When can electricity supply be restored after a theft disconnection? The Supreme Court has resolved a recurring question, as to what procedure governs the ‘assessed amount’ a consumer must deposit to get reconnected after disconnection on allegations of electricity theft under Section 135(1A) of the Electricity Act, 2003?
The Court held that, in the absence of a specific procedure in the applicable Supply Code, the amount required for restoration must be assessed through the Section 126 mechanism, provisional assessment, opportunity to object, reasonable hearing, and final assessment. That assessment is appealable under Section 127 of the Electricity Act, 2003.
However, the Court clarified that the finality of the Section 127 appellate order is limited. It binds only the amount needed for restoration of supply under the third proviso to Section 135(1A). Where a criminal complaint is filed, ultimate civil liability is determined by the Special Court under Section 154(5). If the Special Court fixes liability below the amount deposited, the excess is refunded under Section 154(6).
Crucially, the Court clarified that restoration on a 50% deposit is not a routine entitlement. Because theft involves mens rea, a circumspect, fact-specific approach is required. The High Court may order restoration on payment of not less than 50% of the provisional demand only where it finds the assessment prima facie arbitrary, and only for reasons recorded. Where the facts warrant, the Court can insist on deposit of the entire provisionally assessed amount.
Briefly, the appeals arose from two cases in Gujarat where electricity distribution companies issued supplementary bills alleging theft of electricity under Section 135 of the Electricity Act, 2003. In both matters, the consumers challenged the theft-assessment bills before the Gujarat High Court.
The High Court granted interim protection by directing restoration or fresh supply of electricity upon payment of 50% of the demanded amount and allowed the consumers to challenge the assessments before the competent authority. The distribution licensees challenged these orders before the Supreme Court, contending that in theft cases there is no requirement of hearing, objection, or appeal, and that only the Special Court can determine liability under Section 154 of the Act.
A Two-Judge Bench comprising Justice Manoj Misra and Justice K.V. Viswanathan observed that theft of electricity is a species of unauthorized use of electricity, although every unauthorized use may not amount to theft. Therefore, theft cases are not completely outside the framework of assessment contemplated under Section 126 of the Electricity Act.
The Court noted that while Section 135 allows immediate disconnection upon detection of theft, the third proviso to Section 135(1A) grants the consumer a right to restoration of supply upon deposit of the ‘assessed amount’. Since the Act does not prescribe any separate assessment mechanism for theft cases, the assessment procedure under Section 126 must be adopted for determining that amount.
The Court further held that principles of natural justice cannot be ignored. If the assessed amount is to be determined through the Section 126 mechanism, the consumer must receive a provisional assessment, have an opportunity to file objections, and be heard before a final assessment is made.
According to the Court, proceedings under Section 126 and criminal prosecution for theft under Section 135 can run simultaneously. Assessment proceedings are intended to quantify the amount payable for restoration of electricity supply, whereas criminal proceedings address the offence of theft and permit the Special Court to determine final civil liability under Section 154(5).
The Court clarified that even where an appeal under Section 127 is preferred and attains finality, such finality is only for the limited purpose of restoration of electricity supply. It does not bind the Special Court while determining civil liability in a theft prosecution.
The Bench also emphasized that electricity is an essential commodity affecting both livelihood and business. Therefore, High Courts may exercise their constitutional jurisdiction in appropriate cases to order restoration of supply where a provisional assessment appears arbitrary. However, theft cases involve allegations of dishonest conduct and must be approached with caution rather than routine indulgence.
