The main legal point established in the judgment is the binding nature of the Electrical Inspector's determination on the correctness of meters and the estimation of energy supply under Section 26(6) of the Indian Electricity Act, 1910.

R.C. Lahoti, CJI.—This appeal, by special leave, has been preferred against the judgment dated 10.3.1995 of the Division Bench of Bombay High Court, by which the Letters Patent Appeal filed by first respondent, Laffans (India) Pvt. Ltd. was allowed, the judgment dated 17.3.1993 of the learned Single Judge dismissing the writ petition was set aside and the notice of disconnection of electricity supply issued by the appellant was quashed.

2. The appellant, Bombay Electricity Supply and Transport Undertaking is an undertaking of Municipal Corporation of Greater Bombay (second respondent) and is a licensee under the Indian Electricity Act, 1910 (hereinafter referred to as “the Act”). The appellant was supplying electricity to the first respondent, Laffans (India) Pvt. Ltd. who had a showroom at Veer Nariman Road, Bombay, for carrying on business of retail trade in textiles. The appellant had installed two meters at the premises of the first respondent, for measuring the quantity of electricity consumed : one — by lights, fans and other small fixtures, and, the other — by the air-conditioning unit. The dispute here relates to the meter measuring the quantity of electricity consumed by the air-conditioning unit. Initially, meter No. 850050 had been installed but the same got burnt and a new meter bearing No. 860154 was installed on 2.5.1988. According to the appellant, in a routine checking the said meter was found to be running slow and accordingly the first respondent was informed on 14.6.1989 that the meter would be replaced and revised bills would be issued. Thereafter, a new meter bearing No. 890324 was installed on 30.6.1989. This meter was also found to be running slow and accordingly the first respondent was informed on 25.9.1989 that the meter would be replaced and revised bills would be issued. On 18.12.1989, a new meter bearing No. 880272 was installed. This also got burnt and was replaced by meter No. 890272 on 30.12.1989. The appellant then taking the preceding one year’s period i.e. from 2.2.1987 to 1.2.1988 as the base period and on the pattern of consumption recorded therein, revised the bills and sent a demand notice dated 5.9.1990 for Rs. 2,19,602.73 paise for the period 1.2.1988 to 30.12.1989 on the footing that the first respondent had been undercharged by 1,13,212 units. A perusal of the contents of the demand letter show that for the period for which the meter is alleged to have recorded incorrect readings, bills were sent month by month on the basis of readings as recorded by the meter. As, according to the appellant, the first respondent had been undercharged due to the meter not accurately recording the readings, a revised bill, based on the average consumption of the respondent for the period 2.2.1987 to 1.2.1988 i.e. for such period for which the meters had recorded incorrect readings was raised. As the first respondent did not pay the amount, a notice of disconnection was sent to it on 25.10.1990 calling upon it to pay the amount within a week, failing which the electricity supply would be disconnected. The first respondent then challenged the notice of demand and disconnection by filing a writ petition which was dismissed by a learned Single Judge of the High Court on 17.8.1993. The Letters Patent Appeal preferred by the first respondent was allowed by the Division Bench and the demand notice was quashed.

3. The learned Single Judge held that it was for the consumer (first respondent) to raise a dispute before the Electrical Inspector under Section 26(6) of the Indian Electricity Act in case he challenged or disputed the assertion of the appellant that the meter was not recording correctly and was running slow. Since the consumer did not raise any such dispute, the appellant was entitled to replace the meter if the same was defective and to raise a demand on the basis of average consumption in the past period. The Division Bench has reversed this view and has held that if the appellant disputed the