Page 1 Reportable

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO . 4023 of 2014

(Arising out of Special Leave Petition (Civil) No. 3396 of 2011)

Western Electricity Supply Co. of Orissa Ltd & Ors. ...Appellants

vs

M/s Baba Baijanath Roller and Flour Mill P. Ltd. ...Respondent

With

CA No.4024 of 2014

(arising out of SLP (Civil) No.3397 of 2011)

J U D G M E N T

Pinaki Chandra Ghose, J.

1. Leave granted.

2.This appeal is directed against an order dated August 3, 2010

passed by the High Court of Orissa allowing the writ petition

filed by the respondent, quashing the bill issued by the

appellant for a sum of 5,10,930/- as well the notice of

disconnection dated October 5, 2010.

Page 2 3.The respondent-writ petitioner is a registered company, inter

alia, carrying on its business under the name and style of M/s.

Baba Baijnath Roller and Flour Mill Pvt. Ltd., having installed a

Mill in the district of Jharsuguda and is the consumer of the

appellant herein.

4.The facts of the case, briefly, are as follows :

4.1The respondent alleged in the writ petition that on an

inspection conducted by the appellant on September 9, 2002

at the premises of the respondent, the appellant intimated

that at the time of inspection it was found that H.T. Meter,

T.P Box’s inner door and meter terminal cover quick seals,

plastic seals and paper seals were tampered. In addition,

L.T.T.P Box inner door quick seals, plastic seals and paper

seals were found tampered. The B-Phase P.T wire was found

cut as such the meter was not getting B-Phase potential.

4.2It was further brought to the notice of the respondent by the

appellant that the interference with the metering

arrangement was made by the respondent in order to

prevent the meter from recording actual consumption which

2

Page 3 attracts Regulation 64 of the Orissa Electricity Regulatory

Commission Distribution (Conditions of Supply) Code, 1998

(hereinafter referred to as “the Code”). Accordingly, the

penal charges as per rules were intimated and raised on the

respondent on September 30, 2002. The appellant further

called upon the respondent to submit its representation, if

any, within seven days. It was intimated that in default of

payment of such charges within seven days from the date of

receipt of the penal bill, the power supply to the premises

will be disconnected without any further notice. The penal

bill was raised on the respondent/writ petitioner for a sum of

5,10,930/-. On October 5, 2002 the electricity supply was

disconnected since the respondent failed to make the

payment.

4.3 In these circumstances, a writ petition was filed by the

respondent challenging the action on the part of the

appellant before the High Court. The respondent-writ

petitioner made out a case that the bill used to be received

by the writ petitioner was around 80,000/- per month and

3

Page 4 according to the writ petitioner/respondent, the meter was

defective and recording excessive consumption.

4.4 The writ petitioner/respondent challenged the action on the

part of the appellant that when the inspection was made, at

that point of time the officers of the appellant made a

demand for illegal gratification since refused by the Manager

of the respondent-company, the officers of the appellant

raised such allegations and further the Manager was forced

to sign several papers under duress and coercion.

4.5 It was urged before the High Court on behalf of the

respondent-company on the ground (i) that the penal bill had

been issued in violation of the principles of natural justice;

(ii) that the inspection was made without giving a notice and

in the absence of the representative of the firm; (iii) that the

allegation of tampering with seals cannot be sustained as

there was no allegation that the outer seal of T.P. box was

broken or tampered with; and (iv) that the penal bill could

not have been raised since the meter was defective and was

not recording proper consumption. By filing a counter

4

Page 5 affidavit, the appellant herein duly contested the writ

petition and stated that an alternative remedy was available

to the respondent under the Code. It was further submitted

that in the instant case, there is no question of alleging that

the meter is defective. It is a clear case of theft of electricity

by the consumer and Section 26 of the Indian Electricity Act,

1910 (hereinafter referred to as “the Act of 1910”) has no

application. It is submitted that Section 26(6) of the Act of

1910 is attracted only when a meter is defective and is

incapable of recording the correct consumption of electricity.

It was further contended on behalf of the appellant before

the High Court that inspection of the meter was done in the

presence of the representative of the writ-

petitioner/respondent.

4.6The High Court after hearing the parties held that in case of

violation of principles of natural justice even if alternative

remedy is available, a writ court can interfere for

redressal of grievance of the petitioner. The High Court

further held that the representation filed by the writ

petitioner was never considered before the imposition of

5

Page 6 penalty, far less giving an opportunity of hearing to the writ

petitioner. Accordingly, the High Court held that this action

of the appellant is in clear violation of the principles of

natural justice. In these circumstances, the High Court set

aside the penalty charges imposed by the appellant on the

writ petitioner/respondent. The inspection report was also

quashed on the ground that such inspection was never done

in the presence of the authorised persons of the writ

petitioner. The High Court further held that since the penalty

is untenable, the appellant was not entitled to levy delayed

payment surcharge on the penal charges treating it as old

arrears or current arrears. In these circumstances, the High

Court further directed to refund the amount so paid within

three months.

4.7 Being aggrieved, this appeal has been filed by the appellant.

5.Learned counsel appearing on behalf of the appellant

contended before us that the High Court has erred in holding that

the matter should come within the purview of Section 26(6) of the

Act of 1910. He submitted that the High Court ignoring the judicial

pronouncements on this question undermined the authority of the

6

Page 7 licensee (appellant) to impose penalty as a consequence on a

consumer even if the consumer has committed theft of electricity.

By this process, the provisions of the statutory Code have been

made nugatory. The meter could be subjected to tampering in

various ways. The methods as detected on inspection by the

officers of the appellant are more than sufficient to conclude that

the meter was tampered with and did not record the actual

consumption of energy consumed by the writ

petitioner/respondent. He further contended that the theft of

electricity is governed by the Code and not under the provisions

of the Act of 1910.

6.The relevant provisions of the Act of 1910 as well as the

Code, in particular Clauses 54, 56, 64, 105, 110 and 115, were

duly placed before us. It will be proper for us to reproduce those

hereunder:

“Section 26 - Meters. – (1) In the absence of an

agreement to the contrary, the amount of energy supplied

to a consumer or the electrical quantity contained in the

supply shall be ascertained by means of a correct meter,

and the licensee shall, if required by the consumer, cause

the consumer to be supplied with such a meter:

Provided that the licensee may require the consumer

to give him security for the price of a meter and enter into

7

Page 8 an agreement for the hire thereof, unless the consumer

elects to purchase a meter.

(2)Where the consumer so enters into an agreement for

the hire of a meter, the licensee shall keep the meter

correct, and, in default of his doing so, the consumer shall,

for so long as the default continues, cease to be liable to

pay for the hire of the meter.

(3)Where the meter is the property of the consumer, he

shall keep the meter correct and, in default of his doing so,

the licensee may, after giving him seven days’ notice, for so

long as the default continues, cease to supply energy

through the meter.

(4)The licensee or any person duly authorised by the

licensee shall, at any reasonable time and on informing the

consumer of his intention, have access to and be at liberty

to inspect and test, and for that purpose, if he thinks fit,

take off and remove, any meter referred to in sub-section

(1); and, except where the meter is so hired as aforesaid, all

reasonable expenses of, and incidental to, such inspecting,

testing, taking off and removing shall, if the meter is found

to be otherwise than correct, be recovered from the

consumer, and, where any difference or dispute arises as to

the amount of such reasonable expenses, the matter shall

be referred to an Electrical Inspector, and the decision of

such Inspector shall be final:

Provided that the licensee shall not be at liberty to

take off or remove any such meter if any difference or

dispute of the nature described in sub-section (6) has arisen

until the matter has been determined as therein provided.

(5)A consumer shall not connect any meter referred to

in sub-section (1) with any electric supply-line through

which energy is supplied by a licensee, or disconnect the

same from any such electric supply-line, but he may by

giving not less than forty-eight hours’ notice in writing to

the licensee require the licensee to connect or disconnect

such meter and on receipt of any such requisition the

licensee shall comply with it within the period of the notice.

8

Page 9 (6)Where any difference or dispute arises as to whether

any meter referred to in sub-section (1) is or is not correct,

the matter shall be decided, upon the application of either

party, by an Electrical Inspector; and where the meter has,

in the opinion of such Inspector ceased to be correct, such

Inspector shall estimate the amount of the energy supplied

to the consumer or the electrical quantity contained in the

supply, during such time, not exceeding six months, as the

meter shall not, in the opinion of such Inspector, have been

correct; but save as aforesaid, the register of the meter

shall, in the absence of fraud, be conclusive proof of such

amount or quantity:

Provided that before either a licensee or a consumer

applies to the Electrical Inspector under this sub-section, he

shall give to the other party not less than seven days’

notice of his intention so to do.

(7)In addition to any meter which may be placed upon

the premises of a consumer in pursuance of the provisions

of sub-section (1), the licensee may place upon such

premises such meter, maximum demand indicator or other

apparatus as he may think fit for the purpose of

ascertaining or regulating either the amount of energy

supplied to the consumer, or the number of hours during

which the supply is given, or the rate per unit of time at

which energy is supplied to the consumer, or any other

quantity or time connected with the supply:

Provided that the meter, indicator or apparatus shall

not, in the absence of an agreement to the contrary be

placed otherwise than between the distributing mains of the

licensee and any meter referred to in sub-section (1):

Provided also that, where the charges for the supply

of energy depend wholly or partly upon the reading or

indication of any such meter, indicator or apparatus as

aforesaid, the licensee shall, in the absence of an

agreement to the contrary, keep the meter, indicator or

apparatus correct; and the provisions of sub-sections (4),

(5) and (6) shall in that case apply as though the meter,

indicator or apparatus were a meter referred to in sub-

section (1).

9

Page 10 Explanation.—A meter shall be deemed to be “correct” if it

registers the amount of energy supplied, or the electrical

quantity contained in the supply, within the prescribed

limits of error, and a maximum demand indicator or other

apparatus referred to in sub-section (7) shall be deemed to

be “correct” if it complies with such conditions as may be

prescribed in the case of any such indicator or other

apparatus.”

“CHAPTER - IV

METERS

54. Initial power supply shall not be given without a correct

meter. Meters will be installed at the point of supply or at a

suitable place as the engineer may decide. The same shall

be fixed preferably in the basement or ground floor in multi-

storied buildings where it will be easily accessible for

reading and inspection at any time. The consumer shall run

his wiring from such point of supply and shall be responsible

for the safety of the meter or metering equipment on his

premises from theft, damage or interference.

x x x

56. The meters and associated equipment shall be properly

sealed by the engineer and consumer’s acknowledgement

obtained. The seals, nameplates, distinguishing numbers or

marks affixed on the said equipment or apparatus shall not

be interfered with, broken, removed or erased by the

consumer. The meter, metering equipment, etc. shall on no

account be handled or removed by any one except under

the authority of the engineer. The engineer can do so in the

presence of the consumer or his representative. An

acknowledgement shall be taken from the consumer or his

representative when seal is broken.

x x x

64. If a meter or metering equipment has been found to

have been tampered or there is resistance by the consumer

to the replacement of obsolete or defective meters by the

1

Page 11 engineer, the engineer may disconnect the supply after

giving seven clear days show cause notice and opportunity

to the consumer to submit his representation.

x x x

Penal Charges --

105. (1) On detection of unauthorised use in any manner by

a consumer, the load connected in excess of the authorised

load shall be treated as unauthorised load. The quantum of

unauthorised consumption shall be determined in the same

ratio as the unauthorised load stands to the authorised load.

(2) The period of unauthorised use shall be determined by

the engineer as one year prior to the date of detection or

from the date of initial supply if the initial date of supply is

less than one year from the date of detection. If the

consumer provides evidence to the contrary, the period

may be varied according to such evidence. The engineer

may levy penal charges in addition to the normal charges

for aforesaid period of unauthorised use. Where addition of

the unauthorised installation or sale or diversion would

result in a reclassification according to this Code, the whole

of the power drawn shall be deemed to have been drawn in

the reclassified category. The consumer shall also be

required to execute a fresh agreement under the

reclassified category.

(3) The penal energy charges for unauthorised use of power

shall be two times the charges applicable to the particular

category of consumer.

(4) The penal demand charges for unauthorised use of

power in cases covered under two part tariff shall be

calculated on un-authorised connected load expressed in

KVA multiplied by two times the rate of demand charges

applicable.

x x x

CHAPTER - XII

1

Page 12 CONSUMER PROTECTION

110. (1) A consumer aggrieved by any action or lack of

action by the engineer under this Code may file a

representation within one year of such action or lack of

action to the designated authority of the licensee, above the

rank of engineer who shall pass final orders on such a

representation within thirty days of receipt of the

representation.

(2) A consumer aggrieved by the decision or lack of decision

of the designated authority of the licensee may file a

representation within forty five days to the chief executive

officer of the licensee who shall pass final orders on such a

representation within forty five days of receipt of the

representation.

(3) In respect of orders or lack of orders of the chief

executive officer of the licensee on matters provided under

Section 33 of the Act, the consumer may make a reference

to the Commission under Section 37(1) of the Act.

x x x

Overriding effect --

115. (1) The provisions of this Code shall override the

provisions of OSEB (General Condition of Supply)

Regulation, 1995.

(2) Nothing contained in this Code shall have effect, in so

far as it is inconsistent with the provisions of Indian

Electricity Act, 1910, Electricity (Supply) Act, 1948 and

Rules framed thereunder as amended by the Act.”

1

Page 13 7.Therefore, it would be evident from Section 26(6) which

carves out an exception, that where there is an allegation of

“fraud”, the same provision is not attracted. He further

contended that invariably a plea is being taken by the consumer

found to have committed theft of electricity that his meter was

defective. In the instant case, in accordance with Section 26(4),

an inspection was conducted in the presence of the

representative of the respondent. If the meter is found to be

defective on such inspection and if the respondent was desirous

of availing the benefit of Section 26(6), it is the duty of the

consumer under the said Section to move an application before

the Electrical Inspector for getting the meter tested.

8. It was submitted that the Orissa Electricity Regulatory

Commission (for short “OERC”) by virtue of Section 54 of the

Orissa Electricity Reforms Act, 1995 has framed a Code on

different issues including the manner in which theft of energy is

to be determined. They are statutory in character. Accordingly,

he submitted that the High Court has erred in dealing with the

matter without taking into account the clauses of the Code which

are framed to deal with the theft of electricity. Factually also, the

1

Page 14 High Court was incorrect in recording that the inspection was

conducted in the absence of the consumer. It is further submitted

that the decision relied on by the High Court is totally

inapplicable in the facts and circumstances of this case since

Belwal Spinning Mills Ltd. v. U.P. State Electricity Board

1

did not

deal with the Code of 1998 framed by the Orissa Electricity

Regulatory Commission and the distinguishable feature of the

said decision is that the said decision made it clear that when

there is an allegation of fraud or tampering of meter, Section

26(6) of the Act of 1910 has no application. Learned counsel

further relied upon the decision in Madhya Pradesh Electricity

Board & Ors. v. Smt. Basantibai

2

and drew our attention to

paragraph 9 of the said decision and contended that Section

26(6) of the Act of 1910 has no application where there is a

dispute regarding the commission of fraud in tampering with the

meter and breaking the body seal is totally outside the ambit of

Section 26(6) of the said Act. It is further contended that after

the inspection was conducted in the presence of the

representative of the consumer, details of the illegalities found

1

1997 (6) SCC 740

2

1988 (1) SCC 23

1

Page 15 on such inspection were shared with the respondent consumer,

resulting in receipt of a vague reply from the consumer and was

processed to raise a demand by way of a penal bill. Therefore,

according to him, the requirement under the law was followed

before issuance of the said penal bill. He further pointed out that

on being aggrieved by such decision, the writ

petitioner/respondent could have followed the statutory remedy

as envisaged under Section 110 of the Code. It is further stated

that the High Court did not even give any reason for the direction

to refund the delayed payment surcharge.

9.In these circumstances, it is submitted that the order of the

High Court cannot be sustained under the provisions of law. The

penal bill was quashed only on the ground that the unit of the

respondent was closed. Such fact is immaterial and irrelevant in

respect of demand of a penal bill. The approach of the High Court

is patently erroneous.

10.Per contra, it is submitted on behalf of the respondent that

the argument of the appellant could have succeeded if the

appellant could prove that the respondent had indulged in theft

1

Page 16 of electricity. It is pointed out that on October 10, 2002, the High

Court directed the respondent to deposit 30,000/- without

prejudice and for restoration of power supply since the electricity

was disconnected on October 5, 2002. The power supply was

restored on deposit of 10,000/- and subsequently, the

respondent further deposited a sum of 20,000/- in terms of the

direction. It is submitted that in spite of the interim order passed

by the High Court directing stay of realisation of the penal bill,

the appellants went on charging delayed payment surcharge on

the penal charges in monthly bills raised subsequently on the

respondent. It is submitted that the meter had actually inherent

defects as only the inner seal was broken but the outer seal was

intact. It is true that the matter was not referred to Electrical

Inspector. It is further stated that in case of a dispute between

the Central Act and the State Act, Central Act will prevail upon

the State Act.

11.We have noticed the facts in this case. We have also

considered the Sections of the Act of 1910 and it appears to us

that Section 26 is relevant only when there is any difference or a

dispute arises in connection with correctness of a meter, in that

1

Page 17 case the matter shall be decided, upon being applied by either

party, by an Electrical Inspector and in the opinion of the

Inspector if it is found that the meter is defective, the Inspector

shall estimate the amount of energy supplied to the consumer or

the electrical quantity contained in the supply during such time

not exceeding six months but if there is a question of fraud in

tampering with the meter, in that case there is no question of

applicability of Section 26 of the said Act in such a matter. In the

instance case, we have asked the learned counsel appearing for

the respondent whether following Section 26(6), the respondent

ever asked or applied for checking of the meter by the Electrical

Inspector on the ground of defective meter. The answer was in

the negative. Therefore, it shows that the ingredients of Section

26(6) were not followed by the respondent to meet the necessity

of checking the meter in question in accordance with the said

provision.

12.We have further noticed that the inspection was made in the

presence of the representative of the respondent who is a

Manager of the said company and in his presence the meter was

checked up and was found to be tampered with. We have also

1

Page 18 noticed that the plea of duress or coercion in signing the

inspection report was raised by the respondent but in reality no

allegation was made by the respondent before an appropriate

authority excepting such bald allegations have been made before

the writ court without any basis or evidence. Therefore that fact

cannot have any bearings in deciding this matter. We cannot

brush aside the said fact from the mind while dealing with the

matter concerning tampering of meter. It appears to us that the

said aspect has escaped the attention of the High Court and

therefore, in our opinion, the High Court failed to appreciate the

facts in their proper perspective. Therefore, on this ground, we

find that the High Court has misconstrued the facts and the

provisions of law in dealing with the matter. The provision of law

which deals with tampering of metering equipments, i.e. clauses

56, 64 and 105 of the Code have not been considered by the

High Court and in our opinion the High Court has failed to

construe such provisions and erred in deciding the matter

ignoring the said provisions. The High Court accepted the

position submitted on behalf of the respondent/writ-petitioner

that it was a case of defective meter and there is no question of

1

Page 19 any tampering with the meter in question. The High Court has

failed to appreciate that the inspection was made and the fact of

tampering of meter would appear from the inspection report and

such inspection report was signed on behalf of the

respondent/writ-petitioner. Therefore, the High Court ignoring the

said fact, came to the conclusion without giving any reason, that

the inspection report is bad and has erred in setting aside such

inspection report. Hence, such findings of the High Court cannot

be sustained.

13.Therefore, in our opinion, the High Court was also wrong in

not considering the rights of the appellant to raise penal charges

on the respondent on the ground of unauthorised consumption

by way of tampering the meter or metering equipment and has a

right to raise penal bill in accordance with the provisions of Code.

On this ground the High Court has erred in allowing the writ

petition in favour of the respondent, quashing the penal charges

and further the direction given to refund the amount. The said

order is without any reason and cannot be sustained in the eyes

of law. Hence, the same is set aside.

1

Page 20 14. We have also noticed in Madhya Pradesh Electricity

Board & Ors. v. Smt. Basantibai (supra), this Court held:

“9. It is evident from the provisions of this section that a

dispute as to whether any meter referred to in sub-section

(1) is or is not correct has to be decided by the Electrical

Inspector upon application made by either of the parties. It

is for the Inspector to determine whether the meter is

correct or not and in case the Inspector is of the opinion

that the meter is not correct he shall estimate the amount

of energy supplied to the consumer or the electrical

quantity contained in the supply during a period not

exceeding six months and direct the consumer to pay the

same. 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, that can be decided by the Electrical

Inspector under the provisions of the said Act.”

In Sub-Divisional Officer (P), UHBVNL v. Dharam Pal

3

, it

appears to us that in case of tampering, there is no scope for

reference to Electrical Inspector. It was held :

“9. In State of W.B. v. Rupa Ice Factory (P) Ltd. [2004 (10)

SCC 635], it was observed as follows: (SCC p. 637, para 5)

3

2006 (12) SCC 222

2

Page 21 “5. As regards the second claim, namely, the claim for

the period from December 1993 to December 1995,

the finding of the High Court is that the Vigilance

Squad had found that Respondent 1 had tapped the

electric energy directly from the transformer to the LT

distribution board bypassing the meter circuit. If that

is so, we do not know as to why the High Court would

go on to advert to Section 26 of the Electricity Act and

direct reference to the Electrical Inspector for decision

under Section 26(6). In two decisions of this Court in

M.P Electricity Board v. Basantibai [1988 (1) SCC 23]

and J.M.D. Alloys Ltd. v. Bihar SEB [2003 (5) SCC 226]

it has been held that in cases of tampering or theft or

pilferage of electricity, the demand raised falls

outside the scope of Section 26 of the Electricity Act.

If that is so, neither the limitation period mentioned in

Section 26 of the Electricity Act nor the procedure for

raising demand for electricity consumed would arise

at all. In this view of the matter, that part of the order

of the Division Bench of the High Court, directing that

there should be a reference to the Electrical

Inspector, shall stand set aside. In other respects the

order of the High Court shall remain undisturbed. The

appeal is allowed accordingly.”

15. In these circumstances, in our opinion, the High

Court was wrong in bringing the matter within the scope of the

provision of Section 26(6) of the said Act, and further the High

Court was totally wrong in appreciation of facts even on the

question of inspection and stated that no representative was

present at that point of time. On the contrary, admittedly the

Manager of the respondent at the time of the inspection was

present.

2

Page 22 16. In these circumstances, the appeals are allowed, the

writ petitions filed by the respondent/writ-petitioner are

dismissed and the order passed by the High Court is set aside.

....................................J.

(Gyan Sudha Misra)

New Delhi; .....................................J.

March 26, 2014. (Pinaki Chandra Ghose)

2