Coercive disconnection of electricity is impermissible for recovery of additional demands arising from bona fide billing mistakes.

The Petitioner, a commercial electricity consumer, had its load enhanced to 140KV on July 14, 2023, and remained compliant with all consumption bills

In July 2025, nearly two years later, the respondent supply company issued a notice demanding over ₹54,0,000, claiming a "mistake" in applying the tariff rate for previous consumption

A subsequent notice in October 2025 increased this demand to ₹62,03,152

There were no allegations of electricity theft; the demand was based solely on a billing error discovered by the company

The Petitioner challenged the demand and the threat of disconnection

1. Whether a licensee/supply company can resort to coercive measures, such as disconnection of supply under Section 56 of the Electricity Act, 2003, to recover additional dues arising from a bona fide billing mistake discovered after the limitation period

2. Whether the supply company can progressively increase its demand after the initial discovery of the mistake

The Court applied Section 56 of the Electricity Act, 2003, which governs disconnection for non-payment, noting that Section 56(2) imposes a two-year limitation on recovering sums due unless shown continuously as arrears

It relied extensively on the Supreme Court precedent in Assistant Engineer, Ajmer Vidyut Vitran Nigam Limited v. Rahamatullah Khan (2020), which held that while Section 17(1)(c) of the Limitation Act, 1963, allows recovery within two years of discovering a mistake, the licensee is barred from using disconnection as a coercive recovery tool for such "mistake-based" arrears

The court also noted M/s Prem Cottex v. Uttar Haryana Bijli Vitran Nigam Ltd. (2021), clarifying that it did not overrule the bar on coercive action established in Rahamatullah Khan

The Court reasoned that once a demand is raised based on a newly discovered mistake, the supply company cannot bypass the law by threatening disconnection

Under Section 56 as interpreted by the Supreme Court, if a consumer disputes a demand arising from a billing error or if the limitation period for summary recovery has passed, the company's only recourse is through a civil suit for recovery

The Court observed that the Respondent’s notices lacked particulars of a "bona fide" error and that the demand had been arbitrarily revised upward from ₹54 lakhs to ₹62 lakhs without justification

It held that a supply company cannot "progressively increase its demand" once a mistake is identified; it must provide a clear calculation and, if payment is not forthcoming, seek a decree from a civil court where the consumer has the opportunity to test the correctness of the demand

It held that while the supply company may issue a corrected demand based on a discovered mistake, it is strictly prohibited from taking coercive steps (disconnection) to recover such amounts

The Court directed the supply company to provide the Petitioner with a transparent calculation and a prescribed time for payment; however, in the event of non-payment, the company is mandated to resort only to civil remedies to recover the principal sum and any applicable interest