumer should be immediately changed from LT V B II to
LTII Commercial and the bill issued u/s 126 be cancelled and
plain tariff difference for the period of 1 year prior to the date
of change of tariff be charged from the said consumer. The
consumer should be given 10 equal installments for this plain
tariff difference and if he fails to pay the instalments and tariff
difference amount the action as per prescribed procedure of
MSEDCL should be taken from your end for disconnection."
15. What was challenged before the Assessing Authority was the
provisional bill issued under Section 126 of the EC Act, which provides
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for provisional assessment upon arriving at a finding that the
consumer is indulging in unauthorised use of electricity after
conducting an inspection. Sub section (5) of Section 126 provides that
if the Assessing Authority comes to a conclusion that unauthorized
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 cannot be ascertained it
shall be limited to period of 12 months preceding the date of
inspection.
16. The provisions of section 126 therefore make it clear that it is
only where there is an unauthorized use of electricity and it is difficult
to ascertain the period during which the unauthorized use of
electricity has taken place, that the period shall be confined to a
period of 12 months immediately preceding the date of inspection.
The order of the Assessing Authority records a categorical finding that
the period of taking premises on rent cannot be concluded. After
arriving at the said finding it orders that the bill issued under Section
126 be cancelled. After having ordered the cancellation of bill under
Section 126, it was thereafter not open for the Assessing Authority to
further direct the plain tariff difference to be charged for a period of
one year prior to the date of change of tariff from the consumer. The
Assessing Authority while exercising powers under Section 126 was
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deciding the issue of correctness of the provisional assessment bill
and was required to pass a final order of assessment after hearing the
objections as contemplated under Section 126(3) of the EC Act. The
order of cancellation the bill under section 126, constitutes setting
aside of the provisional assessment and thereafter there was no
question of issuing any further directions for charging the tariff
difference for period of one year prior to the date of change of tariff.
The wordings of the order of the Assessing Authority are in terms of
Section 126(5) of EC Act, which directions could not have been issued
once the provisional bill has been ordered to be cancelled.
17. Though it is sought to be contended by learned counsel
appearing for the Respondents that two different directions have
been passed by the Assessing Authority in two different capacities as
Assessing Authority and Additional Executive Engineer respectively
and that the directions for issuance of a differential bill could be
directed in the capacity as an Additional Executive Engineer can only
be stated to be rejected. The proceedings which were being
conducted before the Assessing Authority was under Section 126(3)
of the EC Act in the capacity as an Assessing Officer and there was no
question of different directions being passed in different capacity in a
composite order passed under Section 126(3) of the EC Act. The
revised bill which was subsequently issued makes a specific reference
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to the order of 12th June, 2018 and was therefore passed not on the
basis of the applicability of the wrong tariff code and relatable to
Section 56(2) of the Electricity Act but was in furtherance of the order
of 12th June, 2018 which was an order passed by the Assessing
Authority.
18. The CGRF has held that the activity of the petitioner No.1 falls in
commercial activity and the said change of establishment were not
informed to the utility properly. The CGRF accepts the submission of
the Petitioners that the proceedings under Section 126 of the EC Act
is cancelled by the order of 12th June, 2018, however, erroneously
holds that a consequence of the order is that revised bill will have to
be issued considering the actual activity carried out by the consumer
between the period June 2017 to June 2018. The CGRC has therefore
conflated the powers under Section 126 of the EC Act and Section
56(2) of the EC Act to uphold the directions passed in the order of 12 th
June, 2018. Neither the Assessing Authority nor the CGRC has based
on its findings on the applicability of commercial Circular No.284 and
even accepting the applicability of the said commercial circular, the
revised bill in accordance with the commercial circular could not have
been directed by the order passed under Section 126 (3) of the EC Act.
19. The Electricity Ombudsman has considered the submissions of
the Petitioners that as per the tariff order of 3 rd November, 2016, the
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commercial Circular No.284 was issued which directed the proper
categorization by actual field inspection. It held that inadvertently due
to oversight the tariff was not changed and that it is not an abrupt
change to tariff category but an error through oversight and the
Respondent is entitled to recover the arrears to the extent of two
years prior to the date of detection. The Electricity Ombudsman failed
to consider the submissions of the Petitioners that the action under
Section 126 was dropped by the order of 12 th June, 2018 and has
erroneously held that through oversight an appropriate change was
not made by the Respondents in the appropriate tariff.
20. The findings of the Electricity Ombudsman is contrary to the
material on record as regards the order of 12 th June, 2018 and the
revised bill which clearly states that the same is in furtherance of the
order dated 12th June, 2018. It was therefore not a case of issuance of
a bill as per the revised tariff category but issuance of a bill in
furtherance of order of 12th June, 2018, which could not have been
issued once the Assessing Authority orders the cancellation of the
provisional assessment bill.
21. In light of the above discussion, the impugned dated 15 th May,
2019 passed by the Electricity Ombudsman, Mumbai, the impugned
order dated 7th February, 2019 passed by the CGRC and the directions
in the order of 12th June, 2018 directing levying of tariff difference for
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the period of one year prior to the date of change of tariff are clearly
unsustainable and are hereby quashed and set aside.
22. The Assessing Authority could not have passed the direction of
levying plain tariff difference while adjudicating the objections
against the provisional assessment bill under Section 126 of EC Act. It
is open for the Respondents to issue a fresh differential bill in
accordance with law notwithstanding the fact that the impugned
orders are being quashed and set aside. In event such a differential bill
is raised, the same if challenged, be considered on its own merits and
in accordance with law and uninfluenced by the quashing and setting
aside of the impugned orders in the present proceedings. As the
Petitioner have paid the amount of Rs.3,61,320/- under protest, the
Respondents are directed to refund the sum of Rs 3,61,320/ within a
period of eight weeks from date of uploading of the order failing
which the amount to carry interest @ 6% p.a. till payment or
realisation.
23. The Petition is allowed. Rule is made absolute in the above
terms.
[Sharmila U. Deshmukh, J.]
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Signed by: Sanjay A. Mandawgad
Designation: PA To Honourable Judge
Date: 27/03/2026 17:26:17
