KERALA STATE ELECTRICITY BOARD & ORS. v. THOMAS JOSEPH ALIAS THOMAS M. J. & ORS.

Citation: [2022] 9 S.C.R. 85; 2022 INSC 1293

Court: Supreme Court of India

Bench: DINESH MAHESHWARI , J.B. PARDIWALA

Judgment date: 2022-12-16

Case summary

2022 INSC 1293. Supreme Court of India judgment dated 2022-12-16. KERALA STATE ELECTRICITY BOARD & ORS. v. THOMAS JOSEPH ALIAS THOMAS M. J. & ORS. Read the...

Judgment text

A B C D E F G H 85 KERALA STATE ELECTRICITY BOARD & ORS. v. THOMAS JOSEPH ALIAS THOMAS M. J. & ORS. (Civil Appeal Nos. 9252-9253 of 2022) DECEMBER 16, 2022 [DINESH MAHESHWARI AND J. B. PARDIWALA, JJ. ] Electricity Act, 2003: ss. 126 and 127 – Unauthorised use of electricity – Consumption of electricity by consumers in excess of the connected load/contracted load whether amount to ‘unauthorised use of electricity’ under explanation (b) to s. 126(6) – Held: ss. 126 and 127 of the Act constitute a complete code in themselves – The expression ‘unauthorised use of electricity’ means as it appears in s. 126 – The purpose of s. 126 is to ensure stoppage of misuse/unauthorised use of electricity as well as to ensure prevention of revenue loss – Consumption of electricity in excess of sanctioned/connected load in very same premise and for the very same purpose without change in tariff constitutes ‘unauthorised use of electricity’ under explanation (b) (iv) to s.

126 of the Act – Kerala Electricity Supply Code, 2014 – r. 153. Administrative law: Delegated Legislation – Rule making power – 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 – A delegated power to legislate by making rules or regulations cannot be exercised so as to bring into existence the substantive rights or obligations or disabilities not contemplated by the provisions of the Electricity Act, 2003. Kerala Electricity Supply Code, 2014: Regn. 153(15) – Whether Regn. 153(15) is ultra vires of s.

126 of Electricity Act, 2003 – Held: A rule making body must function within the purview of the rule making authority conferred on it by the parent Act – 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 [2022] 9 S. C. R. 85 85 A B C D E F G H 86 SUPREME COURT REPORTS [2022] 9 S. C. R. necessarily function within the purview of the statute – If Regn. 153(15) is to be given effect, then the same would frustrate the very object of s. 126 of the Act – Therefore, Regn. 153(15) is invalid on the ground that same is inconsistent with the provisions of s. 126 of the Electricity Act, 2003 – Doctrine of ultra vires. Allowing the appeals, the Court HELD: 1. 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. High Court 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. [Paras 56 and 58][136-B-C; 137-A-B] 2. It is settled law that the regulation making power cannot be used to bring into existence substantive rights, which are not contemplated under the Act 2003.

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. [Paras 63 and 64][139-E-H] 3. 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 A B C D E F G H 87 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. [Para 65] [140-B-D] 4. 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. 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. [ Paras 78 and 80][144-H; 145-A, D] 5.

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. 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. [Para 82][148-B-C] Sukhdev Singh and Others v. Bhagatram Sardar Singh Raghuvanshi and Another (1975) 1 SCC 421 : [1975] 3 SCR 619 – followed. Executive Engineer, Southern Electricity Supply Company of Orissa Limited (Southco) and Another v. Sri Seetaram Rice Mill (2012) 2 SCC 108 : [2011] 15 SCR 211 – relied on. KERALA STATE ELECTRICITY BOARD & ORS. v. THOMAS JOSEPH A B C D E F G H 88 SUPREME COURT REPORTS [2022] 9 S. C. R.

Punjab State Electricity Board v. Vishwa Caliber Builders Private Limited (2010) 4 SCC 539; Uttar Pradesh Power Corporation Limited and Others v. Anis Ahmad (2013) 8 SCC 491 : [2013] 13 SCR 388; Additional District Magistrate (Rev. ) Delhi Admn. v. Siri Ram (2000) 5 SCC 451 : [2000] 3 SCR 1019; State of Karnataka and Another v. H. Ganesh Kamath and Others (1983) 2 SCC 402 : [1983] 2 SCR 665; Kunj Behari Lal Butail and Others v. State of H. P. and Others (2000) 3 SCC 40 : [2000] 1 SCR 1054; St. Johns Teachers Training Institute v. Regional Director, National Council for Teacher Education and Another (2003) 3 SCC 321 : [ 2003] 1 SCR 975; Global Energy Limited and Another v. Central Electricity Regulatory Commission (2009) 15 SCC 570 : [2009] 9 SCR 22; State of T. N. and Another v. P. Krishnamurthy and Others (2006) 4 SCC 517 : [2006] 3 SCR 396; Pratap Chandra Mehta v. State Bar Council of Madhya Pradesh and Others (2011) 9 SCC 573 : [2011] 11 SCR 965; Dr. Mahachandra Prasad Singh v.

Chairman, Bihar Legislative Council and Others (2004) 8 SCC 747 : [2004] 5 Suppl. SCR 692; McEldowney v. Forde (1971) AC 632 : (1969) 3 WLR 179 – referred to. “Delegated Legislation” in Francis Bennion’s Statutory Interpretation, 3rd Edn. ) – referred to. Case Law Reference [2011] 15 SCR 211 relied on Para 15 (2010) 4 SCC 539 referred to Para 59 [2013] 13 SCR 388 referred to Para 62 [2000] 3 SCR 1019 referred to Para 67 [1975] 3 SCR 619 followed on Para 68 [1983] 2 SCR 665 referred to Para 69 [2000] 1 SCR 1054 referred to Para 70 [2003] 1 SCR 975 referred to Para 71 A B C D E F G H 89 [2009] 9 SCR 22 referred to Para 72 [2006] 3 SCR 396 referred to Para 74 [2011] 11 SCR 965 referred to Para 75 [2004] 5 Suppl. SCR 692 referred to Para 76 CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 9252- 9253 of 2022. From the Judgment and Order dated 12. 04. 2017 of the High Court of Kerala at Ernakulam in WP (C) No. 22644 of 2015 and dated 21. 08. 2017 in Review Petition No.

598 of 2017 in WP (C) No. 22644 of 2015. With Civil Appeal Nos. 9256-9257, 9254-9255, 9262-9263, 9264-9265, 9266-9267, 9268-9269, 9270-9271, 9258-9259 and 9260-9261 of 2022. Basant R. , Sr. Adv. , Raghenth Basant, P. V. Dinesh, Vishnu Pazhanganat, Ajay Krishna, Rahul Raj Mishra, Ashwini Kumar Singh, Dineesh K. , Advs. for the Appellants. Nishe Rajen Shonker, Sriram P. , Abraham C. Mathew, Anu K. Joy, Alim Anvar, Mohammed Sadique T. A. , Kuriakose Varghese, V. Shyamohan, Akshat Gogna, Ms. Aishwarya Hariharan, M/s. Kmnp Law, Dhananjaya Mishra, C. K. Sasi, Abdulla Naseeh. V. T. , Ms. Meena k. Poulose, Advs. for the Respondents. The Judgment of the Court was delivered by J. B. PARDIWALA, J. 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 STATE ELECTRICITY BOARD & ORS. v. THOMAS JOSEPH A B C D E F G H 90 SUPREME COURT REPORTS [2022] 9 S. C. R. 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. 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 A B C D E F G H 91 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. 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. KERALA STATE ELECTRICITY BOARD & ORS. v. THOMAS JOSEPH [J. B.

PARDIWALA, J. ] A B C D E F G H 92 SUPREME COURT REPORTS [2022] 9 S. C. R. 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 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 A B C D E F G H 93 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 LT- IV 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 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 LT- VIIA 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 KERALA STATE ELECTRICITY BOARD & ORS. v. THOMAS JOSEPH [J. B. PARDIWALA, J. ] A B C D E F G H 94 SUPREME COURT REPORTS [2022] 9 S. C. R. 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 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 A B C D E F G H 95 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 KERALA STATE ELECTRICITY BOARD & ORS. v. THOMAS JOSEPH [J. B. PARDIWALA, J. ] A B C D E F G H 96 SUPREME COURT REPORTS [2022] 9 S. C. R. (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 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. A B C D E F G H 97 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 self- explanatory, 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 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. KERALA STATE ELECTRICITY BOARD & ORS. v. THOMAS JOSEPH [J. B. PARDIWALA, J. ] A B C D E F G H 98 SUPREME COURT REPORTS [2022] 9 S. C. R. 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 A B C D E F G H 99 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 KERALA STATE ELECTRICITY BOARD & ORS. v. THOMAS JOSEPH [J. B. PARDIWALA, J. ] A B C D E F G H 100 SUPREME COURT REPORTS [2022] 9 S. C. R. 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 Jeweller y (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). 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 A B C D E F G H 101 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 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 KERALA STATE ELECTRICITY BOARD & ORS. v. THOMAS JOSEPH [J. B. PARDIWALA, J. ] A B C D E F G H 102 SUPREME COURT REPORTS [2022] 9 S. C. R. 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 LT- VIIA 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 A B C D E F G H 103 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. 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. KERALA STATE ELECTRICITY BOARD & ORS. v. THOMAS JOSEPH [J. B. PARDIWALA, J. ] A B C D E F G H 104 SUPREME COURT REPORTS [2022] 9 S. C. R. 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. 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 A B C D E F G H 105 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) 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 KERALA STATE ELECTRICITY BOARD & ORS. v. THOMAS JOSEPH [J. B. PARDIWALA, J. ] A B C D E F G H 106 SUPREME COURT REPORTS [2022] 9 S. C. R. 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 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 A B C D E F G H 107 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 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 KERALA STATE ELECTRICITY BOARD & ORS. v. THOMAS JOSEPH [J. B. PARDIWALA, J. ] A B C D E F G H 108 SUPREME COURT REPORTS [2022] 9 S. C. R. 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 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 A B C D E F G H 109 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. 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 KERALA STATE ELECTRICITY BOARD & ORS. v. THOMAS JOSEPH [J. B. PARDIWALA, J. ] A B C D E F G H 110 SUPREME COURT REPORTS [2022] 9 S. C. R. 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:- 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 . A B C D E F G H 111 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 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 KERALA STATE ELECTRICITY BOARD & ORS. v. THOMAS JOSEPH [J. B. PARDIWALA, J. ] A B C D E F G H 112 SUPREME COURT REPORTS [2022] 9 S. C. R. 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.

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. A B C D E F G H 113 (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 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 KERALA STATE ELECTRICITY BOARD & ORS. v. THOMAS JOSEPH [J. B. PARDIWALA, J. ] A B C D E F G H 114 SUPREME COURT REPORTS [2022] 9 S. C. R. 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 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 A B C D E F G H 115 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). 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 KERALA STATE ELECTRICITY BOARD & ORS. v. THOMAS JOSEPH [J. B. PARDIWALA, J. ] A B C D E F G H 116 SUPREME COURT REPORTS [2022] 9 S. C. R. 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 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: A B C D E F G H 117 Provided further that the Authority shall – (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. 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 KERALA STATE ELECTRICITY BOARD & ORS. v. THOMAS JOSEPH [J. B. PARDIWALA, J. ] A B C D E F G H 118 SUPREME COURT REPORTS [2022] 9 S. C. R.

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 inter- connection 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. 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 A B C D E F G H 119 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 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: KERALA STATE ELECTRICITY BOARD & ORS. v. THOMAS JOSEPH [J. B. PARDIWALA, J. ] A B C D E F G H 120 SUPREME COURT REPORTS [2022] 9 S. C. R. “ 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

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