Supreme Court: In an appeal filed by Kerala State Electricity Board(‘KSEB’) against the judgment passed by Kerala High Court, wherein the 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 division bench of Dinesh Maheshwari and J.B. Pardiwala*, JJ.
The issue was 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.
The Court noted that the High Court while relying upon Regulation 153(15) of the Kerala Electricity Supply Code, 2014 (‘the Code 2014’) 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 based on the connected load.
The question for 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?
The Court examined the Electricity Act, 2003 (‘Act, 2003’) said that by enacting this Act, 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.
The Court further examined Section 50, 126 and 181 of the Act 2003 and various regulations of the Kerala Electricity Supply Code, 2014.
Placing reliance on Southern Electricity Supply Co. of Orissa Ltd. v. Sri Seetaram Rice Mill, (2012) 2 SCC 108, the Court said the following:
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The provisions of Section 126, read with Section 127 of the Act 2003 become a Code in themselves. It specifically provides the method of computing the amount that a consumer would be liable to pay for excessive consumption of electricity and for the manner of conducting assessment proceeding. Section 126has been enacted to put an implied restriction on such unauthorised consumption of electricity.
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The purpose of Section 126 is to provide safeguards to check the misuse of powers by unscrupulous elements. The provisions of Section 126 are self-explanatory. They are intended to cover 46 situations, other than the situations specifically covered under Section 135. In such circumstances, the Court should adopt an interpretation which should help in attaining the legislative intent.
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The purpose sought to be achieved with the aid of the provisions of Section 126 is to ensure stoppage of misuse/unauthorised use of the electricity as well as to ensure prevention of revenue loss.
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The overdrawal of electricity is 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.
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The expression ‘unauthorised use of electricity’ means as it appears in Section 126, and it is of wider connotation and principle construed purposively in contrast to contextual interpretation, while keeping in mind the object and purpose of the Act 2003.
The after reading and re-reading the decision in Seetaram Rice Mill (supra), said that the High Court in its impugned judgment has carved out an exception, which does not find a place in Section 126(6) of the Act 2003. Further, in Seetaram Rice Mill (supra) it was held that the 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 2003.
The Court said that the High Court has completely overlooked that in Seetaram Rice Mill (supra) it was said that the 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.
The Court took note of Punjab SEB v. Vishwa Caliber Builders (P) Ltd., (2010) 4 SCC 539, wherein the excess load was assessed as unauthorised use of electrical energy.
The Court examined Regulation 153(15) of the Code 2014 to look into the main limb of the submission of the consumers, that the Regulation 153(15) of the Code 2014 makes all the difference and the ratio and the principles as propounded in Seetaram Rice Mill (supra) should be understood in the light of the Regulation 153(15) of the Code 2014.
The Court relied on U.P. Power Corpn. Ltd. v. Anis Ahmad, (2013) 8 SCC 491, wherein it was held that the Supply Code cannot provide for, nor does it relate to assessment of charges for ‘unauthorised use of electricity’ under Section 126 of the Act 2003. Thus, it said that reliance on Regulation 153(15) of the Code 2014 framed under Section 50 of the Act 2003 by the consumers is thoroughly misconceived, as the same does not conform to the provisions of the Act 2003. In any event, Regulation 153(15) travels much beyond Section 126 and Section 50 of the Act 2003. 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.
The court said that, if a rule goes beyond the rule making power conferred by the statute, the same must be declared invalid, and rule must be in accord with the parent statute, as it cannot travel beyond it.
The Court further said that 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 to bring into existence the substantive rights or obligations or disabilities not contemplated by the provisions of the Act 2003 itself. The Court, considering the validity of a subordinate legislation, will have to consider the nature, object and scheme of the enabling Act, and the area over which power as has been delegated under the Act and then decide whether the subordinate legislation conforms to the parent statute.
The Court said that, in order to set right the impugned judgment of the High Court and bring in tune with the principles embodied in Seetaram Rice Mill (supra), then it’s important to declare that Regulation 153(15) of the Code 2014 framed by the Commission inconsistent with Section 126 of the Act 2003.
The Court said that, if the Regulation 153(15) is to be taken effect, then the same would frustrate the very object of Section 126 of the Act 2003. The High Court in its impugned judgment says that Regulation 153(15) does not lead to any loss of revenue. The stance of the Commission also is that there is no loss of revenue if Regulation 153(15) is permitted to be operated. However, the Court was of the view that it is not just the question of loss of revenue and emphasised 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.
The Court was surprised that the High Court, while rejecting the review applications declared that the regularisation of additional connected load or enhancement of contract demand should not necessitate upgradation of the existing distribution system.
Thus, the Court held that the finding recorded by the High Court in para 31(vi) is not sustainable in law. Further, declared Regulation 153(15) invalid, being inconsistent with the provisions of Section 126 of the Act 2003.
[Kerala SEB v. Thomas Joseph, 2022 SCC OnLine SC 1737, decided on 16-12-2022]
*Judgment by: Justice J.B. Pardiwala.
*Apoorva Goel, Editorial Assistant has reported this brief.