Madhya Gujarat Vijli Co Ltd vs Appellate Authority And ...
2023 Latest Caselaw 797 Guj

     C/SCA/9035/2018                            JUDGMENT DATED: 01/02/2023




             IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

              R/SPECIAL CIVIL APPLICATION NO. 9035 of 2018
                                  With
              R/SPECIAL CIVIL APPLICATION NO. 11589 of 2018


FOR APPROVAL AND SIGNATURE:


HONOURABLE MR. JUSTICE BIREN VAISHNAV                 sd/-
==========================================================

1     Whether Reporters of Local Papers may be allowed           YES
      to see the judgment ?

2     To be referred to the Reporter or not ?                     YES

3     Whether their Lordships wish to see the fair copy            NO
      of the judgment ?

4     Whether this case involves a substantial question            NO
      of law as to the interpretation of the Constitution
      of India or any order made thereunder ?

==========================================================
                 MADHYA GUJARAT VIJLI CO LTD
                            Versus
    APPELLATE AUTHORITY AND ELECTRICAL INSPECTOR & 1 other(s)
==========================================================
APPEARANCE IN SPECIAL CIVIL APPLICATION NO. 9035 of 2018:
MR MAULIK NANAVATI, ADVOCATE FOR NANAVATI & CO.(7105) for the
Petitioner(s) No. 1
MR ROHAN SHAH, ASST GOVERNMENT PLEADER for the Respondent(s)
No. 1
NOTICE SERVED for the Respondent(s) No. 2

APPEARANCE IN SPECIAL CIVIL APPLICATION NO. 11589 of 2018:
MR MAULIK NANAVATI, ADVOCATE FOR NANAVATI & CO.(7105) for the
Petitioner(s) No. 1
NOTICE SERVED for the Respondent(s) No. 1
MR ROHAN SHAH, ASST GOVERNMENT PLEADER for the Respondent(s)
No. 2
==========================================================

    CORAM:HONOURABLE MR. JUSTICE BIREN VAISHNAV



                                Page 1 of 39

                                                     Downloaded on : Wed Feb 08 20:31:09 IST 2023
      C/SCA/9035/2018                                     JUDGMENT DATED: 01/02/2023




                                   Date : 01/02/2023
                                    ORAL ORDER

1. Rule returnable forthwith. Mr. Rohan Shah, learned

advocate appearing for respondent - Appellate Authority

and Electrical Inspector waives service of notice of rule.

Though served, none appears for respondent no. 2 in

Special Civil Application No. 9035 of 2018 and though

served, none appears for respondent no. 1 in Special Civil

Application No. 11589 of 2018. Heard Mr. Maulik

Nanavati, learned advocate for the petitioner - Electricity

Company and Mr. Rohan Shah, learned AGP for

respondent - Appellate Authority and Electrical

Inspector.

2. Challenge in these petitions is to the orders dated

29.01.2018 and 17.04.2018 passed by the Appellate

Authority & Electrical Inspector, Division Office, Nadiad

under section 127 of the Electricity Act, 2003.

3. The facts of Special Civil Application No. 9035 of

2018 indicate that it is the case of the petitioner

C/SCA/9035/2018 JUDGMENT DATED: 01/02/2023

electricity company that though respondent no. 2 was

having a sanctioned limit of 25 KW, when the premises

was checked on 25.05.2017, it was found that the

respondent no. 2 was using 91.214 KW and therefore was

in excess of the sanctioned load limits by 66.214 KW from

the NRGP connection. The respondent no. 2 was issued

a provisional bill of Rs.3,59,913.89 ps on 30.05.2017. An

opportunity of hearing was given to the respondent no. 2

to file his objections and after considering the same, the

petitioner company issued the final supplementary bill of

Rs.3,59,913.89 on 16.06.2017. The respondent

consumer filed an appeal under Section 127 of the Act

before the appellate authority after deposit of 50% of

assessment amount. The appellate authority allowed the

appeal on the ground that in light of section 4.95 of the

Supply Code, 2015, the assessment was not in

accordance with Section 4.95.

3.1 Facts of Special Civil Application No. 11589 of 2018

indicate that the respondent had applied for and was

C/SCA/9035/2018 JUDGMENT DATED: 01/02/2023

granted electricity connection (NRGP) with contracted

load of 9 KW. On 03.07.2017, when a surprise inspection

was carried out it was noticed that the private respondent

was using 18.988 KW load instead of the sanctioned load

of 9 KW. The usage of the consumer was thus found to be

in excess of the sanctioned load limit by 9.988 KW. The

petitioner company provisionally and then finally

assessed that the amount payable by the respondent

consumer for unauthorized use of electricity was

Rs.38,022.60 ps. On an appeal filed by the respondent

consumer the appellate authority though having found

that the consumer was using more than the sanctioned

load, allowed the appeal by observing that there has been

a breach of clause 4.95 of the Supply Code which

requires a distribution licencee to issue a notice to the

consumer informing such consumer that they need to

prefer an application for enhancement of the sanctioned

load.

4. Mr. Maulik Nanavati, learned Advocate for the

C/SCA/9035/2018 JUDGMENT DATED: 01/02/2023

petitioner would submit that the order passed by the

Appellate Authority quashing and setting aside the final

order of assessment passed by the Assessing Officer

under Section 126 of the Act only on the ground of

violation of Clause 4.95 of the Supply Code is erroneous

and contrary to law. He would contend that Section 126

of the Act contains the method of computing the amount

that a consumer would be liable to pay for excessive

consumption of electricity, being in the nature of

unauthorised use of electricity. The purpose of Section

126 is to check and prevent misuse or unauthorized of

electricity, and the section is a complete code in itself in

so far as it relates to the manner of dealing with cases of

unauthorised use of electricity. He would submit that

Regulations framed by the Commission in exercise of

power under Section 50 of the Act have no play in cases

of unauthorized use of electricity covered under Section

126 of the Act or theft covered under Section 135 of the

Act. He would urge that in the facts of the present case

once the Appellate Authority confirmed the finding of fact

C/SCA/9035/2018 JUDGMENT DATED: 01/02/2023

that there was consumption by consumer of electricity in

excess of the contracted demand the case was required to

be viewed and dealt with only by looking at provisions of

Section 126 of the Act.

4.1 Mr. Nanavati, learned Advocate has referred to and

relied upon the decision of the Hon'ble Supreme Court in

the case of Southern Electricity Supply Co. of Orissa

Ltd. v. Sri Seetaram Rice Mill reported in (2012) 2

SCC 108, to submit that the issue of consumption of

electricity by consumer in excess of the maximum load

contracted between the parties and reflecting in the

agreement being covered within the meaning of

"unauthorised use of electricity" and therefore attracting

provisions of Section 126 of the Act is no longer res

integra. He would argue that the declaration of law made

by the Hon'ble Supreme Court ought to have been strictly

adhered to by the Appellate Authority.

4.2 Mr. Nanavati, learned Advocate would contend that

C/SCA/9035/2018 JUDGMENT DATED: 01/02/2023

the Appellate Authority has completely misread the

provision contained in Section 4.95 of the Supply Code.

The said provision gets attracted in case of demand based

connections when maximum demand is recorded to be in

excess of 5% or more for at least four times during the

last financial year. In such eventuality, the distribution

licensee, like the petitioner company, would be required

to issue a notice to the consumer calling upon the

consumer to submit an application for enhancement of

load. Maximum demand, he would contend, means the

energy supplied during consecutive 30 or 15 minutes

period of maximum use of energy by the consumer. It

does not envisage a cases of over drawal of energy by the

consumer, and that too for a continuous period of time.

4.3 Mr. Nanavati, learned advocate would also refer to

and rely upon the decision of the Hon'ble Supreme Court

of India in the case of Uttar Pradesh Power

Corporation Limited vs. Anis Ahmad reported in

(2013) 8 SCC 491 and submit that Supply Code framed

C/SCA/9035/2018 JUDGMENT DATED: 01/02/2023

by the Commission in exercise of powers under Section

50 of the Act does not provide, and cannot provide, for

matters relating to assessment of charges for

'unauthorised use of electricity' covered under Section

126 of the Code. He would go to the extent of arguing

that Section 4.95 of the Regulations, if read to interdict or

in any manner interfere, with the operation and play of

Section 126 of the Act, especially by conferring a

substantive right in favour of consumer to be served with

a caution notice even in cases of excess consumption of

electricity, would amount to traveling much beyond

Section 126 and Section 50 of the Act.

4.4 Mr. Nanavati, learned advocate, would lastly refer to

and rely on a recent decision of the Hon'ble Supreme

Court in the case of Kerala State Electricity Board &

Ors. Vs. Thomas Joseph & Ors., reported in 2022

SCC Online SC 1737 and contend that there is

reiteration of the settled legal position that consumption

of electricity in excess of the load sanctioned by the

C/SCA/9035/2018 JUDGMENT DATED: 01/02/2023

distribution licensee or load demanded by the consumer

would be covered within the meaning of "unauthorised

use of electricity" and such cases would be liable to be

dealt with only in accordance with Section 126 of the Act.

He would also submit that Regulation 153(15) of the

Supply Code framed by the Kerala State Electricity

Regulatory Commission, which provided that

unauthorised additional load in the same premises and

under the same tariff shall not be reckoned as

unauthorised use of electricity, fell for consideration

before the Hon'ble Supreme Court. After analysing the

provisions of the Act and considering the judicial reports,

the Court held that the said regulation is inconsistent

with the provisions of Section 126 of the Act since the

section does not make any distinction in cases of

consumption of electricity in excess of sanctioned /

connected load in the very same premises and for the

same purpose which do not involve any change in tariff

applicable for the relevant category of service.

C/SCA/9035/2018 JUDGMENT DATED: 01/02/2023

5. Having heard learned Advocate appearing for the

petitioner and considering the impugned order as well as

judgements cited at the bar, the following questions arise

for consideration of this Court:

(i) Whether consumption of electricity in excess of

maximum of contracted demand / sanctioned

load / contracted demand would amount to

unauthorised use of electricity and therefore be

governed by Section 126 of the Act?

(ii) Whether Section 4.95 of the Supply Code will be

applicable to the facts of the case, and even

otherwise can be said to prevail over Section 126

of the Act by conferring a substantive right in

favour of the consumer of being served with a

notice for enhancement of load capacity in event

of excessive consumption of electricity by the

consumer being noticed by the distribution

licensee?

5.1 In so far as the first issue is concerned, the law is

C/SCA/9035/2018 JUDGMENT DATED: 01/02/2023

not well settled. It has been unequivocally declared by

the Hon'ble Supreme Court in the case of Sri Seetaram

Rice Mill (supra) that cases of excess load consumption

than the connected load would fall under Explanation (b)

(iv) to Section 126 of the Act and that a consumer

consuming electricity in excess of the sanctioned and

connected load would be "in blame and under liability"

within the ambit and scope of Section 126 of the Act. In

Sri Seetaram Rice Mill (supra), the Hon'ble Supreme

Court noted the contentions of both parties thus:

"13. On the simple analysis of the facts as pleaded by the parties, it is contended on behalf of the respondent that the provisions of Section 126 of the 2003 Act are not attracted and no liability could be imposed upon them by the authorities in exercise of their power under that provision. Even if the case advanced by the appellants against the respondent without prejudice and for the sake of argument is admitted, even then, at best, the demand could be raised under Regulation 82 of the Orissa Electricity Regulatory Commission Distribution (Conditions of Supply) Regulations, 2004 (for short "the Regulations"). But recourse to the provisions of Section 126 was impermissible in law. The contention is that the case of a consumer consuming the electricity in excess of maximum and the

C/SCA/9035/2018 JUDGMENT DATED: 01/02/2023

installed load does not fall within the mischief covered under Section 126 of the 2003 Act. To put it plainly, the argument is that the appellants lack inherent authority to raise such demand with reference to the present case on facts and law both.

14. On the contra, submission on behalf of the appellants is that the case of excessive consumption of power beyond the sanctioned load would be a case falling within the ambit of Section 126 of the 2003 Act. Section 126 of the 2003 Act is incapable of an interpretation which would render the said provision otiose in cases which do not specifically fall under Section 135 of the 2003 Act."

5.2 The Hon'ble Supreme Court then discussed the

scope and ambit of Section 126 of the Act of 2003 with

reference to the construction of words "unauthorised

use" and "means". Relevant paragraphs are quoted

below:

"36. 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.

C/SCA/9035/2018 JUDGMENT DATED: 01/02/2023

(ii) The formation of a conclusion that such person has indulged in unauthorised 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.

37. Wherever the assessing officer arrives at the conclusion that unauthorised use of electricity has taken place, the assessment shall be made for the entire period during which such unauthorised use of electricity has taken place and if such period cannot be ascertained, it shall be limited to a period of 12 months immediately preceding the date of inspection and the assessment shall be made at the rate equal to twice the tariff applicable for the relevant category of service specified under these provisions.

C/SCA/9035/2018 JUDGMENT DATED: 01/02/2023

This computation has to be taken in terms of Sections 126(5), 126(6) and 127 of the 2003 Act. The complete procedure is provided under these sections. Right from the initiation of the proceedings till preferring of an appeal against the final order of assessment and termination thereof, as such, it is a complete code in itself.

38. We have already indicated that the provisions of Section 126 do not attract the principles of criminal jurisprudence including mens rea. These provisions primarily relate to unauthorised use of electricity and the charges which would be payable in terms thereof. To determine the controversy in the present case, it will be essential to examine the implication of the expression "unauthorised use of electricity" as contained in Explanation (b) of Section 126 of the 2003 Act.

39. In order to explain these expressions, it will be necessary for us to refer to certain other provisions and the Regulations as well. These expressions have to be understood and given meaning with reference to their background and are incapable of being fairly understood, if examined in isolation. It is always appropriate to examine the words of a statute in their correct perspective and with reference to relevant statutory provisions. The expression "unauthorised use of electricity" on its plain reading means use of electricity in a manner not authorised by the licensee of the Board. "Authorisation" refers to the permission of the licensee to use of electricity, subject to

C/SCA/9035/2018 JUDGMENT DATED: 01/02/2023

the terms and conditions for such use and the law governing the subject.

40. To put it more aptly, the supply of electricity to a consumer is always subject to the provisions of the 2003 Act, State Acts, Regulations framed thereunder and the terms and conditions of supply in the form of a contract or otherwise. Generally, when electricity is consumed in violation of any or all of these, it would be understood as "unauthorised use of electricity". xxxxxxxxx

41. The "unauthorised use of electricity" means the usage of electricity by the means and for the reasons stated in sub- clauses (i) to (v) of clause (b) of the Explanation to Section 126 of the 2003 Act. Some of the illustratively stated circumstances of "unauthorised use" in the section cannot be construed as exhaustive. The "unauthorised use of electricity" would mean what is stated under that Explanation, as well as such other unauthorised user, which is squarely in violation of the abovementioned statutory or contractual provisions.

5.3 The Court then interpreted the statutory provision,

adopting principle of purposive interpretation, and

observed thus:

"44. The unauthorised use of electricity in the manner as is undisputed on record clearly brings the respondent "under liability and in blame" within the ambit and

C/SCA/9035/2018 JUDGMENT DATED: 01/02/2023

scope of Section 126 of the 2003 Act. The blame is in relation to excess load while the liability is to pay on a different tariff for the period prescribed in law and in terms of an order of assessment passed by the assessing officer by the powers vested in him under the provisions of Section 126 of the 2003 Act.

xxxxxxx

49. Once the court decides that it has to take a purposive construction as opposed to textual construction, then the legislative purpose sought to be achieved by such an interpretation has to be kept in mind. We have already indicated that keeping in view the legislative scheme and the provisions of the 2003 Act, it will be appropriate to adopt the approach of purposive construction on the facts of this case. We have also indicated above that the provisions of Section 126 of the 2003 Act are intended to cover the cases over and above the cases which would be specifically covered under the provisions of Section 135 of the 2003 Act.

50. In other words, the purpose sought to be achieved is to ensure stoppage of misuse/unauthorised use of the electricity as well as to ensure prevention of revenue loss. It is in this background that the scope of the expression "means" has to be construed. If we hold that the expression "means" is exhaustive and cases of unauthorised use of electricity are restricted to the ones stated under Explanation (b) of Section 126 alone, then it shall defeat the very purpose of the 2003 Act, inasmuch as the different cases of breach of the terms and conditions of the

C/SCA/9035/2018 JUDGMENT DATED: 01/02/2023

contract of supply, Regulations and the provisions of the 2003 Act would escape the liability sought to be imposed upon them by the legislature under the provisions of Section 126 of the 2003 Act. Thus, it will not be appropriate for the courts to adopt such an approach.

51. The primary object of the expression "means" is intended to explain the term "unauthorised use of electricity" which, even from the plain reading of the provisions of the 2003 Act or on a common sense view cannot be restricted to the examples given in the Explanation. The legislature has intentionally omitted to use the word "includes" and has only used the word "means" with an intention to explain inter alia what an unauthorised use of electricity would be. It must be noticed that clause (iv) of Explanation (b) and sub- section (5) of Section 126 of the 2003 Act were both amended/substituted by the same amending Act 26 of 2007, with a purpose and object of preventing unauthorised use of electricity not amounting to theft of electricity within the meaning of Section 135 of the 2003 Act. This amendment, therefore, has to be given its due meaning which will fit into the scheme of the 2003 Act and would achieve its object and purpose.

52. The expression "means" would not always be open to such a strict construction that the terms mentioned in a definition clause under such expression would have to be inevitably treated as being exhaustive. There can be a large number of cases and examples where even

C/SCA/9035/2018 JUDGMENT DATED: 01/02/2023

the expression "means" can be construed liberally and treated to be inclusive but not completely exhaustive of the scope of the definition, of course, depending upon the facts of a given case and the provisions governing that law.

xxxxxx

58. The above judgments clearly support the view that we have taken with reference to the facts and law of the present case. It cannot be stated as an absolute proposition of law that the expression "means" wherever occurring in a provision would inevitably render that provision exhaustive and limited. This rule of interpretation is not without exceptions as there could be statutory provisions whose interpretation demands somewhat liberal construction and requires inclusive construction. An approach or an interpretation which will destroy the very purpose and object of the enacted law has to be avoided. The other expressions used by the legislature in various sub-clauses of Explanation (b) of Section 126 of the 2003 Act are also indicative of its intent to make this provision wider and of greater application. Expressions like "any artificial means", "by a means not authorised by the licensee", etc. are terms which cannot be exhaustive even linguistically and are likely to take within their ambit what is not specifically stated. For example, "any artificial means" is a generic term and so the expression "means" would have to be construed generally.

xxxxxxx

60. The expressions "means", "means and includes" and "does not include" are

C/SCA/9035/2018 JUDGMENT DATED: 01/02/2023

expressions of different connotation and significance. When the legislature has used a particular expression out of these three, it must be given its plain meaning while even keeping in mind that the use of the other two expressions has not been favoured by the legislature. To put it simply, the legislature has favoured non- use of such expression as opposed to other specific expression. In the present case, the Explanation to Section 126 has used the word "means" in contradistinction to "does not include" and/or "means and includes". This would lead to one obvious result that even the legislature did not intend to completely restrict or limit the scope of this provision.

61. Unauthorised use of electricity cannot be restricted to the stated clauses under the Explanation but has to be given a wider meaning so as to cover cases of violation of the terms and conditions of supply and the Regulations and provisions of the 2003 Act governing such supply. "Unauthorised use of electricity" itself is an expression which would, on its plain reading, take within its scope all the misuse of the electricity or even malpractices adopted while using electricity. It is difficult to restrict this expression and limit its application by the categories stated in the Explanation. It is indisputable that the electricity supply to a consumer is restricted and controlled by the terms and conditions of supply, the Regulations framed and the provisions of the 2003 Act.

xxx

C/SCA/9035/2018 JUDGMENT DATED: 01/02/2023

69. It will also be useful to notice that certain malpractices adopted by the consumer for consuming electricity in excess of the contracted demand could squarely fall within the ambit and scope of Section 126 of the 2003 Act as it is intended to provide safeguards against pilferage of energy and malpractices by the consumer. The Regulations framed in exercise of power of subordinate legislation or the terms and conditions imposed in furtherance of statutory provisions have been held to be valid and enforceable. They do not offend the provisions of the 2003 Act. In fact, the power to impose penal charges or disconnect electricity has been held not violative even of Article 14 of the Constitution of India. The expression "malpractices" does not find mention in the provisions under the 2003 Act but as a term coined by judicial pronouncements. Thus, the expression "malpractices" has to be construed in its proper perspective and normally may not amount to theft of electricity as contemplated under Section 135 of the 2003 Act. Such acts/malpractices would fall within the mischief of unauthorised use of electricity as stipulated under Section 126 of the 2003 Act. Cases of pilferage of electricity by adopting malpractices which patently may not be a theft would be the cases that would fall within the jurisdiction of the Board in furtherance to the terms and conditions of supply. Reference in this regard can be made to the judgment of this Court in Hyderabad Vanaspathi Ltd. v. A.P. SEB [(1998) 4 SCC 470]

C/SCA/9035/2018 JUDGMENT DATED: 01/02/2023

70. There is another angle from which the present case can be examined and obviously without prejudice to the other contentions raised. It is a case where, upon inspection, the officers of the appellant found that the respondent was consuming 142 kVA of electricity which was in excess of the sanctioned load. To the inspection report, the respondent had not filed any objection before the competent authority as contemplated under Section 126(3) and had approached the High Court. Limited for the purposes of these proceedings, excess consumption is not really in dispute. As stated above, the contentions raised by the respondent were to challenge the very jurisdiction of the authorities concerned.

71. Consumption in excess of sanctioned load is violative of the terms and conditions of the agreement as well as of the statutory benefits. Under Explanation

(b)(iv), "unauthorised use of electricity" means if the electricity was used for a purpose other than for which the usage of electricity was authorised. Explanation (b)

(iv), thus, would also cover the cases where electricity is being consumed in excess of sanctioned load, particularly when it amounts to change of category and tariff. As is clear from the agreement deed, the electric connection was given to the respondent on a contractual stipulation that he would consume the electricity in excess of 22 kVA but not more than 110 kVA. The use of the negative language in the condition itself declares the intent of the parties that there was an implied prohibition in consuming electricity in

C/SCA/9035/2018 JUDGMENT DATED: 01/02/2023

excess of the maximum load as it would per se be also prejudiced. Not only this, the language of Regulations 82 and 106 also prescribes that the consumer is not expected to make use of power in excess of the approved contract demand otherwise it would be change of user falling within the ambit of "unauthorised use of electricity".

72. Again, there is no occasion for this Court to give a restricted meaning to the language of Explanation (b)(iv) of Section

126. According to the learned counsel appearing for the respondent, it is only the actual change in purpose of use of electricity and not change of category that would attract the provisions of Section 126 of the 2003 Act. The contention is that where the electricity was provided for a domestic purpose and is used for industrial purpose or commercial purpose, then alone it will amount to change of user or purpose. The cases of excess load would not fall in this category. This argument is again without any substance and, in fact, needs to be noticed only to be rejected.

73. We have already discussed in some detail above that the expressions of the Explanation to Section 126 are to be given a wider and amplified meaning so as to ensure the implementation of the provisions in contradistinction to defeating the very object of the 2003 Act. Without being innovative and while predicating, we only state the principles which have been authoritatively pronounced by this Court in different cases."

The Court eventually declared thus:

C/SCA/9035/2018 JUDGMENT DATED: 01/02/2023

"76. The consistent view of this Court would support the proposition that the cases of excess load of consumption would be squarely covered under Explanation (b)(iv) of Section 126 of the 2003 Act. Once this factor is established, then the assessing officer has to pass the final order of assessment in terms of Sections 126(3) to 126(6) of the 2003 Act."

5.4 This clear exposition of law leaves no scope for any

judicial debate on the subject. A consumer drawing

electricity in excess of the sanctioned load / contracted

demand / connected load / demanded load would fall

within the meaning of "unauthorized use of electricity".

Even if the over drawing of electricity energy by the

consumer is unintentional then also the case would be

covered within the sweep of unauthorized use of

electricity. Intention of consumer is not relevant for the

purpose of determining whether the excess use of

electricity is unauthorized or not; it would assume

relevance only if the case is to be treated as one of theft

covered under Section 135 of the Act. All cases of over

drawal of electricity by the consumer constitute a breach

C/SCA/9035/2018 JUDGMENT DATED: 01/02/2023

of the terms of agreement, regulations and the provisions

of the Act and are liable to be dealt with under Section

126 of the Act, unless they get covered under Section 135

of the Act.

6. This position of law has been restated in the case of

Kerala State Electricity Board (supra). The Court has

summarized the principles of law surrounding cases of

excessive consumption of electricity by the consumer in

the context of Section 126 of the Act thus:

"56. The principles of law discernible from the aforesaid may be summarised as under:

(1) The provisions of Section 126, read with Section 127 of the Act, 2003 become a Code in themselves. It specifically provides the method of computation of the amount that a consumer would be liable to pay for excessive consumption of electricity and for the manner of conducting assessment proceeding. Section 126 of the Act, 2003 has been enacted with a purpose to achieve i.e., to put an implied restriction on such unauthorised consumption of electricity.

(2) The purpose of Section 126 of the Act, 2003 is to provide safeguards to check the misuse of powers by unscrupulous elements. The provisions of Section 126 of

C/SCA/9035/2018 JUDGMENT DATED: 01/02/2023

the Act, 2003 are self-explanatory. They are intended to cover situations, other than, the situations specifically covered under Section 135 of the Act, 2003. In such circumstances, the Court should adopt an interpretation which should help in attaining the legislative intent. (3) The purpose sought to be achieved with the aid of the provisions of Section 126 of the Act, 2003 is to ensure stoppage of misuse/unauthorised use of the electricity as well as to ensure prevention of revenue loss.

(4) The overdrawal of electricity is prejudicial to the public at large, as it is likely to throw out of gear the entire supply system, undermining its efficiency, efficacy and even-increasing voltage fluctuations.

(5) The expression 'unauthorised use of electricity' means as it appears in Section 126 of the Act, 2003. It is an expression of wider connotation and principle construed purposively in contrast to contextual interpretation, while keeping in mind the object and purpose of the Act, 2003..."

6.1 This Court therefore holds that consumption of

electricity in excess of maximum of contracted demand /

sanctioned load / contracted demand shall amount to

unauthorised use of electricity and such cases would be

governed solely and exclusively by provisions of Section

126 and 127 of the Act.

C/SCA/9035/2018 JUDGMENT DATED: 01/02/2023

7. Now coming to the second question about

applicability of Section 4.95 of the Supply Code to cases

of excessive consumption of electricity covered under

Section 126 of the Act, it has been argued by Mr.

Nanavati on behalf of the distribution licensee that

Section 4.95 has no application in cases of excessive

drawal of electricity by the consumer, beyond the

maximum of contracted demand / sanctioned load /

demanded load. According to his submission, the

provision applies to those cases where the maximum

demand is recorded in excess of 5% or more for at least

four times in the previous financial year. Maximum

demand has been defined in the Supply Code, and means

"an average kW / kVA supplied during consecutive 30 / 15

minutes period of maximum use where such meter with

the features of reading the maximum demand in kW / kVA

directly has been provided". The cases covered are those

of supply of electricity in excess of the demand and that

too intermittently and for short duration of time. There is

C/SCA/9035/2018 JUDGMENT DATED: 01/02/2023

force in his submission.

7.1 However, the issue regarding applicability of Section

4.95 now needs to be examined in light of the

observations made by the Hon'ble Supreme Court in the

decision of Kerala State Electricity Board (supra). In

this case, the Court was examining the corrects of

decision of Division Bench of the Kerala High Court. The

Division Bench, in light of the decision of the Hon'ble

Supreme Court in Sri Seetharam Mills (supra) held that

excessive consumption of electricity amounts to

unauthorised use of electricity. However, by relying upon

Regulation 153(15) of the Kerala Electricity Supply Code,

2014 took a view that consumption of additional load by a

consumer within the same premises and under the same

tariff category (residential / commercial / industrial) shall

not be reckoned as unauthorised use of electricity, except

in cases where the consumer is billed on the basis of

connected load. The Court examined the scheme of the

Act and analysed the provisions of the Act, particularly

C/SCA/9035/2018 JUDGMENT DATED: 01/02/2023

Section 50, Section 126 and 181 of the Act. The Court

then proceeded to hold thus:

"....57. Having read and re-read the decision of this Court in the case of Seetaram Rice Mill (supra), we are clear in our mind that the High Court in its impugned judgment has carved out an exception, which does not find a place in Section 126(6) of the Act, 2003. Paras 18 & 37 resply of the judgment, in the case of Seetaram Rice Mill (supra) referred to above categorically hold that Section 126 and 127 resply of the Act, 2003 read together constitute a complete code in themselves. Para 50 of the said judgment holds that the purpose of Section 126 is to ensure stoppage of misuse/unauthorised use of electricity. Para 61 of Seetaram Rice Mill (supra) referred to above makes the picture abundantly clear.

58. In para 67 of Seetaram Rice Mill (supra) referred to above, it was categorically held that the consumption of electricity in excess of the sanctioned/connected load shall be an 'unauthorised use of electricity' in terms of Section 126 of the Act, 2003. According to us, the observations made by this Court in Seetaram Rice Mill (supra) as contained in para 67 goes to the root of the matter.

Seetaram Rice Mill (supra) in para 67 has said in so many words that overdrawal of

C/SCA/9035/2018 JUDGMENT DATED: 01/02/2023

electricity amounts to breach of the terms and conditions of the contract and the statutory conditions, besides such overdrawal being prejudicial to the public at large, as it is likely to throw out of gear the entire supply system undermining its efficiency, efficacy and even-increasing voltage fluctuations. This aspect of the matter has been completely overlooked by the High Court. It is not just a matter of overdrawal of electricity in excess of sanctioned/connected load in the very same premises and for the very same purpose, which does not involve any change in the tariff applicable for the relevant category of services. The tariff applicable may remain the same; the overdrawal may be in the same premises and for the very same purpose, there may not be any loss of revenue but it may lead to a disastrous situation being prejudicial to the public at large, as such overdrawal of electricity in excess of sanctioned/connected load may disturb the entire supply system, undermining its efficiency, efficacy and even-increasing voltage demand.

59. In para 72 of Seetaram Rice Mill (supra), a contention was raised by the consumer that it is only the actual change in purpose of use of electricity that would attract Section 126 of the Act, 2003. The contention was that where the electricity was provided for domestic purpose but

C/SCA/9035/2018 JUDGMENT DATED: 01/02/2023

was actually used for industrial or commercial purpose, then alone it will amount to change of user or purpose and accordingly a contention was raised that a case of usage of excess load would not fall in this category. This Court rejected the said contention in para 72. Para 72 states as follows:

"72. Again, there is no occasion for this Court to give a restricted meaning to the language of Explanation (b)(iv) of Section 126. According to the learned counsel appearing for the respondent, it is only the actual change in purpose of use of electricity and not change of category that would attract the provisions of Section 126 of the 2003 Act. The contention is that where the electricity was provided for a domestic purpose and is used for industrial purpose or commercial purpose, then alone it will amount to change of user or purpose. The cases of excess load would not fall in this category. This argument is again without any substance and, in fact, needs to be noticed only to be rejected."

(Emphasis supplied)

60. In view of para 72 of Seetaram Rice Mill (supra) referred to above, the High Court could be said to have erred in coming to the conclusion that the

C/SCA/9035/2018 JUDGMENT DATED: 01/02/2023

consumer cannot be charged twice the energy charges if the consumer uses in excess of the sanctioned/connected load in the very same premises and for the very same purpose, which do not involve any change in the tariff. Para 87(2) in Seetaram Rice Mill (supra) categorically holds that consumption in cases of the connected load would fall in Explanation

(b)(iv) to Section 126 of the Act, 2003.

63. We shall now look into the main limb of the submission canvassed on behalf of the consumers that the Regulation 153(15) of the Code 2014 makes all the difference and the ratio and the principles as propounded in Seetaram Rice Mill (supra) should be understood in the light of the Regulation 153(15) of the Code 2014. We have quoted Regulation 153(15) of the Code 2014 in the earlier part of our judgment. We do not find any merit in the submission canvassed on behalf of the consumers in regard to the applicability of Regulation 153 (15) of the Code 2014. The Code 2014 is framed under Section 50 read with Section 181(x) of the Act, 2003.

64. This Court in Uttar Pradesh Power Corporation Limited v. Anis Ahmad reported in (2013) 8 SCC 491, held that the Supply Code cannot provide for nor does it relate to assessment of charges for 'unauthorised use of electricity' under Section 126 of the Act, 2003. Paras 53 and

C/SCA/9035/2018 JUDGMENT DATED: 01/02/2023

54 resply of the said judgment state as follow:

"53. Section 50 of the Electricity Act, 2003 empowers the State Commission to specify an Electricity Supply Code to provide for recovery of electricity charges, intervals for billing of electricity charges, measures for preventing damage to electrical plant or electrical line or meter, entry of distribution licensee, etc. and it reads as follows: "50. The Electricity Supply Code.--The State Commission shall specify an Electricity Supply Code to provide for recovery of electricity charges, intervals for billing of electricity charges, disconnection of supply of electricity for non-payment thereof, restoration of supply of electricity, measures for preventing tampering, distress or damage to electrical plant or electrical line or meter, entry of distribution licensee or any person acting on his behalf for disconnecting supply and removing the meter, entry for replacing, altering or maintaining electric lines or electrical plants or meter and such other matters."

54. From reading Section 50, it is clear that under the Electricity Supply Code provisions are to be

C/SCA/9035/2018 JUDGMENT DATED: 01/02/2023

made for recovery of electricity charges, billing of electricity charges, disconnection, etc. and measures for preventing tampering, distress or damage to the electrical plant or line or meter, etc. But the said Code need not provide provisions relating to it/do not relate to assessment of charges for "unauthorised use of electricity" under Section 126 or action to be taken against those committing "offences" under Sections 135 to 140 of the Electricity Act, 2003." (Emphasis supplied) 65. Thus, reliance on Regulation 153(15) of the Code 2014 framed under Section 50 of the Act, 2003 by the respondent (consumers) is thoroughly misconceived, as the same does not conform to the provisions of the Act, 2003. In any event, Regulation 153(15) travels much beyond Section 126 and Section 50 resply of the Act, 2003. It is settled law that the regulation making power cannot be used to bring into existence substantive rights, which are not contemplated under the Act, 2003.

65. Thus, reliance on Regulation 153(15) of the Code 2014 framed under Section 50 of the Act, 2003 by the respondent

C/SCA/9035/2018 JUDGMENT DATED: 01/02/2023

(consumers) is thoroughly misconceived, as the same does not conform to the provisions of the Act, 2003. In any event, Regulation 153(15) travels much beyond Section 126 and Section 50 resply of the Act, 2003. It is settled law that the regulation making power cannot be used to bring into existence substantive rights, which are not contemplated under the Act, 2003.

66. At this stage, it is apposite to state about the rule making powers of a delegating authority. If a rule goes beyond the rule making power conferred by the statute, the same has to be declared invalid. If a rule supplants any provision for which power has not been conferred, it becomes invalid. The basic test is to determine and consider the source of power, which is relatable to the rule. Similarly, a rule must be in accord with the parent statute, as it cannot travel beyond it.

67. Delegated legislation has come to stay as a necessary component of the modern administrative process. Therefore, the question today is not whether there ought to be delegated legislation or not, but that it should operate under proper controls so that it may be ensured that the power given to the Administration is exercised properly; the benefits of the institution may be utilised, but its disadvantages

C/SCA/9035/2018 JUDGMENT DATED: 01/02/2023

minimised. The doctrine of ultra vires envisages that a rule making body must function within the purview of the rule making authority conferred on it by the parent Act. As the body making rules or regulations has no inherent power of its own to make rules, but derives such power only from the statute, it has to necessarily function within the purview of the statute. Delegated legislation should not travel beyond the purview of the parent Act. If it does, it is ultra vires and cannot be given any effect. Ultra vires may arise in several ways; there may be simple excess of power over what is conferred by the parent Act; delegated legislation may be inconsistent with the provisions of the parent Act or statute law or the general law; there may be non-compliance with the procedural requirement as laid down in the parent Act. It is the function of the courts to keep all authorities within the confines of the law by supplying the doctrine of ultra vires.

81. It is important to keep in mind that where a rule or regulation is directly inconsistent with a mandatory provision of the statute, then, of course, the task of the Court is simple and easy. But where the contention is that the inconsistency or non- conformity of the rule is not with reference to any specific provision of the enabling Act, but with the object and scheme of the parent Act, the Court should proceed with caution before declaring the same to be

C/SCA/9035/2018 JUDGMENT DATED: 01/02/2023

invalid.

82. Rules or regulation cannot be made to supplant the provisions of the enabling Act but to supplement it. What is permitted is the delegation of ancillary or subordinating legislative functions, or, what is fictionally called, a power to fill up details.

84. If we have to set right the impugned judgment and order of the High Court and bring in tune with the principles embodied in the decision of this Court in the case of Seetaram Rice Mill (supra), then we have no other option but to declare that Regulation 153(15) of the Code 2014 framed by the Commission is inconsistent with Section 126 of the Act, 2003. If the Regulation 153(15) is to be given effect, then the same would frustrate the very object of Section 126 of the Act, 2003. The High Court in its impugned judgment says that Regulation 153(15) does not lead to any loss of revenue. The stance of the Commission also is that there is no loss of revenue if the Regulation 153(15) is permitted to be operated. However, we are of the view that it is not just the question of loss of revenue. At the cost of repetition, we emphasis on the fact that overdrawal of electricity is prejudicial to the public at large as it may throw out of gear the entire supply system, undermining its efficiency, efficacy and even-increasing voltage

C/SCA/9035/2018 JUDGMENT DATED: 01/02/2023

fluctuations.

91. In overall view of the matter, we have reached to the conclusion that the finding recorded by the High Court in para 31(vi) is not sustainable in law. We have also reached to the conclusion that the Regulation 153(15) deserves to be declared invalid being inconsistent with the provisions of Section 126 of the Act, 2003..."

8. Examining Section 4.95 of our Supply Code, it can

be seen that the provision brings into existence a

substantive right in favour of consumer of being served

with a notice for enhancement of load capacity if it is

observed that the consumer is drawing and consuming

electricity in excess of the connected load / sanctioned

load / contracted demand. Such notice is not envisaged by

Section 126 of the Act. The regulation making power

could not have been exercised so as to bring into

existence substantive rights or obligations or disabilities

which are not contemplated in terms of the provisions of

the Act. The regulation therefore clearly travels beyond

Section 126. The regulation is otherwise inconsistent

C/SCA/9035/2018 JUDGMENT DATED: 01/02/2023

with the plain language of Section 126, and in any case

conflicts with the scope and ambit of Section 126 as also

interpretation placed on its language by the Hon'ble

Supreme Court. Additionally, it is debatable as to

whether the said provision comes within the scope and

purview of the rule making power of the authority

framing the rule. The Hon'ble Supreme Court has clearly

held that Supply Code, prepared by the Electricity

Regulatory Commission, "need not provide provisions

relating to it / do not relate to assessment of charges for

"unauthorised use of electricity" under Section 126 or

action to be taken against those committing "offences"

under Section 135 to 140 of the Electricity Act, 2003".

Therefore, considering the nature, object and scheme of

the Act, particularly in the context of cases of

unauthorised use of electricity under Section 126 of the

Act, it becomes clear that Section 4.95 of the Supply

Code, referred to and relied upon by the Appellate

Authority to quash and set aside the assessment made

under Section 126 of the Act for unauthorised use of

C/SCA/9035/2018 JUDGMENT DATED: 01/02/2023

electricity, is inconsistent with the mandatory provision of

the statute, namely Section 126 of the Act. Permitting

the view taken by the Appellate Authority of distribution

licensee being required to issue a notice to the consumer

who is otherwise to be blamed with overdrawal of

electricity in excess of connected load / sanctioned load /

contracted demand would not just be contrary and

inconsistent with Section 126 of the Act but would also

result in defeating the intent and object of Section 126 of

the Act. The impugned orders therefore deserve to be

quashed and set aside being bad in law.

9. In view of the above, the order dated 29.01.2018

passed in Special Civil Application No. 9035 of 2018 and

the order dated 17.04.2018 passed in Special Civil

Application No. 11589 of 2018 are hereby quashed and

set aside. The petitions are allowed accordingly. Rule is

made absolute accordingly.

sd/-

(BIREN VAISHNAV, J) DIVYA