In Electricity Theft Cases,High Courts Can Restore Supply On 50% Deposit If Provisional Assessment Appears Arbitrary : Supreme Court

The Supreme Court on Monday (October 26) has held that High Courts can, in appropriate cases, order restoration of electricity supply disconnected over alleged electricity theft upon payment of at least 50% of the provisionally assessed amount, provided the assessment appears prima facie arbitrary, and the court records reasons for granting such relief.

"In such circumstances, where the provisional assessment is prima facie arbitrary, in our view, the High Court may, for reasons to be recorded, order restoration of the supply by directing the writ petitioner to pay such amount, out of the demanded amount, which should not be less than 50%. We have said 50% because under sub-section (2) of Section 127 of the 2003 Act an appeal is be entertained only upon deposit of half of the assessed amount.", observed a bench of Justice Manoj Misra and Justice KV Viswanathan, stressing that electricity is an essential commodity necessary for life and livelihood, and its deprivation may have serious consequences. However, courts must adopt a cautious approach in cases involving alleged theft, which necessarily involves criminal intent.

The Court clarified that the amount payable for restoration of electricity supply under the third proviso to Section 135(1A) of the Electricity Act, 2003, must be assessed by following the procedure prescribed under Section 126 of the Act, unless a separate procedure is prescribed under the applicable Electricity Supply Code.

In one case, the Respondent-Vaibhav Metal Crusher received a supplementary bill dated January 3, 2024, demanding approximately ₹92.99 lakh for alleged electricity theft and ₹23.45 lakh as compounding charges. The Gujarat High Court permitted restoration of supply upon deposit of 50% of the bill amount.

In the second case, the Respondent-Jamanbhai Nanajibhai Bhuva challenged a supplementary bill for alleged theft. The High Court directed him to deposit 50% of the demand and permitted him to apply for a fresh connection.

The distribution companies argued before the Supreme Court that assessments in theft cases were distinct from those under Section 126 and that the Special Court alone could determine civil liability under Section 154(5) of the Act.

The distribution companies approached the Supreme Court, contending that restoration of supply on payment of only half the demand was unjustified in cases involving electricity theft.

Rejecting the distribution company's argument, the judgment authored by Justice Misra held that since theft of electricity falls within the broader category of unauthorised use, and there's no separate assessment procedure was prescribed for assessment of the amount payable for restoration of power supply, thus the procedure under Section 126 (for unauthorized use of electricity), including provisional assessment, objections, hearing and final assessment, would apply for assessment of the amount payable for restoration of power supply.

“…the expression “the assessed amount” as used in the third proviso to subsection 1(A) of Section 135 of the 2003 Act would have to be understood as the amount assessed in accordance with the procedure delineated in Section 126 of the 2003 Act. In consequence, the amount required to be deposited under the third proviso to sub-section (1A) of Section 135 for restoration of supply would have to be assessed by the same procedure as is to be used for making assessment under Section 126 of the 2003 Act. Therefore, if sub-section (2) of Section 126 requires the consumer to be served with an order of provisional assessment, and sub-section (3) thereof enables the consumer to file an objection to the provisional assessment to ensure that the final order of assessment is passed after affording a reasonable opportunity of hearing to such person, the same procedure, which conforms to the principles of natural justice, would have to be adopted for assessing the amount required to be deposited under the third proviso to sub-section (1A) of Section 135 for restoration of supply until a separate procedure is prescribed therefor by the Supply Code.”, the Court observed.

Further, the Court clarified that an appeal under Section 127 is available against the assessment order for amount payable for restoration of power supply. However, where theft prosecution is pursued, the Special Court retains the power to determine civil liability under Section 154(5). Any excess amount deposited must be dealt with under Section 154(6) and be refunded to the consumer.

The following conclusions can be drawn from the judgment:

"(i) In cases of electricity theft, for seeking restoration of the supply of electricity disconnected under subsection (1A) of Section 135 of the 2003 Act, the 'assessed amount' required to be deposited or paid under the third proviso to sub-section (1A) of Section 135 by the person concerned, in the absence of any specific procedure prescribed under the Supply Code notified under Section 181(2)(x) read with Section 50 of the 2003 Act, is to be determined by adopting the same procedure as is for assessing the electricity charges payable by a person benefiting by the unauthorized use of electricity.

(ii) The amount so assessed is subject to the determination in an appeal, if any, filed under Section 127 of the 2003 Act. However, in cases of theft, the determination by the appellate authority is final for the limited purpose of seeking restoration of the supply of electricity in terms of the third proviso to sub-section (1A) of Section 135 of the 2003 Act. Importantly, where a criminal complaint is filed, such determination is not binding on the Special Court which is empowered to determine the civil liability of the person concerned under sub-section (5) of Section 154 of the 2003 Act.

(iii) If the amount assessed and deposited under the third proviso to sub-section (1A) of Section 135 exceeds the civil liability determined by the Special Court under sub-section (5) of Section 154, the excess amount is to be refunded in terms envisaged under sub-section (6) of Section 154."

As a result, the appeal was dismissed.

Appearance:

For Petitioner(s) :Mr. Ranjeet Kumar, Sr. Adv. Mr. Pradeep Misra, AOR Ms. Indu Misra, Adv. Mr. Daleep Dhyani, Adv. Mr. Suraj Singh, Adv.

For Respondent(s) :Mr. Raghenth Basant, Sr. Adv. Mr. Dhruvik Patel, Adv. Ms. Jaikriti S. Jadeja, AOR Ms. Hima Bhardwaj, Adv. Mr. Shivang Goel, Adv. Mr. Ishaan Aggarwal, Adv.