High Court of KeralaSingle Judge2020-01-16Writ petition allowed; Ext.P10 set aside; refun...

K.S.E.LIMITED v. Kerala State Electricity Board

Case / Petition Number:WP(C).No.22071 OF 2007(C)

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: N. Nagareesh
Judgment Date: 2020-01-16
Court Decision / Holding: Writ petition allowed. Ext.P10 demand set aside. 3rd respondent directed to refund or adjust ₹50,000 remitted by the petitioner in future bills.
Final Disposition: Writ petition allowed; Ext.P10 set aside; refund/adjust ₹50,000 remitted; direct to adjust in future bills; reliance on Varghese to ensure that penalty provisions require misuse or tariff alteration and hear before imposing penalties.

Parties to the Case

Appellants / Petitioners

K.S.E.LIMITED

Respondents

Kerala State Electricity Board
Chief Engineer (Tariff & Commercial), KSEB
Special Officer (Revenue), KSEB

Legal Representation & Advocates

Counsels for Petitioners

• Sri J. Julian Xavier
• Sri Firoz K. Robin

Counsels for Respondents

• Sri T.R. Rajan, SC, K.S.E.B.
• Sri P.P. Thajudeen, SC, K.S.E.B.
• Smt. P.K. Radhika, SC, K.S.E.B

Case Synopsis & Summary

The petitioner, K.S.E.Limited, a High Tension (HT) tariff consumer, challenges Ext.P10 and seeks interpretation of the HT agreement clause versus Regulation 42(d) of the Supply Conditions in the context of penalties for excess contract demand. The HT agreement (dated 24.04.2000) provides that in case of excess over contract demand, the consumer pays 15% of the excess over demand (Clause 15), while the recorded maximum demand for the petitioner was 130 KVA against a contract demand of 150 KVA. In July 2002, KSEB billed for unauthorised load (66 KVA) with penalties for energy and fixed charges. The petitioner filed statutory appeal (Ext.P3) and sought relief under Writ Petition O.P. No.24122/2002, with Ext.P4 directing consideration of the appeal. Subsequently, a series of bills (Exts.P5–P8) culminated in a revised demand of ₹3,93,824 after reduction of the alleged additional load to 23 KVA. A further writ petition (OP 39120/2002) led to Ext.P9 directing a fresh decision with hearing. In 30.06.2007, Ext.P10 demanded ₹1,11,780 without hearing. Relying on Varghese v. State of Kerala (2019) (1) KLT 1), the court held that penalties under Clause 42(d) require certain conditions (excess contracted load or misuse and a higher tariff), and there was no evidence of tariff alteration. The court found a violation of natural justice and allowed the petition, quashing Ext.P10 and directing refund/adjustment of ₹50,000. The judgment is by N. Nagareesh, J.

Provisions of Law Cited

Section 23(2) of the Electricity Act, 1910Regulation 42(d) of the Conditions of Supply of Electrical EnergyClause 15 of HT agreement

Legal Doctrines & Maxims

Principles of natural justice

Submissions & Arguments

Contentions of Appellants / Petitioners

The HT agreement Clause 15 governs excess over contract demand, implying liability only at 15% of the excess; since the contract demand was 150 KVA and the recorded demand was 130 KVA, the penalty and Ext.P10 demand are illegal. The authority is not to impose higher tariffs under Regulation 42(d) unless there is misuse or tariff alteration; there was no alteration in tariff, and Section 23(2) of the Electricity Act, 1910 was not violated. Natural justice requires a hearing, which Ext.P10 did not provide, in light of Ext.P9 directing a fresh hearing. The petitioner seeks refund/adjustment of ₹50,000 already remitted and reversal of the excess demand. The decision in W.P. (C) No.4983/2005 emphasized hearing opportunities, guiding the court to set aside the improper demand.

Contentions of Respondents

The authority contended that penalties under the HT agreement and Clause 42(d) can be invoked for excess energy usage or mis-use, potentially warranting a higher tariff; the 2nd respondent’s adjustments and the accounting of the extra load were to be considered under the applicable provisions. The defense may rely on prior orders and the right to recover dues in accordance with the agreement and statutory regime. However, the record does not show tariff alteration; it was argued that opportunity of hearing was provided during the proceedings leading to Ext.P9, though Ext.P10 was passed in a post-hearing context.

Cited Precedents (2)

Case Name	Citation	Treatment	Explanation
Varghese v. State of Kerala	2019 (1) KLT 1	Positive	The Division Bench held that Regulation 42(d) can be invoked only where there is excess/ misuse resulting in a higher tariff; a combined reading with the Electricity Act, 1910 is required. This supported recognizing that penalties under Clause 42(d) are not automatic without misused energy or tariff alteration, guiding the present court to require similar preconditions.
W.P. (C) No.4983/2005	—	Mentioned Only	The judgment references the matter for requiring an opportunity of hearing, but does not establish a binding proposition within the current decision.

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Extracted Judgment Text

Exact text extracted from official judgment records.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR.JUSTICE N.NAGARESH** **THURSDAY, THE 16TH DAY OF JANUARY 2020 / 26TH POUSHA, 1941** ## **WP(C).No.22071 OF 2007(C)** ## **PETITIONER:** ## **K.S.E.LIMITED** **DAIRY DIVISION, KONIKKARA,, MARATHAKKARA P.O., THRISSUR DISTRICT, REPRESENTED BY ITS MANAGING DIRECTOR M.C.PAUL.** **BY ADVS. SRI.J.JULIAN XAVIER SRI.FIROZ K.ROBIN** ## **RESPONDENTS:** **1 KERALA STATE ELECTRICITY BOARD REPRESENTED BY ITS SECRETARY,, VYDYUTHI BHAVAN, PATTOM,, THIRUVANANTHAPURAM. 2 CHIEF ENGINEER (TARIFF & COMMERCIAL) KERALA STATE ELECTRICITY BOARD,, VYDYUTHI BHAVAN, PATTOM,, THIRUVANANTHAPURAM. 3 SPECIAL OFFICER (REVENUE) KERALA STATE ELECTRICITY BOARD,, VYDYUTHI BHAVAN, PATTOM,, THIRUVANANTHAPURAM.** **BY SRI.T.R.RAJAN,SC,K.S.E.B. BY SRI.P.P.THAJUDEEN, SC, K.S.E.B BY SMT.P.K.RADHIKA, SC, KSEB** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 16.01.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **WP(C) No.22071 OF 2007(C)** **2** ## **J U D G M E N T** ~ ~ ~ ~ ~ ~ ~ ~ ~ _**Dated this the 16[th] day of January, 2020**_ The petitioner-KSE Limited has filed this writ petition seeking to quash Ext.P10 and to declare that as far as HT consumers of the 1[st] respondent-KSEB are concerned, in a case exceeding the contract demand, the Clause applicable is Clause 15 of the HT agreement and not Regulation 42(d) of the Conditions of Supply of Electrical Energy. The petitioner further seeks to direct the 3[rd] respondent-Special Officer (Revenue) to refund or adjust ₹50,000/- remitted by the petitioner pursuant to the orders of this Court. 2. The petitioner is a High Tension (HT) Tariff consumer of electrical energy with Consumer No.HTB 32/3613. Ext.P1 **WP(C) No.22071 OF 2007(C)** **3** HT agreement was made by the petitioner with the KSEB on 24.04.2000, consequent to which power supply was effected on 19.05.2000. For the month of July, 2002, the 3[rd] respondent issued Ext.P2 bill wherein it was stated that unauthorised load of 66 KVA is being consumed by the petitioner and penalty for energy and fixed charges for the unauthorised consumption are added in Ext.P2 bill. 3. According to the petitioner, Clause 15 of HT agreement provides that in case exceeding the contract demand, the consumer needs to pay only 15% for the excess over contract demand. The contract demand is 150 KVA, whereas recorded maximum demand in respect of the petitioner's unit is only 130 KVA. Therefore, the penalty imposed is totally illegal. The petitioner, therefore, filed Ext.P3 statutory appeal on 19.08.2002. Under the threat of disconnection, the petitioner filed O.P. No.24122/2002 also before this Court. By Ext.P4 judgment dated 26.08.2002, this Court directed the 2[nd] respondent to consider the appeal filed by the petitioner. **WP(C) No.22071 OF 2007(C)** **4** 4. While the issue was so pending, the 3[rd] respondent issued Ext.P5 bill dated 02.09.2002 demanding ₹10,16,378/-, inclusive of the penalty demand which was under appeal. The petitioner therefore was forced to file O.P. No.25553/2002, which was admitted. During the hearing, the petitioner was informed by the 3[rd] respondent that during the inspection on 02.05.2002, it was found that the petitioner has unauthorisedly used additional load of 56.25 KW. However, by Ext.P7 appellate order dated 25.11.2002, the 2[nd] respondent reduced the alleged additional load from 66 KVA to 23 KVA. Consequently, Ext.P8 revised demand was issued for ₹3,93,824/-. The petitioner contends that mode of penalty for drawing excess energy over the contract demand, is inbuilt in HT agreement and Ext.P8 is therefore, illegal. 5. Against Ext.P8, the petitioner filed O.P. No.39120/2002. The said writ petition was admitted and an interim stay was granted by this Court on condition of the petitioner paying ₹50,000/-, which was paid by the petitioner. Later, this Court, by Ext.P9 judgment, set aside the impugned **WP(C) No.22071 OF 2007(C)** **5** demand and directed the 2[nd] respondent to take a fresh decision, granting opportunity of hearing to the petitioner. On 30.06.2007, the petitioner was served with Ext.P10 making a fresh demand of ₹1,11,780/-. The petitioner contends that they were not heard before passing Ext.P10 and they are not liable to satisfy the said demand. 6. Heard. The respondents have not filed any counter affidavit in the writ petition, controverting the material allegations raised by the petitioner. 7. A Division Bench of this Court in _**Varghese v. State of Kerala** [2019 (1) KLT 1]_ considered the applicability of Section 23(2) of the Electricity Act, 1910 and Regulation 42(d) of the Supply Conditions in the matter of imposing penalty over consumers. This Court held that a combined reading of the provisions of the Act, 1910 with Clause 42(d) of the Supply Conditions makes it clear that to invoke the provisions of Clause 42(d), there must necessarily be use in excess of contracted load or a misuse by the consumer, for which a higher tariff is applicable and it must necessarily come under **WP(C) No.22071 OF 2007(C)** **6** the definition of misuse of energy within the meaning of the Act, 1910 and if it is not so, the penalty prescribed under Clause 42(d) cannot be imposed. Therefore, applicability of higher tariff to the excess consumption is a necessary pre-requisite for imposition of penalty. 8. In the present writ petition, the KSEB authorities have no case that Tariff of the consumer has been altered due to the unauthorised load consumed by the petitioner. There is also no allegation as to violation of Section 23(2) of the Electricity Act. In the circumstances, the issue involved in the writ petition is squarely covered by the decision of the Division Bench of this Court in _**Varghese**_ ( _supra_ ). 9. Furthermore, this Court, in Ext.P9 judgment in O.P. No.39120/2002, had directed the respondents to take a fresh decision on the grievances of the petitioner in the light of the judgment in W.P. (C) No.4983/2005, giving an opportunity of hearing to the petitioner. The petitioner states that no such opportunity was given to them. Therefore, the impugned order is violative of the principles of natural justice also. For the **WP(C) No.22071 OF 2007(C)** **7** aforesaid reasons, the writ petition is liable to be allowed. Accordingly, the writ petition is allowed. Ext.P10 demand made by the respondents is set aside. The 3[rd] respondent is directed to refund or adjust ₹50,000/- remitted by the petitioner pursuant to the directions of this Court, in the future bills. Sd/- **N. NAGARESH, JUDGE** aks/20.01.2020 **WP(C) No.22071 OF 2007(C)** **8** ## **APPENDIX** ## **PETITIONER'S EXHIBITS:** **P1 TRUE COPY OF THE RELEVANT EXTRACT OF THE HT AGREEMENT DATED 24.4.2000.** **P2 TRUE COPY OF THE BILL FOR THE MONTH OF 7/2002.** **P3 TRUE COPY OF THE ORDER APPEAL DATED 19.8.2002 FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT.** **P4 TRUE COPY OF THE ORDER JUDGMENT DATED 26.8.2002 IN OP.24122/2002.** **P5 TRUE COPY OF THE BILL DATED 2.9.2002.** **P6 TRUE COPY OF THE MAHAZAR DATED 2.5.2002.** **P7 TRUE COPY OF THE ORDER DATED 25.11.2002 ISSUED BY THE 2ND RESPONDENT.** ## **P8 TRUE COPY OF THE DEMAND DATED 7.12.2002.** **P8(A) TRUE COPY OF THE REVISED STATEMENT SHOWING THE ADDITIONAL BILL FROM 11/2001 TO 7/2002.** **P9 TRUE COPY OF THE JUDGMENT DATED 30.6.2006 IN OP.39120/2002.** **P10 TRUE COPY OF THE DEMAND DATED 30.6.2007.**