The Canning Industries Cochin Ltd. v. The Chairman, Kerala State Electricity Board, and Others

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT:** ## **THE HONOURABLE MR.JUSTICE C.K.ABDUL REHIM** **TUESDAY, THE 8TH DAY OF JULY 2014/17TH ASHADHA, 1936** ## **WP(C).No. 24126 of 2013 (M)** **----------------------------** **PETITIONER :** **THE CANNING INDUSTRIES COCHIN LTD., EDACOCHIN, COCHIN-682010 REPRESENTED BY ITS GENERALMANAGER MR.P.T.THOMAS.** **BY ADVS.SMT.SUMATHY DANDAPANI (SR.) SRI.MILLU DANDAPANI** **RESPONDENTS :** **1. THE CHAIRMAN, KERALA STATE ELECTRICITY BOARD, VYDHYUTHI BHAVAN, PATTOM, THIRUVANANTHAPURAM PIN-695004.** **2. DEPUTY CHIEF ENGINEER, ELECTRICAL CIRCLE, KERALA STATE ELECTRICITY BOARD PERUMBAVOOR-683542.** ## **3. ASSISTANT ENGINEER,** **ELECTRICAL SECTION, KERALA STATE ELECTRICITY BOARD PALLURUTHY, KOCHI-682006.** **R1 TO R3 BY ADV. SRI.JAICE JACOB,SC,** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 08-07-2014, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** ## **BP** **WP(C).No. 24126 of 2013 (M) ----------------------------** ## **APPENDIX** ## **PETITIONER(S)' EXHIBITS -------------------------------------** **EXT.P1: TRUE COPY OF THE HT AGREEMENT BETWEEN THE PETITIONER AND THE IST RESPONDENT,DATED 18.9.1984. EXT.P2: TRUE COPY OF THE MAHAZAR DATED 24.8.2012 PREPARED BY THE KSEB OFFICIALS FOR THE PERIOD FROM 22.1.2009 TO 15.9.2012. EXT.P3: TRUE COPY OF THE PROVISIONAL INVOIDE DATED 28.9.2012 ISSUED BY THE 3RD RESPONDENT TO THE PETITIONER EXT.P4: TRUE COPY OF THE OBJECTIONS SUBMITTED BY THE PETITIONER DATED 3.10.2012 EXT.P5: TRUE COPY OF THE ORDER NO.DB-1/PLTY/HT/PRO-1/12-13/22-11-2012 ISSUED BY THE 3RD RESPONDENT EXT.P5(A): TRUE COPY OF THE ORDER FINISHING THE PROVISIONAL INVOICE,DATED 22.11.2012,ISSUED BY THE 3RD RESPONDENT EXT.P6: TRUE COPY OF THE LETTER SUBMITTED BY THE PETITIONER TO THE R3, DT 29/9/2010. EXT.P7: TRUE COPY OF THE SCHEME OF APPROVAL BY THE ELECTRICAL INSPECTOR,ERNAKULAM DATED 22.1.2009. EXT.P8: TRUE COPY OF THE DEMAND NOTICES FOR THE PERIOD FROM SEPTEMBER 2010 TO JULY 2012. EXT.P9: TRUE COPY OF THE APPEAL FILED BY THE PETITIONER BEFORE THE DEPUTY CHIEF ENGINEER,ELECTRICAL CIRCLE,PERUMBAVOOR,DATED 7.1.2013. EXT.P10: TRUE COPY OF THE ORDER NO.GB/AP-CAICO/13-14/2612/19.9.2013 PASSED BY THE 2ND RESPONDENT. EXT.P11: TRUE COPY OF THE LETTER NO.AE 2/HT SHOP/CANNING/2013-14/283 DATED 29.8.2013 ISSUED BY THE KERALA STATE ELECTRICITY BOARD,ELECTRICAL CIRCLE, ERNAKULAM. EXT.P12: TRUE COPY OF THE UNDERTAKING EXECUTED ON 7.9.2013 MISTAKENLY SHOWN AS 7.8.2013 EXT.P13: TRUE COPY OF THE DEMAND NOTICE/BILL DATED 6.9.2013. EXT.P14: COPY OF THE AGREEMENT FOR SUPPLY OF HT ENERGY EXECUTED ON 7/10/2013** ## **WP(C).NO. 24126 OF 2013 (M)** |**EXT.P14:**<br>|**COPY OF THE ORDER NO. B.O.(FM) MO. 368/2008(DPCI/C-**| |---|---| ||**G1/182/2007 DT 7/2/2008 ISSUED BY THE RESPONDENT**| ||**ELECTRICITY BOARD (IA NO. 8647/2014)**| |**EXT.P15:**<br>|**COPY OF THE ORDER DT IN DP 75/2009 DT NO.1061 DT 15/7/09)**| ||**19/1/2010 OF THE KERALA STATE ELECTRICITY REGULATORY**| ||**COMMISSION**| |**RESPONDENT(S)'**|**EXHIBITS :**<br>**NIL.**| **//TRUE COPY//** **P.S. TO JUDGE** **BP** C.K.ABDUL REHIM,J. ------------------------------WP(C).NO. 24126 of 2013 --------------------------------Dated this the 8th day of July, 2014 ## JUDGMENT The petitioner is challenging the finalisation of penal assessment made under section 126 of the Electricity Act 2003, which is confirmed by the 2[nd] respondent appellate authority in Ext.P10 order. The petitioner is a high tension (HT) consumer provided with an electric connection with contract load of 120 KVA. Ext.P1 is the HT connection agreement executed on 18.9.1984. Pursuant to an inspection conducted on 24.8.2012 a provisional assessment of penalty was issued against the petitioner, as per Ext.P3 notice, on the allegation that the petitioner had installed unauthorised additional load of 111 KVA over and above the contract load of 120 KVA. Objections submitted by the petitioner before the 3[rd] respondent against the provisional assessment was discarded and the assessment was confirmed through Ext.P5 final order issued by the 3[rd] respondent. Eventhough the petitioner preferred an appeal WP(C).No. 24126 /2013 2 before the 2[nd] respondent as contemplated under section 127, the same was rejected confirming the assessment made by the 3[rd] respondent. It is aggrieved by the appellate order, Ext.P10, this writ petition is filed. 2. The petitioner points out that he had already applied for enhancement of the contract load, based on Ext.P7 approval granted by the Electrical Inspector. In Ext.P6 request, the petitioner had approached the 3[rd] respondent seeking regularisation of the excess connected load. Ext.P8 series bills are produced to show that, from 2009 onwards 50% additional amounts were charged as per clause 15 of Ext.P1 agreement. Hence it is contended that imposition of further penalty under section 126 is not sustainable. 3. It is pertinent to note that, none of the terms and conditions of Ext.P1 agreement permits the petitioner to have the unauthorised additional load installed without authorisation in a manner exceeding the contracted load. Clause 15 of Ext.P1 agreement only provides that, if the recorded maximum demand of any month exceeds the contract demand, as specified in the WP(C).No. 24126 /2013 3 agreement, the service is liable to be disconnected and the consumer is liable to pay for the excess demand drawn at 150% of the demand charges notified by the Board. Therefore it is evident that the clause provides charging of the maximum demand which exceeded the contract demand at 50% addition of the normal tariff. The impugned penalty is imposed on the basis that the petitioner had installed additional machineries exceeding the contracted load by 111 KVA. Such installation was totally unauthorised and was without getting proper permission from the Board . It is evident that any usage of energy through the unauthorised additional installations will amount to 'unauthorised usage' of electricity contemplated under section 126. The above proposition remains settled in the decision of the Hon'ble apex court in **Executive Engineer, Southern Electricity Supply Company of Orissa Ltd. and another vs. Sri.Seetaram Rice Mill (2012) 2 SCC 108).** Therefore the contention that imposition of penalty under section 126 is not maintainable in view of the additional charges imposed on the excess maximum demand, is totally unsustainable. WP(C).No. 24126 /2013 4 4. Learned counsel for the petitioner had drawn my attention to the details contained in the calculation statement in Exts.P3 and P5 (a). It is evident that, with respect to the 111 KVA additional load, penalty on demand charges was imposed for a period of 43 months at the rate of Rs.350/- at 2 times. Learned counsel pointed out that the rate of 350/- is the rate applicable with respect to HT (Commercial) consumers. The petitioner, as on the date of inspection, was included in the HT (Industrial) category and therefore the penalty on demand charges ought to have been levied only at the tariff applicable at the relevant point of time with respect to HT (Industrial) consumers. So also it is contended that, imposition of penalty for a period of 43 months is not sustainable in view of the provisions contained in section 126 as well as in the provisions contained in Regulation 51 of the 'KSEB Terms and Conditions of Supply 2005'. Further contention is to the effect that, calculation of penalty on the proportionate energy charges is not done in a proper manner. Proportionate energy charges in the additional load of 111 KVA was calculated for a period of 43 months taking WP(C).No. 24126 /2013 5 proportion of the energy charges levied. But, according to the petitioner, proportionate energy consumed should have been assessed on the basis of the total consumption and not on the basis of charges. So also, the period of penalisation should have been limited to the maximum of one year, as contemplated under section 126, is the contention. 5. The inspection was conducted on 8/12. Penalty is seen imposed for a period of 43 months preceding the date of inspection. That is from 1/09 onwards. In Ext.P10, while meeting the contention of the petitioner, the appellate authority observed that, the petitioner had applied for the additional power allocation during the year 2009, but he has not completed the requisite formalities by executing any revised agreement with the KSEB. But he continued with consumption of the excess energy through the unauthorised additional load. There cannot be any presumption that, even before applying for the additional power allocation, the petitioner had installed the additional machineries and started consumption of energy through the unauthorised additional load. In fact, if any such unauthorised WP(C).No. 24126 /2013 6 additional load was installed, the respondents ought to have disconnected the supply after conducting inspection, which is not seen done in the case at hand. Therefore the imposition of penalty from the date on which application for additional power allocation was submitted, presuming that the petitioner might have used the unauthorised additional load from that date onwards, cannot be sustained. Section 126 (5) of the Electricity Act 2003 provides that the assessment shall be made for the entire period during which the unauthorised use of electricity has taken place. However, if the period during which such unauthorised use of electricity cannot be ascertained, such period shall be taken as a period of 12 months immediately preceding the date of inspection. Similar is the provision contained in Regulation 51 of the KSEB Terms and Conditions of Supply, 2005. Therefore the imposition of penalty for 43 months preceding the date of inspection, on the basis that the petitioner applied for additional power allocation on that date, cannot be sustained. In the case at hand, the petitioner had submitted Ext.P6 before the 3[rd] respondent, in which it is admitted that there is an excess WP(C).No. 24126 /2013 7 connected load in the factory due to the additional installations. The said letter is dated 29.9.2010. Therefore it can reasonably be presumed that the additional installations continued in usage atleast from the date of Ext.P6 onwards. Therefore this court is of the opinion that imposition of penalty from 10/10 to 9/12, will be justifiable. 6. The dispute regarding the rate at which the penalty is to be imposed on the demand charges, need reconsideration. It is to be held that the penalty can be levyable only at the tariff applicable to the petitioner as on the date of inspection. If the tariff applied as on the date of inspection comes under HT (Industrial), then the penalisation of demand charges can be made only at the said tariff. 7. With respect to computation penalty on proportionate energy charges, it is noticed that the method adopted is not proper and reasonable. Penalty ought to have been imposed on proportionate consumption at the normal tariff applicable and credit should have been given to payments already made. In other words, the quantum of energy recorded for the period from WP(C).No. 24126 /2013 8 10./10 till 9/12 should be multiplied by the unauthorised additional load and then divided by the total contracted load, for the purpose of getting the proportionate consumption. The said consumption ought to have been charged at the tariff which was applicable as on the date of inspection. Since the said consumption was already billed, imposition of charges at one time alone will be sustainable. 8. Under the above mentioned circumstances this court is of the opinion that the penal bill need to be revised in accordance with the observations contained hereinabove. Hence this writ petition is allowed in part by quashing Exts.P5 and P5(a), which is confirmed in Ext.P10 appellate order. The 3[rd] respondent is directed to recompute the amount of penalty based on the observations and directions contained hereinabove. A revised bill shall be issued to the petitioner within a period of one moth from the date of receipt of a copy of this judgment. Needless to observe that amount already paid by the petitioner shall be appropriated against the revised demand. Time for payment of balance amount if any due, shall be granted with a period of one WP(C).No. 24126 /2013 9 month from the date of service of the revised demand. On the other hand, if excess payment is there, the same shall be refunded/adjusted within a period of one month. Considering the fact that penal assessment stands quashed, no surcharge (interest) will be levyable. C.K.ABDUL REHIM, JUDGE pmn/ WP(C).No. 24126 /2013 10