Delegated legislation has come to stay as a necessary component of the modern administrative process. Therefore, the question today is not whether there ought to be delegated legislation or not, but that it should operate under proper controls so that it may be ensured that the power given to theAdministration is exercised properly; the benefits of the institution may be utilised, but its disadvantages minimised. The doctrine of ultra vires envisages that a rule making body must function within the purview of the rule making authority conferred on it by the parent Act. As the body making rules or regulations has no inherent power of its own to make rules, but derives such power only from the statute, it has to necessarily function within the purview of the statute. Delegated legislation should not travel beyond the purview of the parent Act. If it does, it is ultra vires and cannot be given any effect. Ultra vires may arise in several ways; there may be simple excess of power over what is conferred by the parent Act; delegated legislation may be inconsistent with the provisions of the parent Act or statute law or the general law; there may be noncompliance with the procedural requirement as laid down in the parent Act. It is the function of the courts to keep all authorities within the confines of the law by supplying the doctrine of ultra vires. {Para 65}
66. In this context, we may refer with profit to the decision in General Officer Commanding-in-Chief and Another v. Dr. Subhash Chandra Yadav and Another reported in (1988) 2 SCC 351, wherein it has been held as follows:-
“14. ….before a rule can have the effect of a statutory provision,
two conditions must be fulfilled, namely, (1) it must conform to the provisions of the statute under which it is framed; and (2) it must also come within the scope and purview of the rule making power of the authority framing the rule. If either of these two conditions is not fulfilled, the rule so framed would be void…..”
67. In Additional District Magistrate (Rev.) Delhi Admn. v. Siri Ram
reported in (2000) 5 SCC 451, it has been ruled that it is a well recognised principle that the conferment of rule-making power by an Act does not enable the rule-making authority to make a rule which travels beyond the scope of the enabling Act or which is inconsistent therewith or repugnant thereto.
74. In this context, it would be apposite to refer to a passage from State of T.N. and Another v. P. Krishnamurthy and Others reported in (2006) 4 SCC 517 wherein it has been held thus:-
“16. The court considering the validity of a subordinate
legislation, will have to consider the nature, object and scheme of
the enabling Act, and also the area over which power has been
delegated under the Act and then decide whether the subordinate
legislation conforms to the parent statute. Where a rule is directly inconsistent with a mandatory provision of the statute, then, of course, the task of the court is simple and easy. But where the contention is that the inconsistency or non-conformity of the rule is not with reference to any specific provision of the enabling Act, but with the object and scheme of the parent Act, the court should proceed with caution before declaring invalidity.”
76. In Dr. Mahachandra Prasad Singh v. Chairman, Bihar Legislative
Council and Others reported in (2004) 8 SCC 747, this Court explained the
concept of delegated legislation thus:
“13. …..Underlying the concept of delegated legislation is the
basic principle that the legislature delegates because it cannot
directly exert its will in every detail. All it can in practice do is to
lay down the outline. This means that the intention of the
legislature, as indicated in the outline (that is the enabling Act),
must be the prime guide to the meaning of delegated legislation
and the extent of the power to make it. The true extent of the power governs the legal meaning of the delegated legislation. The
delegate is not intended to travel wider than the object of the
legislature. The delegate's function is to serve and promote that
object, while at all times remaining true to it. That is the rule of
primary intention. Power delegated by an enactment does not
enable the authority by regulations to extend the scope or general operation of the enactment but is strictly ancillary. It will authorise the provision of subsidiary means of carrying into effect what is enacted in the statute itself and will cover what is incidental to the execution of its specific provision. But such a power will not support attempts to widen the purposes of the Act, to add new and different means of carrying them out or to depart from or vary its ends. (See Section 59 in chapter “Delegated Legislation” in Francis Bennion's Statutory Interpretation, 3rd Edn.)……."
78. A delegated power to legislate by making rules or regulations ‘for carrying out the purpose of the Act’, is a general delegation without laying down any guidelines; it cannot be exercised so as to bring into existence the substantive rights or obligations or disabilities not contemplated by the provisions of the Act 2003 itself. The Court, considering the validity of a subordinate legislation, will have to consider the nature, object and scheme of the enabling Act, and also the area over which power as has been delegated under the Act and then decide whether the subordinate legislation conforms to the parent statute.
79. It is important to keep in mind that where a rule or regulation is directly inconsistent with a mandatory provision of the statute, then, of course, the task of the Court is simple and easy. But where the contention is that the inconsistency or non-conformity of the rule is not with reference to any specific provision of the enabling Act, but with the object and scheme of the parent Act, the Court should proceed with caution before declaring the same to be invalid.
80. Rules or regulation cannot be made to supplant the provisions of the enabling Act but to supplement it. What is permitted is the delegation of ancillary or subordinating legislative functions, or, what is fictionally called, a power to fill up details.
12. Rules, regulations, schemes, bye-laws, orders made under
statutory powers are all comprised in delegated legislation. The
need for delegated legislation is that statutory rules are framed
with care and minuteness when the statutory authority making the rules is after the coming into force of the Act in a better position to adapt the Act to special circumstances. Delegated legislation permits utilisation of experience and consultation with interests affected by the practical operation of statutes.
15. The words “rules” and “regulations” are used in an Act to limit the power of the statutory authority. The powers of statutory bodies are derived, controlled and restricted by the statutes which create them and the rules and regulations framed thereunder. Any action of such bodies in excess of their power or in violation of the restrictions placed on their powers is ultra vires. The reason is that it goes to the root of the power of such corporations and the declaration of nullity is the only relief that is granted to the aggrieved party.
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS. 9252-9253 OF 20222
KERALA STATE ELECTRICITY BOARD & ORS.
Vs THOMAS JOSEPH ALIAS THOMAS M. J. & ORS.
Author: J.B. PARDIWALA, J.,
Date: December 16, 2022.
1. Leave granted in all the captioned Special Leave Petitions.
2. Since the issues raised in all the captioned petitions are the same and the
challenge is also to the self-same judgment and order passed by the High Court
of Kerala dated 12.04.2017 deciding a batch of writ applications filed by the
respondents herein, those were taken up for hearing analogously and are being
disposed by this common judgment and order.
3. This batch of petitions is at the instance of the Kerala State Electricity
Board (“Board” or “KSEB”) and is directed against the judgment and order
passed by Division Bench of the High Court of Kerala dated 12.04.2017 in Writ
Petition (C) No. 22644 of 2015 and allied petitions by which the High Court
declared that in case of unauthorised use of electricity in a higher tariff the
assessment shall be made at the rate equal to twice the tariff applicable for the
relevant category of services attracting such higher tariff for which electricity
supplied was unauthorisedly used and not the relevant category of services to
which the consumer belongs. The High Court proceeded further to hold that the
exception to the above would be in the case of a consumer who is guilty of
overdrawal of electricity in excess of the sanctioned/connected load in the very
same premises and for the very same purpose which does not involve any
change in the tariff applicable for the relevant category of services, which
consumption has already been metered and paid by the consumer, as such use
being not by any artificial means or through the tampered meter, the assessment
under Section 126(6) of the Electricity Act 2003 (for short, ‘the Act 2003’)
could only be called to twice the fixed charges payable and such consumer
cannot be saddled with the liability to pay twice the energy charges applicable
for the relevant category of services, unless regularisation of such additional
connected load or enhancements of contract demand necessitates upgradation of
the existing distribution system or enhancement of the voltage level of supply.
FACTUAL MATRIX
4. The neat question of law that falls for the consideration of this Court is
whether the consumption of electricity by the respondents (consumers) in
excess of the connected load/contracted load would amount to ‘unauthorised use
of electricity’ under explanation (b) to Section 126(6) of the Act 2003.
2
5. The appellant Board is a company incorporated under the Companies Act,
1956 (for short, ‘the Act 1956’) and is controlled by the Government of Kerala.
It is engaged in the business of generation, transmission and distribution of
electricity in the State of Kerala.
6. In the present litigation, all the respondents are commercial/industrial
consumers having LT (Law Tension) connections. It is not in dispute that at the
time of the inspection undertaken by the officials of the Appellant Board, all the
consumers were found to be drawing electricity in excess of the
connected/contracted load. The issue that arises is whether the respondents
(consumers) can be assessed at the rate equal to twice the tariff applicable as
stipulated in Section 126(6) of the Act 2003?
7. The consumers went before the High Court of Kerala and preferred
respected writ petitions seeking an authoritative pronouncement on the
quantification of penalty under Section 126(6) of the Act 2003. It may not be
out of place to state at this stage that the Division Bench of the High Court took
up the petitions for hearing on the strength of an order of reference made by a
learned Single Judge of the High Court dated 17.08.2015 observing that an
authoritative pronouncement on the quantification of penalty under Section
126(6) of the Act 2003 was necessary as everyday many petitions were being
filed in the High Court with a challenge to the orders imposing penalty
involving ‘excess/additional load’ falling under explanation (b)(ii) to Section
126 of the Act 2003 and ‘unauthorised use of electricity’ falling under
explanation (b)(iv) to Section 126 of the Act 2003, in which cases, the energy
charges are already metered and paid by the consumers. The learned Single
Judge of the High Court while passing an order of reference observed that a
different yardstick may have to be applied to cases falling under the explanation
(b)(i), (iii) and (v) to Section 126 of the Act 2003 as the energy charges are not
metered.
3
8. The Division Bench of the Kerala High Court heard all the consumers
concerned and held as under:
“7.16. Accordingly, in Para. 87 of the judgment in Seetharam Rice
Mill's case (supra), the Three-Judge Bench of the Apex Court
concluded that, 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 Electricity Act, 2003. The
expression ‘unauthorised use of electricity means’ as appearing in
Section 126 of the 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 Act, besides it being in
violation of Regulations 82 and 106 of the Regulations and terms of
the agreement.
8. Following the law laid down by the Apex Court in Seetharam Rice
Mill's case (supra), a Division Bench of this Court in which one
among us (AKN J) was a member, held in M/s. Classic Color
Lab v. Assistant Engineer and others (2014 (3) KLT 57) that, while
interpreting the provisions of Section 126 of the Electricity Act, 2003
this Court would have to apply the principle of purposive
interpretation in preference to textual interpretation, keeping in mind
the purpose to be achieved by that Section, i.e., to put an implied
restriction on unauthorised use of electricity. Therefore, a
construction which will improve the workability of the Statute, to be
more effective and purposive, would have to be preferred to any other
interpretation which may lead to undesirable results.
8.1. In Classic Color Lab's case (supra), in the site inspection
conducted on 3.3.2005, unauthorised use of electricity was detected
by the APTS in the premises in question where the
appellant/consumer was having a Colour Photo Processing Unit and
Lab. The APTS found that the appellant/consumer was misusing
electricity for industrial purpose under LT-IV tariff for commercial
use, attracting higher tariff under LT-VIIA. Accordingly, the
appellant/consumer was issued with a demand notice, demanding
energy charges at a rate equal to one and a half times LT-VIIA tariff
4
for a period of 6 months, less the amount already paid under LT-IV
tariff.
8.2. After referring to Explanation (b) to Section 126 of the Act, this
Court held that, once it is found that the appellant/consumer had
indulged in unauthorised use of electricity, the penal assessment
contemplated under Section 126 of the Act has to follow. As per
Section 126(6), as it stood prior to the Amendment Act 26 of 2007,
such assessment shall be made at a rate equal to one and a half times
the tariff applicable for the relevant category of services specified in
sub-section (5).
8.3. In Classic Color Lab's case (supra), it was contended on behalf
of the appellant/consumer that, assessment under Section 126 of the
Act should be made at a rate equal to one and a half times the tariff
applicable for industrial connection. Per contra, it was contended on
behalf of the Board that, such assessment should be made at a rate
equal to one and a half times the tariff applicable for commercial
connection, for which a higher tariff is applicable.
8.4. After taking note of the law laid down by the Apex Court
in Seetharam Rice Mill's case (supra), this Court held that, once it is
found that the appellant/consumer had indulged in unauthorised use
of electricity supplied under industrial tariff, the entire consumption
in that service connection will have to be assessed under Section
126(6) of the Act and as such, the contention of the
appellant/consumer that the consumption through the light meter
alone should have been charged under LT-VIIA is untenable. This
Court held further that, the only interpretation that can be given to
Section 126(6) of the Act is that, in an assessment under Section 126
for unauthorised use of electricity, assessment shall be made at a rate
equal to one and a half times (two times with effect from 15.6.2007)
the tariff applicable for the relevant category of services attracting
higher tariff for which the electricity supplied was unauthorisedly
used, and not the relevant category of service to which the consumer
belongs. Paras.15 and 16 of the judgment read thus;
“15. On 3.3.2005, the appellant's premises was inspected by the
APTS. As evident from Ext. P1 site mahazar, the APTS found that,
the power supply through the light meter under industrial tariff LTIV
was being used for the neon lights and air conditioners in the
studio, which are under commercial tariff LT-VIIA. The finding in
Ext. P1 site mahazar is to the effect that, the appellant was
5
indulging in unauthorised use of electricity for industrial purpose
under the tariff LT-IV for commercial purpose, attracting a higher
tariff under LT-VIIA. As the appellant used the electricity supplied
for industrial use under LT-IV tariff for commercial use under LTVIIA
tariff it amounts to ‘unauthorised use of electricity’ falling
under Clause (b) to the Explanation to Section 126. For such
unauthorised use the appellant is liable to be assessed under
Section 126(6), as it stood prior to the Amendment Act 26 of 2007,
at a rate equal to one and half times the tariff applicable for the
relevant category of service. On 27.10.2005, the appellant
segregated the commercial load in the industrial connection and
thereafter, the connected load of service connection under
commercial tariff was enhanced from 5KW to 28KW and the
connected load of service connection under industrial tariff was
reduced from 88KW to 44KW. This makes it abundantly clear that,
the appellant was indulging in unauthorised use electricity, thereby
using a major portion of the electricity supplied under industrial
tariff for commercial use. Once it is found that, the appellant had
indulged in unauthorised use of the electricity supplied under
industrial tariff the entire consumption in that service connection
will have to be assessed under Section 126(6). Therefore, the
contention of the appellant that the consumption through the light
meter alone should have been charged under LT-VIIA is absolutely
untenable.
16. The KSEB is supplying electricity for industrial purpose, under
LT-IV tariff, at a subsidised rate, whereas, supply of electricity for
commercial purpose, under LT-VIIA tariff attracts a higher rate. As
evident from the calculations made in Ext.P5 demand, the
commercial tariff under LT-VIIA during the relevant period was Rs.
8.25 per unit. As pointed out by the learned Standing Counsel for
the KSEB, the industrial tariff under LT-IV during the relevant
period was only Rs.4.25 per unit. Therefore, if the appellant is
assessed under Section 126(6) for the unauthorised use of
electricity, taking LT-IV industrial tariff @Rs. 4.25 per unit as the
basis for calculating the rate equal to one and half times the tariff
applicable for the relevant category of service, then the appellant
need pay only Rs. 6.37 per unit for unauthorised use of electricity
for commercial purpose, as against the prevailing rate of Rs.8.25
per unit applicable for the commercial tariff under LT-VIIA. If such
an interpretation is given, it would defeat the very purpose that
Section 126 has to achieve, i.e., to put an implied restriction on
unauthorised consumption of electricity. On the other hand, if the
6
appellant is assessed for the unauthorised use of electricity, taking
LT-VIIA industrial tariff @Rs.8.25 per unit as the basis for
calculating the rate equal to one and half times the tariff
applicable for the relevant category of service, the appellant has to
pay only Rs.12.37 per unit for unauthorised use of electricity for
commercial purpose, as against the prevailing rate of Rs.8.25 per
unit applicable for the commercial tariff under LT-VIIA. Therefore,
the only interpretation that can be given to Section 126(6) of the
Electricity Act, 2003, is that, in an assessment under Section 126
for unauthorised use of electricity, assessment shall be made at a
rate equal to one and half times (two times with effect from
15.6.2007) the tariff applicable for the relevant category of service
attracting higher tariff for which the electricity supplied was
unauthorisedly used and not the relevant category of service to
which the consumer belongs, and we hold so.”
8.5. In Classic Color Lab's case (supra), after taking note of the
arguments advanced on behalf of the appellant/consumer relying on
the judgment of this Court in J.D.T. Islam Orphanage
Committee v. Assistant Engineer, KSEB (2007 (3) KLT 388) and
that of the Calcutta High Court in Sk. Jafar Ali v. West Bengal State
Electricity Distribution Company Limited (AIR 2010 Cal. 84) this
Court observed that, J.D.T. Islam Orphanage Committee's
case (supra) is a case under the Electricity Act, 1910, in which an
orphanage under LT-VI tariff was assessed for unauthorised
extension, by levying LT-VIII tariff applicable to temporary extension.
It was not a case in which electricity supplied under LT-VI tariff was
used by the consumer for any other purpose attracting higher tariff.
That decision was rendered on an entirely different set of facts and it
does not in any way support the case of the appellant/consumer.
8.6. In Sk. Jafar Ali's case (supra) the electricity supplied under
domestic tariff was used for commercial purpose attracting a higher
tariff. The Court found that the meter used for commercial purpose
situated in the consumer's premises has not been tampered with and it
is the meter relating to domestic consumption that has been tampered
with. The learned Judges of the Calcutta High Court, interpreting
Section 126(6) of the Act held that, the phrase ‘applicable for the
relevant category of the services specified in sub-section (5)’
appearing in Section 126 should be reasonably construed as the rate
‘applicable for the relevant category of the services to which the
consumer belongs’. Though, the judgment of the Calcutta High Court
does support the view as propounded by the learned counsel for the
7
appellant/consumer, the Division Bench of this Court disagreed with
that view of the Calcutta High Court, stating that, if the above
interpretation is accepted, a consumer under LT-V Agriculture tariff
at the rate of around ₹ 1/- per unit need pay only ₹ 1.50 per unit for
unauthorised use of electricity for commercial purpose, as against the
prevailing rate of ₹ 8.25 per unit applicable for LT-VIIA commercial
tariff.
9. In Maria Plana Society v. KSEB and others (judgment dated
21.5.2009 in W.P.(C). No. 12068 of 2009) a learned Judge of this
Court held that, as can be seen from Section 126 of the Electricity
Act, 2003 as amended, once the assessing officer reaches the
conclusion that unauthorised use of electricity has taken place, the
assessment shall be made for the entire period and the assessment
shall be at the rate equal to twice the tariff applicable for the relevant
category of services. A reading of Section 45(3)(a) of the Act shows
that, charges for electricity supplied by a distribution licensee include
fixed charges in addition to the charges for the actual electricity
supplied and consumed. In the light of the above statutory provisions,
the irresistible conclusion is that, tariff includes both fixed charges
and energy charges and that, once the assessing officer has reached
the conclusion that unauthorised used of electricity has taken place,
he is bound to make assessment at the rate equal to twice the tariff
applicable, which includes the dues payable towards energy charges
also. In the judgment dated 3.4.2014 in W.A.No.1149 of 2009 arising
out of the judgment in W.P.(C).No.12068 of 2009 the Division Bench,
without interfering with the judgment of the learned Single Judge,
disposed of the Writ Appeal leaving open the question of law as to
whether the penalty under Section 126 of the Act is applicable to
energy charges also in the case of unauthorised additional load.
10. In Seetharam Rice Mill's case (supra) the Apex Court has stated
that, Section 126 of the Act, which embodies a complete process for
assessment, determination and demand has a purpose to achieve, i.e.,
to put an implied restriction on such unauthorised consumption of
electricity. The provisions of Section 126 of the Act are selfexplanatory,
which are intended to cover situations other than the
situations specifically covered under Section 135 of the Act; which
would be applicable to cases where there is no theft of electricity but
the electricity is being consumed in violation of the terms and
conditions of supply leading to malpractices, which may squarely fall
within the expression ‘unauthorised use of electricity’. Section 135 of
the Act deals with an offence of theft of electricity, which squarely
8
falls within the dimensions of criminal jurisprudence, and mens rea is
one of the relevant factors for finding a case of theft. On the contrary,
Section 126 of the Act does not speak of any criminal intendment,
which does not have features or elements which are traceable to the
criminal concept of mens rea. Thus, the expression ‘unauthorised use
of electricity’ under Section 126 of the Act deals with cases of
unauthorised use, even in absence of intention. As such, intention is
not the foundation for invoking powers of the competent authority
and passing of an order of assessment under Section 126 of the Act.
11. As held by the Apex Court in Seetharam Rice Mill's case (supra),
‘unauthorised use of electricity’ means the usage of electricity by the
means and for the reasons stated in Explanation (b)(i) to (v) to
Section 126 of the Act, which would mean what is stated under that
Explanation, as well as such other unauthorised use, which is
squarely in violation of the statutory or contractual provisions in the
Act, Regulations framed thereunder and the terms and conditions of
supply in the form of contract or otherwise. Unauthorised use of
electricity brings the consumer ‘under liability and in blame’ within
the ambit and scope of Section 126 of the Act. The blame is in
relation to excess load while the liability is to pay on a different tariff
for the period prescribed in law and in terms of an order of
assessment passed by the assessing officer.
12. After referring to the expression ‘means’ used in Explanation (b)
to Section 126 of the Act, the Apex Court held that, the primary object
of that expression is intended to explain the term ‘unauthorised use of
electricity’ which, even from the plain reading of the provisions of the
Act or on a common sense view cannot be restricted to the examples
given in the Explanation. Section 126(5) and clause (iv) of
Explanation (b) to Section 126 of the Act were amended by the
Electricity (Amendment) Act, 2007 with a purpose and object of
preventing unauthorised use of electricity not amounting to theft of
electricity within the meaning of Section 135 of the Act, which has to
be given its due meaning, which will fit into the scheme of the Act and
would achieve its object and purpose.
13. Taking note of the fact that electricity supply to a consumer is
restricted and controlled by the terms and conditions of supply,
Regulations and the provisions of the Act, the Apex Court held that,
unauthorised use of electricity cannot be restricted to the stated
clauses under Explanation to Section 126 but has to be given a wider
meaning so as to cover cases of violation of terms and conditions of
supply and the Regulations and provisions of the Act governing such
supply. Therefore, the Apex Court concluded 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 Act,
since 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 even increasing voltage fluctuations.
14. The provisions under Section 126 of the Act, as it stood prior to
the amendment by the Electricity (Amendment) Act, 2007 provided for
assessment of unauthorised use of electricity ‘one and a half times’
the tariff applicable for the relevant category of service, for a period
of three months immediately preceding the date of inspection in the
case of domestic and agricultural services and for a period of six
months immediately preceding the date of inspection for all other
categories of services, unless the onus is rebutted by the person,
occupier or possessor of such premises or place.
15. In tune with the provisions under Section 126 of the Act,
Regulation 51(1) of the Conditions of Supply, 2005 provides for
assessment of unauthorised additional load in terms of Regulation
50(5) and (6), i.e., at a rate equal to one and half times the tariff
applicable for the relevant category of services specified in
Regulation 50(5), for a period of three months immediately
preceding the date of inspection in case of domestic and agricultural
services and for a period of six months immediately preceding the
date of inspection for all other categories of services, unless the onus
is rebutted by the person/occupier or possessor of such premises or
place. Though Regulation 51(1) of the Conditions of Supply, 2005
employs the term ‘penalised’, what is contemplated under the said
Regulation is only assessment of unauthorised use of electricity in
terms of Section 126 of the Act for the period specified in Section
126(5) and at the rate specified in Section 126(5) of the Act. In that
view of the matter, Regulation 51(1) of the Conditions of Supply, 2005
is neither ultra vires the provisions of Section 126 of the Act nor
unenforceable, and we hold so.
16. The provisions under Section 126 of the Act underwent a
substantial change by the Electricity (Amendment) Act, 2007. After
the amendment, if the period during which unauthorised use of
electricity has taken place cannot be ascertained by the assessing
officer, such period shall be limited to a period of ‘twelve months’
immediately preceding the date of inspection and assessment shall be
made at a rate equal to ‘twice’ the tariff applicable for the relevant
category of services specified in sub-section (5). The said amendment
made to Section 126(5) and (6) of the Act, with a purpose and object
of preventing unauthorised use of electricity not amounting to theft of
electricity within the meaning of Section 135 of the Act has to be
given its due meaning, which will fit into the scheme of the Act and
would achieve its object and purpose. In the absence of any challenge
against the said amendment made to Section 126(5) of the Act, the
petitioners/consumers cannot now contend that the period of ‘twelve
months’ prescribed therein is unreasonable, in as much as, for theft of
electricity the period prescribed in Section 135 of the Act is only
‘three months’.
17. When ‘unauthorised use of electricity’ under Section 126 of the
Act deals with cases of unauthorised use even in absence of intention,
it cannot be contended that, in the absence of mens rea, assessment at
the maximum rate, i.e. at the rate equal to twice the tariff applicable
to the relevant category of service is legally impermissible. In all
cases of ‘unauthorised use of electricity’ falling under Explanation
(b) to Section 126 of the Act, the assessing officer is empowered to
assess such unauthorised use of electricity, at the rate prescribed in
Section 126(6) and for the period specified in Section 126(5), as
amended by the Electricity (Amendment) Act, 2007. In that view of
the matter, we find no merit in the contention of the learned counsel
for the petitioners/consumers, relying on the judgment of a Division
Bench of this Court in KSEB and others v. M/s. Alukkas
Jewellery (judgment dated 9.11.2005 in W.A.No.1262 of 2004) that,
in cases where no damage has been caused to the Board's installation
due to overdrawal of electricity, assessment at the rate equal to twice
the tariff applicable to the relevant category of service is
unwarranted.
18. In Seetharam Rice Mill's case (supra) the Three-Judge Bench of
the Apex Court laid down that, consumption of electricity in excess of
the sanctioned/connected load would be squarely covered under
Explanation (b)(iv) to Section 126 of the Act. Once this factor is
established, then the assessing officer has to pass the final order of
assessment in terms of Section 126(6) of the Act, which shall be at a
rate equal to twice the tariff applicable for the relevant category of
services specified in sub-section (5).
11
19. In PTC India Ltd. v. Central Electricity Regulatory
Commission (2010 (4) SCC 603) the Apex Court held that, the term
‘tariff’, though not defined in the Electricity Act, 2003, it includes
within its ambit not only the fixation of rates but also the rules and
regulations relating to it.
20. Section 45(1) of the Act provides that, subject to the provisions of
Section 45, the prices to be charged by a distribution licensee for the
supply of electricity by him in pursuance of Section 43 shall be in
accordance with such tariffs fixed from time to time and conditions of
his licence. Section 45(3) provides further that, the charges for
electricity supplied by a distribution licensee may include a fixed
charge in addition to the charge for the actual electricity supplied;
and a rent or other charges in respect of any electric meter or
electrical plant provided by the distribution licensee.
21. The provisions under Section 45(3) of the Act makes it explicitly
clear that, the term ‘tariff’ in Section 45(1), which is the price to be
charged by the distribution licensee for the supply of electricity,
includes the fixed charge in addition to the charge for the actual
electricity supplied. If that be so, it can be safely concluded that, the
term ‘tariff’ in Section 126(6) of the Act includes both fixed charges
and charges for the electricity supplied, which has to be assessed in
the case of a consumer indulged in unauthorised use of electricity, at
a rate equal to twice the tariff applicable for the relevant category of
services specified in sub-section (5). Therefore, once the assessing
officer has reached the conclusion that the consumer has indulged in
unauthorised use of electricity, he is bound to make assessment of
such consumer at the rate equal to twice the tariff applicable, which
includes both fixed charges and energy charges.
22. Relying on the decisions in JDT Islam Orphanage
Committee v. Assistant Engineer, KSEB (2007 (3) KLT
388), George Joseph and another v. KSEB and others (2008 (4)
KLT 610), etc. the petitioners/consumers contended that, when the
energy consumed through meter having been billed and payment
having been made, assessment of penal charges for such consumption
of energy is legally impermissible and the only liability that can be
fastened upon the consumers found indulging in unauthorised use of
electricity is penal charges on fixed charges. The said contention can
only be repelled in view of our finding made hereinbefore, with
reference to the provisions under Sections 45 and 126 of the Act and
12
the law laid down by the Apex Court in Seetharam Rice Mill's
case (supra) and that laid down by this Court in Classic Color Lab's
case (supra) that, the assessment of a consumer Section 126(6) of the
Act, at the rate equal to twice the tariff applicable, includes both fixed
charges and energy charges.
23. In Board Order dated 7.2.2008, which was made applicable with
effect from 15.6.2007, it was ordered that, the field officers shall
strictly follow the provisions of Section 126(5) and (6) of the Act, as
amended by the Electricity (Amendment) Act, 2007, i.e., two times the
respective tariff for the entire period, and in case the said period
cannot be ascertained for a period of twelve months, for assessing
penalty in the case of misuse of energy including unauthorised
additional load, unauthorised extension and meter tampering cases
detected. It was also made clear that, the penalty rate shall be
applicable to both fixed and energy charges for the unauthorised use.
Penalty charges for current charges shall be levied for proportionate
energy charge and normal current charge collected shall be deducted.
24. Though Board Order dated 7.2.2008 employs the term ‘penalty’,
what is contemplated under the said order is only assessment of
unauthorised use of electricity in terms of Section 126 of the Act, as
amended by the Electricity (Amendment) Act, 2007, for the period
specified in Section 126(5) and at the rate specified in Section 126(6)
of the Act. In that view of the matter, Board Order dated 7.2.2008 is
neither ultra vires the provisions of Section 126 of the Act nor
unenforceable, and we hold so.
25. In Seetharam Rice Mill's case (supra) the Apex Court was
dealing with a case in which the tariff applicable to the consumer was
changed from ‘medium industry’ to tariff applicable for ‘large
industry’. Similarly, in Classic Color Lab's case (supra) this Court
was dealing with a case in which electricity supplied at a subsidised
rate for industrial purpose under LT-IV tariff, was unauthorisedly
used for commercial purpose, which attracts a higher rate under LTVIIA
tariff. In the said decision, while upholding the demand for fixed
charges and energy charges made under Section 126(6) of the Act,
this Court held that, in an assessment under Section 126 for
unauthorised use of electricity, assessment shall be made at a rate
equal to one and a half times (two times with effect from 15.6.2007)
the tariff applicable for the relevant category of services attracting
higher tariff for which the electricity supplied was unauthorisedly
13
used, and not the relevant category of service to which the consumer
belongs.
26. As far as domestic consumers are concerned, the fixed charge for
single phase connection is ₹20/- per month and it is ₹ 60/- per month
for three phase connection, irrespective of the connected load.
Therefore, a domestic consumer is paying fixed charge at the
specified rate irrespective of the connected load and the energy
charge for the actual consumption at the rates specified in the tariff
order. Even if there is excess connected load in the premises of a
domestic consumer, the electricity charges realisable from the
consumer do not change and as such, additional connected load
would not result in any financial loss to the licensee as per the terms
and conditions of the tariff orders in force. That may be the reason
which persuaded the Electricity Regulatory Commission not to
penalise domestic consumers for additional loads in their premises,
by incorporating Regulation 153(15) of the Supply Code, 2014, which
provides that, unauthorised additional load in the same premises and
under same tariff shall not be reckoned as unauthorised use of
electricity. Such domestic consumers will have the option either to
regularise such additional load or to get such additional load
removed at the discretion of the licensee. If the consumer fails to
remove the additional load as directed by the licensee, the supply to
the premises can be disconnected by the licensee.
27. Regulation 153(15) of the Supply Code, 2014 has undergone
amendment by the Kerala Electricity Supply (Amendment) Code
2016, which came into force on 4.2.2016, by adding the words ‘except
in the case of consumers billed on the basis of connected load’ at the
end of that sub-regulation. Such an amendment was made when it
was found that, the application of Regulation 153(15) to the
consumers who are charged on connected load basis, would result in
the licensees incurring financial loss in as much as, for the additional
connected load the licensees are entitled for charges demanded on
connected load basis.
28. In cases falling under Explanation (b) to Section 126 of the Act,
the assessing officer is empowered to assess unauthorised use of
electricity at the rate prescribed in Section 126(6) and for the period
specified in Section 126(5), as amended by the Electricity
(Amendment) Act, 2007 for both fixed charges and energy charges.
Penalty charges for current charges shall be levied for proportionate
energy charge and normal current charge collected shall be deducted.
14
In case of unauthorised use of electricity in a higher tariff, such
assessment shall be made at the rate equal to twice the tariff
applicable for the relevant category of services attracting such higher
tariff for which electricity supply was unauthorisedly used and not the
relevant category of service to which the consumer belongs.
29. A different yardstick has to be applied in cases of consumption of
electricity in excess of the sanctioned/connected load in the very same
premises and for the very same purpose, which do not involve any
change in tariff applicable for the relevant category of services,
which consumption has already been metered and paid by the
consumer, since such usage being not by any artificial means or
through a tampered meter. This is for the reason that, in such cases
request made by the consumer for regularisation of unauthorised
connected load or enhancement of contract demand will be acceded
to by the Board, as a matter of course, once the consumer fulfills the
statutory requirements, unless such regularisation of connected load
or enhancement of contract demand necessitates upgradation of the
existing distribution system or enhancement of voltage level of supply.
30. As held by the Apex Court in Seetharam Mill's case (supra), in
the case of unauthorised use of electricity, the blame on the consumer
is in relation to excess load while the liability is to pay on a different
tariff for the period prescribed in law and in terms of the order of
assessment passed by the assessing officer under the provisions of
Section 126 of the Act. In that view of the matter, in the case of a
consumer, who is blamed with overdrawal of electricity in excess of
sanctioned/connected load in the very same premises and for the very
same purpose, which do not involve any change in tariff applicable
for the relevant category of services, which consumption has already
been metered and paid by the consumer, since such usage being not
by any artificial means or through a tampered meter, assessment
under Section 126(6) of the Act can only be equal to twice the fixed
charges payable and such consumer cannot be saddled with the
liability to pay twice the energy charges applicable for the relevant
category of services, unless regularisation of such additional
connected load or enhancement of contract demand necessitate
upgradation of the existing distribution system or enhancement of
voltage level of supply.”
(Emphasis supplied)
15
9. After holding as aforesaid, the High Court summarised its final
conclusion, as under:
“31. For the reasons stated hereinbefore, we hold as follows;
(i) The presence of the assessing officer at the time of inspection and
detection of unauthorised use of electricity in the premises of a
consumer is not a mandatory requirement for initiating assessment
proceedings under Section 126(1) of the Act.
(ii) The expression ‘unauthorised use of electricity’ under Section 126
of the Act deals with cases of unauthorised use even in the absence of
intention. Hence, the intention of the consumer is not the foundation
for invoking powers of the competent authority and passing of an
order of assessment under Section 126 of the Act.
(iii) Whenever a 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/connected load, such consumer
would be in blame and under liability to pay at the rate equal to twice
the tariff applicable for the relevant category of services in terms of
Section 126 of the Act.
(iv) The term ‘tariff’ in Section 126(6) of the Act includes both fixed
charges and charges for the electricity supplied, which has to be
assessed in the case of a consumer indulged in unauthorised use of
electricity, at a rate equal to twice the tariff applicable for the
relevant category of services specified in sub-section (5).
(v) In case of unauthorised use of electricity in a higher tariff, such
assessment shall be made at the rate equal to twice the tariff
applicable for the relevant category of services attracting such higher
tariff for which electricity supplied was unauthorisedly used and not
the relevant category of service to which the consumer belongs.
(vi) However, in the case of a consumer, who is blamed with
overdrawal of electricity in excess of sanctioned/connected load in
the very same premises and for the very same purpose, which do not
involve any change in tariff applicable for the relevant category of
services, which consumption has already been metered and paid by
the consumer, since such usage being not by any artificial means or
through a tampered meter, assessment under Section 126(6) of the Act
can only be equal to twice the fixed charges payable and such
16
consumer cannot be saddled with the liability to pay twice the energy
charges applicable for the relevant category of services, unless
regularisation of such additional connected load or enhancement of
contract demand necessitates upgradation of the existing distribution
system or enhancement of voltage level of supply.
(vii) In all other cases falling under Explanation (b) to Section 126 of
the Act, the assessing officer is empowered to assess unauthorised use
of electricity at the rate prescribed in Section 126(6) and for the
period specified in Section 126(5), as amended by the Electricity
(Amendment) Act, 2007 for both fixed charges and energy charges.
Penalty charges for current charges shall be levied for proportionate
energy charge and normal current charge collected shall be deducted.
(viii) Though Regulation 51(1) of the Conditions of Supply, 2005
employs the term ‘penalised’, what is contemplated under the said
Regulation is only assessment of unauthorised use of electricity in
terms of Section 126 of the Act for the period specified in Section
126(5) and at the rate specified in Section 126(6) of the Act. As such,
Regulation 51(1) of the Conditions of Supply, 2005 is neither ultra
vires the provisions of Section 126 of the Act nor unenforceable.
(ix) What is contemplated under Board Order dated 7.2.2008 is only
assessment of unauthorised use of electricity in terms of Section 126
of the Act, as amended by the Electricity (Amendment) Act, 2007, for
the period specified in Section 126(5) and at the rate specified in
Section 126(5) of the Act. As such, the said Board Order is neither
ultra vires the provisions of Section 126 of the Act nor
unenforceable.”
(Emphasis supplied)
10. Thus, the High Court, as evident from para 31(vi) as above, took the view
that ‘unauthorised additional load’ in the same premises and under the same
tariff shall not be reckoned as ‘unauthorised use of electricity’ except in cases of
consumers billed on the basis of the connected load. The High Court took such
view, relying upon Regulation 153(15) of the Kerala Electricity Supply Code,
2014 (for short, ‘the Code 2014’).
11. The appellant Board being dissatisfied with the judgment and order
passed by the High Court, preferred review applications in the individual writ
17
petitions filed by the consumers. The review applications also came to be
rejected, wherein, the High Court held as under:
“10. What follows from the above is that, in order to come within
the purview of clause (vi) of Para.31 of the judgment, a consumer
who is blamed with overdrawal of electricity in excess of
sanctioned/connected load must satisfy the following conditions;
(i) Such overdrawal of electricity should be in the very same
premises and for the very same purpose, which do not involve any
change in tariff applicable for the relevant category of services;
(ii) Such consumption must have already been metered and paid by
the consumer, since such usage being not by any artificial means or
through a tampered meter; and
(iii) Regularisation of such additional connected load or
enhancement of contract demand should not necessitate
upgradation of the existing distribution system or enhancement of
voltage level of supply.”
12. Being dissatisfied with the judgment and order passed by the High Court
in the main matter as well as the order passed in the review applications, the
appellant Board has come up with the present appeals.
SUBMISSIONS ON BEHALF OF THE APPELLANT BOARD
13. Mr. R. Basant, the learned Senior Counsel appearing for the appellant
Board vehemently submitted that the High Court committed a serious error in
deciding the issue in question by relying upon Regulation 153(15) of the Code
2014. He pointed out that the State Regulations have been enacted in exercise of
the powers conferred under Section 50 read with Section 181 of the Act 2003.
The principal argument of Mr. Basant is that while framing Regulation 153(15),
the Kerala State Electricity Regulatory Commission (“Commission”) could be
said to have transgressed into the realm of Section 126 of the Act 2003 which is
not provided for either under Section 50 or Section 181. In other words, the
18
argument of the learned Senior Counsel is that if Section 50 and Section 181
resply, of the Act are read closely, then, the two Sections do not provide any
power for such clarification/explanation. The learned Senior Counsel invited the
attention of this Court to Regulation 153(15) which provides that an
unauthorised additional load in the same premises and under the same tariff
shall not be reckoned as ‘unauthorised use of electricity’ except in cases of
consumers billed on the basis of connected load.
14. The learned Senior Counsel further submitted that the regulation making
power cannot be used to bring into existence substantive rights which are not
contemplated under the Act 2003.
15. The learned Senior Counsel invited the attention of this Court, to a three-
Judge Bench decision of this Court in the case of Executive Engineer,
Southern Electricity Supply Company of Orissa Limited (Southco) and
Another v. Sri Seetaram Rice Mill reported (2012) 2 SCC 108, wherein, this
Court in clear terms has said that cases of excess load consumption other than
the connected load would fall within the Explanation (b)(iv) to Section 126 Act
2003.
16. The learned Senior Counsel would argue that this Court in Seetaram
Rice Mill (supra) has said so many words that Section 126 of the Act 2003 is a
complete code in itself. Consumption in excess of sanctioned/connected load is
unauthorised use under Section 126 of the Act 2003. Such an act of
consumption in excess of the sanctioned/connected load is prejudicial to the
public at large, as the same would affect the entire system.
17. The learned Senior Counsel further submitted that the finding of the High
Court in para 31(vi) of the impugned judgment is erroneous and if upheld may
result in the entire collapse of the grid. He would argue that the appellant Board
needs to plan its affairs and ensure that it is able to supply the required
electricity to its consumers. The connected load/contracted load ensures that the
Board knows how much electricity is to be supplied to each consumer.
19
18. The learned senior counsel further submitted that the overdrawal of
excess electricity from the grid would result into a penalty to the Board, while
purchasing electricity from the Central grid. The connected load is calculated
based on the number of devices connected by the consumer at its premises. The
same would become evident during inspection. Therefore, if the consumer
agrees for a connected load of 10 KW and thereafter, connects many more
devices resulting in the connected load, becoming 20 KW, the same would
amount to ‘unauthorised use of electricity’ under Section 126(6) of the Act 2003
in accordance with the dictum laid by this Court in Seetaram Rice Mill (supra).
19. The learned Senior Counsel made us understand something important.
According to Mr. Basant, the finding of the High Court that it becomes
unauthorised use only if the said usage leads to necessitation of upgradation of
the system, could be termed as perverse as the same will end up penalising only
the last consumer responsible for causing the disruption of distribution system
and not the collective lot of consumers who are also unauthorised users. The
learned Senior Counsel submitted that the collapse of the system would be as a
result of many consumers drawing electricity in excess of the connected load/
contracted load and therefore, to penalise only the last consumer/customer for
the collapse of the system would be unworkable and would not act as a deterrent
for the consumers from drawing excess electricity.
20. In such circumstances referred to above, Mr. Basant, the learned Senior
Counsel prays that there being merit in his appeals, those may be allowed and
the impugned judgment and order passed by the High Court to the extent, it
relies upon Regulation 153(15) of the Code 2014 may be set aside.
SUBMISSIONS ON BEHALF OF THE RESPONDENT (CONSUMERS)
21. The submissions canvassed on behalf of the respondent (consumers) may
be summarised, as under:-
20
1. The learned counsel appearing for the respondent (consumers)
vehemently submitted that no error not to speak of any error of law could be
said to have been committed by the High Court in taking the view that if the
overdrawal of electricity is detected in the same premises and for the very
same purpose, then, the same would not amount to unauthorised use of
electricity within the meaning of Section 126 of the Act 2003.
2. Moreover, the Regulation 153 of the 2014 Code deals with estimation and
regularisation of unauthorised additional load. The regulation defines the
threshold for the additional loads to be considered as unauthorised additional
load. It is also provided that the licensee may, suo motu or on an application
from the consumer, regularise such additional load mentioned in clause (a)
and clause (b) of Regulation 153(4).
3. Regulation 153(15) provides further that the unauthorised additional load
in the same premises and under the same tariff shall not be reckoned as
unauthorised use of electricity, except in the case of consumers billed on the
basis of connected load. Regulation 153(15) of the Code 2014 has undergone
amendment by way of the Kerala Electricity Supply (Amendment) Code
2016, which came into force on 04.02.2016, by adding the words ‘except in
the case of consumers billed on the basis of connected load’ at the end of that
sub-regulation. Such an amendment was made when it was found that, the
application of Regulation 153(15) to the consumers who are charged on
connected load basis, would result in the licensees incurring financial loss in
as much as, for the additional connected load the licensees are entitled for
charges demanded on connected load basis. Even this amendment as on date
is sought to be rendered nugatory by the appellant Board with its plea to
strike down the Regulation (s) as ultra vires.
21
4. To understand the letter and spirit of the impugned judgment it is
imperative to note that at paragraph 26 of the impugned judgement, the High
Court has observed that as far as domestic consumers are concerned, the
fixed charges are imposed at a specified rate irrespective of the connected
load or the energy charges for actual consumption. It is stated by the Court
that even if there is excess connected load in the premises of a domestic
consumer, the electricity charges realisable from the consumer do not change
and as such, additional connected load would not result in any financial loss
to the licensee. Essentially the domestic consumer would have to pay for the
actual energy consumed. Notably, there is no variation in the fixed charges.
5. The Regulations in the Code 2014 seek to contextualise the Act 2003 to
the prevalent local conditions and a conjoint (purposive) reading of the Act
and the Code is paramount. Any other reading (including reading as ultra
vires) renders the Code 2014 an empty vessel. The aforesaid reasoning of the
High Court does not supplant the provisions of either Section 126 or Section
135, but only seeks to supplement the same, by reading (in conjunction) the
relevant Regulations of the Code 2014.
6. Regulation 2(24) of the Code 2014 states that “connected load”
expressed in KW or KVA means aggregate of the rated capacities of all
energy consuming devices or apparatus which can be simultaneously used,
excluding the standby load if any, in the premises of the consumer, which are
connected to the service line of the distribution licensee. Regulation 2(78)
defines 'unauthorised connected load' to mean the connected load in excess
of the contract connected load and Regulation 2(79) defines 'unauthorised
use of electricity' to mean the usage of electricity as explained in Section
126 of the 2003 Act. As shall be shown Regulation 2(78) is connected load
which is in excess of [Regulation 2 (24)]. And Regulation 2(78) is
22
unauthorised use of electricity. The distinction is crucial and has been
analysed by the High Court at Para 5.18 of the impugned judgment.
7. The High Court was well within its scope when it rendered the
Regulations intra vires. This Court has emphasised that the Legislature and its
delegate are the sole repositories of the power to take decisions. Further, there
is no scope of interference by the Court unless the particular provision
impugned suffers from (i) any legal infirmity, or (ii) being wholly beyond the
scope of regulation-making power, or (iii) being inconsistent with any of the
provisions of the parent enactment. The impugned judgment of the High
Court correctly read and applied the law in the light of the settled judicial
position.
8. The stance of the appellant Board that the regularisation is ultra vires, is
against its very own Full Board decision. A Full Board of the KSEB, as early
as on 27.07.2002 decided to modify Regulation 42(d) of the Conditions of
Supply, 1990 for relaxation of penalty in the case of unauthorised additional
loads in the following manner:
(i)[...]
(ii)In the case of LT customers other than domestic consumers, the penalty for
unauthorised additional load shall be levied at the rate of twice the fixed
charges per KW of additional load per month or part thereof till the said
unauthorised additional load is removed or regularised as per rules.
(iii) In the case of HT and EHT consumers the penalty for unauthorised
additional load shall be levied at the rate of twice the demand charges per
KVA for the additional load till the said unauthorised additional load is
removed or regularised as per rules.
9. In such circumstances referred to above, learned counsel appearing for
the respondent (consumers) prayed that there being no merit in the appeals
filed by the appellant Board, those may be dismissed.
23
SUBMISSIONS ON BEHALF OF THE KERALA STATE ELECTRICITY
REGULATORY COMMISSION (RESPONDENT NO. 3)
22. It is submitted on behalf of the Commission i.e., respondent No. 3 in SLP
(C) No. 7886-7887 of 2018, that there are two kinds of billing contemplated:
(a) Connected load based billing – in case of connected load based
billing, if additional/excess load is connected, then the same would
be treated as unauthorised use. The same is indicated in Regulation
153(15) itself, as amended on 11.01.2016.
(b) Contract demand based billing – It is submitted however that in
case of contract demand based billing, connecting additional load
will not amount to “unauthorised use” under Section 126 of the
Act.
23. It is further submitted that contract demand is the maximum demand that
is agreed to be supplied by the licensee to the consumer. The same is indicative
of the maximum load that can be drawn at the premises of the consumer at any
given point of time. It is possible that the maximum demand of a consumer
may be higher than the contract demand at any given point of time. However, as
per Regulation 153(15), such excess demand will not be construed as
unauthorised use of electricity. Rather, Regulation 101 of the Code 2014
provides the consequences where the maximum demand exceeds the contract
demand. The said regulation stipulates that if the maximum demand exceeds the
contract demand in 3 billing periods during the previous financial year, the
distribution licensee shall issue a notice of enhancement of contract demand to
such consumer. Furthermore, as already indicated, the present Tariff Order
provides that where maximum demand exceeds contract demand, the
Fixed/Demand Charges will be collected at 150% of the applicable demand
charges for such excess demand. Insofar as Energy Charges are concerned, the
consumer would be billed as per actual usage. Furthermore, as per Regulation
24
153(12) of the Code 2014 where the infrastructure does not allow for the excess
load of a consumer to be regularised or the contract demand to be enhanced,
such consumers are required to disconnect such load or restrict their demand to
the contract limit, failing which supply of electricity can be disconnected.
Therefore, the Code 2014 and the Tariff Order adequately address concerns of
both (i) revenue loss; and (ii) infrastructural constraints in cases of excess load /
excess demand. The exception is where such excess load/ excess demand results
in change of purpose or change of tariff, in which case, it would fall within the
ambit of Section 126 of the Act 2003. It is relevant to point out that there is no
challenge to the vires of any of the provisions of the Code 2014 in the present
proceedings.
24. It is further submitted that the observations of this Court in Seetaram Rice
Mill (supra) were made specifically in the context of the Orissa Electricity
Regulatory Commission Distribution (Conditions of Supply) Regulations, 2004
and the Standard Agreement Form for Supply of Electrical Energy by the Grid
Corporation of Orissa Ltd. The observations made in the said judgement cannot
be uniformly applied to the present matter. The Explanation to Section 126 of
the Act 2003 is reproduced as below (emphasis supplied):
“Explanation.- For the purposes of this section,-
(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
authority 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 authorized.”
25. It is evident that insofar as Kerala is concerned, the Code 2014
specifically provides a certain leeway for excess load / excess demand, within
the same premises and under the same tariff, subject to the rigours of Regulation
25
101 and Regulation 153, and penal demand charges at 1.5 times the regular rates
in respect of the excess demand under the relevant Tariff Order. It is submitted
that the supply regulations applicable to the State of Orissa may not be applied
in a straitjacketed manner to Kerala. Each State has its own generation, supply
and distribution capacities and other relevant considerations before the Supply
Code regulations are framed by the respective State Commissions.
26. In such circumstances referred to above, the learned counsel appearing
for the Commission prayed that there being no merit in the appeals filed by the
Board, those may be dismissed.
ANALYSIS
27. Having heard the learned counsel for the parties and having gone through
the materials on record, the only question that falls for our consideration is
whether the High Court committed any error in passing the impugned judgment
and order more particularly, the finding recorded in para 31(vi) of the impugned
judgment?
28. It is necessary for us to clarify at this stage itself that the appeals have
been filed by the appellant Board, essentially, being aggrieved and dissatisfied
with the finding recorded by the High Court in para 31(vi) of the impugned
judgment. The High Court, over and above para 31(vi), has dealt with many
other issues arising between the parties. There is no cross appeal at the instance
of any of the consumers. We propose to look into and decide only the legality
and validity of the finding recorded by the High Court so far as para 31(vi) is
concerned. We shall not go into any other issue decided by the High Court
other than para 31(vi).
26
29. Before adverting to the rival submissions canvassed on either side, we
must look into the scheme and various relevant provisions of the Act 2003 as
well as the Code 2014 framed by the Commission in exercise of the powers
conferred by the Section 50 read with Section 181 of the Act 2003.
ELECTRICITY ACT, 2003
30. Before the enactment of the Act 2003, the Indian electricity sector was
governed by the Indian Electricity Act, 1910, the Electricity (Supply) Act, 1948
and the Electricity Regulatory Commissions Act, 1998. The Indian Electricity
Act, 1910 created a basic framework for the electricity supply industry in India.
The Electricity (Supply) Act, 1948 mandated the creation of State Electricity
Boards, which had the responsibility of facilitating supply of electricity within
states. However, the State Electricity Boards were unable to use their power to
fix tariffs judiciously. It was noted that the State Governments were in practice
fixing tariffs. To distance the State Governments from the exercise of tariff
fixation, the Electricity Regulatory Commissions Act, 1998 was enacted.
31. Parliament enacted the Act 2003 to consolidate the laws relating to
generation, transmission, distribution, trading and use of electricity; to develop
the electricity industry; and to promote competition. The Act 2003 was enacted
with the objective of encouraging the participation of the private sector in the
generation, transmission, and distribution of electricity, and to harmonise and
consolidate the provisions into a self-contained code. The Statement of Objects
of Reasons for the Act 2003 reads as follows :
“With the policy of encouraging private sector participation in
generation, transmission and distribution and the objectives of
distancing the regulatory responsibilities from the Government to
the Regulatory Commissions, the need for harmonising and
rationalising the provisions of the Electricity Act 1910, the
Electricity (Supply) Act 1948 and the Electricity Regulatory
27
Commissions Act 1948 in a new self-contained comprehensive
legislation arose.”
32. The long title of the Act 2003 indicates that its object is to consolidate the
laws relating to generation, transmission, distribution, trading, and use of
electricity and to take measures conducive to the development of the electricity
industry; promote competition and protect the interests of consumers; ensure the
supply of electricity to all areas; rationalise electricity tariffs and ensure
transparent policies. The Statement of Objects and Reasons of the Act 2003
states that “it gives the States enough flexibility to develop their power sector in
the manner they consider appropriate.”
33. Section 3 of the Act 2003 provides for the formulation of a National
Electricity Policy and National Tariff Policy:
“3. National Electricity Policy and Plan.─(1) The Central
Government shall, from time to time, prepare the National
Electricity Policy and tariff policy, in consultation with the State
Governments and the Authority for development of the power
system based on optimal utilisation of resources such as coal,
natural gas, nuclear substances or materials, hydro and renewable
sources of energy.
(2) The Central Government shall publish National Electricity
Policy and tariff policy from time to time.
(3) The Central Government may, from time to time, in
consultation with the State Governments and the Authority, review
or revise, the National Electricity Policy and tariff policy referred
to in sub-section (1) .
(4) The Authority shall prepare a National Electricity Plan in
accordance with the National Electricity Policy and notify such
plan once in five years:
Provided that the Authority while preparing the National
Electricity Plan shall publish the draft National Electricity Plan
and invite suggestions and objections thereon from licensees,
generating companies and the public within such time as may be
prescribed:
Provided further that the Authority shall –
28
(a) notify the plan after obtaining the approval of the Central
Government;
(b) revise the plan incorporating therein the directions, if any,
given by the Central Government while granting approval under
clause (a).
(5) The Authority may review or revise the National Electricity
Plan in accordance with the National Electricity Policy.”
In terms of the above provision, the Union Government has to formulate the
National Electricity Policy and National Tariff Policy, in consultation with the
State Governments and the Central Electricity Authority.
34. Part III of the Act 2003 deals with the generation of the electricity; Part
IV deals with licensing; Part V with transmission; Part VI with distribution and
Part VII with tariff.
35. Section 38 of the Act 2003 provides that the Central Government may
notify any government company as the Central Transmission Utility (CTU). The
CTU is statutorily empowered to undertake the transmission of electricity
through inter-State transmission systems. The CTU has to also discharge
functions of planning and coordination relating to inter-State transmission
systems. For this purpose, the CTU is required to coordinate with the State
Transmission Utility (STU), Central and State Governments, generating
companies, authorities and licensees.
36. Section 39 of the Act 2003 stipulates that the State Government may
notify the Board or any government company as the STU. The STU shall
undertake transmission of electricity through the intra-State transmission system
and discharge functions relating to the planning and coordination of the intra-
State transmission system. While discharging its functions, the STU is required
to reflect the planning initiatives of intra-State transmission system by
publishing a five-year plan periodically.
29
37. Sections 76 and 82 of the Act 2003 constitute the Central Electricity
Regulatory Commission and State Electricity Regulatory Commission
respectively. The Central and State Electricity Regulatory Commissions shall
among other functions, determine and regulate the tariff for inter-State
transmission of electricity and intra-State transmission of electricity
respectively. Sections 79(3) & (4) and 86(3) & (4) of the Act 2003 stipulate that
the Central and State Commissions shall while discharging their functions
ensure transparency, and ‘shall be guided’ by the National Electricity Policy,
National Electricity Plan and Tariff Policy. The Central and State Commissions
also discharge advisory functions, whereby they advise the Central Government
and State Government respectively on, inter alia, promotion of competition in
activities related to the electricity industry and in matters concerning generation,
transmission, and distribution of electricity. Section 25 states that the Central
Government may make a region-wise demarcation of the country for the
purpose of integrated transmission of electricity to facilitate inter-State, regional
and inter-regional transmission of electricity. Section 30 provides that the State
Commission shall facilitate and promote transmission, wheeling and interconnection
arrangements within its territorial jurisdiction for the transmission
and supply of electricity.
38. Section 14 of the Act 2003 envisages that the Appropriate Commission,
defined in Section 2(4) to mean the Central or as the case may be the State
Regulatory Commission, may grant a licence to any person:
(a) to transmit electricity as a transmission licensee; or
(b) to distribute electricity as a distribution licensee; or
(c) to undertake trading in electricity as an electricity trader, in any area as
may be specified in the licence.
30
39. Section 15 of the Act 2003 prescribes the procedure to be followed for the
grant of licence. The application for a licence under Section 14 has to be filed in
such a form and in such manner as may be prescribed by the Appropriate
Commission. The person who has applied for the grant of a licence must publish
a notice of the application. The licence shall not be granted by the Appropriate
Commission until the objections, if any received, are considered by the
Appropriate Commission. The application shall also be forwarded to the CTU
or the STU, as the case may be. The CTU or STU must send its
recommendations to the Appropriate Commission. The recommendations of the
CTU or the STU are however, not binding on the Appropriate Commission. The
Appropriate Commission is also required to publish a notice of the application if
it proposes to issue the licence. The Appropriate Commission has to consider
the objections and the recommendations of the Transmission Utility before
granting the licence.
40. In enacting the above provisions of law, the Parliament has made a clear
demarcation between intra-state and inter-state transmission of electricity. While
the CTU, Central Government and the Central Regulatory Commission are
responsible for the facilitation of inter-state transmission of electricity, the State
Commission and the STU have been granted full autonomy with respect to
intrastate transmission of electricity.
41. Part VII of the Act 2003 deals with Tariff. Part VII comprises of Section
61(Tariff regulations), Section 62 (Determination of tariff), Section 63
(Determination of tariff by bidding process), Section 64 (Procedure for tariff
order), Section 65 (Provision of subsidy by the State Government) and Section
66 (Development of market). In terms of Section 61, the Appropriate
Commission is entrusted, subject to the provisions of the Act 2003, to specify
the terms and conditions for the determination of tariff. While specifying the
terms and conditions, the Appropriate Commission shall be guided by the
31
requirements specified in clauses (a) to (i). Amongst them, in clause (i) is the
National Electricity Policy and tariff policy, while clause (c) emphasises the
need to encourage competition, efficiency, economical use of the resources,
good performance and optimum investments. Section 62(1) empowers the
Appropriate Commission to determine the tariff “in accordance with the
provisions of this Act” for :
a. supply of electricity by a generating company to a distribution licensee;
b. transmission of electricity;
c. wheeling of electricity;
d. retail sale of electricity.
Section 63 provides that notwithstanding anything contained in Section 62,
the Appropriate Commission shall adopt the tariff determined through the
bidding process if the tariff has been determined through a transparent process
in accordance with the guidelines issued by the Central Government.
42. However, what is relevant for our purpose is Section 50, Section 126 and
Section 181 resply of the Act 2003. Section 50 is in regard to the Electricity
Supply Code. The same reads thus:
“50. The Electricity Supply Code.–The State Commission shall
specify an Electricity Supply Code to provide for recovery of
electricity charges, intervals for billing of electricity charges,
disconnection of supply of electricity for non-payment thereof,
restoration of supply of electricity, measures for preventing
tampering, distress or damage to electrical plant or electrical line
or meter, entry of distribution licensee or any person acting on his
behalf for disconnecting supply and removing the meter, entry for
replacing, altering or maintaining electric lines or electrical plants
or meter and such other matters.”
32
43. Section 126 falls in Part XII of the Act 2003. Part XII is in regard to
investigation and enforcement. Section 126 provides for assessment. Section
126 reads thus:
“126. Assessment.─(1) If on an inspection of any place or
premises or after inspection of the equipments, gadgets, machines,
devices found connected or used, or after inspection of records
maintained by any person, the assessing officer comes to the
conclusion that such person is indulging in unauthorised use of
electricity, he shall provisionally assess to the best of his judgment
the electricity charges payable by such person or by any other
person benefited by such use.
(2) The order of provisional assessment shall be served upon the
person in occupation or possession or in charge of the place or
premises in such manner as may be prescribed.
(3) The person, on whom an order has been served under subsection
(2), shall be entitled to file objections, if any, against the
provisional assessment before the assessing officer, who shall, after
affording a reasonable opportunity of hearing to such person, pass
a final order of assessment within thirty days from the date of
service of such order of provisional assessment, of the electricity
charges payable by such person.
(4) Any person served with the order of provisional assessment
may, accept such assessment and deposit the assessed amount with
the licensee within seven days of service of such provisional
assessment order upon him.
(5) If the assessing officer reaches to the conclusion that
unauthorised use of electricity has taken place, the assessment
shall be made for the entire period during which such unauthorised
use of electricity has taken place and if, however, the period during
which such unauthorised 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.
(6) The assessment under this section shall be made at a rate equal
to twice the tariff applicable for the relevant category of services
specified in sub-section (5).
33
Explanation.─For the purposes of this section,─
(a) "assessing officer" means an officer of a State
Government or Board or licensee, as the case may be,
designated as such by the State Government;
(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
authority 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.”
44. Section 181 of the Act 2003 confers powers to the State Commissions to
frame regulations. Section 181(2)(x) reads thus:
“181. Powers of State Commissions to make regulations.─
xx xx xx
(2) In particular and without prejudice to the generality of the
power contained in sub-section (1), such regulations may provide
for all or any of the following matters, namely:-
xx xx xx
(x) electricity supply code under section 50;….”
45. We shall now look into the Code 2014. Regulation 1 reads thus:
“1. Short title, extent and commencement. - (1) This Code shall
be called the Kerala Electricity Supply Code, 2014.
(2) This Code shall be applicable to,-
(i) all distribution licensees including deemed licensees and all
consumers and users in the State of Kerala; and
(ii) all other persons and institutions who are exempted under
Section 13 of the Act.
34
(3) It shall come into force with effect from the first day of April,
2014.”
46. Regulation 2 provides for the definitions. The phrase ‘contracted
connected load’ as defined under Regulation 2(27) reads thus:
“2. Definitions. - In this Code, unless it is repugnant to the
context,-
xx xx xx
(27) “contracted connected load” means the connected load
installed by the consumer at the time of executing the service
connection agreement and recorded in kW / kVA in the schedule to
the said agreement or the connected load duly revised thereafter;”
47. Regulation 2(28) defines the terms ‘contracted load’ or ‘contract
demand’. The same reads thus:
“2. Definitions.- In this Code, unless it is repugnant to the
context,-
xx xx xx
(28) “contracted load” or “contract demand” means the
maximum demand in kW or kVA, agreed to be supplied by the
distribution licensee and indicated in the agreement executed
between the licensee and the consumer; or the contracted load or
contract demand duly revised thereafter;”
48. Regulation 2(78) defines the phrase ‘unauthorised connected load’. The
same reads thus:
“2. Definitions.- In this Code, unless it is repugnant to the
context,-
xx xx xx
(78) “unauthorised connected load” means the connected load in
excess of the contracted connected load;”
49. Regulation 2(79) defines the phrase ‘unauthorised use of electricity’. The
same reads thus:
35
“2. Definitions.- In this Code, unless it is repugnant to the
context,-
xx xx xx
(79) “unauthorised use of electricity” means the usage of electricity as
explained in Section 126 of the Act;”
50. Regulation 153 falls within Chapter IX of the Code 2014. Chapter IX is
in respect of theft, unauthorised use and other irregularities. The Regulation 153
reads thus:
“153. Estimation and regularisation of unauthorised additional
load.-(1) If it is detected, on inspection, that additional load in
excess of the sanctioned load has been connected to the system
without due sanction from the licensee, further action shall be
taken in accordance with the following subregulations.
(2) The difference between the total connected load in the premises
of the consumer at the time of inspection and the sanctioned load
of the consumer shall be reckoned as unauthorised additional load.
(3) Connected load shall be determined as per the following
clauses:-
(a) the rated capacities of all energy consuming devices and
apparatus which can be simultaneously used, excluding stand-by
load if any, in the premises of the consumer and found connected to
the system shall be considered for estimating the total load of the
consumer;
(b) while estimating the total load of a consumer, the loads of the
following equipment and apparatus shall not be taken into
account:-
i. standby equipment of consumers, when they are operated
through a change over switch;
ii. firefighting equipment;
iii. un-interrupted power supply equipment (UPS), switch mode
power supply system (SMPS), transformer, voltage stabilizer,
inverter, rectifier and measuring devices:
Provided that the rated capacities of the equipment and apparatus
connected to the UPS or SMPS or voltage stabilizer or inverter or
rectifier shall be considered for computation of the connected load.
36
(4) (a) If the additional load in the case of domestic consumers is
of and below twenty percent of the sanctioned load it shall not be
reckoned as unauthorised additional load.
(b) If the additional load in the case of other consumers is of and
below ten percent of the sanctioned load, it shall not be reckoned
as unauthorised additional load.
(c) The licensee may, suo motu or on application from the
consumer, regularise such additional load mentioned in clause (a)
and clause (b) above.
(5) When the load in excess of sanctioned load exceeds the limit as
provided in subregulation (4) above, the entire load in excess of the
sanctioned load shall be treated as unauthorised additional load, if
express sanction or deemed sanction under clause (c) of
subregulation (4) has not been obtained for it.
(6) In the case of consumers billed under demand based tariff, the
total load declared in the test cum completion report of the
installation of the consumer, submitted at the time of availing
connection or the load mentioned in the energisation approval
granted by the Electrical Inspector or the load at the time of
revising contract demand or revising the connected load may be
taken as the sanctioned connected load.
(7) If it is found that any additional load has been connected
without due authorisation from the licensee or in violation of any
of the provisions of the Central Electricity Authority (Measures
relating to safety and electric supply) Regulations, 2010, as
amended from time to time, the licensee shall direct the consumer
to disconnect forthwith such additional load and the consumer
shall comply with such direction, failing which the supply of
electricity to the consumer shall be disconnected by the licensee.
(8) If it is found that no additional load has been connected and
recorded maximum demand has been exceeded, the demand
charges may be collected for the recorded maximum demand at the
rates as approved by the Commission and steps may be initiated to
enhance the contract demand as specified in regulation 99 of the
Code.
(9) If it is found that additional load has been connected without
any increase in the contract demand, steps may be initiated to
regularise the connected load in accordance with the provisions in
the agreement within a time frame as stipulated by the licensee.
37
(10) If it is found that additional load has been connected without
due authorisation from the licensee and contract demand has been
exceeded, steps may be initiated to regularise the additional load
and to enhance the contract demand in addition to collection of
demand charges as per the agreement conditions, for the recorded
maximum demand at the rates approved by the Commission:
Provided that such regularisation of additional load and
enhancement of contract demand shall be done only after ensuring
that wiring has been done in conformity with the provisions of
Central Electricity Authority (Measures relating to safety and
electric supply) Regulations, 2010 as amended from time to time.
(11) The proceedings specified in subregulations (9) and (10)
above, are applicable in the cases where the regularisation of
unauthorised connected load or enhancement of contract demand
will not necessitate enhancement of voltage level of supply or
upgradation of the existing distribution system or both.
(12) In case such regularisation of unauthorised connected load or
enhancement of contract demand will necessitate upgradation of
the existing distribution system or enhancement of voltage level of
supply, the licensee shall direct the consumer to disconnect
forthwith such additional load and to restrict the contract demand
within the agreed limit and the consumer shall comply with such
direction, failing which the supply of electricity to the consumer
shall be disconnected by the licensee.
(13) The regularisation of unauthorised additional load as per the
subregulations (9) and (10) above shall be subject to realisation of
a fee at the rates notified by the Commission in schedule 1 of the
Code.
(14) The provisions relating to unauthorised additional load in
subregulations (1) to (13) above shall not be applicable to any
domestic consumer if his total connected load including the
additional load detected is of and below 10kW.
(15) Unauthorised additional load in the same premises and
under same tariff shall not be reckoned as ‘unauthorised use of
electricity’.”
51. We shall now look into the decision of this Court in the case of Seetaram
Rice Mill (supra).
38
52. The respondent in Seetaram Rice Mill (supra) was a partnership firm
engaged in the production of rice. For supply of electricity, it had entered into
an Agreement dated 09.12.1997 with the appellant therein. The respondent
therein was classified as 'Medium industry' category, which dealt with contract
demand of 99 KVA and above but below 110 KVA. On 10.06.2009, 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. On 25.07.2009, provisional assessment order was issued
by the appellant therein to the respondent therein. Intimation was issued to the
respondent therein that there was unauthorised use of electricity falling squarely
within the ambit of Section 126 of the Act 2003. In the dump report, it was
stated that there was unauthorised use of electricity and maximum demand had
been consumed upto 142 KVA. On this basis, the provisional assessment order
was passed by taking the contracted demand as that applicable to large industry.
The respondent therein did not file objections but challenged the provisional
assessment order on the ground of lack of authority and jurisdiction on the part
of the Executive Engineer to frame the provisional assessment by alleging
unauthorised use of electricity since 04.06.2008. The respondent therein
contended that since it was classified as medium scale industry, provisional
assessment could not have been made on the basis of the dump charges relating
to large industry. The High Court held that overdrawal of maximum demand
would not fall within the scope of 'unauthorised use of electricity' as defined by
sub-clause (b) to the Explanation to Section 126 of the said Act. The High Court
set aside the provisional assessment order. While dealing with the challenge to
the High Court's order, this Court, inter alia, examined the scope of Sections
126, 127 and 135 resply of the said Act against the backdrop of the scheme of
the Act 2003 and summed up its conclusions as under:
"1. Wherever the consumer commits the breach of the terms of the
Agreement, Regulations and the provisions of the Act by consuming
39
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.
2. The expression “unauthorised 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.
3. 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.
4. 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.
5. 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 25-07-2009. 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 the factual controversy of the case.
6. 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."
53. In our opinion, the first two conclusions quoted hereinabove completely
support the appellant Board. The learned counsel appearing for the consumers
and the Commission tried to distinguish Seetaram Rice Mill (supra) from the
40
present case on the ground that there was a change in the classification/category
which is not so in this case inasmuch as here the consumers remain
commercial/industrial having LT connection and, therefore, there is no issue of
unauthorised use within the meaning of Section 126 of the Act 2003. We see no
force in the submission that change of category would not attract Section 126 of
the Act 2003. In Seetaram Rice Mill (supra), it was contended that only cases of
change of user would be covered under Section 126 of the Act 2003. While
rejecting such contention, this Court clarified that the explanation to Section
126 is not exhaustive and any use of electricity which is not permissible and
beyond the contract demand amounts to unauthorised use of electricity and the
blame contemplated under Section 126 of the Act 2003 is not dependent on
whether the overdrawal transgresses into another tariff category or not. We may
quote the relevant paragraphs from Seetaram Rice Mill (supra):
“18. It is true that fiscal and penal laws are normally construed
strictly but this rule is not free of exceptions. In given situations,
this Court may, even in relation to penal statutes, decide that any
narrow and pedantic, literal and lexical construction may not be
given effect to, as the law would have to be interpreted having
regard to the subject-matter of the offence and the object that the
law seeks to achieve. The provisions of Section 126, read with
Section 127 of the 2003 Act, in fact, become a code in themselves.
Right from the initiation of the proceedings by conducting an
inspection, to the right to file an appeal before the appellate
authority, all matters are squarely covered under these provisions.
It specifically provides the method of computation of the amount
that a consumer would be liable to pay for excessive consumption
of the electricity and for the manner of conducting assessment
proceedings. In other words, Section 126 of the 2003 Act has a
purpose to achieve i.e. to put an implied restriction on such
unauthorised consumption of electricity.
Xxx xxx xxx
22. The relevancy of objects and reasons for enacting an Act is a
relevant consideration for the court while applying various
principles of interpretation of statutes. Normally, the court would
not go behind these objects and reasons of the Act. The discussion
41
of a Standing Committee to a Bill may not be a very appropriate
precept for tracing the legislative intent but in given circumstances,
it may be of some use to notice some discussion on the legislative
intent that is reflected in the substantive provisions of the Act itself.
The Standing Committee on Energy, 2001, in its discussion said,
“the Committee feels that there is a need to provide safeguards to
check the misuse of these powers by unscrupulous elements”. The
provisions of Section 126 of the 2003 Act are self-explanatory, they
are intended to cover situations other than the situations
specifically covered under Section 135 of the 2003 Act. This would
further be a reason for this Court to adopt an interpretation which
would help in attaining the legislative intent.
Xxx xxx xxx
24. Upon their plain reading, the marked differences in the
contents of Sections 126 and 135 of the 2003 Act are obvious. They
are distinct and different provisions which operate in different
fields and have no common premise in law. We have already
noticed that Sections 126 and 127 of the 2003 Act read together
constitute a complete code in themselves covering all relevant
considerations for passing of an order of assessment in cases
which do not fall under Section 135 of the 2003 Act.
Xxx xxx xxx
37. Wherever the assessing officer arrives at the conclusion that
unauthorised use of electricity has taken place, the assessment
shall be made for the entire period during which such unauthorised
use of electricity has taken place and if such period cannot be
ascertained, it shall be limited to a period of 12 months
immediately preceding the date of inspection and the assessment
shall be made at the rate equal to twice the tariff applicable for the
relevant category of service specified under these provisions. This
computation has to be taken in terms of Sections 126(5), 126(6)
and 127 of the 2003 Act. The complete procedure is provided under
these sections. Right from the initiation of the proceedings till
preferring of an appeal against the final order of assessment and
termination thereof, as such, it is a complete code in itself.
Xxx xxx xxx
44. The unauthorised use of electricity in the manner as is
undisputed on record clearly brings the respondent “under liability
and in blame” within the ambit and scope of Section 126 of the
42
2003 Act. The blame is in relation to excess load while the liability
is to pay on a different tariff for the period prescribed in law and in
terms of an order of assessment passed by the assessing officer by
the powers vested in him under the provisions of Section 126 of the
2003 Act.
Xxx xxx xxx
50. In other words, the purpose sought to be achieved is to ensure
stoppage of misuse/unauthorised use of the electricity as well as to
ensure prevention of revenue loss. It is in this background that the
scope of the expression “means” has to be construed. If we hold
that the expression “means” is exhaustive and cases of
unauthorised use of electricity are restricted to the ones stated
under Explanation (b) of Section 126 alone, then it shall defeat the
very purpose of the 2003 Act, inasmuch as the different cases of
breach of the terms and conditions of the contract of supply,
Regulations and the provisions of the 2003 Act would escape the
liability sought to be imposed upon them by the legislature under
the provisions of Section 126 of the 2003 Act. Thus, it will not be
appropriate for the courts to adopt such an approach.
Xxx xxx xxx
60. The expressions “means”, “means and includes” and “does
not include” are expressions of different connotation and
significance. When the legislature has used a particular expression
out of these three, it must be given its plain meaning while even
keeping in mind that the use of other two expressions has not been
favoured by the legislature. To put it simply, the legislature has
favoured non-use of such expression as opposed to other specific
expression. In the present case, the Explanation to Section 126 has
used the word “means” in contradistinction to “does not include”
and/or “means and includes”. This would lead to one obvious
result that even the legislature did not intend to completely restrict
or limit the scope of this provision.
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 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
43
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.
Xxx xxx xxx
64. Minimum energy charges are to be levied with reference to
“contract demand” at the rate prescribed under the terms and
conditions. These clauses of the Agreement clearly show that the
charges for consumption of electricity are directly relatable to the
sanctioned/connected load and also the load consumed at a given
point of time if it is in excess of the sanctioned/connected load. The
respondent could consume electricity up to 110 kVA but if the
connected load exceeded that higher limit, the category of the
respondent itself could stand changed from “medium industry” to
“large industry” which will be governed by a higher tariff.
65. Chapter VIII of the Conditions of Supply classifies the
consumers into various categories and heads. The electricity could
be provided for a domestic, LT industrial, LT/HT industrial, large
industry, heavy industries and power intensive industries, etc. In
terms of Regulation 80, the industry would fall under LT/HT
category, if it relates to supply for industrial production with a
contract demand of 22 kVA and above but below 110 kVA.
However, it will become a “large industry” under Regulation
80(10) if it relates to supply of power to an industry with a contract
demand of 110 kVA and above but below 25,000 kVA. Once the
category stands changed because of excessive consumption of
electricity, the tariff and other conditions would stand
automatically changed. The licensee has a right to reclassify the
consumer under Regulation 82 if it is found that a consumer has
been classified in a particular category erroneously or the purpose
of supply as mentioned in the agreement has changed or the
consumption of power has exceeded the limit of that category etc.
The Conditions of Supply even place a specific prohibition on
consumption of excessive electricity by a consumer.
66. Regulation 106 of the Conditions of Supply reads as under:
"106. No consumer shall make use of power in excess of the
approved contract demand or use power for a purpose other
than the one for which agreement has been executed or shall
dishonestly abstract power from the licensee's system."
44
67. 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 even increasing voltage fluctuations.
Xxx xxx xxx
71. 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. Not only this, the language of Regulations 82 and 106
also prescribe that the consumer is not expected to make use of
power in excess of approved contract demand otherwise it would
be change of user falling within the ambit of “unauthorised use of
electricity”.
72. Again, there is no occasion for this Court to give a restricted
meaning to the language of Explanation (b)(iv) of Section 126.
According to the learned counsel appearing for the respondent, it
is only the actual change in purpose of use of electricity and not
change of category that would attract the provisions of Section 126
of the 2003 Act. The contention is that where the electricity was
provided for a domestic purpose and is used for industrial purpose
or commercial purpose, then alone it will amount to change of user
or purpose. The cases of excess load would not fall in this
45
category. This argument is again without any substance and, in
fact, needs to be noticed only to be rejected.
Xxx xxx xxx
87. Having dealt with and answered determinatively the questions
framed in the judgment, we consider it necessary to precisely
record the conclusions of our judgment which are as follows:
1. 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.
2. The expression “unauthorised 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…."
54. The principles of law discernible from the aforesaid may be summarised
as under:
(1) The provisions of Section 126, read with Section 127 of the Act 2003
become a Code in themselves. It specifically provides the method of
computation of the amount that a consumer would be liable to pay for excessive
consumption of electricity and for the manner of conducting assessment
proceeding. Section 126 of the Act 2003 has been enacted with a purpose to
achieve i.e., to put an implied restriction on such unauthorised consumption of
electricity.
(2) The purpose of Section 126 of the Act 2003 is to provide safeguards to
check the misuse of powers by unscrupulous elements. The provisions of
Section 126 of the Act 2003 are self-explanatory. They are intended to cover
46
situations, other than, the situations specifically covered under Section 135 of
the Act 2003. In such circumstances, the Court should adopt an interpretation
which should help in attaining the legislative intent.
(3) The purpose sought to be achieved with the aid of the provisions of Section
126 of the Act 2003 is to ensure stoppage of misuse/unauthorised use of the
electricity as well as to ensure prevention of revenue loss.
(4) The overdrawal of electricity is prejudicial to the public at large, as it is
likely to throw out of gear the entire supply system, undermining its efficiency,
efficacy and even-increasing voltage fluctuations.
(5) The expression ‘unauthorised use of electricity’ means as it appears in
Section 126 of the Act 2003. It is an expression of wider connotation and
principle construed purposively in contrast to contextual interpretation, while
keeping in mind the object and purpose of the Act 2003.
55. Having read and re-read the decision of this Court in the case of
Seetaram Rice Mill (supra), we are clear in our mind that the High Court in its
impugned judgment has carved out an exception, which does not find a place in
Section 126(6) of the Act 2003. Paras 18 & 37 resply of the judgment, in the
case of Seetaram Rice Mill (supra) referred to above categorically hold that
Section 126 and 127 resply of the Act 2003 read together constitute a complete
code in themselves. Para 50 of the said judgment holds that the purpose of
Section 126 is to ensure stoppage of misuse/ unauthorised use of electricity.
Para 61 of Seetaram Rice Mill (supra) referred to above makes the picture
abundantly clear.
56. In para 67 of Seetaram Rice Mill (supra) referred to above, it was
categorically held that the consumption of electricity in excess of the
sanctioned/connected load shall be an ‘unauthorised use of electricity’ in terms
of Section 126 of the Act 2003. According to us, the observations made by this
47
Court in Seetaram Rice Mill (supra) as contained in para 67 goes to the root of
the matter. Seetaram Rice Mill (supra) in para 67 has said in so many words
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 even-increasing voltage
fluctuations. This aspect of the matter has been completely overlooked by the
High Court. It is not just a matter of overdrawal of electricity in excess of
sanctioned/connected load in the very same premises and for the very same
purpose, which does not involve any change in the tariff applicable for the
relevant category of services. The tariff applicable may remain the same; the
overdrawal may be in the same premises and for the very same purpose, there
may not be any loss of revenue but it may lead to a disastrous situation being
prejudicial to the public at large, as such overdrawal of electricity in excess of
sanctioned/connected load may disturb the entire supply system, undermining
its efficiency, efficacy and even-increasing voltage demand.
57. In para 72 of Seetaram Rice Mill (supra), a contention was raised by the
consumer that it is only the actual change in purpose of use of electricity that
would attract Section 126 of the Act 2003. The contention was that where the
electricity was provided for domestic purpose but was actually used for
industrial or commercial purpose, then alone it will amount to change of user or
purpose and accordingly a contention was raised that a case of usage of excess
load would not fall in this category. This Court rejected the said contention in
para 72. Para 72 states as follows:
“72. Again, there is no occasion for this Court to give a restricted
meaning to the language of Explanation (b)(iv) of Section 126 .
According to the learned counsel appearing for the respondent, it
is only the actual change in purpose of use of electricity and not
change of category that would attract the provisions of Section
126 of the 2003 Act. The contention is that where the electricity
48
was provided for a domestic purpose and is used for industrial
purpose or commercial purpose, then alone it will amount to
change of user or purpose. The cases of excess load would not fall
in this category. This argument is again without any substance and,
in fact, needs to be noticed only to be rejected .”
(Emphasis supplied)
58. In view of para 72 of Seetaram Rice Mill (supra) referred to above, the
High Court could be said to have erred in coming to the conclusion that the
consumer cannot be charged twice the energy charges if the consumer uses in
excess of the sanctioned/connected load in the very same premises and for the
very same purpose, which do not involve any change in the tariff. Para 87(2) in
Seetaram Rice Mill (supra) categorically holds that consumption in cases of the
connected load would fall in Explanation (b)(iv) to Section 126 of the Act 2003.
59. This Court in Punjab State Electricity Board v. Vishwa Caliber Builders
Private Limited reported in (2010) 4 SCC 539 had the occasion to consider the
Punjab State Electricity Regulatory Commission (Forum and Ombudsman)
Regulations, 2005. In the said case, the challenge was to the order passed by a
Division Bench of the Punjab and Haryana High Court whereby it had
dismissed the writ petition filed by the appellant therein against the order of
Ombudsman, Electricity, Punjab who in turn reversed the decision of the
Disputes Settlement Authority and directed refund of the amount recovered
from the respondent therein towards Advance Consumption Deposit (ACD)
service connection charges and load sur charge. In para 13, 14 and 15 this Court
observed as under:
“13. We have considered the arguments of the learned counsel and
agree with him that in the absence of any provision in the Act or
the Regulations framed by the appellant, the Ombudsman
committed jurisdictional error by directing regularisation of
unauthorised use of electricity by the respondent and refund of the
alleged excess amount charged by the appellant.
49
14. The fact that the appellant could not release connection with a
load of 2548 kW on account of non-availability of transformer
necessary for transfer of 8 MVA load from 66 kV Sub-Station, GT
Road, Ludhiana had no bearing on the issue of consumption of
electricity by the respondent beyond the sanctioned load.
Undisputedly, in terms of the request made by the respondent, the
Chief Engineer had sanctioned connection on the existing system
with a load of 1500 kW, but the respondent used excess load to the
tune of 481.637 kW and this amounted to unauthorised use of
electrical energy.
15. It is also not in dispute that after installation of a new
transformer, the respondent could not avail the balance load within
the stipulated time of six months and when the authority concerned
issued notice dated 13-12-2001 and reminder dated 23-5-2002, its
representative refused to submit fresh A&A form necessary for
release of the balance load. This being the position, the fault, if
any, for non-release of the balance load lay at the doors of the
respondent and the Ombudsman committed serious error by
directing the appellant to refund the alleged excess amount
collected from the respondent on account of use of electricity over
and above the sanctioned load.”
(Emphasis supplied)
60. Thus, in the aforesaid case, the excess load to the tune of 481.637 KW
was assessed as unauthorised use of electrical energy.
REGULATION 153(15) OF THE CODE 2014
61. We shall now look into the main limb of the submission canvassed on
behalf of the consumers that the Regulation 153(15) of the Code 2014 makes all
the difference and the ratio and the principles as propounded in Seetaram Rice
Mill (supra) should be understood in the light of the Regulation 153(15) of the
Code 2014. We have quoted Regulation 153(15) of the Code 2014 in the earlier
part of our judgment. We do not find any merit in the submission canvassed on
behalf of the consumers in regard to the applicability of Regulation 153(15) of
the Code 2014. The Code 2014 is framed under Section 50 read with Section
181(x) of the Act 2003.
50
62. This Court in Uttar Pradesh Power Corporation Limited and Others v.
Anis Ahmad reported in (2013) 8 SCC 491, held that the Supply Code cannot
provide for nor does it relate to assessment of charges for ‘unauthorised use of
electricity’ under Section 126 of the Act 2003. Paras 53 and 54 resply of the said
judgment state as follow:
“53. Section 50 of the Electricity Act, 2003 empowers the State
Commission to specify an Electricity Supply Code to provide for
recovery of electricity charges, intervals for billing of electricity
charges, measures for preventing damage to electrical plant or
electrical line or meter, entry of distribution licensee, etc. and it
reads as follows:
“50. The Electricity Supply Code.—The State Commission shall
specify an Electricity Supply Code to provide for recovery of
electricity charges, intervals for billing of electricity charges,
disconnection of supply of electricity for non-payment thereof,
restoration of supply of electricity, measures for preventing
tampering, distress or damage to electrical plant or electrical
line or meter, entry of distribution licensee or any person acting
on his behalf for disconnecting supply and removing the meter,
entry for replacing, altering or maintaining electric lines or
electrical plants or meter and such other matters.”
54. From reading Section 50, it is clear that under the Electricity
Supply Code provisions are to be made for recovery of electricity
charges, billing of electricity charges, disconnection, etc. and
measures for preventing tampering, distress or damage to the
electrical plant or line or meter, etc. But the said Code need not
provide provisions relating to it/do not relate to assessment of
charges for “unauthorised use of electricity” under Section 126 or
action to be taken against those committing “offences” under
Sections 135 to 140 of the Electricity Act, 2003.”
(Emphasis supplied)
63. Thus, reliance on Regulation 153(15) of the Code 2014 framed under
Section 50 of the Act 2003 by the respondent (consumers) is thoroughly
misconceived, as the same does not conform to the provisions of the Act 2003.
In any event, Regulation 153(15) travels much beyond Section 126 and Section
50 resply of the Act 2003. It is settled law that the regulation making power
51
cannot be used to bring into existence substantive rights, which are not
contemplated under the Act 2003.
64. At this stage, it is apposite to state about the rule making powers of a
delegating authority. If a rule goes beyond the rule making power conferred by
the statute, the same has to be declared invalid. If a rule supplants any provision
for which power has not been conferred, it becomes invalid. The basic test is to
determine and consider the source of power, which is relatable to the rule.
Similarly, a rule must be in accord with the parent statute, as it cannot travel
beyond it.
65. Delegated legislation has come to stay as a necessary component of the
modern administrative process. Therefore, the question today is not whether
there ought to be delegated legislation or not, but that it should operate under
proper controls so that it may be ensured that the power given to the
Administration is exercised properly; the benefits of the institution may be
utilised, but its disadvantages minimised. The doctrine of ultra vires envisages
that a rule making body must function within the purview of the rule making
authority conferred on it by the parent Act. As the body making rules or
regulations has no inherent power of its own to make rules, but derives such
power only from the statute, it has to necessarily function within the purview of
the statute. Delegated legislation should not travel beyond the purview of the
parent Act. If it does, it is ultra vires and cannot be given any effect. Ultra vires
may arise in several ways; there may be simple excess of power over what is
conferred by the parent Act; delegated legislation may be inconsistent with the
provisions of the parent Act or statute law or the general law; there may be noncompliance
with the procedural requirement as laid down in the parent Act. It is
the function of the courts to keep all authorities within the confines of the law
by supplying the doctrine of ultra vires.
66. In this context, we may refer with profit to the decision in General
Officer Commanding-in-Chief and Another v. Dr. Subhash Chandra Yadav
and Another reported in (1988) 2 SCC 351, wherein it has been held as
follows:-
“14. ….before a rule can have the effect of a statutory provision,
two conditions must be fulfilled, namely, (1) it must conform to the
provisions of the statute under which it is framed; and (2) it must
also come within the scope and purview of the rule making power
of the authority framing the rule. If either of these two conditions is
not fulfilled, the rule so framed would be void…..”
67. In Additional District Magistrate (Rev.) Delhi Admn. v. Siri Ram
reported in (2000) 5 SCC 451, it has been ruled that it is a well recognised
principle that the conferment of rule-making power by an Act does not enable
the rule-making authority to make a rule which travels beyond the scope of the
enabling Act or which is inconsistent therewith or repugnant thereto.
68. In Sukhdev Singh and Others v. Bhagatram Sardar Singh Raghuvanshi
and Another reported in (1975) 1 SCC 421, the Constitution Bench has held
that:
“18. …. These statutory bodies cannot use the power to make
rules and regulations to enlarge the powers beyond the scope
intended by the Legislature. Rules and regulations made by reason
of the specific power conferred by the statute to make rules and
regulations establish the pattern of conduct to be followed. …”
69. In State of Karnataka and Another v. H. Ganesh Kamath and Others
reported in (1983) 2 SCC 402, it has been stated that:
“7. …..It is a well-settled principle of interpretation of statutes that
the conferment of rule-making power by an Act does not enable the
rule-making authority to make a rule which travels beyond the
scope of the enabling Act or which is inconsistent therewith or
repugnant thereto.”
70. In Kunj Behari Lal Butail and Others v. State of H.P. and Others
reported in (2000) 3 SCC 40, it has been ruled thus:-
“13. It is very common for the legislature to provide for a general
rule-making power to carry out the purpose of the Act. When such
a power is given, it may be permissible to find out the object of the
enactment and then see if the rules framed satisfy the test of having
been so framed as to fall within the scope of such general power
confirmed. If the rule-making power is not expressed in such a
usual general form then it shall have to be seen if the rules made
are protected by the limits prescribed by the parent act…….”
71. In St. Johns Teachers Training Institute v. Regional Director,
National Council for Teacher Education and Another reported in (2003)
3 SCC 321, it has been observed that:
“10. A regulation is a rule or order prescribed by a superior for
the management of some business and implies a rule for general
course of action. Rules and regulations are all comprised in
delegated legislation. The power to make subordinate legislation is
derived from the enabling Act and it is fundamental that the
delegate on whom such a power is conferred has to act within the
limits of authority conferred by the Act. Rules cannot be made to
supplant the provisions of the enabling Act but to supplement it.
What is permitted is the delegation of ancillary or subordinate
legislative functions, or, what is fictionally called, a power to fill up
details…..”
72. In Global Energy Limited and Another v. Central Electricity Regulatory
Commission reported in (2009) 15 SCC 570, this Court was dealing with the
validity of clauses (b) and (f) of Regulation 6-A of the Central Electricity
Regulatory Commission (Procedure, Terms and Conditions for Grant of Trading
Licence and other Related Matters) Regulations, 2004. In that context, this
Court expressed as under:-
“25. It is now a well-settled principle of law that the rule-making
power “for carrying out the purpose of the Act” is a general
delegation. Such a general delegation may not be held to be laying
54
down any guidelines. Thus, by reason of such a provision alone,
the regulation-making power cannot be exercised so as to bring
into existence substantive rights or obligations or disabilities
which are not contemplated in terms of the provisions of the said
Act.
73. In the aforementioned case, while discussing further about the
discretionary power, delegated legislation and the requirement of law, the Bench observed thus:
“73. The image of law which flows from this framework is its
neutrality and objectivity: the ability of law to put sphere of
general decision-making outside the discretionary power of those
wielding governmental power. Law has to provide a basic level of
“legal security” by assuring that law is knowable, dependable and
shielded from excessive manipulation. In the contest of rulemaking,
delegated legislation should establish the structural
conditions within which those processes can function effectively.
The question which needs to be asked is whether delegated
legislation promotes rational and accountable policy
implementation. While we say so, we are not oblivious of the
contours of the judicial review of the legislative Acts. But, we have
made all endeavours to keep ourselves confined within the wellknown
parameters.”
74. In this context, it would be apposite to refer to a passage from State of
T.N. and Another v. P. Krishnamurthy and Others reported in (2006) 4 SCC
517 wherein it has been held thus:-
“16. The court considering the validity of a subordinate
legislation, will have to consider the nature, object and scheme of
the enabling Act, and also the area over which power has been
delegated under the Act and then decide whether the subordinate
legislation conforms to the parent statute. Where a rule is directly
inconsistent with a mandatory provision of the statute, then, of
course, the task of the court is simple and easy. But where the
contention is that the inconsistency or non-conformity of the rule is
not with reference to any specific provision of the enabling Act, but
with the object and scheme of the parent Act, the court should
proceed with caution before declaring invalidity.”
75. In Pratap Chandra Mehta v. State Bar Council of Madhya Pradesh and
others reported in (2011) 9 SCC 573, while discussing about the conferment of
extensive meaning, it has been opined that:
“58. ….The Court would be justified in giving the provision a
purposive construction to perpetuate the object of the Act, while
ensuring that such rules framed are within the field circumscribed
by the parent Act. It is also clear that it may not always be
absolutely necessary to spell out guidelines for delegated
legislation, when discretion is vested in such delegatee bodies. In
such cases, the language of the rule framed as well as the purpose
sought to be achieved, would be the relevant factors to be
considered by the Court.”
76. In Dr. Mahachandra Prasad Singh v. Chairman, Bihar Legislative
Council and Others reported in (2004) 8 SCC 747, this Court explained the
concept of delegated legislation thus:
“13. …..Underlying the concept of delegated legislation is the
basic principle that the legislature delegates because it cannot
directly exert its will in every detail. All it can in practice do is to
lay down the outline. This means that the intention of the
legislature, as indicated in the outline (that is the enabling Act),
must be the prime guide to the meaning of delegated legislation
and the extent of the power to make it. The true extent of the power
governs the legal meaning of the delegated legislation. The
delegate is not intended to travel wider than the object of the
legislature. The delegate's function is to serve and promote that
object, while at all times remaining true to it. That is the rule of
primary intention. Power delegated by an enactment does not
enable the authority by regulations to extend the scope or general
operation of the enactment but is strictly ancillary. It will authorise
the provision of subsidiary means of carrying into effect what is
enacted in the statute itself and will cover what is incidental to the
execution of its specific provision. But such a power will not
support attempts to widen the purposes of the Act, to add new and
different means of carrying them out or to depart from or vary its
ends. (See Section 59 in chapter “Delegated Legislation” in
Francis Bennion's Statutory Interpretation, 3rd Edn.)…….”
56
77. In McEldowney v. Forde reported in (1971) AC 632 : (1969) 3
WLR 179, Lord Diplock explained the role of the Courts in this area in the
following words :
“The division of functions between Parliament and the courts as
respects legislation is clear. Parliament makes laws and can
delegate part of its power to do so to some subordinate authority.
The courts construe laws whether made by Parliament directly or
by a subordinate authority acting under delegated legislative
powers. The view of the courts as to whether particular statutory
or subordinate legislation promotes or hinders the common weal is
irrelevant. The decision of the courts as to what the words used in
the statutory or subordinate legislation mean is decisive. Where the
validity of subordinate legislation made pursuant to powers
delegated by Act of Parliament to a subordinate authority is
challenged, the court has a threefold task: first, to determine the
meaning of the words used in the Act of Parliament itself to
describe the subordinate legislation which that authority is
authorised to make, secondly, to determine the meaning of the
subordinate legislation itself and finally to decide whether the
subordinate legislation complies with that description.”
78. A delegated power to legislate by making rules or regulations ‘for
carrying out the purpose of the Act’, is a general delegation without laying
down any guidelines; it cannot be exercised so as to bring into existence the
substantive rights or obligations or disabilities not contemplated by the
provisions of the Act 2003 itself. The Court, considering the validity of a
subordinate legislation, will have to consider the nature, object and scheme of
the enabling Act, and also the area over which power as has been delegated
under the Act and then decide whether the subordinate legislation conforms to
the parent statute.
79. It is important to keep in mind that where a rule or regulation is directly
inconsistent with a mandatory provision of the statute, then, of course, the task
of the Court is simple and easy. But where the contention is that the
inconsistency or non-conformity of the rule is not with reference to any specific
57
provision of the enabling Act, but with the object and scheme of the parent Act,
the Court should proceed with caution before declaring the same to be invalid.
80. Rules or regulation cannot be made to supplant the provisions of the
enabling Act but to supplement it. What is permitted is the delegation of
ancillary or subordinating legislative functions, or, what is fictionally called, a
power to fill up details.
81. A Constitution Bench of this Court in the case of Sukhdev Singh (supra),
while explaining the fine distinction between a rule and regulation and also the
power of the delegate authority to frame such rules or regulations has made few
very important observations which we must take notice of and quote as under:
“11. The contentions on behalf of the employees are these.
Regulations are made under the statute. The origin and source of
the power to make regulations is statutory. Regulations are selfbinding
in character. Regulations have the force of law inasmuch as
the statutory authorities have no right to make any departure from
the regulations.
12. Rules, regulations, schemes, bye-laws, orders made under
statutory powers are all comprised in delegated legislation. The
need for delegated legislation is that statutory rules are framed
with care and minuteness when the statutory authority making the
rules is after the coming into force of the Act in a better position to
adapt the Act to special circumstances. Delegated legislation
permits utilisation of experience and consultation with interests
affected by the practical operation of statutes.
xx xx xx
14. Subordinate legislation is made by a person or body by virtue
of the powers conferred by a statute. By-laws are made in the main
by local authorities or similar bodies or by statutory or other
undertakings for regulating the conduct of persons within their
areas or resorting to their undertakings. Regulations may
determine the class of cases in which the exercise of the statutory
power by any such authority constitutes the making of statutory
rules.
15. The words “rules” and “regulations” are used in an Act to
limit the power of the statutory authority. The powers of statutory
bodies are derived, controlled and restricted by the statutes which
create them and the rules and regulations framed thereunder. Any
action of such bodies in excess of their power or in violation of the
restrictions placed on their powers is ultra vires. The reason is that
it goes to the root of the power of such corporations and the
declaration of nullity is the only relief that is granted to the
aggrieved party.
xx xx xx
18. The authority of a statutory body or public administrative body
or agency ordinarily includes the power to make or adopt rules
and regulations with respect to matters within the province of such
body provided such rules and regulations are not inconsistent with
the relevant law. In America a “public agency” has been defined
as an agency endowed with governmental or public functions. It
has been held that the authority to act with the sanction of
Government behind it determines whether or not a governmental
agency exists. The rules and regulations comprise those actions of
the statutory or public bodies in which the legislative element
predominates. These statutory bodies cannot use the power to
make rules and regulations to enlarge the powers beyond the scope
intended by the Legislature. Rules and regulations made by reason
of the specific power conferred on the statute to make rules and
regulations establish the pattern of conduct to be followed. Rules
are duly made relative to the subject-matter on which the statutory
bodies act subordinate to the terms of the statute under which they
are promulgated. Regulations are in aid of the enforcement of the
provisions of the statute. Rules and regulations have been
distinguished from orders or determination of statutory bodies in
the sense that the orders or determination are actions in which
there is more of the judicial function and which deal with a
particular present situation. Rules and regulations on the other
hand are actions in which the legislative element predominates.
xx xx xx
136. The regulations framed under the regulation-making power
conferred by the three Acts in question are not the regulations as
defined in the General Clauses Act. In interpreting Indian statutes
it is unnecessary and might sometimes be misleading to refer to the
provisions of English law in connection with subordinate
legislation. We have to refer only to the General Clauses Act and
the Indian legislative practice. Though “rule” is defined as
including a regulation made as a rule, it cannot be said that
regulation-making power conferred on the three organisations in
question is a rule-making power. Under the legislative practice in
India the rule-making power is conferred on the State and the
power to make regulations is conferred on bodies or organisations
created by the statute.
xx xx xx
161. I have gone through the various statutes only to point out that
under the Indian legislative practice rules are what the Central
Government or the State Governments make and the regulations
are made by any institution or organisation established by a statute
and where it is intended that the regulation should have effect as
law the statute itself says so. It is, therefore, as I stated earlier,
unnecessary and may be even misleading to refer to the English
practice in interpreting the word ‘regulation’.”
(Emphasis supplied)
82. If we have to set right the impugned judgment and order of the High
Court and bring in tune with the principles embodied in the decision of this
Court in the case of Seetaram Rice Mill (supra), then we have no other option
but to declare that Regulation 153(15) of the Code 2014 framed by the
Commission is inconsistent with Section 126 of the Act 2003. If the Regulation
153(15) is to be given effect, then the same would frustrate the very object of
Section 126 of the Act 2003. The High Court in its impugned judgment says
that Regulation 153(15) does not lead to any loss of revenue. The stance of the
Commission also is that there is no loss of revenue if the Regulation 153(15) is
permitted to be operated. However, we are of the view that it is not just the
question of loss of revenue. At the cost of repetition, we emphasis on the fact
that overdrawal of electricity is prejudicial to the public at large as it may throw
out of gear the entire supply system, undermining its efficiency, efficacy and
even-increasing voltage fluctuations.
60
83. The material on record indicates something very startling. During the
year 2014-15, total unauthorised use of electricity in the State of Kerala was
detected in 1662 units and the total amount assessed comes to Rs.14,40,82,176/-
(Rupees Fourteen Crore Forty Lakhs Eighty Two Thousand One Hundred and
Seventy Six only). The corresponding figures during the years 2015-16 and
2016-17 were 1262 and 1875 units resply and the total amount assessed comes
to around Rs.10,63,76,776/- (Rupees Ten Crore Sixty Three Lakhs Seventy Six
Thousand Seven Hundred and Seventy Six only) and Rs. 34,64,80,421/-
(Rupees Thirty Four Crore Sixty Four Lakh Eighty Thousand Four Hundred and
Twenty One only) resply.
84. In the revenue petitions filed by the appellant Board, it was pointed to the
High Court that the total amount assessed for all the three years referred to
above, came to Rs.59,69,39,373/- (Rupees Fifty Nine Crore Sixty Nine Lakh
Thirty Nine Thousand Three Hundred and Seventy Three only).
85. In addition to the above, an amount of Rs. 41,14,858/- (Rupees Forty One
Lakh Fourteen Thousand Eight Hundred and Fifty Eight only) and
Rs.1,42,09,148/- (Rupees One Crore Forty Two Lakh Nine Thousand and One
Hundred Forty Eight only) were assessed during the years 2015-16 and 2016-17
resply, by Regional Audit Office (RAO) Inspection.
86. We are really taken by surprise that despite the aforesaid, the High Court
while rejecting the review applications declared that the regularisation of
additional connected load or enhancement of contract demand should not
necessitate upgradation of the existing distribution system.
87. At this stage, we may also refer to Section 45(3)(a) of the Act 2003. The
same reads thus:
“45. Power to recover charges. ─
xx xx xx
61
(3) The charges for electricity supplied by a distribution licensee
may include─
(a) a fixed charge in addition to the charge for the actual
electricity supplied;”
88. A plain reading of Section 45(3)(a) of the Act 2003 referred to above
would indicate that the charges for electricity certified by a distribution licensee
include the fixed charges, in addition to the charges for the actual electricity
supplied and consumed. In such circumstances, it can be said that the tariff
includes both, fixed charges and energy charges and once the assessing officer
arrives at the conclusion that unauthorised use of electricity has taken place, he
is obliged to make the assessment charge equal to twice the tariff applicable,
which includes the dues payable towards the energy charges also.
89. In overall view of the matter, we have reached to the conclusion that the
finding recorded by the High Court in para 31(vi) is not sustainable in law. We
have also reached to the conclusion that the Regulation 153(15) deserves to be
declared invalid being inconsistent with the provisions of Section 126 of the Act
2003.
90. The order passed by the High Court in the review applications more
particularly para 10(i), 10(ii) and 10(iii) resply is also hereby set aside.
91. In the result, all the appeals succeed and are hereby allowed to the
aforesaid extent. The declaration issued by the High Court, as contained in para
31(vi) of the impugned judgment is hereby set aside.
92. Regulation 153(15) of the Code 2014 is declared to be invalid being
inconsistent with the provision of Section 126 of the Act 2003.
93. No order as to costs.
………...……….…………..J.
(DINESH MAHESHWARI)
…………….………………J.
(J.B. PARDIWALA)
New Delhi;
Date: December 16, 2022.
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