High Court can order restoration of electricity in disputes involving power theft: Supreme Court

The Supreme Court on Monday held that High Courts can order the restoration of electricity supply that was disconnected over disputed allegations of theft, but advised against adopting a liberal approach in such cases [Dakshin Gujarat Vij Vs Vaibhav Crusher].

A Bench of Justices Manoj Misra and KV Viswanathan observed that electricity is essential for life and livelihood, and that its deprivation could have serious consequences. Therefore, constitutional courts can intervene to protect consumers against arbitrary disruption of electricity supply by electricity distribution companies, it held.

"Electricity is an essential commodity necessary for both life and livelihood. Its deprivation may have serious consequences. In an appropriate case, the High Court may be justified in exercising its constitutional powers to protect a person from an arbitrary action of the State and its instrumentalities including a distribution licensee," the judgment stated.

The Court, however, cautioned that a liberal approach may not be appropriate in cases involving allegations of electricity theft.

It said that in such cases - involving allegations of theft that are yet to be finally decided - courts should impose appropriate conditions before ordering the reconnection of electricity.

"In cases of theft, which necessarily involves a criminal intent (i.e. mens rea), adoption of a liberal approach may not be appropriate. Rather, each case should be addressed on its own facts and if the facts so warrant, the High Court might be justified in even declining the prayer for restoration of electricity supply till entire amount, provisionally assessed, is deposited. In short, a circumspect approach is required while dealing with petitions seeking restoration of supply of electricity disconnected on ground of theft," the October 26 ruling stated.

The judgment was delivered in appeals filed by Dakshin Gujarat Vij Company Limited and Paschim Gujarat Vij Company Limited against orders passed by the Gujarat High Court.

One of the disputes concerned Vaibhav Metal Crusher, which had received a supplementary electricity bill demanding approximately ₹93 lakh towards alleged electricity theft, besides ₹23.45 lakh as compounding charges.

The Gujarat High Court had permitted the restoration of electricity supply upon payment of 50 percent of the demanded amount and allowed the consumer to challenge the assessment of the demand.

The distribution companies challenged the orders before the Supreme Court, arguing that the assessment of electricity use by consumers accused of electricity theft is not subject to the procedural safeguards that are available in cases of unauthorised use of electricity.

The Supreme Court rejected this distinction insofar as the assessment procedure was concerned.

It held that in the absence of a separate procedure prescribed under the applicable Electricity Supply Code, assessments made in electricity theft cases must follow the procedure under Section 126 of the Electricity Act, 2003.

This includes giving consumers an opportunity to object to provisional assessments and challenge final assessments through appeals under Section 127.

However, the Court clarified that such assessments would remain subject to the determination of civil liability (money that can be recovered to compensate for electricity theft) by the special court under Section 154 of the Act in cases involving criminal prosecution.

Nevertheless, it held that where a provisional assessment appeared prima facie arbitrary, High Courts could order the restoration of electricity supply upon the payment of an amount not less than 50 percent of the demand, after recording reasons.

The Court, therefore, upheld the Gujarat High Court's direction permitting the restoration of electricity to Vaibhav Metal Crusher upon depositing half the assessed amount, subject to the clarification regarding appellate proceedings and determination of civil liability by the Special Court.

It also declined to interfere with the High Court's remand order in the second dispute.

Both appeals by the electricity distributors were dismissed.

Senior Advocate Ranjit Kumar appeared for the electricity distribution companies, assisted by advocates Indu Misra, Daleep Dhyani and Suraj Singh.

Senior Advocate Raghenth Basant appeared for the consumers, assisted by advocates Dhruvik Patel, Hima Bhardwaj, Shivang Goel and Ishaan Aggarwal.

[Read Judgment]