Disconnection of Electricity Connection without notice and opportunity to the consumer is illegal

CALCUTTA HIGH COURT (D.B.)

Before :- Satya Brata Sinha, ACJ and M.H.S. Ansari, JJ.
A.P.O.T. No. 50 and G.A. No. 2653 of 1999. D/d. 14.10.1999.

CESC Ltd. - Appellants
Versus
Karan Cafe - Respondents


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Cases referred :-
Vishnu Traders v. State of Haryana, 1995(Suppl)(1) SCC 461.
P.K. Mukherjee v. CESC Ltd., 1998(1) Cal HN 107.
M.P. Electricity Board v. Harsh Wood Products, 1996(3) RCR (Civil) (SC) 453.
M.P. State Electricity Board v. Basanti Bai, AIR 1988 Supreme Court 71.
Pankaj Kumar Mukherjee v. CESC Limited, 1999(1) Cal HN 107.
State of West Bengal v. Rupa Ice Factory, 1997(2) Cal HN 254.
Shiva Steel Rolling Mill Ltd. v. CESC Ltd., 1998(1) Calcutta Law Times 424.
Ganges Manufacturing Company Ltd. v. West Bengal State Electricity Board, 1993(2) Cal LJ 210.
Hanuman Steel Rolling Mills v. CESC, 1996(1) Cal HN 469.
Nishi Kanta Banik v. CESC Ltd., 1996(2) Cal HN 534.
Isha Marbles v. Bihar State Electricity Board, 1995(2) JT 626.
W.B. State Electricity Board v. Fakir Chand Rice Mills, (SC) 1996(2) RRR 233.
Hyderabad Vanaspati Ltd. v. A.P. State Electricity Board, AIR 1998 Supreme Court 1715.

Calcutta High Court, West Bengal Judgments

JUDGMENT
M.H.S. Ansari, J. - All these appeals are against the order of a Ld. Single Judge whereby directions were issued for restoration of electric supply without any conditions as to depositing any sum on account of the demand made by the appellant.
2. As identical question arises for consideration, the appeals where heard analogously and are being disposed of by this common Judgment.
3. Mr. Anindya Mitra, Learned Senior Counsel on behalf of the appellant submitted that in cases involving theft/pilferage of electricity there is need for a consistency of approach and uniformity in the exercise of judicial discretion respecting similar causes and desirability to eliminate occasions for grievances of discriminatory treatment requires that all similar matters should receive similar treatment except where factual differences require a different treatment so that there is assurance of consistency, uniformity, predictability and certainty of judicial approach.
4. The said submission of Mr. Mitra is supported by the Judgment of the Supreme Court in Vishnu Traders v. State of Haryana & Ors., reported in 1995(Suppl)(1) SCC 461 wherein observations to the above effect had been made by the Supreme Court after having stated that in the matters of interlocutory orders, principle of binding precedents cannot be said to apply. There can be no dispute with the aforesaid proposition that although in the matters of interlocutory orders principle of binding precedents cannot be said to apply, the need for consistency in approach and uniformity in the exercise of judicial discretion in similar matters needs no emphasis. In the light of the above it was submitted by Mr. Mitra that in the below mentioned cases, all Judgments of Ld. Single Judges, the Court had a taken a consistent view while directing restoration of electricity supply.
    (a) AIR 1996 Calcutta 449 (Hanuman Steel Rolling Mills) - interim order was passed directing restoration on deposit of Rs. 1,50,000/- (Paragraph 11) at the final hearing. Upon completion of affidavits the writ petition was disposed of by directing CESC to give a post-decisional hearing.
    (b) 1998(1) Cal LT (HC) 424 (Siva Steel Rolling Mills Ltd.) - Direction was for restoration of supply on payment of Rs. 30 lacs within 72 hours from deposit and direction was given for preservation of the old meters and reference to the Chief Electrical Inspector (Paragraph 24).
    (c) 1998(1) Cal HN 107, (P.K. Mukherjee v. CESC Ltd.) - Final disposal of the writ petition by directing CESC Ltd. to restore electricity on payment of 50% of the amount claimed within 72 hours of last payment. Direction was given for preservation of the meters and reference to the Electrical Inspector (Para 62).
    (d) 1996(2) Cal HN 534 (Nishi Kanto Banik v. CESC Ltd.) - Disposal of the Writ petition by directing payment of 50% of the amount claimed to CESC and restoration within 48 hours thereafter, disputes referred to Electrical Inspector (Para 25).
    All the aforesaid judgments are in respect of cases involving allegations of theft/pilferage of electricity.
    (e) Unreported judgment of the Division Bench in Meena Agarwal's case in FMAT No. 364-367 of 1999 dated 15th February, 1999 - directing deposit of 50% by way of interim order.
    (f) Interim order of the Hon'ble Supreme Court directing deposit of 50% reported in 1996(8) SCC 647 - subject to determination of controversy in the suit.
5. In was the submission of Mr. Mitra that the Ld. Single Judge in the instant cases ought not to have taken a different view and directed restoration of electricity supply without imposing a condition as to payment of 50% of the demand.
6. In M.P. Electricity Board v. Harsh Wood Products, reported in 1996(4) SCC 522 : 1996(3) RCR (Civil) (SC) 453 the Supreme Court held that the Electricity Board, when it detects that any consumer had committed any malpractice with reference to his use of electrical energy, may disconnect the supply of electricity forthwith and may call upon consumer to make payment for compensation of unauthorised use of electricity i.e. theft of electricity. The Supreme Court rejected the contention that a consumer is entitled to a prior notice as contemplated in section 24 of the Indian Electricity Act, 1910, before disconnection as that section would have no application to a demand in respect of detection of pilferage. The relevant portion of the said judgment of the Supreme Court is extracted herein below :
    "A reading thereof clearly indicates that the appellant-Board, when it detects that any consumer had committed any mal-practice with reference to his use of electrical energy including unauthorised alterations to installations, unauthorised extension and use of devices to commit theft of electrical energy, may, without prejudice to its other rights, disconnect the supply of electricity forthwith and may call upon the consumer to make payment for compensation of the unauthorised use of electricity which is now stated to be a theft of electricity. It is not in dispute that an FIR had already been lodged for theft of electrical energy. It is seen that the proceedings have been drawn in the presence of the representative of the respondent-Industry and the meters were found to have been tampered with. In furtherance thereof, a prima facie conclusion of pilferage has been reached that the meters were tampered with and respondents were called upon to pay the difference of the rate for electricity said to have been consumed during the stated period of the detection. It would appear that the said assessment was based upon the previous consumption. It is seen that since the proceedings are pending, it would not be desirable to record any finding in this behalf."
7. A Few relevant facts of the above case, as exacted, in the said Judgment need to be stated. They are : that during the course of inspection one Mr. Dilip was present as representative of M/s. Harsh Wood Products and proceedings were drawn up with respect to the irregularities noticed which were to the effect that no seal was found on meter terminal cover. Body seals of the Meter found tampered. No seal found with Meter terminal cover. Meter Body seals on other meters found broken and tampered. Consumer was called upon to pay the difference of rate based upon previous consumption.
8. It will be seen that the proceedings in that case had been drawn up in he presence of the representative of the consumer wherein the meters were found tampered with. It is in pursuance thereof a prima facie conclusion of pilferage had been reached. The demand raised on account of alleged pilferage was based upon the previous consumption.
9. It is the contention of the respondents/writ petitioners that neither at the time of inspection nor while removing the meters a fair and reasonable procedure has been adopted by the Appellant. The demands raised in all the cases are for a period of one year prior to the date of alleged detection of pilferage.
10. In addition to the estimate of electricity pilfered, Government duty payable in relation thereof, fuel surcharge calculated on that basis and additional security amount has been demanded.
11. The respondents contend that the said demand, apart from being highly unreasonable is not supported by any basis. Even before the case of pilferage is prima facie established, the consumer is required to pay an abnormal sum including towards Government Duty, Fuel Charge and Additional Security Amount, This, it was contended, is arbitrary, wholly without jurisdiction and contrary to any accepted norms.
12. No doubt, a statutory principle has been laid down by the Supreme Court in W.B. State Electricity Board v. Fakir Chand Rice Mills, reported in 1996(8) SCC 647 : (SC) 1996(2) RRR 233 wherein it was held, that normally, in matter of Money Claim, at least half of the amount should be directed to be deposited.
13. The question, therefore, that arises is whether whatever amount i.e. demanded by the Appellant/CESC fifty per cent thereof needs to be paid before restoration of electricity can be ordered. That is the only question in the instant cases.
14. Before the consider the said question, it may be useful to refer to some of the judgments dealing with the power of the Board/Licensee to assess amount of unmetered consumption.
15. In M/s Hyderabad Vanaspati Ltd. v. A.P. State Electricity Board, reported in AIR 1998 Supreme Court 1715 the Supreme Court was considering the question whether A.P. State Electricity Board had the power to assess amount of unmetered consumption and whether the regulation framed with respect to the terms and conditions of supply of electricity are contrary to the provisions of Electricity (Supply) Act, 1948 and the Indian Electricity Act. It was noticed, in that case, that under section 49 of the Electricity Supply Act, 1948 Regulations had been framed with respect to the terms and conditions of supply of electricity. Clause 39 of the said terms and conditions lay down elaborate procedure empowering the Board to make provisional assessment of the amount towards unmetered consumption in case of pilferage and thereafter to make final assessment after hearing the consumer. The said Clause 39 was the subject matter of challenge, inter alia, on the ground that the same is ultra-vires sections 24, 26(6) and Clause 6(iii) of the Schedule to the Electricity (Supply) Act, 1910 as also section 44 of the Electrify (Supply) Act, 1948 and that it was arbitrary besides being violative of section 49 of the Indian Electricity Act.
16. The Supreme Court held the said regulation to be statutory and that the same was within the power of the Board to frame such conditions and regulations under section 49 of the Act. It was further held that the said regulations did not contravene the provisions of sections 21 and 26 of the Indian Electricity Act, 1910, nor it is violative of section 49 of the Electricity (Supply) Act, 1948. The Supreme Court repelled the contentions of the appellants before it that the aforesaid conditions of supply are contrary to the provisions of the Indian Electricity Act specially sections 21(4) and 26(6)(b) of the Act.
17. After referring to and relying upon the judgment in M.P. State Electricity Board v. Smt. Basanti Bai, reported in AIR 1988 Supreme Court 71, the Supreme Court held that a dispute regarding commission of fraud that is by tampering of the meter and breaking the body seal is one outside the ambit of sections 21 and 26 of the Indian Electricity Act and an Electrical Inspector has no jurisdiction to decide such case of fraud. Sections 21 and 26 of the Indian Electricity Act, it was held, provided for different situations. A relevant portion of the said judgment of the Supreme Court in Smt. Basanti Bai's case needs to be extracted and is accordingly extracted hereunder :
    "....... If there is an allegation of fraud committed by the consumer in tampering with the meter or manipulating the supply line or breaking the body seal of the meter resulting in not registering the amount of energy supplied to the consumer or the electrical quantity contained in the supply, such a dispute does not fall within the purview of sub-section (6) of section. 26. Such a dispute regarding the commission of fraud in tampering with the meter and breaking the body seal is outside the ambit of section 26(6) of the said Act. An electrical Inspector has, therefore, no jurisdiction to decide such cases of fraud. It is only the dispute as to whether the meter is/is not correct or it is inherently defective or faulty not recording correctly the electricity consumed, can be decided by the Electrical Inspector under the provisions of the said Act."
In so far as the State of West Bengal is concerned, no such regulation has been framed as was under consideration before the Supreme Court in Hyderabad Vanaspati's case.
18. In Hanuman Steel Rolling Mills (AIR 1996 Calcutta 449) one of us upon consideration of various decisions has held that in absence of any rule disconnection of electrical energy on the ground of pilferage or otherwise cannot be made without compliance of the principle of nature justice. The said decision has been followed recently in Pankaj Kumar Mukherjee v. CESC Limited, reported in 1999(1) Cal HN 107.
19. Furthermore, in State of West Bengal v. Rupa Ice Factory, reported in 1997(2) Cal HN 254, a Division Bench of this High Court held that in the absence of any rules and regulations or conditions of supply or agreement between the parties authorising the licensee (CESC) to determine the amount payable on account of pilferage the matter should be decided by Electrical Inspector. In coming to the said conclusion reliance was place upon Clause 6(iii) of the Schedule to the Indian Electricity Act, 1910 which provides, inter alia, reference of any dispute to the Electrical Inspector as to the improper use of energy and the said expression was construed to mean use of energy in an unauthorised manner.
20. Admittedly, there is no provision in the Indian Electricity Act, 1910 which authorises the licensee (CESC) to determine any such amount towards unmetered consumption.
21. This aspect of the matter has also been considered in Shiva Steel Rolling Mill Ltd. v. CESC Ltd., reported in 1998(1) Calcutta Law Times 424.
22. The preponderance of judicial opinion of this High Court has been that in absence of any provisions in the Act or Regulations in that behalf or agreement, empowering the Board/Licensee to raise bills towards unmetered consumption on the ground of tampering of the meter, the course left open to the Board/Licensee was to realise such amount by establishing the claim by reference of the dispute to the Electrical Inspector. However, it was held that disputes relating to tampering of meter can be referred to and determined by the Electrical Inspector. See Ganges Manufacturing Company Ltd. v. West Bengal State Electricity Board, 1993(2) Cal LJ 210Hanuman Steel Rolling Mills & Anr. v. CESC, 1996(1) Cal HN 469 and also the cases cited in the earlier part of this judgment.
23. Harsh Wood Product's case, cited supra, has been distinguished in Nishi Kanta Banik v. CESC Ltd. & Ors., reported in 1996(2) Cal HN 534 in the following terms :-
    "As the act of default itself is disputed, it would not be appropriate to withhold the supply of electricity to the petitioner merely on the calculations as made by C.E.S.C. Besides there is no provision in law or in the conditions of supply which enables CESC to withhold the connection unless payment is made as demanded by CESC. The most important distinction between this case and the Harsh Wood Products' case (supra) is the absence of any provision in the case before me entitling CESC to withhold the supply of electricity after disconnection on the ground of pilferage without the payment of the alleged claim on account of improper dues. In the case before the Supreme Court, the power was expressly provided for."
24. As indicated hereinbefore, such a view has been taken by this Court in other decisions as well. In the aforementioned cases it has been held that Clause (vi) of the schedule appended to the Indian Electricity Act shall apply although there cannot be any doubt that section 26(6) thereof would not. In any event, the appellant herein in a large number of cases before us had agreed that reference to the Chief Electrical Inspector be made as special referee.
25. Reference to an independent statutory authority would sub-serve the interest of justice inasmuch as he would be in a position to hear both the parties, examine the extent of damages to which the licensee may be entitled to as also the fact as to whether the assertions of the licensee to the effect that the writ petitioners are guilty of pilferage and/or theft of electrical energy is correct or not. It is not possible for this Court to enter into such a question and the Chief Electrical Inspector is an expert in the field and as such his opinion would be valued by both the licensee and the consumer.
26. It is only the dispute as to whether the meter is/is not correct or it is faulty not recording correctly the electricity consumed, can be decided by Electrical Inspector under the provisions of the said Act. Also, in such cases a consumer is not entitled to a prior notice as contemplated under section 24 of the Indian Electricity Act, before disconnection as section 24 has no application to a demand in respect of detection of pilferage. The Board/Licensee without prejudice to its rights can disconnect the supply of electricity forthwith and may call upon the consumer to make payment by way of compensation towards theft of electricity.
27. The above position of law will undoubtedly operate where the disconnection is based upon at least prima facie proof of fraud committed by the consumer. There must be material placed before Court based upon which at least a prima facie conclusion can be arrived at as regards the 'fraud' committed by the consumer in tampering with the meter and/or the seals. Unless a conclusion can be arrived at that there has been tampering with the meter and/or the seals, we do not think anyprima facie conclusion of pilferage of electricity can be reached justifying the disconnection of electricity or of the demand raised on that assumption.
28. Let us now examine whether the procedure adopted by CESC in the instant cases can be adjudged to be fair.
29. We must bear in mind that only a prima facie view can be expressed on this aspect as we do not, in this proceeding, wish to decide finally the matters between the parties as that would be a matter based on which the validity of the demand raised by CESC is to be considered and decided.
30. In Nishi Kanta Banik's case (supra), the precautions to be taken by the CESC have been referred to and more particularly, it has been observed that ipsi dixit of CESC is not final, at the highest it is a presumption which may be drawn.
31. Harsh Wood Products' case (supra) proceeded on a different fact situation. That was also a case where the allegation of theft of electricity was founded on the ground that the seals were found tampered. The electricity authorities in that case conducted the inspection and drew up proceedings in the presence of the consumer and/or his representative who was also a signatory to such proceedings.
32. In that view of the matter, a prima facie conclusion could be arrived at and was in fact, arrived at with regard to theft of electricity.
33. The estimate of such theft of electricity was made on the basis of previous consumption for the similar period and not on an assumption of load factor for the entire period of one year proceeding the detection as in the instant case.
34. Before us various Bills prepared by CESC Limited had been produced. Such Bills had not been prepared on any principle. Even in cases where the consumer has paid electricity charges on the basis of the consumption of electrical energy recorded in the meter upto a certain period, even if alleged pilferage has been detected in the next month the consumer has been asked to pay a huge amount. How and on what basis such Bills have been prepared, are not known to this court. Reasonableness or otherwise of the claim as a result whereof; the consumer can be directed to deposit a portion of the Billed amount and/or furnish security amount, thus, depend upon facts and circumstances of each case.
35. Prima facie, therefore, we are of the view that the procedure adopted by the appellant does not satisfy the test of reasonableness in the instant case.
36. We are, therefore, of the view that appellant/CESC is not entitled to get similar relief as in M/s. Harsh Wood Products' case (supra), wherein directions were issued for payment of 50% of the demand raised before restoration of electricity. We must emphasise here that appellant/CESC being a State though only for the purpose of Article 226 of the Constitution of India, nevertheless it has a duty to act in a fair, just and a reasonable manner. Electricity is an essential requirement and a vital raw material for the Industry. The very existence of an Industry or a Commercial establishment depends upon the supply of electricity. Vast powers have been conferred by the Act, Rules and Regulations upon the CESC regulating supply of electricity including power to disconnect the same apart from measures provided for recovery of the outstanding.
37. The Licensee in terms of the conditions of licence as also under the Indian Electricity Act can discontinue supply of electrical energy only in terms of law. In none of the aforementioned cases despite the decision of this Court in Hanuman Steel Rolling Mill (supra) an opportunity of hearing had been granted. Whether the exceptional case has been made out for giving a post- decisional hearing would, thus, also depend upon the facts and circumstances of each case.
38. It has been held that Principles of natural justice have to be complied with before disconnection. The same view has been taken by a Division Bench of Patna High Court in 1999(2) PLJR 665.
39. It is not disputed that there are no Rules, Regulations providing for guidelines in the matter of assessment of damages on account of theft of electricity. Mere absence of such Regulations cannot confer unbridled power upon CESC to resort to the extreme step of disconnecting electric supply. The consumer has to be protected from the vagaries and arbitrariness of licensee. Actions of the Licensee/CESC have to conform to the standard as expected of an authority within the meaning of Article 12 of the Constitution of India.
40. At the same time, as observed by the Supreme Court in M/s. Isha Marbles v. Bihar State Electricity Board, reported in 1995(2) JT 626, dishonest consumers cannot be allowed to pay tyrant with the public property but inadequacy of the law can hardly be a substitute for over-zealousness.
41. At this stage, it must be noticed that the learned Trial Judge by his order dated 28th June, 1999 observed as under :
    "There is no evidence before this Court as to the notice, if any or such disconnection is made in the presence of the petitioner or any independent person. Therefore, if today this Court holds that there is pilferage this will be a presumption and on the basis of such presumption to hold as such without any material will be an interference with the right of the petitioner in its essential service. Therefore, the respondent authorities are directed to restore the electrical connection in the factory premises of the petitioner within 48 hours from date. Re-connection charges, if any, for a sum of Rs. 40/- will be paid by the petitioner without prejudice to its rights and conditions. The demand of the respondents, if any, on account of deposit of 50% of the amount claimed will be heard and considered on the basis of affidavits to be filed by the parties on the returnable date."
42. We are prima facie of the view that on the facts and circumstances of the case, the Learned Trial Judge was justified in making the observations as he did so for want of any relevant material based on which a prima facie conclusion could have been arrived at with regard to the theft of electricity.
43. Mr. Mitra, however, submitted that the question of fact such as whether there has been pilferage of electricity by the consumer or not is a matter which cannot be adjudicated in writ proceedings. True, the writ Court normally does not adjudicate disputed questions of fact. On that ground, however, it cannot be said that a writ application under Article 226 of the Constitution of India is not maintainable by an aggrieved consumer of electricity. Scope of writ petition as also the jurisdiction of a writ Court are circumscribed only by the parameters of well settled principles of judicial review. It is, however, not helpless to issue appropriate directions where the procedure adopted by a statutory authority does not meet the test of fairness, as in the instant case.
44. Normally, such writ applications as the instant cases are being disposed of with directions relegating the parties to refer the dispute to the Electrical Inspector as "Special referee" for adjudication and pending disposal of such dispute, directions are issued for restoration of electric supply upon payment of reasonable amount based upon the demand raised by the statutory authority. As already noticed in the cases referred to supra, directions had been issued in those reported cases by the learned single Judges of this Court directing restoration of electricity on payment of 50% of the demand raised.
45. As a question has now been raised with respect to the consistency in passing interim orders, we are of the considered opinion that the CESC should follow a fair and reasonable procedure both with regard to drawing up of proceedings in the presence of the consumer and/or his representative so that a prima facie conclusion can be arrived at that there has been pilferage of electricity. The CESC is also required to raise the demand on account of alleged pilferage based upon some reasoned or reasonable basis. The previous consumption by the consumer for a similar period which is not in dispute can be said to be reasonable basis.
46. In the instant cases, with a view to expedite the disposal of the disputes and in the view that we have taken in the matter consistent with the judgments of this court, the parties are to be relegated to the adjudication of the disputes before the Electrical Inspector as Special Referee. Also, keeping in view the fact that the demands raised by the appellant-CESC in the instant cases pertain to the period of one year prior to the date of alleged detection of pilferage and also keeping in view the fact that apart from the electricity allegedly pilfered, demand has been raised with respect to fuel sur-charge, Government duties and additional security amount, it would serve the ends of justice, if without interfering with the orders under appeal we remit the matter back with a view to give an opportunity to the CESC authorities to satisfy the learned trial Judge as regard imposition of conditions for passing of an interim order.
47. There cannot be any doubt whatsoever that the writ petitioners-respondents shall go on paying the charges for consumption of electrical energy as recorded in the meter. The writ petitioners-respondents, there cannot, further, be any doubt, would also be bound to pay the admitted charges. In any case, such admitted charges and/or any Bill raised on the basis of the consumption of electrical energy as recorded in the meter and/or other charges payable to the appellant in terms of the provisions of Indian Electricity Act and/or condition of supply is not paid, it would be open to the appellant herein to take recourse to the provisions of section 24 of the Indian Electricity Act.
48. We may further make it clear that the interim order passed by the learned trial Judge shall be subject to any final order that may be passed in the matter.
49. These appeals are disposed of with the aforementioned directions without any order as to costs.
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