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2012(2) SCC 108
SUPREME COURT OF INDIA
S.H. KAPADIA, CJI., K.S. RADHAKRISHNAN & SWATANTER KUMAR, JJ.
EXECUTIVE ENGINEER & ANR. - Appellants
VERSUS
M/S SRI SEETARAM RICE MILL - Respondents
Civil Appeal No. 8859 of 2011 (Arising out of SLP (C) No.36166 of 2010)
Decided on 20-10-2011.
(2003) 7 SCC 628; (1979) 4 SCC 85 – Relied upon
(b) Electricity Act, 2003 – Sections 126 and 135 – The two provisions operate in different spheres – Section 126 deals with assessment of consumption and realization of electricity dues – Section 135 deals with criminal act of theft of electricity and penalty therefor – Section 126 is primarily an action and remedy available under civil law – Mens rea is not an element of section 126 – Use of load in excess of sanctioned load simpliciter would fall u/s 126 – Dishonest abstraction of energy by specified means amounts to theft of electricity and attracts section 135. (Para 16, 17, 18)
AIR 1966 SC 523 – Relied upon
(c) Electricity Act, 2003 – Sections 126 and 127 – Provide for right from the initiation of the proceedings and making of an assessment till preferring of an appeal against the final order of assessment and termination thereof – As such these provisions constitute a complete code. (Para 24)
(d) Electricity Act, 2003 – Section 126, Explanation (b) – Ambit and scope – `Unauthorised use of electricity’ – Means the usage of electricity by the means and for the reasons stated in sub-clauses (i) to (v) of clause (b) of Explanation to Section 126 – Instantly, respondent is in blame for excess load without permission and under liability to pay on a different tariff as prescribed by law and in terms of an order of assessment. (Para 28, 31)
(2006) 3 SCC 391 – Relied upon
(e) Legal Interpretation – ‘Means’ and ‘includes’ – Section 126, Electricity Act, 2003 – `Means’ by itself is a restrictive term and when used with the word `includes’, it is construed as exhaustive – But there are exceptions – Therefore section 126 cannot be restricted to the examples given in the provision. (Para 32, 37, 38, 41)
(1997) 2 SCC 53; (2008) 9 SCC 527; (2010) 6 SCC 193 – Relied upon
(f) Interpretation of contracts – Practical interpretation – If the common sense view which furthers application of provisions to the ground reality should be accepted. (Para 35)
(g) Electricity Act, 2003 – Sections 126 and 135 – Provisions of Section 126 are intended to cover the cases over and above the cases which would be specifically covered under the provisions of Section 135. (Para 36)
(h) Electricity Act, 2003 – Section 126 r/w Regulations 80, 82 and 106, Grid Corporation of Orissa Ltd. (General Conditions of Supply) Regulations, 1995 – Consumption of electricity in excess of the sanctioned/ connected load – `Unauthorised use’ of electricity in terms of Section 126 – More so because that overdrawal of electricity amounts to breach of the terms and conditions of the contract and the statutory conditions – Further, such overdrawal is prejudicial to the public at large, being likely to throw out of gear the entire supply system, undermining its efficiency, efficacy and even increasing voltage fluctuations – On overdrawal of electricity, Utility is authorised to change the category of the consumer to higher tariff . (Para 46)
(2003) 7 SCC 185; (1995) 4 SCC 328 – Relied upon
(i) Electricity Act, 2003 – Section 126 – Expression `malpractices’ – For unauthorisedly using electricity, will fall within mischief of section 126 – May not amount to theft of electricity u/s 135. (Para 48)
(1998) 4 SCC 471 – Relied upon
(j) Electricity Act, 2003 – Section 126, Explanation (b) (iv) r/e Regulations 82 and 106 – Explanation (b) (iv) to section 126 covers the cases where electricity is being consumed in excess of sanctioned load, particularly when it amounts to change of category and tariff – Respondent a medium industry category consumer – Authorised to consume 22-110 KVA power – Consuming 142 KVA power – Becoming large industry category consumer – Covered by Explanation (b) (iv) – Assessing officer has to pass final order of assessment in terms of Sections 126(3) to 126(6). (Para 49, 50)
(2002) 3 SCC 711; (2010) 4 SCC 539 – Relied upon
(k) Electricity Act, 2003 – Sections 126 and 127 – Appeal u/s 127 lies only against final order of assessment u/s 126 that too within 30 days of the order – Notice or provisional order of assessment made in terms of sub-section (1) to sub-section (3) of Section 126 is not appealable. (Para 51)
(l) Constitution of India – Article 226 – Alternative statutory remedy – Availability of – May not operate as an absolute bar for exercise of jurisdiction by the Courts. (Para 53)
(1998) 8 SCC 1; (2000) 10 SCC 482 – Relied upon
(m) Electricity Act, 2003 – Section 127 – Constitution of India – Article 226 – Respondent challenging provisional assessment u/Art. 226 – No error in entertaining the writ petition against provisional assessment – However, High Court should not have decided the matter, being specialized subject – Rather it should have remanded the matter to competent authority. (Para 57)
Facts of the case:
The respondent was classified as ‘medium industry category’.
On 10th June, 2009, the Executive Engineer, Jeypore Electrical Division and SDO, Electrical MRT Division, Jeypore inspected the business premises of the respondent’s unit and dump was conducted.
Alleging unauthorised use of electricity a demand was raised, assessing the consumer for the period from June 2008 to August 2009 for a sum of Rs.7,77,300/-.
This was challenged before the High Court by a writ petition.
The High Court held that overdrawal of MD would not fall under the scope of `unauthorized use of electricity’ as defined under the 2003 Act, and the appellants had no jurisdiction to issue the intimation in question and pass the assessment order in terms of Section 126 of the 2003 Act.
Finding of the Court:
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.
Result: Appeal allowed.
The judgment in 2012(2) SCC 108 provides a detailed and nuanced interpretation of the legal principles governing assessments related to unauthorized use of electricity. The Court emphasizes the importance of a purposive and holistic approach in understanding the statutory provisions, focusing on the legislative intent to prevent revenue loss and misuse of electricity (!) .
A key aspect of the analysis is the recognition that the provisions concerning assessment and enforcement are to be viewed as a comprehensive code that covers all procedural aspects, from inspection to the final appeal. This indicates that the procedural safeguards built into the scheme are integral to its effective functioning (!) .
The judgment clarifies that the nature of the offense related to unauthorized use is primarily civil, and the statutory scheme does not require mens rea for establishing liability. Instead, the emphasis is on the act of unauthorized consumption or breach of contractual terms, which can be assessed and penalized without proving dishonest intent (!) .
Furthermore, the Court underscores that the term "unauthorized use" should be interpreted broadly. It encompasses various forms of malpractices, such as exceeding sanctioned load or using electricity without proper authorization, rather than being confined to specific acts explicitly listed in the legislation (!) .
The Court advocates for an expansive interpretation of the terms "means" and "unauthorized use" to ensure the effective achievement of the law’s objectives. Such an interpretation should not be limited to narrow definitions but should include all acts that undermine the regulatory framework or facilitate misuse (!) .
Procedural aspects are also critically analyzed. The judgment highlights that provisional assessments or notices are not appealable, but the final assessment order is. It emphasizes that courts should generally avoid interference with assessments unless there are jurisdictional or procedural irregularities, thereby respecting the specialized authority's domain (!) .
Finally, the Court promotes a pragmatic approach, encouraging judicial restraint and emphasizing that the primary responsibility for factual and substantive determinations lies with the assessment authorities. Judicial intervention should be limited to cases involving jurisdictional lapses or procedural violations, ensuring that the statutory scheme functions effectively to curb malpractices and protect revenue (!) .
In sum, the judgment advocates for an interpretative approach rooted in legislative intent, emphasizing broad and purposive understanding, procedural integrity, and judicial restraint to uphold the efficacy of the statutory framework concerning unauthorized use of electricity.
JUDGMENT
Swatanter Kumar, J.-Leave granted.
2. Over a period of time, it was felt that the performance of the State Electricity Boards had deteriorated on account of various factors. Amongst others, the inability on the part of the State Electricity Boards to take decisions on tariffs in a professional and independent manner was one of the main drawbacks in their functioning. Cross-subsidies had reached unsustainable levels. To address this issue and to provide for -distancing of governments from determination of tariffs, the Electricity Regulatory Commissions Act, 1998 (hereinafter, `the 1998 Act') was enacted in addition to the existing statutes like Indian Electricity Act, 1910 (hereinafter, `the 1910 Act') and the Electricity (Supply) Act, 1948 (hereinafter, `the 1948 Act'). For a considerable time, these three legislations remained in force, governing the electricity supply industry in India. The Boards created by the 1948 Act and the bodies created under the 1998 Act, as well as the State Governments, were provided distinct roles under these statutes. There was still overlapping of duties and some uncertainty with regard to exercise of power under these Acts. To address the issues like deterioration in performance of the Boards and the difficulties in achieving efficient discharge of functions, a better, professional and regulatory regime was introduced under the Electricity Bill, 2001, with the policy of encouraging private sector participation in generation, transmission and distribution of electricity and with the objective of distancing regulatory responsibilities from the Government by transferring the same to the Regulatory Commissions. The -need for harmonizing and rationalizing the provisions of the earlier statutes was met by creating a new, self-contained and comprehensive legislation. Another object was to bring unity in legislation and eliminate the need for the respective State Governments to pass any reform Act of their own. This Bill had progressive features and strived to strike the right balance between the economic profitability and public purpose given the current realities of the power sector in India. This Bill was put to great discussion and then emerged the Electricity Act, 2003 (for short, `the 2003 Act'). The 2003 Act had notably provided for private sector participation, private transmission licences for rural and remote areas, stand alone systems for generation and distribution, the constitution of an Appellate Tribunal, more regulatory powers for the State Electricity Regulation Commission and provisions relating to theft of electricity. The additional provisions were introduced in the 2003 Act in relation to misuse of power and punishment of malpractices such as over-consumption of sanctioned electric load which are not covered by the provisions relating to theft; all of which had significant bearing upon the revenue focus -intended by the Legislature. This is the legislative history and objects and reasons for enacting the 2003 Act.
3. To ensure better regulatory, supervisory and revenue recovery system, as expressed in the objects and reasons of the 2003 Act, there was definite concerted effort in preventing unauthorized use of electricity on the one hand and theft of electricity on the other. The present case falls in the former. According to the appellant, there was breach of the terms and conditions of the Standard Agreement Form for Supply of Electrical Energy by the Grid Corporation of Orissa Ltd. (hereinafter, `the Agreement') as the consumer (respondent herein) had consumed electricity in excess of the contracted load.
FACTS
4. We may briefly refer to the facts giving rise to the present appeal. Respondent herein, a partnership firm, claims to be a small scale industrial unit engaged in the production of rice. For carrying on the said business, it had obtained electric supply under the Agreement. Between the present appellant -No.1 and the respondent the Agreement dated 9th December,
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