Madras High Court
U.Viswanathan vs The Executive Engineer on 20 March, 2025
Author: G.R.Swaminathan
Bench: G.R.Swaminathan
W.A(MD) No.983 of 2022
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
Dated : 20.03.2025
CORAM
THE HONOURABLE MR.JUSTICE G.R.SWAMINATHAN
AND
THE HONOURABLE MR.JUSTICE M.JOTHIRAMAN
W.A(MD) No.983 of 2022
and
C.M.P.(MD)No.7910 of 2022
U.Viswanathan ... Petitioner / Petitioner
Vs
1.The Executive Engineer,
Operation & Maintenance,
Tamil Nadu Electricity Board,
Thanjavur.
2.The Assistant Executive Engineer,
Operation & Maintenance / Rural,
Thanjavur-613 007.
3.The Junior Engineer,
Operation & Maintenance,
Tamil Nadu Electricity Board,
Melatur,
Thanjavur.
4.E.Karthikeyan, Assistant Executive Engineer,
Operation & Maintenance / Rural,
Thanjavur-613 007. ... Respondents / Respondents
1/19
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W.A(MD) No.983 of 2022
PRAYER: Writ Appeal filed under Clause 15 of Letters Patent, praying
this Court to allow the writ appeal and set aside the order dated
04.07.2022 passed in W.P.(MD)No.7562 of 2012.
For Appellant : Mr.DR.D.Ganasekaran
For Respondents : Mr.M.Viji
for Mr.K.Nagarajan
Standing Counsel for TANGEDCO
JUDGMENT
(By G.R.SWAMINATHAN, J.)
Heard both sides.
2.The appellant herein was given two service connections (SC No.
216 and SC No.55) for agricultural purposes. On 08.03.2010, the Anti
Power Theft Squad of TANGEDCO conducted surprise inspection. They
noted that the appellant had diverted the electric service connection
meant for agricultural purposes for fish farming activities. They
concluded that the appellant had committed theft of energy. Faced with
the prospect of criminal prosecution, the appellant paid the compounding
charge of Rs.40,000/-. Thereafter, the competent authority issued the
provisional assessment order followed by final assessment order. The
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same was put to challenge in WP(MD)No.7562 of 2012. The learned
single Judge vide order dated 04.07.2022 dismissed the writ petition in
the following terms:-
“12.The petitioner is having two service connections namely
SC.Nos. 216 and 55 for agricultural purposes. The petitioner has
also obtained a commercial service connection in SC.No.516 in the
month of October 2009 for the purpose of carrying out fish
farming. A perusal of the inspection report dated 08.03.2010
reveals that the service connection No.216 (agricultural purpose)
was utilised to draw water from the Well to fish tank through a
hose pipe. The authorities have also found that using SC.No.55
(agricultural service connection) directly water is being drawn to
another fish tank. On the same day, the petitioner had paid a sum
of Rs.40,000/- to compound the criminal offence and avoided
disconnection of the electricity service connection.
13.This Court by its order dated 09.05.2012 in WP(MD).No.
6666 of 2012 has quashed the orders of the final assessment for the
second time and directed the authorities to reconsider the matter in
the light of the explanation submitted by the writ petitioner on
09.04.2012. On 09.04.2012, the petitioner has submitted two
explanations to the authorities namely the second respondent and
the first respondent. The impugned order has been passed by the
second respondent herein. In the said explanations, the petitioner
had contended that the fish tank was dug only in August 2009 and
immediately in October 2009 he has obtained separate commercial
service connection for the same and hence, he has not utilized the
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free service connection for fish farming. The petitioner has further
contended that the increase in the electricity consumption charges
of the commercial service connection will indicate that only the
said connection have used for fish farming.
14.A perusal of the inspection report will clearly disclose
that both the agricultural service connections were used for
drawing water from the Well for fish farming on the date of
inspection namely 08.03.2010. It is not the case of the petitioner
that falsely the authorities have recorded such an event in their
inspection report. In fact on the date of inspection report itself, the
petitioner has paid a sum of Rs.40,000/- towards compounding of
the offence in order to avoid the criminal proceedings. There is no
allegation as against the respondent officials that they have
recorded some false statement in the inspection report. Hence, we
have to arrive at a conclusion that the inspection report is true and
the explanation offered by the writ petitioner is only an after
thought.
15.The explanation offered by the writ petitioner has been
considered para wise in the impugned order passed by the second
respondent herein. Only after considering all the explanations and
rejecting the same with proper reasons, the present impugned order
has been passed. Hence, the contention of the learned counsel for
the petitioner is that again and again, the authorities are passing
orders without properly appreciating the explanation offered by the
writ petitioner is not legally sustainable.”
Aggrieved by the same, this writ appeal has been filed.
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3.The learned counsel appearing for the appellant reiterated all the
contentions set out in the memorandum of grounds of writ appeal and
called upon this Court to set aside the impugned orders. Per contra, the
learned standing counsel for the Board submitted that the orders are well
reasoned and that they do not warrant interference.
4.We carefully considered the rival contentions and went through
the materials on record. Quite a few questions of law have been projected
for consideration. They are as follows :
a) Whether payment of compounding fees by the
assessee amounts to admission of guilt?
b) Whether having collected the compounding fee,
the authority can fasten civil liability on the assessee under
Section 126 of the Electricity Act, 2003 ?
c) Whether an assessee has any scope to contest the
proceedings under Section 126 of the Electricity Act after
payment of compounding fee ?
d) What is the interplay between Section 126 and
154(5) of the Act in the matter of quantifying the civil
liability of the assessee ?
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5.The relevant provisions are extracted as under :
“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
unauthorised 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.
[(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
unauthorised use of electricity has taken place and if, however,
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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 authorised.] ”
“151. Cognizance of offences.—No court shall take
cognizance of an offence punishable under this Act except upon
a complaint in writing made by the Appropriate Government or
Appropriate Commission or any of their officer authorised by
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them or a Chief Electrical Inspector or an Electrical Inspector
or licensee or the generating company, as the case may be, for
this purpose:
[Provided that the court may also take cognizance of an
offence punishable under this Act upon a report of a police
officer filed under section 173 of the Code of Criminal
Procedure, 1973 (2 of 1974): Provided further that a special
court constituted under section 153 shall be competent to take
cognizance of an offence without the accused being committed to
it for trial.]”
“[151A. Power of police to investigate.—For the
purposes of investigation of an offence punishable under this
Act, the police officer shall have all the powers as provided in
Chapter XII of the Code of Criminal Procedure, 1973 (2 of
1974).
151B. Certain offences to be cognizable and non-
bailable.—Notwithstanding anything contained in the Code of
Criminal Procedure, 1973 (2 of 1974), an offence punishable
under sections 135 to 140 or section 150 shall be cognizable and
non-bailable.]”
“152.Compounding of offences.-
1.Notwithstanding anything contained in the Code of Criminal
Procedure, 1973 (2 of 1974), the Appropriate Government or
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any officer authorised by it in this behalf may accept from any
consumer or person who committed or who is reasonably
suspected of having committed an offence of theft of electricity
punishable under this Act, a sum of money by way of
compounding of the offence as specified in the Table below:
TABLE
Rate at which the sum of money for Compounding to be
Nature of collected per Kilowatt(KW)/ Horse Power(HP) or part
thereof for Low Tension (LT) supply and per Kilo Volt
service Ampere(KVA) of contracted demand for High Tension
(HT)
1 Industrial Service twenty thousand rupees;
2. Commercial Service ten thousand rupees;
3. Agricultural Service two thousand rupees;
4. Other Services four thousand rupees:
Provided that the Appropriate Government may, by
notification in the Official Gazette, amend the rates specified in
the Table above.
2.On payment of the sum of money in accordance with
sub-section (1), any person in custody in connection with that
offence shall be set at liberty and no proceedings shall be
instituted or continued against such consumer or person in any
criminal court.
3.The acceptance of the sum of money for compounding an
offence in accordance with sub-section (1) by the Appropriate
Government or an officer empowered in this behalf shall be
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deemed to amount to an acquittal within the meaning of section
300 of the Code of Criminal Procedure, 1973 (2 of 1974).
4.The compounding of an offence under sub-section (1)
shall be allowed only once for any person or consumer.”
6.The Hon'ble Supreme Court in the decision reported in (2012) 2
SCC 108 (Southern Electricity Supply Co. of Orissa Ltd. v. Sri
Seetaram Rice Mill) and (2020) 18 SCC 588 (West Bengal State
Electricity Board vs. Orion Metal Pvt Ltd.) has comprehensively dealt
with the statutory scheme. From a careful reading of the said decisions,
one can cull out the following propositions :
a) Section 135 of the Act deals with theft of electricity
and lays down the penalty that can be imposed for such theft.
It involves mens rea. Section 126 of the 2003 Act does not
speak of any criminal intendment and is primarily an action
and remedy available under the civil law.
b) When there is unauthorised use of energy, whether
it amounts to theft or not, action can be taken under Section
126 of the Act.
c)Where the allegation is of unauthorised of energy
amounting to theft, the assessment proceedings under
Section 126(1) of the Act can proceed parallelly with
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criminal prosecution before the Special Court under Section
154 of the Act.
d)The acquittal of the assessee by the Special Court by
itself will not have any bearing on the assessment
proceedings under Section 126 of the Act.
e) Where the Special Court determines the civil
liability of the assessee under Section 154(5) of the Act, the
excess amount if any paid by the assessee following the
determination of his liability under Section 126(1) of the Act
will have to be refunded.
7. It is true that by virtue of Section 152(3) of the Act, when an
assessee gets the offence compounded, he is deemed to have been
acquitted. But this deeming acquittal is meant to confer immunity on the
offender only against prosecution. Dealing with a similar contention of
compounding of an offence under the Entertainment Tax Act and the
consequential action for suspension of cinema licence by the competent
authority under the Tamil Nadu Cinema Regulation Act, 1955, a Hon'ble
Division Bench of this Court in Sri. Kamatchi Theatre, by its licensee K.
Ramakrishnan vs. The District Collector, Madurai reported in 2000-2-
L.W. 255 held as follows:
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“50...the expression composition or compounding of
offence or irregularity means accepting the acquiescence
or irregularity committed or the violation of the statutory
provision, and by compounding the offence, the person
who is permitted to compound, admits the irregularity or
violation. It may be for ever so many reasons, or it may be
to avoid embarrassment or the situation, to purchase peace.
By mere compounding, such an individual is not
exonerated, nor a blank shield or protection cover is
thrown against him for the commission or omissions for
which compounding is permissible under law. Therefore, it
follows when once the licensee compounds the offence
under Section 15 of the Act, it would mean that the
licensee had committed or is reasonably suspected of
having committed an offence and on his application, is
permitted to compound the offence. In other words, it is a
clear verdict by confession to avoid penal consequences.”
Section 15 of the Entertainment Tax Act (supra) is in pari materia to
Section 154 of the Electricity Act, 2003.
8.A learned Judge of this Court in the decision reported in 2013
SCC OnLine Mad 3520 (Fiem Industries Ltd. v. Tamil Nadu
Generation and Distribution Corporation Ltd.,) held as follows :
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“56. ...Once the consumer decides to compound the
offence, there is no question of contending that the
compounding of the offence was under protest, because
compounding under protest is not recognized in law. An
offence cannot be permitted to be compounded under protest. If
the consumer protests, then it is for the authorised officer to
record such protest and lodge a complaint to the police station,
having jurisdiction. If the consumer accepts the guilt of offence
unequivocally, by compounding, the consumer can avoid
prosecution. When there is payment of compounding fee, under
protest, law does not restrict the powers of the authorised
officer to launch prosecution. In a given case, to avoid
prosecution, the consumer may come forward to remit the
compounding fee, under protest and there is always a possibility
to avoid fine, or imprisonment on conviction, by the Court of
competent criminal jurisdiction.
60..If there is a case of compounding, then the Consumer
should not be permitted to canvass on the correctness of the
finding of guilt or on the ground that he was compelled to
compound under protest. Once option is exercised by the
consumer to compound the offence, there is no question of
retracting the same.”
9.However, a Division Bench of this Court in WA No.649 of 2020
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dated 15.09.2023 (The Assistant Executive Engineer vs.
V.Rajagopalan) had declined to endorse the ratio that an act of
compounding cannot be retracted. We also take judicial notice of the
fact that in almost all cases, the assessee is under the impression that if he
pays the compounding fee, the issue will be given a quietus. He may
also resort to compounding under threat of immediate arrest. Many a
time the person in whose name the service connection stands will not be
available on the spot. The manager or occupier signs the mahazar and
pays the compounding fee and the service holder is made to hold the
baby. That is why, the Hon'ble Division Bench had taken the view that
under certain circumstances, the assessee must be allowed to retract. But
in such circumstances, the field will be once again be opened. The
assessee must be ready to face the consequences of prosecution. We
however hold that such a retraction must be made at the earliest
opportunity. We answer the first issue by holding that having paid the
compounding fee, the assessee cannot plead in the assessment
proceedings under Section 126 of the Act that there was no unauthorised
use of electricity. To this extent, his defence stands foreclosed.
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10.Section 126(5) of the Act states that after the assessing officer
concludes that there was unauthorised use of electricity, the assessment
shall be made for the entire period during which such unauthorised use of
electricity has taken place. If this period cannot be ascertained, it shall
be limited to twelve months immediately preceding the date of
inspection. The assessee can plead and prove that the unauthorised use
of electricity has taken place only for a lesser period and not for the
period alleged by the assessing officer. The scope of defence is limited
to this aspect.
11.One of us (GRSJ) in the decision reported in 2018 SCC
OnLine Mad 12718 (A. Abdul Masjit v Assistant Executive Engineer)
held that before making provisional assessment, the assessment officer
must put the assessee on notice. He must set out the period during which
the unauthorised use of electricity has taken place. Failure to do so
would amount to violation of the statutory mandate set out in Section
126(5) of the Electricity Act.
12.In Southern Electricity Supply Co. of Orissa Ltd. v. Sri
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Seetaram Rice Mill, the Hon'ble Supreme Court evolved the rule of
practical interpretation. An interpretation which upon application of the
provisions at the ground reality, would frustrate the very law should not
be accepted against the common sense view which will further such
application. Since compounding is often done under coercive
circumstances, Section 152 of the Act must be held to be applicable only
where an offence has already been registered. It is only an offence that is
and can be compounded. Part XIV of the Electricity Act catalogues the
offences punishable under the Act. The authorised officer can file a
private complaint before the Special Court. The offences are cognizable
and non-bailable. The police have been conferred the power to
investigate the offences under the Electricity Act and file final report
under Section 173 of Cr.Pc (corresponding to Section 193 of BNSS).
Thus, unless under Section 151A of the Electricity Act, an offence is
registered, the question of compounding may not arise. Sub-section (2) of
Section 152 states that on payment of the compounding fee, the person
in custody in connection with that offence shall be set at liberty. This
again presupposes registration of a case. More than anything else, sub-
section (3) of Section 152 states that once an offence is compounded, it
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shall be deemed to amount to an acquittal. An acquittal is the
culmination of the process whereby the criminal law is set in motion. It is
the registration of the offence that sets the criminal law in motion. There
is a saying in Tamil that a picture can be drawn only if there is a wall in
the first place. Likewise, there can be an acquittal only when there is an
an offence in the first place. An act or omission that is punishable by
law is an offence. It is only the registration of the act or omission that
makes it into an offence for the purpose of compounding. We, therefore,
hold that the authorised officer may accept compounding fee from the
assessee only following the registration of a police case in exercise of
their power under Section 151A and 151B or filing of complaint by the
authorised officer under Section 151 of the Act.
13.In the case on hand, the appellant by paying the compounding
charges had admitted his guilt. He never retracted. Once the guilt stands
admitted, consequences will have to follow. The assessee was given full
opportunity. The learned Single Judge had noted that all the contentions
of the assessee were dealt with and that is why, the orders impugned in
the writ petition were sustained. There is no merit in the writ appeal. It
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stands dismissed. No costs. Consequently, connected miscellaneous
petition is closed.
(G.R.S., J.) & (M.J.R., J.)
20.03.2025
Index : Yes / No
Internet : Yes / No
NCC : Yes / No
rmi/SKM
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G.R.SWAMINATHAN, J.
AND
M.JOTHIRAMAN, J.
rmi/SKM
20.03.2025
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