2011 (10) TMI 586 - SC - Indian Laws

Supreme Court clarifies unauthorized electricity use includes excess load consumption beyond sanctioned limits under Section 126

The Executive Engineer & Anr. Versus M/s Sri Seetaram Rice Mill

The SC held that the HC erred in determining the validity of an electricity demand assessment, which fell within the specialized authority's domain. While ... Applicability of Section 126 of the Electricity Act, 2003 for excess electricity consumption beyond the sanctioned load - violation of Regulations 82 and 106 of the Regulations and terms of the Agreement - error of jurisdiction in entertaining the writ petition - Principles of interpretation of statutes - Exposition ex visceribus actus - violation of the terms and conditions of supply leading to malpractices - expression `unauthorized use of electricity' - expression 'means' - principle of interpretation - purposive construction - HELD THAT:- In the present case, the High Court did not fall in error of jurisdiction in entertaining the writ petition but certainly failed to finally exercise the jurisdiction within the prescribed limitations of law for exercise of such jurisdiction. Keeping in view the functions and expertise of the specialized body constituted under the Act including the assessing officer, it would have been proper exercise of jurisdiction, if the High Court, upon entertaining and deciding the writ petition on a jurisdictional issue, would have remanded the matter to the competent authority for its adjudication on merits and in accordance with law. In the facts of the present case, the High Court should have answered the question of law relating to lack of jurisdiction and exercise of jurisdiction in futility without travelling into and determining the validity of the demand which squarely fell within the domain of the specialized authority. The High Court should have remanded the case to the assessing officer with a direction to the respondent to file its objections including non-applicability of the tariff before the assessing authority and for determination in accordance with law. The expression 'unauthorized use of electricity means' as appearing in Section 126 of the 2003 Act is an expression of wider connotation and has to be construed purposively in contrast to contextual interpretation while keeping in mind the object and purpose of the Act. The cases of excess load consumption than the connected load inter alia would fall under Explanation (b)(iv) to Section 126 of the 2003 Act, besides it being in violation of Regulations 82 and 106 of the Regulations and terms of the Agreement. In view of the language of Section 127 of the 2003 Act, only a final order of assessment passed under Section 126(3) is an order appealable under Section 127 and a notice-cum-provisional assessment made under Section 126(2) is not appealable. Thus, the High Court should normally decline to interfere in a final order of assessment passed by the assessing officer in terms of Section 126(3) of the 2003 Act in exercise of its jurisdiction under Article 226 of the Constitution of India. The High Court did not commit any error of jurisdiction in entertaining the writ petition against the order raising a jurisdictional challenge to the notice/provisional assessment order dated 25th July, 2009. However, the High Court transgressed its jurisdictional limitations while travelling into the exclusive domain of the Assessing Officer relating to passing of an order of assessment and determining factual controversy of the case. The High Court having dealt with the jurisdictional issue, the appropriate course of action would have been to remand the matter to the Assessing Authority by directing the consumer to file his objections, if any, as contemplated under Section 126(3) and require the Authority to pass a final order of assessment as contemplated under Section 126(5) of the 2003 Act in accordance with law. Thus, the judgment of the High Court is set aside and the matter is remanded to the Assessing Officer to pass a final order of assessment expeditiously, after providing opportunity to the respondent herein to file objections, if any, to the provisional assessment order, as contemplated under Section 126(3) of the 2003 Act. The appeal is allowed in the above terms. The core legal questions considered by the Court in this judgment are:1. Whether consumption of electricity in excess of the maximum contracted load by a consumer attracts the provisions of Section 126 of the Electricity Act, 2003 ('the 2003 Act') on its true scope and interpretation.2. Whether the High Court was justified in interfering with the provisional order of assessment and show-cause notice issued under Section 126 of the 2003 Act in exercise of its writ jurisdiction under Article 226 of the Constitution of India.3. Whether the writ petition before the High Court was maintainable in view of the availability of a statutory alternative remedy under Section 127 of the 2003 Act.Issue-wise Detailed Analysis:1. Applicability of Section 126 of the 2003 Act to Excess Consumption of ElectricityRelevant Legal Framework and Precedents: Section 126 of the 2003 Act deals with 'assessment' where an assessing officer, upon inspection, finds unauthorized use of electricity. It provides a complete code for provisional and final assessment of electricity charges payable, including the procedure for objections and appeals under Section 127. Section 135 of the 2003 Act separately deals with the offence of theft of electricity, which involves dishonest abstraction and is punishable with imprisonment or fine. The Explanation to Section 126 defines 'unauthorized use of electricity' by listing specific means, including use by artificial means, tampered meter, use for unauthorized purposes, or for unauthorized premises.Precedents cited include the Court's earlier rulings emphasizing purposive interpretation of statutes, including fiscal and penal laws, and the distinction between Sections 126 and 135 of the 2003 Act. Cases such as Bhilai Rerollers and Orissa State Electricity Board v. IPI Steel Ltd. were cited to uphold recovery of higher tariff charges in cases of excess load consumption. The Court also referred to principles of statutory interpretation from judgments like Balram Kumawat and Whirlpool Corporation.Court's Interpretation and Reasoning: The Court held that Section 126 is a civil provision aimed at regulating unauthorized use of electricity, distinct from the criminal offence under Section 135 which requires mens rea (dishonest intention). Unauthorized use under Section 126 includes consumption in breach of contract terms, such as exceeding sanctioned load, even if no dishonest intention is proven.The Court applied the principles of purposive interpretation rather than strict textual construction. It emphasized that the legislative intent behind Section 126 is to prevent revenue loss and misuse of electricity by covering unauthorized consumption beyond theft. The Explanation to Section 126, which uses the word 'means' rather than 'includes,' was interpreted as illustrative but not exhaustive. The Court reasoned that limiting the scope to the listed means would frustrate the Act's object by allowing other breaches of contract or regulations to escape liability.The Court also examined the contractual terms and regulatory provisions, including the Orissa Electricity Regulatory Commission Distribution (Conditions of Supply) Regulations, 2004. These provisions prohibit consumption beyond the approved contract demand and empower the licensee to reclassify consumers and levy higher charges accordingly. The Court found that consumption beyond sanctioned load amounts to unauthorized use under Section 126(b)(iv), as it breaches the purpose and terms of supply.Key Evidence and Findings: The respondent consumer was found to have consumed electricity up to 142 KVA, exceeding the sanctioned load of 99-110 KVA (medium industry category). The inspection report and dump data confirmed this overdrawal. The consumer did not file objections to the provisional assessment order but challenged jurisdiction before the High Court.Application of Law to Facts: The Court held that the consumer's excess consumption constituted unauthorized use of electricity within Section 126, attracting provisional and final assessment. The licensee was entitled to assess charges at twice the tariff applicable to the relevant category, which would change if the consumption exceeded the sanctioned category limits.Treatment of Competing Arguments: The consumer argued that Section 126 does not apply to excess consumption and that the High Court was correct in holding that the provision is exhaustive and does not cover overdrawal of maximum demand. The Court rejected this, noting the legislative intent and regulatory framework support a wider interpretation. The consumer's contention that only actual change in purpose (e.g., domestic to industrial) would attract Section 126 was also rejected, holding that change of category due to excess load also falls within unauthorized use.Conclusions: Consumption of electricity in excess of sanctioned load amounts to unauthorized use under Section 126 of the 2003 Act. Section 126's Explanation is illustrative, not exhaustive. The licensee is entitled to assess and recover charges accordingly.2. Jurisdiction of the High Court to Interfere with Provisional Assessment Order under Article 226Relevant Legal Framework and Precedents: Section 126(3) provides for filing objections against provisional assessment and passing of a final order, appealable under Section 127. The High Court's writ jurisdiction under Article 226 is discretionary and generally does not interfere where an effective statutory remedy exists. However, exceptions exist where jurisdictional issues arise, or the authority acts without jurisdiction.Precedents include Whirlpool Corporation v. Registrar of Trade Marks, Union of India v. State of Haryana, and other rulings emphasizing circumspection in exercising writ jurisdiction when alternative remedies exist.Court's Interpretation and Reasoning: The Court held that the High Court was justified in entertaining the writ petition to decide the jurisdictional issue, i.e., whether the assessing authority had jurisdiction to issue the provisional assessment order under Section 126. However, the High Court erred in going beyond this and deciding the merits of the assessment and tariff classification, which fall within the specialized authority's domain.The Court emphasized that the High Court should have confined itself to jurisdictional questions and remanded the matter to the assessing officer for final assessment after giving the consumer an opportunity to file objections and be heard, as per the statutory scheme.Key Evidence and Findings: The High Court quashed the provisional assessment order on the ground that Section 126 did not apply to excess load consumption. The Supreme Court found this to be an overreach into the merits of the case.Application of Law to Facts: The High Court's interference with the provisional assessment order was beyond its jurisdictional scope. The proper course was remand for statutory proceedings.Treatment of Competing Arguments: The appellants argued for non-interference with the assessment order, while the respondent contended for quashing on jurisdictional grounds. The Court balanced these and limited High Court's role to jurisdictional review.Conclusions: The High Court may entertain writ petitions on jurisdictional grounds but should not decide merits of assessment orders under Section 126. The matter should be remanded to the assessing authority for final determination.3. Maintainability of Writ Petition in View of Statutory Alternative Remedy under Section 127Relevant Legal Framework and Precedents: Section 127 provides for appeal against final orders passed under Section 126. The general principle is that courts do not interfere under Article 226 where an efficacious statutory remedy exists, except in exceptional cases involving jurisdictional questions or violation of natural justice.Court's Interpretation and Reasoning: The Court held that the writ petition challenging the provisional assessment order was maintainable only to the extent of jurisdictional challenge. Since no appeal lies against a provisional order, the consumer's remedy was to file objections and await the final order, against which appeal could be preferred.The Court noted that the High Court was correct in entertaining the writ petition on jurisdictional grounds but erred in deciding the merits. The Court emphasized that the statutory scheme contemplates objections to provisional orders and appeals against final orders, and this process should be respected.Key Evidence and Findings: The consumer did not file objections under Section 126(3) nor appeal under Section 127 against the final order.Application of Law to Facts: The writ petition was maintainable only for jurisdictional issues but not for challenging the provisional assessment's merits.Treatment of Competing Arguments: The appellants argued for dismissal of writ petition for non-availability of alternative remedy; the respondent argued for writ on grounds of jurisdictional excess. The Court adopted a balanced approach.Conclusions: Writ petitions challenging provisional assessment orders are maintainable only on jurisdictional grounds. The statutory objections and appeals process must be followed for merits.Significant Holdings:'Wherever the consumer commits the breach of the terms of the Agreement, Regulations and the provisions of the Act by consuming electricity in excess of the sanctioned and connected load, such consumer would be 'in blame and under liability' within the ambit and scope of Section 126 of the 2003 Act.''The expression 'unauthorized use of electricity means' as appearing in Section 126 of the 2003 Act is an expression of wider connotation and has to be construed purposively in contrast to contextual interpretation while keeping in mind the object and purpose of the Act. The cases of excess load consumption than the connected load inter alia would fall under Explanation (b)(iv) to Section 126 of the 2003 Act, besides it being in violation of Regulations 82 and 106 of the Regulations and terms of the Agreement.''In view of the language of Section 127 of the 2003 Act, only a final order of assessment passed under Section 126(3) is an order appealable under Section 127 and a notice-cum-provisional assessment made under Section 126(2) is not appealable.''The High Court should normally decline to interfere in a final order of assessment passed by the assessing officer in terms of Section 126(3) of the 2003 Act in exercise of its jurisdiction under Article 226 of the Constitution of India.''The High Court did not commit any error of jurisdiction in entertaining the writ petition against the order raising a jurisdictional challenge to the notice/provisional assessment order dated 25th July, 2009. However, the High Court transgressed its jurisdictional limitations while travelling into the exclusive domain of the Assessing Officer relating to passing of an order of assessment and determining factual controversy of the case.''The High Court having dealt with the jurisdictional issue, the appropriate course of action would have been to remand the matter to the Assessing Authority by directing the consumer to file his objections, if any, as contemplated under Section 126(3) and require the Authority to pass a final order of assessment as contemplated under Section 126(5) of the 2003 Act in accordance with law.'The Court set aside the High Court judgment and remanded the matter to the Assessing Officer for passing a final order of assessment after giving the consumer opportunity to file objections, thereby preserving the regulatory scheme and ensuring adherence to due process under the 2003 Act.