Consumers in arrears cannot claim statutory compensation for a licensee’s failure to meet performance standards.

The appellants were agricultural electricity consumers of Purvanchal Vidyut Vitran Nigam Ltd. (“distribution licensee”) and used the connection for a private tubewell.

Following an inspection on 25 November 2018, the licensee allegedly detected prima facie theft of electricity and disconnected the supply on the same date.

An FIR was lodged on 27 November 2018, beyond the 24-hour period prescribed under Clause 8.1(xi) of the Uttar Pradesh Electricity Supply Code, 2005.

No police report or complaint before the competent Special Court was filed thereafter within the prescribed period.

A final assessment under Section 126 of the Electricity Act, 2003 was issued on 9 April 2019.

The appellants filed Petition No. 1497/2019 before the Uttar Pradesh Electricity Regulatory Commission (“Commission”) under Section 57 of the Electricity Act and Clauses 8.1 and 8.2 of the Supply Code, seeking restoration of supply and compensation for the licensee’s alleged non-compliance.

The Commission initially dismissed the petition on maintainability grounds, but the Appellate Tribunal revived the proceedings in Appeal No. 140/2020 and directed adjudication on merits.

Upon revival, the Commission directed the appellants to pay the final assessment and ordered restoration of supply within 24 hours of payment.

The appellants paid Rs. 42,896 in 2021 after adjustment of amounts already paid through monthly bills.

The Commission subsequently held that compensation was unavailable because the appellants had arrears arising from the final assessment.

It nevertheless found that the licensee had failed to lodge the FIR within 24 hours and had not filed a case before the Special Court within 30 days, and directed initiation of separate suo motu proceedings, including possible action under Section 142 of the Electricity Act.

Whether the distribution licensee’s failure to lodge the FIR within 24 hours and to file a case before the Special Court within 30 days constituted failure to meet the applicable standards of performance under Section 57 of the Electricity Act, 2003 and the Uttar Pradesh Electricity Supply Code, 2005?

Whether the appellants were entitled to compensation under Section 57 despite having arrears of electricity dues arising from the final assessment at the time of filing their compensation claim?

Section 57(1)–(3) of the Electricity Act, 2003 empowers the Appropriate Commission to prescribe standards of performance and requires a licensee failing to meet those standards to pay compensation determined by the Commission to the affected person.

Clauses 8.1(xi) and 8.2(i) of the Uttar Pradesh Electricity Supply Code, 2005 require the licensee to lodge an FIR within 24 hours of disconnection in theft cases and to file a case before the Special Court within 30 days; failure to do so is treated as failure to achieve and maintain the prescribed standards of performance.

However, Clause 7.9(b)(i) of the Supply Code limits compensation to consumers who have no arrears of electricity dues, and Regulation 8.1 of the UPERC (Standards of Performance) Regulations, 2019 similarly provides that no compensation is payable where the consumer has arrears outstanding for more than 30 days on the date of filing the claim.

The Tribunal held that the licensee had breached the procedural obligations under Clauses 8.1 and 8.2 because the FIR was lodged beyond 24 hours and no case was filed before the Special Court within 30 days.

Such conduct amounted to failure to maintain the prescribed standards of performance and justified the Commission’s decision to initiate separate suo motu proceedings and consider action under Section 142.

Nevertheless, the right to compensation was subject to the specific eligibility condition that the consumer should not have arrears beyond the permitted period.

The appellants filed their compensation petition on 2 August 2019, whereas the final assessment had been issued on 9 April 2019 and had not been challenged.

Since the assessment amount remained unpaid when the claim was filed, the appellants were admittedly in arrears at the relevant time.

Their subsequent payment in 2021 could not retrospectively cure the statutory and regulatory disqualification existing on the date of filing the claim.

However, it answered the second issue against the appellants: their arrears arising from the final assessment disentitled them from compensation under Section 57.

The Commission’s order rejecting compensation was therefore upheld, and Appeal No. 299 of 2021 was dismissed as devoid of merit.