S. 126 Electricity Act | Assessment Based Solely On Board's Records Illegal; Inspection Of Site/ Consumer Records Mandatory: HP High Court

The Himachal Pradesh High Court has held that a provisional assessment for unauthorised use of electricity under Section 126 of the Electricity Act, 2003, cannot be made without conducting a site inspection or inspecting the records maintained by the consumer.Justice Ajay Mohan Goel rejected the Board's argument that its own records could form the basis of assessment under Section 126 and clarified that: "A provisional assessment order cannot be issued on the basis of the record maintained by the Board. It has to be on the basis of records maintained by any person and this 'any person' by no stretch of imagination can be the Board". The Court further held that, since the provisional assessment order was issued in complete breach of statutory provisions, it had the jurisdiction to strike it down at the initial stage, rejecting the Board's contention that the petition was premature.In 2015, the petitioner, M/S Kundlas Loh Udyog, was served with a demand of ₹1.52 crore for alleged meter tampering between August 2014 and May 2015.However, after litigation before the Consumer Grievance Redressal Forum, the Divisional Commissioner and the Ombudsman, the Electricity Board withdrew the demand order in February 2021.Subsequently, in March 2021, the board issued a fresh provisional assessment order raising a demand of Rs. 4.55 crore on the same cause.The Core issue before the Court was whether a provisional assessment under Section 126 could be issued without any physical inspection of the consumer's premises or records, and solely on the basis of internal data (MRI data) available with the Electricity Board.The Respondent-Board argued that the petition was not maintainable as the petitioner had the alternative remedy of filing objections to the provisional order.The High Court reiterated that as per Section 126 of the Electricity Act, inspection is the foundation of assessment and a jurisdictional precondition.The High Court relied on the Supreme Court judgment in Executive Engineer, Southern Electricity Supply Company of Orissa Limited (Southco) vs. Sri Seetaram Rice Mill to hold that proceedings must commence with an inspection.Noting that the electricity board did not conduct any inspection of the petitioner's premises or records, the Court observed:"The provisional assessment order is based on the record of the Electricity Board itself, which could not have formed the foundation of the invocation of Section 126 of the Electricity Act".As the mandatory statutory procedure was not followed, the Court held that the provisional order is beyond the scope of Section 126 of the Electricity Act and is an arbitrary exercise of power by the assessing authority.Consequently, the Court allowed the writ petition and quashed the Provisional Order of Assessment of March 2021.Case Name: M/s Kundlas Loh Udyog v/s Himachal Pradesh State Electricity Board Limited and anotherCase No.: CWP No.2239 of 2021Date of Decision: 29.12.2025For the Petitioner: Mr. R.L. Sood, Senior Advocate, with M/s Manik Sethi and VidurKapur, Advocates.For the Respondents: Mr. Amal Nair, Advocate (through V.C.) with Mr. Shivom Vashisht, Advocate.Click Here To Read/Download Order

S. 126 Electricity Act | Assessment Based Solely On Board's Records Illegal; Inspection Of Site/ Consumer Records Mandatory: HP High Court

Mehak Aggarwal

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