1996 JTR(SC) 812
1996 AIR(SC) 2258 ; 1996 AIR(SCW) 2848 ; 1996 2 AllCJ 1080 ; 1996 2 BLJR 1487 ; 1996 2 CCC(SC) 411 ; 1996 2 CLT(SC) 366 ; 1996 2 CurCC(SC) 411 ; 1996 DNJ 269 ; 1996 JLJ 797 ; 1996 5 JT 434 ; 1996 2 MLJ 113 ; 1996 3 RCR(Civ) 453 ; 1996 2 RLW(Raj) 136 ; 1996 2 RRR 685 ; 1996 4 Scale 485 ; 1996 4 SCC 522 ; 1996 3 SCJ 127 ; 1996 Supp1 SCR 574 ; 1996 2 UJ 176 ; 1996 WBLR 381 ; 1996 KHC 849 ; 1996 4 Supreme 630
1996(4) Supreme 630
SUPREME COURT OF INDIA
K. Ramaswamy and G.B. Pattanaik, JJ.
M.P. Electricity Board, Jabalpur & Ors. -Appellants
versus
Harsh Wood Products & Anr. -Respondents
Civil Appeal No. 7798 of 1996
(Arising out of SLP (C) No. 12310 of 1993)
Decided on 18-4-1996
IMPORTANT POINT
Electricity Board, when it detects that any consumer had committed any malpractice with reference to his use of electrical energy, may disconnect the supply of electricity forthwith and may call upon consumer to make payment for compensation of unauthorised use of electricity i.e. theft of electricity.
Act
Referred
:CONSTITUTION OF INDIA : Art.14, Art.20(1)
ELECTRICITY ACT : S.31(e), S.24
A) The Electricity Act, 1910, read in conjunction with its Section 31(e), empowers the distribution licensee to disconnect electrical supply and demand compensation upon detecting consumer malpractice such as tampering with meter seals or using unauthorized devices to commit theft of energy, and such action is not subject to the seven-day notice requirement under Section 24 when pilferage is established on prima facie grounds. The Constitution of India, under Articles 14, 20(1), and 21, mandates that any such disconnection or demand for payment must comply with procedural fairness, ensuring the consumer is given an opportunity to be heard before a substantive penalty is imposed, and any order determining liability or directing restoration must be lawful and non-arbitrary.
B) Key legal principles include that detection of tempering with meter seals constitutes prima facie evidence of theft of electricity, enabling the supplier to disconnect supply and seek compensation; Section 24 of the Electricity Act, 1910 does not apply to demands arising from detected pilferage; and while natural justice and constitutional protections under Articles 14, 20(1), and 21 apply, the necessity of a pre-disconnection hearing depends on the stage of the proceeding and whether a final determination has been made.
Facts of the case:
During an inspection on August 21, 1991, the appellant-Boards staff, with the respondent-industrys representative present, found that meters connected to the respondents installation had missing seals on meter terminal covers and tempering of body seals, with discrepancies in serial numbers and locations compared to earlier records, indicating possible tampering to reduce energy consumption. A panchnama was recorded, new seals were fitted, and the respondent was directed to pay a assessed difference amounting to several hundred thousand rupees. The respondent sought restoration of supply on humanitarian grounds and requested time to pay, but the demand was not accepted. The High Court held that the respondent was entitled to a hearing before being required to pay, and that the order was violative of Articles 20(1) and 21, setting aside the demand and restoring supply.
Findings of Court:
The Supreme Court found that the High Court was not justified in interfering with the demand for payment because the respondent, having been given an opportunity to explain during the inspection proceedings and having agreed to the panchnama, was not denied a hearing in violation of natural justice or constitutional rights. The Boards power under Section 31(e) to disconnect supply and demand compensation upon detection of malpractice was held valid, and the absence of a separate formal hearing prior to issuing the demand did not render the order void.
Issues:
Whether a consumer is entitled to a pre-demand or pre-disconnection hearing when the supplier has detected malpractice in the form of tampered meter seals and prima facie evidence of theft of electricity, and whether such demand, issued after an inspection where the consumer had an opportunity to respond, offends Articles 20(1), 14, and 21 of the Constitution.
Ratio Decidendi:
Where a supplier, acting in exercise of its statutory power under Section 31(e) of the Electricity Act, 1910, detects tampering and theft through an inspection recorded with the consumers representative present and subsequently issues a demand for compensation, the requirement of a separate pre-demand hearing is not attracted if the consumer has already been given an opportunity to explain; such demand does not violate Articles 14, 20(1), or 21, and the High Courts interference was not sustainable.
Result:
The appeal is allowed, the High Courts order quashing the demand is set aside, and the Board is entitled to proceed with the assessed demand under its statutory powers.
A) The Electricity Act, 1910, read in conjunction with its Section 31(e), empowers the distribution licensee to disconnect electrical supply and demand compensation upon detecting consumer malpractice such as tampering with meter seals or using unauthorized devices to commit theft of energy, and such action is not subject to the seven-day notice requirement under Section 24 when pilferage is established on prima facie grounds. The Constitution of India, under Articles 14, 20(1), and 21, mandates that any such disconnection or demand for payment must comply with procedural fairness, ensuring the consumer is given an opportunity to be heard before a substantive penalty is imposed, and any order determining liability or directing restoration must be lawful and non-arbitrary.
B) Key legal principles include that detection of tempering with meter seals constitutes prima facie evidence of theft of electricity, enabling the supplier to disconnect supply and seek compensation; Section 24 of the Electricity Act, 1910 does not apply to demands arising from detected pilferage; and while natural justice and constitutional protections under Articles 14, 20(1), and 21 apply, the necessity of a pre-disconnection hearing depends on the stage of the proceeding and whether a final determination has been made.
Facts of the case:
During an inspection on August 21, 1991, the appellant-Boards staff, with the respondent-industrys representative present, found that meters connected to the respondents installation had missing seals on meter terminal covers and tempering of body seals, with discrepancies in serial numbers and locations compared to earlier records, indicating possible tampering to reduce energy consumption. A panchnama was recorded, new seals were fitted, and the respondent was directed to pay a assessed difference amounting to several hundred thousand rupees. The respondent sought restoration of supply on humanitarian grounds and requested time to pay, but the demand was not accepted. The High Court held that the respondent was entitled to a hearing before being required to pay, and that the order was violative of Articles 20(1) and 21, setting aside the demand and restoring supply.
Findings of Court:
The Supreme Court found that the High Court was not justified in interfering with the demand for payment because the respondent, having been given an opportunity to explain during the inspection proceedings and having agreed to the panchnama, was not denied a hearing in violation of natural justice or constitutional rights. The Boards power under Section 31(e) to disconnect supply and demand compensation upon detection of malpractice was held valid, and the absence of a separate formal hearing prior to issuing the demand did not render the order void.
Issues:
Whether a consumer is entitled to a pre-demand or pre-disconnection hearing when the supplier has detected malpractice in the form of tampered meter seals and prima facie evidence of theft of electricity, and whether such demand, issued after an inspection where the consumer had an opportunity to respond, offends Articles 20(1), 14, and 21 of the Constitution.
Ratio Decidendi:
Where a supplier, acting in exercise of its statutory power under Section 31(e) of the Electricity Act, 1910, detects tampering and theft through an inspection recorded with the consumers representative present and subsequently issues a demand for compensation, the requirement of a separate pre-demand hearing is not attracted if the consumer has already been given an opportunity to explain; such demand does not violate Articles 14, 20(1), or 21, and the High Courts interference was not sustainable.
Result:
The appeal is allowed, the High Courts order quashing the demand is set aside, and the Board is entitled to proceed with the assessed demand under its statutory powers.
ORDER
Leave granted.
2. We have heard learned counsel on both sides. This appeal by special leave arises from the judgment and order dated March 12, 1993 passed by the Division Bench of the High Court of Madhya Pradesh, Gwalior Bench in M.P. No. 1484/91. The admitted position is that on August 21, 1991, the appellants staff inspected the electrical installation of the respondents connected by the appellant-Board. In the proceedings recorded after the said inspection, the facts noted are as under :
"During the course of inspection, Shri Dilip was present as the representative of M/s. Harsh Wood Products, Banmore, and found the following irregularities. Connection No. 1156 [2556] -
1. No seal found on Meter terminal cover.
2. Body seals of the meter, bearing No.490812 [Right side] and 01443 [Lift Side] found tempered.
3. The seals on Meter Box, bearing No.38556/SE Morena, C-10/MPEB Gwalior, found OK.
Connection No.1158 [2824]
1. No seal found with Meter terminal cover.
2. Meter Body seals, bearing No.49817 [Right Side] & 013361 [Left Side] found broken and tampered.
3. Seal on meter box bearing No. 33434/SE Morena C-10/MPEB Gwalior found OK.
In both the above connections, the difference was noticed, in serial No. and the location of the seals provided on Meter Body. The serial No. and the location of the meter body seals, as found in the inspection carried out on dated 16.3.91, are found different in the checking carried out on dated 22.8.91. The difference noticed in serial No. & location in checking is as hereunder :
Connection No. 2556 Connection No.2824
16.3.91 Right Side 490817 013343
Seal fixed Lift Side 490812 013361
28.8.91
Reprot as Right Side 490812 49817
Left Side 013343 013361
Meter No. 0530489 545768
This panchnama has been prepared in view of Meter Body seals found Tempered and Meter terminal seals found missing so as to interfere and control the energy consumption as per his own desire.
Maintaining "Status Quo" of the tempered and broken body seals of Meter of Both the above connection, New Seals are fixed on the meter box bearing No. M1919 MPEB/MT on Connection No.2556 and No. M 1920 MPEB/MT on connection No.2824. The old seals provided on the meter box are in custody with the Executive Engineer [O&M] Morena.
Sd/-22.8.91 Sd/-22.8.91 Sd/ 22.8.91
EE [O&M] S.E [Testing] A.E.[DIW]
Morena Gwalior Morena
Sd/-22.8.91 Sd/-22.8.91 Sd/-22.8.91
A.E.132 KV A.E. [Testing] Dilip
S/s Banmore Morena [Representative of Consumer]".
3. In the said proceedings, one Mr. Dilip had represented the respondent-Industry and he was also the signatory to the proceedings. Thereafter, notice was issued to the respondents on August 26, 1991 informing that the meter body seals were tempered and damaged with seal wire. The seals of the meter terminal block were found missing which would indicate that the function of the meter was disturbed to reduce the consumption of electrical energy. Therefore, the respondent-Industry was directed to pay the difference of the assessed amount said to be in a sum of Rs. 6,51,256,61 at the earliest. It was also pointed out that bill for the further past years was being examined and the decision would be taken and intimated in due course. In furtherance thereof, the respondent-Industry submitted the explanation to the show cause on August 29, 1991 wherein he requested that on humanitarian grounds, viz., "the supply of the installation will please be restored immediately and we give the undertaking that if any balance amount becomes due for payment on account of vigilance checking, the same will be deposited immediately on providing the bills for such amount". The reply was also given by Mr. Dilip who had participated during inspection.
4. Upon these facts, the question emerges : whether the High Court would be justified in interfering with the order directing them to pay the difference of the amount. The High Court in the impugned judgment has held that the respondent has a right of hearing before the authority subject it to payment of the amount which is alleged to be due towards the theft of electricity as required under Section 31 [e] of the Indian Electricity Act, 1910. Since that opportunity was not given, it violated Articles 20 [1] and 21 of the Constitution and, therefore, the order was void. Accordingly, it directed the appellant-Board to restore within 24 hours the service connection No.2556/1156 of the Industry. It is also stated with respect to the claim of the Board against electricity stolen that it would be open to the appellant to raise legal and appropriate demand in a legal and lawful manner. Accordingly, the demand was quashed.
5. The question, therefore, is: whether the view of the High Court is sustainable in law. It would be seen that Section 49 read with Section 79 of the Electricity (Supply) Act, 1948 gives power to the appellant-Board to determine and also to revise tariff from time to time. Admittedly, in exercise of the power the tariff has been determined and the principles governing the supply of electricity have been enumerated. Clause 31[e] is relevant in this behalf. It provides as under:
"[e] Where any consumer is detected in the commission of any malpractice with reference to his use of electrical energy including authorised alternations to installations, unauthorised extension and use of devices to commit theft of electrical energy the Board may, without prejudice to its other rights, cause the consumer s supply to be forthwith disconnected. The supply may be restored in the discretion of the Division Engineer of the Board if the consumer forthwith compensates the Board and pays all dues as per bill and takes such other actions as he may be directed by the Divisional Engineer of the Board to take in this connection".
6. A reading thereof clearly indicates that the appellant-Board, when it detects that any consumer had committed any malpractice with reference to his use of electrical energy including authorised alternations to installations, unauthorised extension and use of devices to commit theft of electrical energy, may, without prejudice to its other rights, disconnect the supply of electricity forthwith and may call upon the consumer to make payment for compensation of the unauthorised use of electricity which is now stated to be a theft of electricity. It is not in dispute that an FIR had already been lodged for theft of electrical energy. It is seen that the proceedings have been drawn in the presence of the representative of the respondent-Industry and the meters were found to have been tempered with. In furtherance thereof, a prima facie conclusion of pilferage has been reached that the meters were tempered with and respondents were called upon to pay the difference of the rate for electricity said to have been consumed during the stated period of the detection. It would appear that the said assessment was based upon the previous consumption. It is seen that since the proceedings are pending, it would not be desirable to record any finding in this behalf.
7. The learned counsel for the respondent placed strong reliance on Section 24 of the Indian Electricity Act, 1910 which contemplates seven days notice before disconnection. Section 24 does not apply to demand on detection of pilferage. It would apply to a case of regular supply made and prior demand for payment of electricity charges with a notice of seven days to be made and for failure to pay within the given time, after expiry of seven days, the appellant as a licensee would get the right to disconnect the supply of electrical energy. It would thus be seen that disconnection will be in the course of regular supply of electricity for non-payment of the usual bills but not to any case demand after detection of pilferage.
8. The only question is : whether the consumer is entitled to hearing before disconnection? In view of the conditions to which the respondents had agreed at the time of installation and also the prima facie conclusion reached by the authorities, it was not necessary to give further hearing to the respondents. The action taken by the appellant is not violative of Articles 20[1], 14 of the Constitution and principles of natural justice.
The appeal is accordingly allowed. No costs.
Appeal allowed.
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