Reclassification of electricity tariff due to bona fide mistake allows recovery of arrears beyond two years.

The Respondent, M/s. Sai Kaveri Petroleum, has operated a petrol pump since July 2011.

Initially, the Petitioner (MSEDCL) billed the Respondent under the "Industrial" tariff category.

During a spot inspection on September 20, 2017, the Petitioner noticed that the Respondent should have been categorized under the "Commercial" (LT-II) tariff as per Commercial Circular No. 175 and the MERC Tariff Order dated August 16, 2022.

Consequently, MSEDCL issued a retrospective assessment bill of ₹3,57,810/- for differential charges from 2011 to 2017.

The Respondent challenged this before the Consumer Grievance Redressal Forum (CGRF), Nashik, which partially allowed the grievance, directing the Petitioner to revise the bill and apply the commercial tariff only from October 9, 2017, onwards.

The Petitioner filed this writ petition challenging the CGRF's restriction on retrospective recovery.

1. Whether the limitation period of two years under Section 56(2) of the Electricity Act, 2003, bars the recovery of differential dues arising from a bona fide mistake in tariff categorization.

2. Whether the reclassification of a consumer from Industrial to Commercial tariff can be applied retrospectively to recover escaped charges.

Section 56 of the Electricity Act, 2003, which governs the recovery of electricity charges and provides a two-year limitation period starting from when the sum "first became due".

The two-year bar under Section 56(2) does not apply to cases of short-billing resulting from a bona fide mistake or negligence of the licensee, as the sum only becomes "first due" once a bill is actually issued after the mistake is detected, as established in Prem Cottex v. Uttar Haryana Bijli Vitran Nigam Limited (2021) and K.C. Ninan v. Kerala State Electricity Board (2023).

The Court reasoned that the Respondent’s activity (petrol pump) is expressly classified as "Commercial" under the prevailing MERC regulations and circulars.

The Petitioner’s initial billing under the "Industrial" category was a mistake and such errors do not fall within the "negligence to pay" contemplated by Section 56(1), and therefore, the two-year limitation under Section 56(2) is not triggered until the mistake is rectified and a corrected bill is issued.

The Court held that the CGRF erred in treating the reclassification as an impermissible retrospective change; rather, it was a correction of a bona fide categorization error.

Since the Petitioner is legally bound to follow MERC tariff classifications, the respondent is liable for the differential amount from the date of connection.

The Court allowed the Writ Petition, quashed the CGRF order dated June 29, 2018, and made the Rule absolute.