Partly allowed

M/S.Jaishankar Steels Pvt.Ltd. v. Kerala State Electricity Board

Kerala HC16 Aug 2016WP(C)/22536/2006

Case brief

AI extract

What is this about?

Petitioner challenging penalty bill for unauthorized additional load. Court held excess consumption constitutes unauthorised use under Electricity Act, 2003. Impugned order set aside and remanded for fresh hearing under Section 127 despite petitioner failing to object earlier to different provisions.

What did the court decide?

Ext.P8 order and Ext.P9 bill set aside. Petitioner to be heard fresh under Section 127 of the Act by competent authority within 3 months.

M/S.Jaishankar Steels Pvt.Ltd. Vs Kerala… — Contract and Commercial Disputes | Kerala HC (2016)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT:

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THE HONOURABLE SMT. JUSTICE P.V.ASHA

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TUESDAY, THE 16TH DAY OF AUGUST 2016/25TH SRAVANA, 1938

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WP(C).No. 22536 of 2006 (G)

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PETITIONER :

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M/S.JAISHANKAR STEELS PVT. LTD., NEAR INDUSTRIAL AREA, ERUMATHALA P.O., ALUVA, REPRESENTED BY ITS DIRECTOR.

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BY ADVS.SRI.J.JULIAN XAVIER SRI.FIROZ K.ROBIN

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RESPONDENT(S):

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1. KERALA STATE ELECTRICITY BOARD, RESPRESENTED BY ITS SECRETARY, VYDYUTHI BHAVANAM,

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PATTOM, THIRUVANANTHAPURAM.

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2. DEPUTY CHIEF ENGINEER, APTS, KERALA STATE ELECTRICITY BOARD, VYDYUTHI BHAVANAM,

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PATTOM, THIRUVANANTHAPURAM.

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3. SPECIAL OFFICER (REVENUE), KERALA STATE ELECTRICITY BOARD, VYDYUTHI BHAVANAM,

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PATTOM, THIRUVANANTHAPURAM.

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4. DEPUTY CHIEF ENGINEER, KSEB, ELECTRICAL CIRCLE, PERUMBAVOOR.

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5. ASSISTANT EXECUTIVE ENGINEER, APTS, PALAKKAD.

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BY ADV. SMT.P.K.RADHIKA-KSEB SRI.JOSE J.MATHEIKEL, SC, KSEB

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THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 04-08-2016,THE COURT ON 16-08-2016 DELIVERED THE FOLLOWING:

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sts

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WP(C).NO.22536/2006

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APPENDIX

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PETITIONER'S EXHIBITS:

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P1 COPY OF THE PROCEEDINGS OF THE POWER ALLOCATION ORDER DATED 8/12/2000

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P2 COPY OF THE SANCTION OF ENERGIZATION ORDER DATED 18/12/2001

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P3 COPY OF THE RELEVANT EXTRACT OF THE HT AGREEMENT DATED 18/1/2002

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P4 COPY OF THE MAHAZAR PREPARED BY THE 5TH RESPONDENT.

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P5 COPY OF THE PROCEEDINGS DATED 16/12/2004 ISSUED BY THE 3RD RESPONDENT.

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P5(A) COPY OF THE BILL DATED 16/12/2004 FOR RS.4,63,320/-

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P6 COPY OF THE APPEAL DATED 21/12/2004

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P7 COPY OF THE JUDGMENT DATED 28/12/2004 IN WP(C).NO.37614/2004

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P8 COPY OF THE ORDER DATED 13/7/2006

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P9 COPY OF THE PENALTY DEMAND DATED 08/8/2006 ISSUED BY THE 3RD RESPONDENT TO THE PETITIONER.

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P10 COPY OF THE PROFORMA SUBMITTED BY THE PETITIONER.

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P11 COPY OF THE JUDGMENT DATED 6/6/2005 IN WP(C).NO.16320/2005

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P12 COPY OF THE POWER ALLOCATION DATA RECOMMENDED BY THE ASSISTANT ENGINEER, ELECTRICAL SECTION, ALUVA WHICH WAS COUNTER SIGNED BY ASSISTANT EXECUTIVE ENGINEER

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P13 COPY OF THE COVERING LETTER DATED 3/3/2009 SHOWING THE REMITTANCE OF AN AMOUNT OF RS.38,18,204/- UNDER PROTEST.

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RESPODNENT'S EXHIBITS:

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R1(A) COPY OF THE DETAILS REGARDING THE POWER ALLOCATION

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R1(B) COPY OF THE DISMANTLING NOTICE ISSUED TO THE PETITIONER.

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R1(C) COPY OF THE LETTER DATED 7/1/2005

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R1(D) COPY OF THE ORDER DATED 27/4/2006

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R1(E) COPY OF THE LETTER DATED 3/8/2007

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R1(F) COPY OF THE APPLICATION BY THE PETITIONER DATED 24/2/2007

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2/-

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-2-

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WP(C).NO.22536/2006

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R1(G) COPY OF THE LETTER DATED 16/1/2008

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R1(H) COPY OF THE PROCEEDINGS OF THE DYCE DATED 18/12/08

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R1(I) COPY OF THE LETTER DATED 18/2/2009

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R1(J) COPY OF THE LETTER DATED 28/2/2009

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R1(K) COPY OF THE LETTER BY THE PETITIONER DATED 3/3/09

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R1(L) COPY OF THE LETTER DATED 21/3/09

/TRUE COPY/

P.S.TO JUDGE

sts

P.V.ASHA, J.

W.P(C) No.22536 of 2006-G

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Dated this the 16^th day of August, 2016

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JUDGMENT

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The petitioner is a consumer under High Tension (`HT' for short) tariff. As per Ext.P1 order dated 8.12.2000, the Deputy Chief Engineer- the 4^th respondent, sanctioned power allocation of 500 KVA. As per Ext.P2 order dated 18.12.2001, the Electrical Inspector, Ernakulam accorded sanction for energisation of installations including 630 KVA and transformer with total authorised load of 413 KVA, as provided therein. The petitioner executed an agreement Ext.P3 on 18.1.2002 with the Deputy Chief Engineer, Electrical Circle, Perumbavur. As per the agreement, the contract demand was 350 KVA. Power upto 350 KVA was agreed to be supplied to the petitioner. As per clause 18 of the agreement, the conditions of supply of electrical energy published by the Board as amended from time to time and the provisions therein which are not contradictory to the provisions in the agreement are binding on the consumer. Clause 24

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W.P(C) No.22536 of 2006-G 2

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provides that the when actual maximum demand in a month exceeds the contract demand as per the agreement, the excess demand shall be charged at 150% the demand charge applicable. Clause 17(a) provides that, if the supply under the agreement is utilised for purposes other than that shown in the schedule annexed to the agreement, consumer agrees to remit the amount that may be charged for the entire supply as if the tariff applicable is the highest one in vogue in the Board for the various uses put to by him for the entire period.

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On 9.12.2004, the Anti Power Theft Squad (APTS) conducted a surprise inspection in the premises of the petitioner under Operation Jyothi in which it was detected that the connected load was of 556 KVA as against the sanctioned load of 413 KVA. Certain other irregularities were also found with respect to the capacity of transformer motors, etc. actually connected.

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Ext.P5 proceedings were issued thereafter informing the petitioner that at the time of inspection, the total load connected in the premises of the petitioner was 556 KVA; whereas, as per the agreement executed the total connected load was only 413 KVA. It was therefore found that the unauthorised

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W.P(C) No.22536 of 2006-G 3

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additional load of 143 KVA connected in the premises without the Board's consent was in violation of the agreement and the use of such additional load was to be charged under Regulation 42(d) of the Condition of Supply. Accordingly, additional bill for a sum of Rs.4,63,320/- was issued to the petitioner for the previous 6 months, ie. for the period from 7/2004 - 12/2004. The petitioner was requested to regularise the unauthorised additional load or to dismantle the additional load immediately, failing which penalisation would be continued till regularisation. Ext.P5(a) bill demanding the sum of Rs.4,63,320/- was enclosed with Ext.P5 proceedings.

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The petitioner thereupon filed an appeal Ext.P6 on 21.12.2004 as provided under regulation 48 of the Condition of Supply before the Deputy Chief Engineer-the 2^nd respondent. According to the petitioner, there was no reason for issuing such a bill demanding higher rates and to penalise him. The petitioner pointed out that the power allocation given to the petitioner was 500 KVA as per Ext.P1 and there was no violation of the agreement. It was also pointed out that as per clause 24 of the H.T agreement, the consumer needs to pay only 150% for the excess in case the contract demand exceeded and such payments

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W.P(C) No.22536 of 2006-G 4

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were being made by the petitioner as and when demanded. The petitioner also pointed out that, there was no defaults in the meters installed at the premises. Immediately after submitting the appeal, the petitioner filed W.P(c) No.37614 of 2004 in which this Court by Ext.P7 judgment dated 28.12.2004 directed the 2^nd respondent to dispose of the appeal on condition that the petitioner shall pay 1/3^rd of the amount demanded within a period of two weeks.

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Thereafter, the Deputy Chief Engineer passed Ext.P8 order on the appeal after hearing the petitioner and officers of the Board. The Deputy Chief Engineer found that the sanctioned load of the petitioner was only 413 KVA; whereas the connected load was found to be 556 KVA at the time of inspection. Therefore, it was found that there was violation of the agreement executed by the petitioner, as there was unauthorised additional load of 143 KVA. The appellate authority stated that in view of the complication involved in the dispute regarding connected load, contract demand, transformer capacity etc. the appellate authority sought clarification from various authorities of the Board and got a legal opinion on 31.3.06 in which it was clarified that the Board has got every right to penalise the consumer in

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W.P(C) No.22536 of 2006-G 5

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case the connected load of a consumer found exceeded by the installation of additional equipments. The appellate authority also relied on a judgment of this Court in KSEB v. Amrutha Institute of Medical Sciences and stated that the Board was entitled to realise penal charges on energy charges and F.C. It was further found that even though transformer capacity was not exceeded, the connected load was seen increased and was found to be in excess of the sanctioned load and therefore the Board had every right to penalise the consumer for the unauthorised additional load even under Section 126 of the Electricity Act, 2003. The appellate authority found that as per clause 51(5) and 51(6) of the Supply Code, the loads connected in excess of the connected load specified in the agreement can be treated as unauthorised load for charging penalty. However, it was found that in the light of the judgment in W.A No.2005/2004, this Court had directed the Board to limit penalty at 1.5 times tariff rate under Section 126 of the Electricity Act, 2003. The penalty imposed on the petitioner charging twice the normal rate required revision to 1.5 times and it was directed to continue the penalisation till regularisation or removal of unauthorised load. Accordingly, the appellate authority modified the original order

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W.P(C) No.22536 of 2006-G 6

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directing that the penalty be at 1.5 from F.C rate for six months period prior to the date of inspection to be continued till regularisation or removal of unauthorised load.

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Based on Ext.P8 order, the revised bill was issued to the petitioner as per Ext.P9 demanding a sum of Rs.10,81,070/directing payment on or before 24.08.2006 threatening disconnection on non payment. The bill was issued under Section 56(1) of Electricity Act 2003 and clause 32(C)(1) of Conditions of Supply of Electrical Energy. This Writ Petition was filed at that stage challenging the order passed by the Deputy Chief Engineer and the bill issued thereupon.

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According to the petitioner, Ext.P8 order was passed more than an year after hearing was held on 14.6.2005 and the second respondent issued the order Ext.P8 after getting legal opinion and clarification in the year 2006, without affording a further opportunity of hearing to the petitioner. According to the petitioner, the Board did not have any right to penalise the petitioner under clause 42(d) of the Conditions of Supply of Electrical Energy, 1990, which was inconsistent with Section 126 (6) of the Electricity Act as held in the decision reported in KSEB v. Najeeb [2005(1) KLT 406]. Petitioner's case is that

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since the inspection was conducted in the year 2004, after the Electricity Act, 2003 had come into force, the action if any had to be taken under Section 126 of the Electricity Act, which is more beneficial to the consumer. The further case of the petitioner is that the Deputy Chief Engineer relied on clauses 51(5) and 51(6) of supply code and held that, load connected in excess of connected load specified in the agreement can be treated as unauthorised load for charging penalty pointing out that the Supply Code has come into effect only in the year 2005 and the provisions contained therein cannot be applied in respect of an inspection held in the year 2004. The petitioner also alleged that the proper procedure which should have been adopted was under Sections 126 and 126(6)(b) of the Indian Electricity Act, 2003 and that as per the provisions therein, the excess/additional load cannot be termed as unauthorised use of electricity. A penal assessment could have been made only if the use of electricity was “unauthorised use of electricity” and that use can be termed unauthorised only if the use is by any artificial means or by means not authorised by concerned persons or authority or licensee or through a tampered meter or for the purpose other than for which the usage was authorized, as

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W.P(C) No.22536 of 2006-G 8

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defined under Section 126. The contention is that the Board did not have any case that the use of electricity by the petitioner was for any of the purposes mentioned under clause (b), so as to proceed against it and that in such circumstances, there could not have been any penal assessment. It is the case of the petitioner that, whenever there was additional demand the excess demand used to be charged @ 150% of the demand charges applicable, in accordance with the paragraph VIII of High Tension tariff notification. Under the above circumstances, the petitioner challenges Exts.P8 and P9 orders and seeks a declaration that the provisions contained in the Supply Code, 2005 are not applicable in the case and there was no unauthorised use of electricity by the petitioner as per Section 126 of the Electricity Act, 2003. Alternatively there is a prayer to reconsider and pass orders on Ext.P6 setting aside Exts.P8 and P9.

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The respondents have filed a statement and counter affidavit. It is stated that the power allocation as per Ext.P1 was a formal procedure. The load sanctioned by the Electrical Inspector after completion report and recorded in the agreement is the authorised load. It is stated that as per the agreement, the

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W.P(C) No.22536 of 2006-G 9

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petitioner is not authorised to use in excess of what is provided therein irrespective of the power allocation and he is bound to pay charges at the highest rate. It is further stated that the impugned order and bill were issued, after hearing the petitioner. The penalty assessed was only 1.5 times.

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The learned counsel on both sides relied on the judgment of the Apex Court in Southern Electricity Supply Co. of Orissa Ltd. v. Sri Seetaram Rice Mill [(2012) 2 SCC 108]. According to the learned counsel for the petitioner, the Apex Court has laid down the procedure to be followed under the 2003 Act under Section 126, according to which, there should be a provisional assessment and a final assessment after considering the objections of the consumer. But penalty is imposed on the petitioner without following the procedure prescribed in Section 126 (b)(i) to (v). In this case, the appeal was filed against an order which was passed without affording an opportunity to the petitioner to file objections and therefore it is pointed out that there is no order against which the appeal could have been filed.

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The learned counsel relied on the judgment of this Court in Alwaye Rubex (P) Ltd. v. Kerala State Electricity

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W.P(C) No.22536 of 2006-G

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Board [2014(1) KLT 307] in which it was held that, no penalty can be imposed under Regulation 50(5) and (6) of the K.S.E.B Terms and Conditions of Supply 2005, on the basis of an inspection conducted before the regulations were issued in the year 2005. It was further held in paragraph 13 that, regulation enabling assessment of penalty on the allegation of detection of additional load in the case of HT/LT/EHT consumers is totally lacking either in the Conditions of Supply of Electrical Energy 1990 or in the 2003 Act. It was further held that, in a case where there is detection of additional connected load in the case of an HT consumer during the period prior to introduction of K.S.E.B Terms and Conditions of Supply 2005 without exceeding the contract demand, which has got approval from an authority, no penalty can be imposed. This Court in that case permitted the respondents to initiate steps for imposition of penalty, only if there is additional unauthorised connected load continued in the premises.

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According to Smt. Radhika, the learned Standing

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Counsel, as per the provisions contained in the agreement executed, ie. Ext.P3, the contract demand agreed to was only 350 KVA on authorised load of 413 KVA and the petitioner did

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W.P(C) No.22536 of 2006-G 11

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not have any authority to use electricity in excess of the same without permission of the Board. As it is found that there was excess use, the petitioner was bound to pay the charges as directed under Ext.P9 bill, in terms of clause 17(a) of the agreement. It is pointed out that the bill, which was issued demanding twice the charges originally, was modified reducing the demand, claiming the rate at 1.5 times the charges. Relying on para. 41 of the judgment of the apex court in Seetharam Rice Mill's case (supra) it was argued that unauthorised use was not limited to those mentioned in the definition as contended by the petitioner.

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I am unable to accept the contention of the learned counsel for the petitioner that the use of electricity can be found to be unauthorised only if it is one mentioned in the Explanation b(iv) to Section 126. Section 126 of the 2003 Act is intended to restrict misuse of electricity. After elaborately considering the purpose and intent of the enactment, the apex court interpreted the word 'means' occurring in Explanation (b)(iv) to Section 126 of the 2003 Act in Southern Electricity Supply Co. of Orissa Ltd. v. Sri Seetaram Rice Mill, [(2012) 2 SCC 108] in paragraphs 58, 61, 67 and 71 as follows::

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W.P(C) No.22536 of 2006-G

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“58. The above judgments clearly support the view that we have taken with reference to the facts and law of the present case. It cannot be stated as an absolute proposition of law that the expression “means” wherever occurring in a provision would inevitably render that provision exhaustive and limited. This rule of interpretation is not without exceptions as there could be statutory provisions whose interpretation demands somewhat liberal construction and requires inclusive construction. An approach or an interpretation which will destroy the very purpose and object of the enacted law has to be avoided. The other expressions used by the legislature in various sub-clauses of Explanation (b) of Section 126 of the 2003 Act are also indicative of its intent to make this provision wider and of greater application. Expressions like “any artificial means”, “by a means not authorised by the licensee”, etc. are terms which cannot be exhaustive even linguistically and are likely to take within their ambit what is not specifically stated. For example, “any artificial means” is a generic terms and so the expression “means” would have to be construed generally.

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xxxx xxxxxx xxxxxx xxxxx

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“61. Unauthorised use of electricity cannot be restricted to the stated clauses under the Explanation but has to be given a wider meaning so as to cover cases of violation of the terms and conditions of supply and the Regulations and provisions of the 2003 Act governing such supply. “Unauthorised use of electricity” itself is an expression which would, on its plain reading, take within its scope all the misuse of the electricity or even malpractices adopted while using electricity. It is difficult to restrict this expression and limit its application by the categories stated in the Explanation. It is indisputable that the electricity supply to a consumer is restricted and controlled by the terms and conditions of supply, the Regulations framed and the provisions of the 2003 Act.

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Xxxxxxx

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xxxxxxxxxxx

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On the cumulative reading of the terms and conditions of supply, the contract executed between the parties and the provisions of the 2003 Act, we have no hesitation in holding that consumption of electricity in excess of the sanctioned/connected load shall be an “unauthorised use of electricity” in terms of Section 126 of the 2003 Act. This, we also say for the reason that overdrawal of electricity amounts to breach of the terms and conditions of the contract and the statutory conditions, besides such overdrawal being prejudicial to the public at large, as it is likely to throw out of gear the entire supply system, undermining its efficiency, efficacy and

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W.P(C) No.22536 of 2006-G

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even increasing voltage fluctuations. Xxxxxxx xxxxxxxxx

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Consumption in excess of sanctioned load is violative of the terms and conditions of the agreement as well as of the statutory benefits. Under Explanation (b)(iv), “unauthorised use of electricity” means if the electricity was used for a purpose other than for which the usage of electricity was authorised. Explanation (b)(iv), thus, would also cover the cases where electricity is being consumed in excess of sanctioned load, particularly when it amounts to change of category and tariff. As is clear from the agreement deed, the electric connection was given to the respondent on a contractual stipulation that he would consume the electricity in excess of 22 kVA but not more than 110 kVA. The use of the negative language in the condition itself declares the intent of the parties that there was an implied prohibition in consuming electricity in excess of the maximum load as it would per se be also prejudiced. Xxxxx”.

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However, it is seen that the inspection was conducted

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in the year 2004 subsequent to the coming into force of the Electricity Act, 2003. The proceedings were initiated, challenged and pursued by both parties even before this court, in terms of the provisions contained in clause 42(d) of the conditions of Supply of Electrical Energy. A Division Bench of this Court in the judgment in KSEB V Najeeb [2005(1) KLT 406] held that, Regulation 42(d) is inconsistent with Section 126 (6) and Section 126 of the 2003 Act is more beneficial. Of course, this judgment was rendered before the term 'unauthorised use' was interpreted by the apex court in Sitharam Rice Mill 's case (supra). This court in that judgment held that proceedings should

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have been in terms of the provisions contained in the Electricity Act, 2003. It is a fact that the petitioner had not raised objections as against the authority to initiate proceedings under clause 42(d) of the Conditions of Supply of Electrical Energy, 1990. It is true that proceedings were not initiated under the provisions contained in the Act which prevailed at the relevant time. The petitioner has raised all his contentions against the proceedings, in Ext.P6 appeal. He has also sought for an alternative relief for a direction to the 2^nd respondent to reconsider and pass orders on Ext.P6. I therefore set aside Ext.P8 order and Ext.P9 bill and direct the competent authority under Section 127 of the Act to consider Ext.P6 appeal and pass appropriate orders afresh, after hearing the petitioner, within a period of 3 months.

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The Writ Petition is accordingly disposed of.

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Sd/- (P.V.ASHA, JUDGE)

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rtr/

M/S.Jaishankar Steels Pvt.Ltd. v. Kerala State Electricity Board

Case brief

What is this about?

What did the court decide?

M/S.Jaishankar Steels Pvt.Ltd. v. Kerala State Electricity Board

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Cases cited

Statutes considered

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