Electricity-Theft Accused Can Contest Section 126 Bills, With SC Upholding 50% Deposit Reconnection Where Provisional Assessment Is Prima Facie Arbitrary

In the first appeal, the distribution licensee issued Vaibhav Metal Crusher a supplementary bill for alleged theft of electricity, together with compounding charges. The High Court initially directed restoration of supply on payment of 50% of the bill; on appeal, its Division Bench permitted the consumer to object to the assessment and made the deposit and reconnection directions subject to the authority’s decision.

In the second appeal, Jamanbhai Nanajibhai Bhuva challenged a supplementary bill for alleged theft. The Single Judge directed a 50% deposit, stayed recovery of the balance, and directed that a fresh connection not be refused solely because of arrears. The Division Bench remitted the matter for a fresh order.

The licensees challenged the High Court’s approach, arguing that assessment and appeal under Sections 126 and 127 did not apply to theft, and that civil liability was for the Special Court under Section 154(5).

Sections 126 and 127 of the Electricity Act, 2003 provide for assessment of charges for unauthorised use, an opportunity to object to provisional assessment, and an appeal against final assessment.

Section 135(1A), including its third proviso, permits disconnection upon detection of theft but requires restoration within 48 hours upon deposit or payment of the assessed amount.

Where the Supply Code prescribes no separate assessment procedure for this purpose, the amount required for restoration must be determined by applying the Section 126 procedure and the applicable Supply Code.

In a theft case, a Section 127 determination is final only for the purpose of restoration; it does not bind the Special Court’s determination of civil liability under Section 154(5), and any excess deposit is refundable under Section 154(6).

The Court relied on West Bengal State Electricity Distribution Company Ltd. v. M/s Orion Metal Pvt. Ltd., which held that assessment under Section 126 may proceed alongside a theft complaint under Section 135, and that the Special Court separately determines civil liability.

The High Court’s constitutional powers are not wholly displaced by the statutory scheme, but restoration applications in theft cases require a circumspect, fact-sensitive approach; where provisional assessment is prima facie arbitrary, restoration may be ordered on a deposit of at least 50% for recorded reasons.

The Court rejected the licensees’ argument that theft cases could not be assessed under Section 126. Section 135 contains no separate assessment machinery, and the Gujarat Supply Code uses the same assessment formula for theft and unauthorised use; moreover, the third proviso to Section 135(1A) contemplates payment of an assessed amount to secure prompt restoration, which would be frustrated if the consumer had to await the Special Court’s final determination.

Applying Sections 126 and 127 therefore provides the procedure for determining the restoration amount, while Section 154(5) preserves the Special Court’s distinct authority to determine civil liability where a theft complaint is filed.

The Court also held that a High Court may, in an appropriate case, order restoration on a deposit of at least 50% where the provisional assessment is prima facie arbitrary, but must give reasons and assess the circumstances of the case.

The appeal concerning Vaibhav Metal Crusher was dismissed, subject to clarification that the assessment is subject first to any Section 127 appeal and ultimately, if prosecuted, to the Special Court’s determination of civil liability.

The appeal concerning Jamanbhai Nanajibhai Bhuva was also dismissed because the High Court had merely remitted the matter for decision in accordance with law.