Punjab-Haryana High Court
Kalsi Warehousing Corporation vs Punjab State Power Corporation Limited ... on 6 November, 2024
Neutral Citation No:=2024:PHHC:155059
IN THE HIGH COURT OF PUNJAB & HARYANA
AT CHANDIGARH
202 CWP-8353-2014 (O&M)
Date of decision: 06.11.2024
M/S KALSI WAREHOUSING CORPORATION, VILLAGE NIMBUAN,
TEHSIL DERABASSI, DISTT. S.A.S. NAGAR, MOHALI
.........PETITIONER
VERSUS
PUNJAB STATE POWER CORPORATION LIMITED AND OTHERS
........RESPONDENTS
CORAM : HON'BLE MR. JUSTICE VINOD S. BHARDWAJ
Present:- Mr. Puneet Jindal, Sr. Advocate with
Ms. Malvi Aggarwal, Advocate
for the petitioner.
Mr. Aditya Sharda, DAG, Punjab,
for respondent No.2.
Mr.A.S. Chadha, Advocate
for respondents No.1 and 3 to 5.
*****
VINOD S. BHARDWAJ , J. (Oral)
Challenging the orders dated 01.01.2014 and 15.03.2013
passed by the respondents imposing penalty for using LS electricity
connection (Industry Category) instead of N.R.S. Category, the present writ
petition has been filed.
2. Learned senior counsel for the petitioner contends that the
petitioner-partnership firm is owner of 5.06 acres of land, situated in Village
Nimbua, Tehsil Dera Bassi, District SAS Nagar Mohali. The said land was
agricultural. The petitioner-partnership firm applied to the department of
Town and Country Planning, Punjab for change of the land use for
warehousing purposes, which was granted on 18.07.2008. Clearance from
the Punjab Pollution Control Board for establishing a Warehouse was also
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obtained under the Air (Prevention & Control of Pollution) Act, 1981 as well
as Water (Prevention & Control of Pollution) Act, 1974. The description of
the property was specifically mentioned as "godown air condition" in all the
statutory forms and approvals. After taking the necessary sanctions and
permissions from the competent authorities for using the premises an air
conditioned warehouse, the petitioner submitted an application to the
respondent-Distribution Licensee for release of electricity connection in the
premises under LS (Industrial Category). All the details with respect to the
electricity consumption, including the equipment installed therein, was
furnished and declared by the petitioner-partnership firm. The establishment
of three A.C. Plants of 20KW capacity each, was also disclosed. There was,
thus, no concealment of any pact of any nature on the part of the petitioner-
firm in making the correct disclosure not only about the nature of activities
being undertaken but also about the equipment installed, at the time of
submission of 'A' & 'A' form.
3. On consideration of the said application, the respondents-
Distribution Licensee sent an intimation of acceptance vide letter dated
04.07.2008, whereupon the requisite service connection charges, as
demanded, were also paid by the petitioner-firm. The premises in question
was subsequently leased out by the petitioner-firm to Torrent
Pharmaceuticals Limited, vide Lease Deed dated 01.09.2008 for a period of
five years, which continued till the time, when the present petition was filed.
4. The object of leasing out the said property was for stocking and
storing pharma products and medicines of Torrent Brand that were to be
manufactured in their unit situated at Baddi, Himachal Pradesh. The
petitioner confirmed to pay at the energy consumption charges regularly.
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5. The petitioner-firm was, however, served with a notice under
Section 126 of the Electricity Act, 2003 alleging that the LS (Industrial
Category Connection) category was being used in the disputed premises,
whereas the application ought to have been submitted for electricity
connection under the NRS Category as no manufacturing was being done at
the disputed premises. A provisional assessment of Rs. 40,56,727/- was
conveyed to the petitioner-firm vide order dated 07.02.2013.
6. In response thereto, the petitioner-firm submitted its objections
dated 18.02.2013. A personal hearing was granted to the petitioner-firm by
the authorities on 06.03.2013 and thereafter a final order, dismissing the
objections, was passed on 08.03.2013 upholding the order of provisional
assessment.
7. Aggrieved thereof, the petitioner-firm had preferred statutory
appeal under Section 127 of the Electricity Act, 2003 before the Additional
Deputy Commissioner/ Appellate Authority (under Electricity Act-2003),
SAS Nagar, Mohali. The said appeal was dismissed by the Appellate
Authority vide its order dated 01.01.2014 upholding the order of assessment.
Hence the present petition was filed.
8. It is argued by the learned senior counsel for the petitioner that
the order of assessment on account of unauthorized use of electricity has
been wrongly passed by the respondent-authorities and the appeal has been
dismissed without appreciating the objections raised by the petitioner-firm
and solely on the ground that no manufacturing activity was being
undertaken by the petitioner-firm and that the premises was being used only
for the stocking of the pharmaceutical products. The activity was thus
assigned as a commercial activity holding the petitioner disentitled for the
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electricity connection under LS (Industrial Category). He contends that
there was no concealment of any nature, whatsoever, by the petitioner-firm
at the time of seeking release of electricity connection from the respondents,
and that after a lapse of nearly five years, the respondents have now raised
this arbitrary demand, by way of penalty, under Section 126 of the
Electricity Act, 2003.
9. It is further argued that the disputed premises continued to be
used and occupied for the same purpose for which it was constructed and
there was no change of usage of the premises or the electricity by the
petitioner-firm and that the assessment order was passed by the respondents
by categorizing the same as NRS (category connection) under the category
"Air Conditioned Plant", is misplaced and misconceived.
10. When the matter had come up for hearing on one of the dates
i.e. 08.11.2023, learned counsel for the respondents - PSPCL - Distribution
Licensee was asked to file a response / affidavit clarifying therein as to
whether an 'Air Condition Warehouse' would fall within the definition of
"Industry" or "Commercial Activity".
11. Pursuant thereto, an affidavit had been filed by the respondents,
by placing reliance on the General Conditions of Tariff and Schedule of
tariff, as per which an 'Air Conditioned Warehouse' was not shown in any
schedule / category in the said instructions. Hence, a letter was sent by the
Senior Executive Engineer, Distribution Division, Lalru to the Principal
Engineer Commercial, PSPCL, Patiala for seeking clarification as to the
category in which the connection for "Air Conditioned Warehouse" would
fall. In response thereto, vide letter dated 08.05.2024, it was informed that as
per Annexure II of Commercial Circular No. 17/2023 issued by the
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Corporation, "an air conditioning unit/ plant" falls under the NRS category
i.e. Commercial Category.
12. It is argued that even though the provisional assessment order
dated 07.02.2013 was served upon the petitioner-firm but the explanation is
being put forth by the respondents by placing reliance on the Commercial
Circular issued in the year 2023 and the same is not with respect to any
circular / tariff order that was in force at the time when the assessment was
undertaken. He further contends that notwithstanding the reliance on the said
circular, it is evident that the reasons given by the respondents for treating
the electricity supply of the petitioner under the NRS category, by placing
reliance on SV(1.1), is misconceived. The Schedule of Tariff for Non-
Residential Supply (NRS) category applies the said tariff schedule to an 'Air
Conditioning Unit/ Plant', amongst various other non-residential premises
such as business houses, cinemas, clubs, offices, hotels/motels, marriage
places, departmental stores etc. He submits that the expression an "Air
Conditioning Plant" has to be read in the context of the nature of the
activities that have been mentioned thereunder and that as per Annexure-II,
of the General Conditions of tariff, applicable to Large Supply Industrial
Consumers (LS), it shows at SL.3 that Ice Factories, Ice Candies & Cold
Storage were covered under the Industrial Category and that even the
packaging and storage units also fell in the said industrial Schedule. He
submits that similar provisions were also made in the Medium Supply
Industrial Power (MS) category wherein the Cold Storage, Ice Factories and
Ice Candies fell in that category. He contends that the "Warehouse" having
been leased out to a pharma industry for "storage of their
manufactured drugs under controlled temperatures" is thus more akin to the
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category of a storage unit instead of being categorized as an Air Conditioned
Plant /Unit under the NRS category. He further submits that the
classification made by respondents would not born out of an intelligible
differentia. Once a Cold Storage is covered under an Industrial Unit for
supply of electricity, where storage of perishable items is done, there is no
reason why a Temperature Controlled Storage Unit/Air Conditioned Unit for
the same object but a different product would be differentiated, merely on
the basis of categorization of the Cold Storage or the nature of product
stored. It is also argued that Section 126 of the Electricity Act, 2003 defines
an Unauthorized Use of Electricity. He submits that the petitioner never
violated any of the said conditions. The Electricity Connection was nowhere
being used by him for a purpose other than for which use the Electricity
connection had been authorized or at any premises, other than where the
supply has been authorized. All factors having been disclosed, no case for an
unauthorized use of electricity was ever made out.
13. He further contends that the premises had regularly been
inspected during the period from release of connection, till the order of
assessment was served upon the petitioner, spanning more than five years.
No deficiency or defect was ever noticed and that no demand was raised for
the entire duration of five years by the respondents. He further submits that
even assuming that the order has to be made for the sake of arguments, the
assessment could not exceed beyond 12 months from the date on which such
detection was made.
14. Learned counsel for the respondent-Distribution Licensee,
however, submits that the order of assessment had been rightly passed in
accordance with the laws, rules and regulations applicable and that the 'Air
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Condition Unit /plants' are covered under the NRS category while the
electricity supply released to the petitioner was under the Industrial
Category. When the said error was detected, the charge was re-assessed and
the objections filed by the petitioners were duly considered and were
declined. He further submits that the account of the petitioner was
overhauled only for a period of 12 months, according to Regulation 36 of the
Electricity Supply Code & Related Matter Regulations, 2007 read with
Annexure 8(1)(a) and not for the entire duration. It is also submitted that as
per the Electricity Supply Instructions, 2010, the Schedule of tariff for Non-
Residential Supply (NRS) mandated in para 121 that Air Conditioning unit
would also be covered under the said Schedule i.e. the NRS Category.
15. He further contends that they also sought specific clarification
from the Office of Deputy Chief Engineer and they referred to the General
Conditions of Tariff and Schedule of Tariff, as issued by the Chief
Commissioner, as per which Air Conditions Warehouse would fall under the
category of NRS and that the supply has been rightly assessed.
16. On being confronted with the averments made in para 3 of the
preliminary submissions, learned counsel for respondent-Distribution
Licensee, submits that the description about overhauling being only for a
period of 12 months, according to regulation 36 of the Electricity Supply
Code & related matters Regulations, 2007 is factually incorrect, and that the
account of the petitioner has been overhauled for the entire duration after the
release of electricity connection till the order of the assessment. He,
however, contends that the limitation for a period of 12 months is prescribed
where the time period is not determinable and that when such time period is
discernible, then the Distribution Licensee is entitled to levy the penalty for
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the entire period for which such unauthorized use has continued.
17. No other argument has been advanced or judgment cited by the
counsel for either parties.
18. I have heard learned counsel appearing for the respective parties
and have gone through the record with their able assistance.
19. The core question which arises for consideration of this Court is
as to whether an "Air Conditioned Storage Unit/ Warehouse" for
pharmaceutical company, would fall under an Industrial activity or has to be
treated as 'NRS category' under an Air Conditioned Units/ Plants.
20. It is not in dispute that after coming into force of the electricity
Act, 2003 only an appropriate commission is competent to carry out an
exercise for determination of tariff under section 62 of the electricity act,
2003 and in devising such tariff, a classification or categorization can be
made by the appropriate commission prescribing different tariff schedule for
different types of usage. The Industrial and NRS category, are some of the
different categories that have been prescribed in the Tariff that was notified.
As per the Electricity Supply Instructions Manual, 2010, "a Cold Storage"
was brought within the ambit of an industrial activity. The classifications
were broadly brought out and there was no further sub-categorization based
on nature of product stored, once the broad category of "storage" - whether
cold storage or for packaging etc., were classified under the Industrial
Category.
21. The second argument advanced that as no manufacturing
activity was being undertaken, hence, the consumption would be deemed to
be a commercial connection would fall flat only on the argument of the
respondents and the categorization done by them since even a 'Cold Storage'
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would not fall in a category where any manufacturing activities were done.
Thus, the reasoning given now for such classification does not withstand
their own scrutiny. The other classification for the LS category connections
has been further widened and includes the storage and packaging units. No
industrial or manufacturing activity would also be presumed to be
undertaken in a 'storage and packaging unit' as well. Thus the explanation
put forth that it must involve a manufacturing process before an industrial
connection can be released, does not hold ground. The justification behind
classification under the NRS category, given by the respondents, is based
solely on the use of the expression an "Air Conditioned Plant/Unit" which,
however, is not being read alongwith the preceding activities mentioned
thereunder. A careful reading of the Schedule of Tariff for Non-Residential
Supply (NRS) category, as per the ESIR, 2011, shows that for the supply of
electricity to be categorized as NRS, the supply for the 'Air Conditioned
Unit/Plant' had to be in non-residential premises such as business houses,
cinemas, clubs, offices, hospitals and private educational institutions,
hotels/motels, departmental stores, shops, guest houses and restaurants,
including sports institutions/facilities including gymnasiums etc. Thus, the
classification of NRS category was not on the basis of installation of an Air
Conditioned Unit or a plant and rather, the installation of the air condition
unit/plant had to be in a premises where the classified nature of activities or
activities similar to it were being undertaken. The classification and
categorization undertaken above shows that the activities such as storage,
packaging, warehousing etc. do not fall in the above category under SV
Schedule of Tariff and in classification SV.1.1 extracted hereinafter below:-
"SV Schedule of Tariff for Non Residential Supply (NRS)
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SV.1 Availability
SV.1.1 Supply for lights, fans, appliances like pumping set and
air-conditioning units/ plants, lifts, welding set, small lathe,
electrical drill, heater, battery charger, embroidery as business
houses, cinemas, clubs, offices, hospitals and private
educational institutions viz school, colleges and universities,
hostels and residential quarters attached shops, guest houses
and restaurants. All private sports institutions / facilities
including gymnasiums will also come under this category."
22. It is further not in dispute that the aforesaid Supply instructions
were in force as in the year 2013, when the provisional assessment was
conveyed to the petitioner, and the final order of assessment was passed.
Taking a clue from the said classification, it is also evident that such
categorization of a storage and packaging unit and as well as the cold storage
units, being part and parcel of an industrial activity, remained intact.
23. The categorization now sought to be done by the respondents-
PSPCL is not based upon a correct reading of their own circulars as were in
force at the relevant point in time. Similar categorization also reflects in the
Schedule of Tariff of 2023, on the basis whereof the instant affidavit has
been filed. The same reads, thus:
SV.1.1 This tariff shall apply to:
Non-residential premises such as business houses, cinemas,
clubs, offices, hotels/motels, marriage palaces, hot mix/ready
mix plants, departmental stores, shops, guest houses,
restaurants for lights, fans, pumping set, air conditioning
units/plants, lifts, welding sets, small lathes, electric drills,
heaters etc.;
EV Charging Stations, battery chargers, embroidery machines,
printing presses, ice candy machines, dry cleaning machines,
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power presses, small motors, Street lighting connections by
private colonizers/private companies/individuals etc.
Private hospitals (other than charitable), Private unaided
educational institutions i.e. schools, colleges and universities,
hostels and residential quarters attached thereto where such
institutions/installations are not covered under schedule DS/BS:
Telecommunication/Cellular Mobile Phone Towers and all
private sports institutions/facilities including gymnasiums."
24. The aforesaid categorization starts from non-residential
premises such as houses, cinemas, clubs, offices, hotels/motels, marriage
palaces, hot mix/ready mix plants, departmental stores, shops, guest houses,
restaurants for lights, fans, pumping set, air conditioning units/plants, lifts,
welding sets, small lathes, electric drills, heaters etc. Hence, the installation
of air conditioned plants has to be in such a premises. Unless the activity of
storage and warehousing is put in the said category, it cannot be subjected to
the NRS tariff merely on account of installation of air conditioning unit.
25. Evidently, the tariff categorization has been done on the basis of
the activities that are being undertaken, before a particular tariff is applied to
it. The activity which is being undertaken by the petitioner herein is a
"storage/warehousing unit" for which an electricity supply had been
obtained and that the requirement of establishing an air condition is an
integral part of "temperature controlled storage unit" to be deployed for
storage of "pharma" and is similar to "cold storage" equipment required to
be installed for storage of perishable items. A discrimination merely on the
basis of the nature of product stored, for subjecting same substantial
activities to different tarrif is even otherwise not borne from the reading of
the Schedule of Tariff as approved by the appropriate Commission. It is a
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trite law that in an event where the categorization or classification has over-
lapping shades, in the tariff schedule notified by the Commission, a Court of
Law would draw a parallel and greater similarity in the nature of activities,
before determining as to which tariff category would a consumer fall
into.
26. The nature of activity undertaken by the petitioner, is akin to an
activity that would fall in the category of 'storage' and 'cold storage' as
against an 'air conditioned unit/plant'. Hence tariff applicable to the former
would be applicable.
27. Even otherwise, the respondents being the author of the said
instructions, cannot claim advantages to themselves for any lapses. Benefit
of such omission has to be extended in favour of the consumer, who has not
made any concealment of any nature whatsoever at the time of submitting
the application for release of electricity connection. A complete disclosure as
regards the installation of the AC plant had been made and a physical
verification was also undertaken before the release of the Electricity
connection. Thus, it cannot be construed that the electricity connection was
being used for any purpose other than for which it had been authorized. The
case hence does not fall in the category of an unauthorized use of electricity
under Section 126 of the Electricity Act, 2003.
28. For the abovestated reasons, I find that the order passed by the
respondents under Section 126 of the Electricity Act, 2003 levying a
fine/penalty to the tune of Rs. 40,56,727/- is bad and is not based upon
correct appreciation of facts as also the provisions of Electricity Supply
Instructions Manual as well as the General Conditions of Tariff.
29. The present writ petition is accordingly allowed. The impugned
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demand is set aside. The pre-deposit, if any, made by the petitioner at the
time of preferring statutory appeal under Section 127 shall be adjusted by the
respondents along with the statutory interest, within a period of three months
of receipt of a certified copy of this order.
06.11.2024 (VINOD S. BHARDWAJ)
Satyawan JUDGE
Whether speaking/reasoned : Yes/No
Whether reportable : Yes/No
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