M/S Santosh Preservation Pvt. Ltd. And ... vs Dakshinanachal Vidyut Vitran Nigam ... on 24 July, 2023

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Allahabad High Court

M/S Santosh Preservation Pvt. Ltd. And ... vs Dakshinanachal Vidyut Vitran Nigam ... on 24 July, 2023

1. The petitioners were having a contracted power load of 280 KVA for running a cold storage. The tariff applicable was HV-2, with facility of MRI downloading. On 12.06.2019, a checking was made at the petitioners' premises and window seal of Main meter and TP seal of NET meter were found tampered. On opening TP cover, it was found that R and B phases wire had been cut. As a result, metering of electric current got disrupted. The meter was showing NIL consumption.

2. The seal of window cover of Pole meter was also found tampered. Two seals of TP cover were also tampered. In said meter also, on account of cutting of wires of R and B phases, the meter was recording zero consumption. However, the transformer was recording 112 Amp on R phase, 120 Amp on Y phase and 125 Amp on B phase when tested with trunk tester. Apparently, the petitioner had rendered the meter dysfunctional so as not to record any electricity consumption. The respondents took MRI reading and thereafter all the three meters were dismantled and sealed in presence of the petitioners' representative and sent for testing. An inspection report was prepared on the spot mentioning the aforesaid facts and that it amounted to theft of electricity, punishable under Section 135 of the Electricity Act, 2003 (for short 'the Act'). It bears signatures of the inspecting team and also the representative of the petitioner's Company.

3. The petitioners, on the same date, handed over a cheque of Rs.56 lakhs to the Electricity Department. According to the respondent-Electricity Department, the said cheque was given by the petitioner towards compounding fee with oral request not to encash the same as the petitioner would deposit the amount by online mode through RTGS within 48 hours.

4. On very next date i.e. 13.06.2019, respondent no.2 wrote to Superintending Engineer, Electricity Distribution Division-III, Saifai, Etawah that assessable unit would be 138221 for a period of 59 days.

5. According to the respondent-Electricity Department, as the petitioner had handed over cheque of Rs. 56 lakhs towards compounding fee and had also assured the Department that he would substitute the cheque with cash amount within 48 hours, therefore on 13.6.2019, a new meter was installed at the petitioner's premises and the electricity supply was restored.

6. It is relevant to note that the petitioner deposited Rs. 56 lakhs through RTGS (Rs. 30 lakhs on 14.6.2019 and Rs. 26 lakhs on 15.6.2019). A consolidated receipt of Rs. 56 lakhs was issued by the respondent-Electricity Department on 17.6.2019 and the cheque was returned. The receipt states that the amount deposited was towards compounding fee, on basis of checking carried out at the petitioner's premises on 12.6.2019.

7. The petitioner also deposited Rs. 10 lakhs, mentioning it as a deposit made towards "electrical expenses". This, according to the petitioner, was to partially satisfy the assessment that would be made against him. It is alleged that the electricity supply was restored only after the said amount was deposited.

8. On 15.06.2019, the petitioner was served with a show cause notice alongwith a provisional assessment of Rs.23,48,452/- calling upon the petitioner to file objection within fifteen days. On 29.06.2019, the petitioner submitted its reply denying theft of electricity and challenging the procedure adopted by the respondents.

9. On 22.8.2019, the respondents issued a final assessment order. The order mentions that it was a case of theft of electricity by tampering the meter. The assessment amount of Rs. 23,48,452/- proposed earlier, was reduced to Rs. 20,54,895/-. The petitioner who had deposited Rs. 10 lakhs on provisional basis in anticipation of the final assessment order, was given due adjustment of the said amount. Rs. 2,000/- was appropriated towards dis-connection and re-connection charges and remaining Rs. 9,98,000/- was adjusted against the assessment amount. The said fact was duly mentioned in the office memo dated 27.8.2019, issued under the signatures of the Executive Engineer, Electricity Distribution Division - III, Saifai, Etawah.

10. Initially, the petitioner had challenged the recovery notice dated 27.7.2019. Subsequently, by amendment in the writ petition, the petitioner has also assailed the final assessment order dated 22.8.2019. He has also prayed for a mandamus directing the respondents to refund Rs. 56 lakhs and Rs. 10 lakhs realized from him so far, along with interest @ 18% per annum.

RIVAL CONTENTIONS

11. The case of the petitioner is that the assessment made by the respondents is based on test report of Executive Engineer (Test Division) DVVNL dated 13.6.2019. It is submitted that when assessment is made on basis of test report, it was mandatory to give opportunity to the petitioner to get the meter tested from an independent laboratory. Since the aforesaid option was not given to the petitioner, therefore, the assessment made was illegal. In support of his contention, he has placed reliance on two Division Bench judgements of this Court - (i) Mohd. Sagir Vs. Dakshinanchal Vidyut Vitran Nigam Ltd.1 and (ii) Smt. Amrawati Devi Vs. Purvanchal Vidyut Vitran Nigam Ltd. and another2.

12. It is further submitted that the proposed assessment was of Rs. 23,48,452/-, whereas the notice dated 22.8.2019 mentions that Rs. 10,56,895/- was recoverable from the petitioner. Moreover, no reason has been given in the final assessment order for arriving at the aforesaid figure. It is also urged that the assessment order is a non-speaking order and therefore, not sustainable in law.

13. On the other hand, learned counsel for the respondent-Electricity Department, submitted that it was a case of theft of electricity. The petitioner was caught red-handed, extracting electrical energy by tampering the Main meter, as well as the Pole meter. In order to save itself and its directors from criminal proceedings, the petitioner chose to get the offence compounded by depositing the compounding fee. The petitioner deposited another sum of Rs. 10 lakhs against the proposed assessment and requested for electric supply being restored. The Department having regard to the fact that the petitioner was running cold storage, sympathetically considered the request of the petitioner and replaced the old meter with a new meter and also restored the electric supply. It is submitted that since theft of electricity was evident to naked eye therefore, there was no impediment in proceeding to make best judgment assessment. It is urged that when a consumer uses any artificial means, or means not authorized by the Board, or licensee and thereby commits theft of electricity, there is a presumption under law that the abstraction, consumption or use of electricity has been dishonestly caused by the consumer. The petitioner had failed to rebut the said presumption. The conclusion relating to theft of electricity in the instant case, is not based on the test result. It was discovered at the time of inspection itself. Therefore, it was not necessary to get the meter tested or to afford opportunity to the petitioner to have the same tested at an independent laboratory of its choice. It is further submitted that the petitioner had in fact, accepted its guilt and deposited the compounding fee and for the said reason, no other coercive action was taken against it. Having regard to the above admitted fact, it cannot be said that the order of final assessment is in any manner illegal, or warrant interference in exercise of equitable and discretionary jurisdiction.

ISSUE

14. The main issue which falls for consideration is whether in the facts and circumstances of the instant case, the assessment proceedings can be held to be illegal for the reason that the petitioner was not given option to get the meter tested at an independent laboratory of its choice, as contemplated under Clause 5.6(c)(iii) of the U.P. Electricity Supply Code, 2005.

RELEVANT STATUTORY PROVISIONS

15. Section 126 of the Electricity Act, 2003 (for short, hereinafter referred to as "the Act") empowers the assessing officer to provisionally assess to the best of its judgment, the electricity charges payable by any person who on an inspection of any place or premises, or after inspection of equipments, gadgets, machines, devices, found connected, or used, or after inspection of records maintained by any person, comes to the conclusion that such person is indulging in unauthorized use of electricity. The phrase "unauthorized use of electricity" has been defined under Explanation to Section 126(6), thus:

"(b) "unauthorised use of electricity" means the usage of electricity

(i) by any artificial means; or

(ii) by a means not authorised by the concerned person or a or licensee; or

(iii) through a tampered meter; or

(iv) for the purpose other than for which the usage of electricity was authorised; or

(v) for the premises or areas other than those for which the supply of electricity was authorised."

(emphasis supplied)

16. According to sub-section (5), such an assessment would be for the entire period during which such unauthorized use of electricity has taken place and if, however, the period during which such unauthorized use of electricity has taken place cannot be ascertained, such period shall be limited to a period of twelve months immediately preceding the date of inspection.

17. Relevant part of Section 135 which deals with "theft of electricity" is as follows: -

"135. Theft of electricity.-[(1) Whoever, dishonestly, (a) taps, makes or causes to be made any connection with overhead, underground or under water lines or cables, or service wires, or service facilities of a licensee or supplier, as the case may be; or

(b) tampers a meter, installs or uses a tampered meter, current reversing transformer, loop connection or any other device or method which interferes with accurate or proper registration, calibration or metering of electric current or otherwise results in a manner whereby electricity is stolen or wasted; or

(c) damages or destroys an electric meter, apparatus, equipment, or wire or causes or allows any of them to be so damaged or destroyed as to interfere with the proper or accurate metering of electricity; or

(d) uses electricity through a tampered meter; or

(e) uses electricity for the purpose other than for which the usage of electricity was authorised, so as to abstract or consume or use electricity shall be punishable with imprisonment for a term which may extend to three years or with fine or with both:

Provided that in a case where the load abstracted, consumed, or used or attempted abstraction or attempted consumption or attempted use-

(i) does not exceed 10 kilowatt, the fine imposed on first conviction shall not be less than three times the financial gain on account of such theft of electricity and in the event of second or subsequent conviction the fine imposed shall not be less than six times the financial gain on account of such theft of electricity;

(ii) exceeds 10 Kilowatt, the fine imposed on first conviction shall not be less than three times the financial gain on account of such theft of electricity and in the event of second or subsequent conviction, the sentence shall be imprisonment for a term not less than six months, but which may extend to five years and with fine not less than six times the financial gain on account of such theft of electricity:

Provided further that in the event of second and subsequent conviction of a person where the load abstracted, consumed, or used or attempted abstraction or attempted consumption or attempted use exceeds 10 kilowatt, such person shall also be debarred from getting any supply of electricity for a period which shall not be less than three months but may extend to two years and shall also be debarred from getting supply of electricity for that period from any other source or generating station:

Provided also that if it is provided that any artificial means or means not authorised by the Board or licensee or supplier, as the case may be, exist for the abstraction, consumption or use of electricity by the consumer, it shall be presumed, until the contrary is proved, that any abstraction, consumption or use of electricity has been dishonestly caused by such consumer.

(1A) Without prejudice to the provisions of this Act, the licensee or supplier, as the case may be, may, upon detection of such theft of electricity, immediately disconnect the supply of electricity:

Provided that only such officer of the licensee or supplier, as authorised for the purpose by the Appropriate Commission or any other officer of the licensee or supplier, as the case may be, of the rank higher than the rank so authorised shall disconnect the supply line of electricity:

Provided further that such officer of the licensee or supplier, as the case may be, shall lodge a complaint in writing relating to the commission of such offence in police station having jurisdiction within twenty four hour from the time of such disconnect:

Provided also that the licensee or supplier, as the case may be, on deposit or payment of the assessed amount or electricity charges in accordance with the provisions of this Act, shall, without prejudice to the obligation to lodge the complaint as referred to in the second proviso to this clause., restore the supply line of electricity within forty-eight hours of such deposit or payment;"

(emphasis supplied)

18. Sub-section (2) of Section 152 which speaks of compounding of offences reads thus: -

"(2) On payment of the sum of money in accordance with sub-section (1), any person in custody in connection with that offence shall be set at liberty and no proceedings shall be instituted or continued against such consumer or person in any criminal court."

(emphasis supplied)

19. The State Commission has framed the U.P. Electricity Supply Code, 2005 in exercise of its powers under Section 50 of the Act. The aforesaid provisions have been made to effectuate the objects of the Act. Clause 5.6 of the Code relates to defective meters. The relevant part thereof is reproduced below: -

"5.6 Defective Meters: (a) The Licensee shall have the right to test any meter and related apparatus if there is a reasonable doubt about the accuracy of the meter and the consumer shall provide the Licensee necessary assistance in conduct of test. However, the consumer shall be allowed to be present during the testing.

(b) A consumer may request the Licensee to test the meter installed on his premises if he doubts its accuracy of meter readings not commensurate with his consumption of electricity, stoppage of meter, damage to seal, by applying to the Licensee in prescribed format (Annexure 5.1) along with the requisite testing fee. The Licensee shall test the meter:

(1) Within 15 days of the receipt of the application, at consumer's premises, or

(ii) Within 30 days at licensee's lab, or Independent lab, or

(iii) By installing a tested check meter in series with the existing meter within 7 days of filing of application.

(c) In case of testing of meter at consumer's premises, the testing of meter shall be done for a minimum consumption of 1 kWh. The meter testing team of the licensee shall carry heating load of sufficient capacity to carry out the testing. Optical Scanner may be used for counting the pulses / revolutions or meter shall be tested as per the procedure described in IS/IER 1956 or through aqua-check for LT meters and through RSS for others. The aqua Check and RSS shall be calibrated in laboratory of national repute once in a year.

(i) In case the meter is found O.K., no further action shall be taken.

(ii) In case the meter is found fast / slow by the licensee, and the consumer agrees to the report, the meter shall be replaced by a new meter within 15 days, and bills of previous three months prior to the month in which the dispute has arisen shall be adjusted in the subsequent bill as per the test results. In case meter is found to be slow, at the request of the consumer, these charges may be recovered in installments not exceeding three.

(iii) If the consumer disputes the results of testing, or testing at consumer's premises is difficult, the defective meter shall be replaced by a new tested meter by the Licensee, and, the defective meter after sealing in presence of consumer, shall be tested at licensee's lab/Independent lab/Electrical Inspector, as agreed by consumer. The option once exercised by consumer shall not be changed. The decision on the basis of reports of the test lab shall be final on the Licensee as well as the consumer.

(d) In cases of testing of a meter in the licensee's/ Independent test laboratory,

(i) Consumer shall be informed of the proposed date of testing at least 7 days in advance so that he may be present at the time of testing, personally or through an authorized representative.

(ii) The signature of the consumer or his authorized representative, if any present, shall be obtained on the Test Result Sheet.

(iii) The results of testing, billing, and in case the consumer disputes the results of testing, shall be same as provided in clause 5.6 (c) above.

Note: (i) The licensee may submit a proposal, with a list of reputed and approved test labs, along with their test charges to the Commission.

(ii) The provisions of IER 1956 shall however be followed until rules are made under Section 53 and 55 of the Act.

(e) In case a check meter is installed, and if after 7-15 days of the period of test, the existing meter is found to be fast or slow beyond the permissible limits, and the test results are not disputed by the consumer, then the same would be removed leaving the check meter in its place for future metering, and bills of previous three months prior to the month in which the dispute has arisen shall be adjusted in the next bill as per the test results. Where the test results are disputed, the procedure as per clause 5.6 (c) as above, as the case may be, shall be followed."

(emphasis supplied) ANALYSIS

20. In Smt. Amrawati Devi (supra), the checking team found that the meter was running slow and therefore it was sent for testing at the laboratory of the Department. During testing, it transpired that the meter had been tampered. The consumer was not given option to get the meter tested at an independent laboratory. In the aforesaid backdrop, relying on Clause 5.6(c)(iii), it was held that when the demand for additional electricity charges was based on test report, the consumer should have had the opportunity to get the meter tested from outside agency, in view of Clause 5.6(c)(iii) of the Code. The relevant extract from the said judgment is as follows: -

"6. From reading of Clause 5.6 (c) it is clear that this clause in unequivocal terms declares that the defective meter after sealing in presence of consumer, shall be tested. at licensee's lab/independent lab/Electrical Inspector, as agreed by the consumer. Therefore, the agreement by the consumer is essential for testing of the meter either at the laboratory of the Nigam or at the laboratory of some other independent agency. It further provides that option exercised by consumer once cannot be changed. The clause, therefore, empowers the authorities to seal the meter and get it tested with consumer's agreement. Since the clause operates harshly against the consumer it has to be construed strictly. The consumer has a right to get the meter tested with independent agency. The authorities, therefore have a corresponding duty to apprise the consumer of the right. Failure to discharge this duty, which flows from sub-clause (c) (ii) by the authorities while exercising their right to send the meter for testing, renders the entire proceedings for sealing the meter irregular and illegal."

21. In Mohd. Sagir (supra), on which also, heavy reliance has been placed by learned counsel for the petitioner, it is noteworthy that at the time of inspection, the meter seal, lead seal, ultrasonic welding seal, were found in order. However, since the respondents were suspecting tampering in the meter, therefore, they took the meter in their custody. A date was fixed under due intimation to the consumer and on which date, the meter was opened before a Committee constituted for the said purpose. It was found that although outer seals were intact, but the petitioner had inserted extra wires and remote control sensing device inside the meter. Thereafter, the consumer was assessed for unauthorized use of electricity on basis of inspection of the meter done by the Committee. The assessment order was assailed on the ground that the consumer was not given opportunity to get the meter tested at an independent laboratory in terms of Clause 5.6(c)(iii). On the other hand, the Electricity Department contested the claim by contending that it was a case of tampering of meter, as a foreign device was found inside the meter, therefore, Clause 5.6 which deals with "defective meters" would not be applicable. The aforesaid contention was repelled by holding that Clause 5.6(a) cannot be interpreted in a narrow manner so as to exclude from it cases of meter tampering, as it would not advance the object of the Act. It is held that a tampered meter would also be a defective meter and will fall within the ambit of Clause 5.6. The relevant observations are as under: -

"25. Now the submission and the stand taken by the learned counsel for the respondents in the impugned order as well as in the counter affidavit is that Clause of 5.6 of the Code, 2005 is not applicable when there is an allegation that the meter has been tampered. Clause 5.6 (a) of the Code, 2005 provides The Licensee shall have he right to test any meter and related apparatus". Although the heading of the word is "defective meters", but the said heading cannot control the substantive provision when the provision is clear and categorical. The right of a licensee to test the meter where licensee has a reasonable doubt that the meter is tampered cannot be taken away and in event the right is only confined to defective meters as alleged by the respondents, the said interpretation shall not advance the object of the Act, 2003.

26. Clause 5.9 of the Code, 2005 deals with cost of Replacement of Defective/ Burnt Meters. Sub-clause (a) (ii) of the Code, 2005 uses the words "as a result of testing, that the meter was rendered defective due to tampering or any other deliberate act by the consumer to interfere with the meter". Thus, when the sub-clauses 5.6 and 5.9 are read together, it is clear that the meter is to be treated as a defective meter consequent to tampering or any other deliberate act by the consumer. Thus, in the cases where the allegations are that the consumer has tampered the meter the said meter is fully covered by the definition of defective meters as given in Cause 5.6 of the Code, 2005 and the case of the respondents that Clause 5.6 is not attracted is incorrect."

22. The aforesaid interpretation definitely advances the object of the Act. However, the seminal issue is whether in all cases of tampering, is it mandatory to give option to the consumer to get the meter tested at an independent laboratory, failing which assessment made would be rendered illegal?

23. Clause 5.6 of the Code gives right to both licensee and consumer to get the meter tested. In the first instance, the testing is done at consumer's premises. If no defect is detected, no further action is taken. However, if the meter is found running fast/slow and the consumer agrees to the report, the meter shall be replaced by a new meter and bills of previous three months prior to the month in which the dispute has arisen, shall be adjusted in the subsequent bills as per the test results. On the other hand, if he disputes the test result or the testing at his premises is not possible, the defective meter shall be tested at licensee's laboratory/independent laboratory/ Electrical Inspector, as agreed by the consumer. The option once exercised, by the consumer shall not be changed. The decision on the basis of reports of the test lab shall be final and binding on the licensee as well as the consumer.

24. The Scheme of the Code reveals that the above procedure is required to be followed only in cases where it is to be ascertained on basis of test report as to whether meter is running slow or fast. It could happen on account of mechanical defect in metering apparatus or because of tampering which may or may not be visible to naked eye. When visible to naked eye, as in the instant case, and meter was recording 'NIL' consumption, the conclusion of theft of electricity is not dependent upon test report.

25. The object of Clause 5.6(c) (iii) is to rule out any complaint of bais if meter is tested in the licensee's Lab or by electrical inspector in a case where it is to be ascertained from test report whether meter is running fast/slow because of tampering or any other reason. There, option has to be given to the consumer under Clause 5.6(c)(iii) to get the meter tested at a lab of his choice. However, when the conclusion of tampering is not based on report of test laboratory/Electrical Inspector, the mere fact that Department had sent the meter for testing, would not result in conferment of any new right in favour of the consumer, which in fact, never existed. Clause 5.6(c)(iii) would not be attracted in such cases.

26. Recently, the Supreme Court in KC Ninan vs. Kerala State Electricity Board and others3 held that "electricity constitutes a 'public good'. The Courts interpretation of the law must foster this position". In our opinion, the above interpretation would help combat brazen acts of meter tampering and prevent loot of 'public good' apart from advancing the object of the Act and the Code.

27. Mohd. Sagir (supra) was a case where tampering was not obvious at the time of inspection. The licensee had only a suspicion and therefore, it sent the meter for testing. As the ultimate conclusion regarding tampering was based on test report of three member committee, therefore, the consumer was rightly held to have right to get the meter tested at laboratory of his choice. Same was the position in Smt. Amrawati Devi. In the instant case, there is no iota of doubt that the tampering was obvious. Moreover, the meter was recording zero consumption, therefore, even the extent to which the meter was running slow was not in issue.

28. The instant case is akin to a case of theft of electricity by tapping the main line, by-passing the meter. The formula for making assessment in such cases is governed by sub-section (5) of Section 126 which states that the assessment would be made for the entire period during which such unauthorized use of electricity has taken place and if the said period is unascertainable, such period shall be limited to a period of twelve months immediately preceding the date of inspection.

29. In the instant case, the respondents have made assessment only for 59 days. It has not come on record why the assessment was made for 59 days only, but the period of assessment has also not been disputed by the petitioner, therefore, we find no illegality in the same.

30. As a result of above discussion, we find no merit in the contention that assessment order is liable to be quashed because it is a non speaking one inasmuch as the finding relating to tampering of meter, as noted above, was a foregone conclusion. Moreover, it is not at all a fit case for interference in exercise of power under Article 226 of the Constitution.

31. Before parting, we note one more contention which though taken in the pleadings was not specifically argued. It is that Rs.56 lakhs was not paid towards compounding fee but as electricity charges and is liable to be adjusted against the assessment amount. We find that the receipt issued by the respondents clearly mentions that the aforesaid sum was paid towards compounding fee. The specific case of the respondents in the counter affidavit is that the petitioner, having regard to the fact that all seals were found broken and meter was not recording any consumption of electricity, accepted the offence and itself offered to pay compounding fee so that criminal proceedings are not taken against the petitioner and its directors and officers. Concededly, under the provisions of the Act, in such cases, criminal prosecution is launched against the offender. In the instant case, the petitioner has nowhere pleaded that the licensee instituted any criminal proceeding against the petitioner or its directors. Therefore, we find no reason to disbelieve the case of the respondents that Rs.56 lakhs was deposited by the petitioner on 14/15.06.2019 towards compounding fee to save itself from criminal prosecution. The contention, therefore, has no merit and is rejected.

32. The petition is dismissed.

 
Order Date :- 24.7.2023
 
SL 
 
			
 
(Prashant Kumar, J.)    (Manoj Kumar Gupta, J.)

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