The State Electricity Board v. State Electricity Ombudsman, Consumer Grievance Redressal Forum Northern Region, and Rani Food Products

# **`IN THE HIGH COURT OF KERALA AT ERNAKULAM`** ## **`PRESENT`** ``` THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH ``` ``` TUESDAY, THE 6[TH] DAY OF AUGUST 2024 / 15TH SRAVANA, 1946 ``` ## **`WP(C) NO. 30927 OF 2021`** ## **`PETITIONERS:`** ``` 1THE ASSISTANT EXECUTIVE ENGINEER KERALA STATE ELECTRICITY BOARD LTD, ELECTRICAL SUB DIVISION, MUTTUNGAL, KOZHIKODE-673101. ``` ``` 2THE ASSISTANT ENGINEER ELECTRICAL SECTION, KERALA STATE ELECTRICITY BOARD LTD, MUTTUNGAL, VADAKARA, KOZHIKODE DISTRICT-673106. ``` ## **`BY ADV SAJEEV KUMAR K.GOPAL`** ## **`RESPONDENTS:`** - **`1 THE STATE ELECTRICITY OMBUSMAN CHARANGATTU BHAVAN, BUILDING NO.34/895, MAMANGALAM - ANCHUMANA ROAD, EDAPALLY, KOCHI-682024, REPRESENTED BY SECRETARY.`** - **`2 CONSUMER GRIEVANCE REDRESSAL FORUM NORTHERN REGION, (FORMED UNDER SECTION 42(5) OF THE ELECTRICITY ACT, 2003), VYDHUTHIBHAVAN, GANDHI ROAD, KOZHIKODE-673011, REPRESENTED BY ITS CHAIRPERSON.`** - **`3 RANI FOOD PRODUCTS, CHORODE P O, VADAKARA TALUK, KOZHIKODE-673106, REPRESENTED BY ITS PARTNER KRISHNAN V R.`** ``` BY ADVS. U.K.DEVIDAS K.K.ANILRAJ ``` ``` THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 26.06.2024, THE COURT ON THE 06.08.2024 DELIVERED THE FOLLOWING: ``` ``` 2024:KER:60098 ``` ``` WP(C) NO. 30927 OF 2021 ``` ``` 2 ``` **==> picture [58 x 57] intentionally omitted <==** ## **JUDGMENT** The present writ petition has been filed by the State Electricity Board, impugning the order in Ext.P4 passed by the State Electricity Ombudsman in appeal petition No.P.1/2021 dated 28.06.2021. The 3[rd] respondent was provided HT connection under HT(I) category from 1997 onwards. This HT connection was dismantled on 06.09.2019 as requested by the 3[rd] respondent and afterwards the 3[rd] respondent availed a new LT electricity connection. 2. The 3[rd] respondent was billed as per the Tariff for the HT-I connection. However, the tariff was changed to HTIV commercial connection from 1999 onwards. The 3[rd] respondent was not put to notice for changing the tariff from HT-I to HT-IV. The case of the 3[rd] respondent was that he continued to pay the electricity charges from October 1999 to May 2016 under the HT-IV Tariff, as he was not put to notice regarding the change in Tariff. 3.HT -I Tariff was meant for water works, printing presses, plantations, granite crushing units, hotels, lodges, ``` 2024:KER:60098 ``` **==> picture [58 x 57] intentionally omitted <==** ## **`WP(C) NO. 30927 OF 2021`** `3` commercial establishments, business houses, film studios, and theaters. 4. On 14.05.1999, a new tariff order came into force introducing a new category, commercial tariff (HT-IV). In view of the introduction of new order, suo moto, the tariff of the 3[rd] respondent was changed to HT-IV commercial. According to the petitioner, since the 3[rd] respondent was having commercial activities, therefore, the tariff was changed from HT-I to HT-IV, and the revised tariff was reflected in the invoices issued to the 3[rd] respondent. It is also the case of the petitioner that, by virtue of the agreement between the electricity board and the 3[rd] respondent, there is liability to pay the revised current charges from time to time. 5. The 3[rd] respondent was again billed under HT-I Industrial tariff, with effect from 01.04.2016, in the light of the proceedings dated 28.03.2016 of the Deputy Engineer, Electrical Circle, Vadakara. According to the 3[rd] respondent, the excess energy charges were collected by the Board on the wrong fixation of the Tariff, i.e., HT-IV category, with effect from October 1999 to May 2016. Accordingly, he had ``` 2024:KER:60098 ``` **==> picture [58 x 57] intentionally omitted <==** ## **`WP(C) NO. 30927 OF 2021`** `4` submitted a representation before the Board for refund of the excess amount paid by him on account of the wrong fixation of the Tariff by the Board, i.e., HT-IV category Tariff instead of HT-I category. 6. The Special Officer Revenue has allowed the refund for the period from 2012-2016 to the tune of Rs.8,79,454/-. The 3[rd] respondent, however, sought refund for the remaining period, which is from 1999-2012. 7. The 3[rd] respondent approached the Consumer Grievance Redressal Forum (CGRF), Kozhikode with his grievance. The CGRF, in its order dated 04.12.2020, in Ext.P3, considering the provisions of regulation 134(3) of the Kerala Electricity Supply Code 2014 held that the 3[rd] respondent could not show that no commercial activity was being undertaken in the premises during the period mentioned in the complaint. It was also held that as per the order dated 10.07.2019, the licensee finally settled the account of the HT Consumer by refunding the balance amount after adjusting the current dues. The 3[rd] respondent received the said amount without any demur/objection at the ``` 2024:KER:60098 ``` **==> picture [58 x 57] intentionally omitted <==** ## **`WP(C) NO. 30927 OF 2021`** `5` time of final settlement. Therefore, the CGRF dismissed the complaint. 8. Aggrieved by the said order of the CGRF, the 3[rd] respondent filed the appeal petition No. P/001/2021 before the State Electricity Ombudsman. The State Electricity Ombudsman, in the impugned order, has held that the petitioner herein could not prove that any commercial activity was undertaken by the 3[rd] respondent attracting HT- IV tariff. The petitioner herein also did not support its argument, that the claim was barred by the limitation. The licensee had collected excess energy charges due to the wrong fixation of the tariff. It is not in dispute that the excess amount was paid by the 3[rd] respondent, and therefore, the 3rd respondent was entitled to a refund of the excess amount paid from 19992012, and the same could not be denied on the grounds of limitation. 9. Mr. Sajeev Kumar K. Gopal, the learned counsel for the petitioner, submitted that the 3rd respondent had made the demand for refund of the excess charges from 1999-2012 only in the year 2019, and such demand is hopelessly barred **==> picture [58 x 57] intentionally omitted <==** ``` 2024:KER:60098 ``` ## **`WP(C) NO. 30927 OF 2021`** `6` by limitation. He has further submitted that the 3[rd] respondent was billed for HT-IV Tariff. He has not produced any document to substantiate his claim that there was no commercial activity in the establishment of the 3[rd] respondent so as to continue the electricity charges under Tariff HT-I. The tariff was changed to HT-IV in accordance with the tariff notification which came into effect from 14.05.1999. It was for the 3[rd] respondent to produce convincing evidence regarding his activities to show that he was wrongly charged under Tariff HT-IV instead of Tariff HT-I. Learned counsel for the petitioner has placed reliance on the judgments in:- - **State of M.P and Others v. Bhailal Bhai and others [1964 KHC 521]** - **Municipal Corporation of Greater Bombay v. Bombay Tyres International Ltd. and others [ 1998 KHC 900]** - **Corporation Bank and Another v. Navin J. Shah [2000 KHC 1003]** 10. Mr. U.K Devidas, the learned counsel for the 3[rd] respondent has refuted the submissions made on behalf of the petitioner Board. He has submitted that the 3[rd] respondent was running a small-scale industry with HT-I Tariff. It was **==> picture [58 x 57] intentionally omitted <==** ``` 2024:KER:60098 ``` ## **`WP(C) NO. 30927 OF 2021`** ``` 7 ``` billed for HT-I Tariff till 13.05.1999. The tariff HT-I was unilaterally changed on 14.05.1999 to HT-IV commercial category without any intimation to the 3[rd] respondent. The agreement was executed by the 3[rd] respondent with the petitioner for taking connection initially to the HT-I Tariff; thereafter, without executing a fresh agreement, the Board unilaterally changed the tariff to the HT-IV commercial category, and illegally collected an excess amount from the 3[rd] respondent. The Board itself has refunded the excess amount for the period 2012-2016, and therefore, it does not lie in the mouth of the Board to say that the 3[rd] respondent could not prove that it was not carrying any commercial activity in the premises not to attract the HT-IV Tariff. 11. It is submitted that the petitioners cannot change the tariff from one category to another category unilaterally. The Execution of the agreement to that effect is necessary and inevitable. No such agreement was executed to change the tariff from HT-I to HT-IV. The wrong tariff and excess collection of bill amount could be deducted by the 3[rd] respondent only in May 2016, and then he brought it to the **==> picture [58 x 57] intentionally omitted <==** ``` 2024:KER:60098 ``` ``` WP(C) NO. 30927 OF 2021 ``` `8` notice of the petitioner, and the old HT-I tariff was reinstated from June 2016 onwards. Thereafter, the electricity charges have been billed only under the HT-I Tariff. It was also said that, by the time, the bills and payments made prior to the year 2002 were misplaced. Thereafter, the representation dated 21.06.2017 was made by the 3[rd] respondent before the Special Officer Revenue, KSEB Ltd, Thiruvananthapuram for refund of the excess charges from the year 2002 alone. The 3[rd] respondent continued to pay the energy bills under the mistake of fact and law with effect from 1999. There was nothing in the bill issued by the Board to identify the introduction of the new Tariff. The change of tariff was also not informed by the Board to the 3[rd] respondent at any point of time, and therefore, the 3rd respondent was not at all aware of the change of Tariff with effect from 14.05.1999 unless the detection could be made in the year 2016 from an experienced electrical contractor. 12. It is submitted that the KSEB has admitted the mistake in the year 2016 and rectified the mistake by collecting the electricity charges on the Tariff HT-I with effect **==> picture [58 x 57] intentionally omitted <==** ``` 2024:KER:60098 ``` ## **`WP(C) NO. 30927 OF 2021`** `9` from 01.06.2016 and refunded the excess amount from 20122016 in the year 2018. The learned counsel for the 3[rd] respondent has submitted that in the above scenario, the provisions of Section 72 of the Indian Contract Act and Sections 14, 17 and 18 and Article 113 of the Limitation Act would come into play. It is submitted that the claim of the 3[rd] respondent is not barred by limitation for the period from 1999-2012. 13. The learned counsel for the 3[rd] respondent has placed reliance on the following judgments in support of the submissions:- ***South India Corporation (p) Ltd v. Asst. Commissioner (Assessment) and others [ 1993 KHC 545)** ***Saseendrakumari v. State Bank of Travancore 2011(1) KHC 192]** ***Assistant Engineer (D1), Ajmer Vidyut Vitran Nigam Limited and Another v. Rahamatullah Khan alias Rahamjulla [2020 KHC 6177]** 14.On the basis of the aforesaid judgments, it has been submitted that limitation of 3 years would run from the date of detection of mistake and not from the date of payment. ``` 2024:KER:60098 ``` **==> picture [58 x 57] intentionally omitted <==** ## **`WP(C) NO. 30927 OF 2021`** ``` 10 ``` 15. I have considered the submission advanced on behalf of the learned counsel for the petitioner Board as well as the learned counsel for the 3[rd] respondent. The question which arises for consideration in the present writ petition is that, whether the claim for refund of the 3[rd] respondent from 1999-2012 is barred by limitation. 16. The facts are not in dispute. The 3[rd] respondent was granted electricity connection by the petitioner Board with HT-I Tariff. The said tariff was changed unilaterally with effect from 14.05.1999, after new tariff order was issued. This change of tariff from HT-I to HT-IV was unilateral decision of the electricity Board and no intimation was issued to the 3[rd] respondent regarding change of Tariff for electricity connection from HT-I to HT-IV. 17. There may be substance in the submissions of the learned counsel for the 3[rd] respondent that the respondent paid the electricity charges under HT-IV tariff, believing that the electricity charges were levied under HT-I Tariff. 18. The 3[rd] respondent only realized that it was wrongly billed under HT-IV Tariff in the year 2016, and **==> picture [58 x 57] intentionally omitted <==** ``` 2024:KER:60098 ``` ## **`WP(C) NO. 30927 OF 2021`** `11` therefore, he raised the issue, and the Board accepted the mistake of wrongly collecting the electricity charges from the 3[rd] respondent under HT-IV. Therefore, from June 2016 he has been billed for HT-I tariff. The petitioner Board has allowed the claim for refund from 2012-2016. However, refund for the period from 1999-2012 has been denied on the ground of limitation. 19. Section 72 of the Indian Contract Act, provides for the liability of a person to whom money is paid, or thing delivered, by mistake or under coercion. ## **Section 72 of the Indian Contract Act reads as** ## **under:-** “A person to whom money has been paid, or anything delivered, by mistake or under coercion, must repay or return it”. 20.This Court in **South India Corporation (p) Ltd** **(supra)** has held that tax paid under the mistake of law is liable to be refunded in view of Article 265 of the Constitution of India, which bars the state from recovering any amount by way of tax without the authority of law. There is ``` 2024:KER:60098 ``` **==> picture [58 x 57] intentionally omitted <==** ## **`WP(C) NO. 30927 OF 2021`** `12` corresponding duty on the State to refund the tax illegally collected. ## Paragraphs 8 and 9 of the said judgment was ## extracted hereunder:- “8. The following principles emanate from the above decisions. Tax paid under a mistake of law falls within the purview of S.72 of the Indian Contract Act, 1872 and is liable to be refunded to the person making the payment. Art.265 of the Constitution bars the State from recovering any amount by way of tax without the authority of law, and in its turn, it imposes a corresponding duty on the State to refund the tax illegally collected. The assessee could claim refund of the amount so paid by resort to proceedings under Art.226 of the Constitution. Ordinarily the courts will entertain such petitions only if they are made within the period prescribed in the Limitation Act, 1963, for a suit for the same relief, that is within a period of three years from the date on which the assessee discovers the mistake or could with reasonable diligence have discovered the mistake (vide S.17(1)(c) read with Art.113), but that is not an inflexible rule. 9. Now coming to the facts of this case, the law on the point relating to the taxability of materials purchased and used in the execution of works contracts was expounded by the court for the first time only in Anandan's case (1987) 65 STC 349 rendered on December 17, 1986. If the judgment applies, the levy of tax under S.5 A on the purchase of materials made by the petitioner for use in execution of works contracts will not be legal. The petitioner has made his claim for refund, namely, exhibit P11, well within the period of 3 years, from the date of this Court's judgment in Anandan's case (1987) 65 STC 349 when alone the mistake could have come to light. Even this original petition was filed well within the period of three years, on December 19, 1988. Petitioner could have discovered the mistake only after this Court laid down the law authoritatively. Both the petitioner and the first respondent were labouring under a mistake of law and it was because of this mistake that the petitioner paid the tax. The petitioner is therefore entitled to refund of the tax paid as alleged by them which was not legally due. Exts. P1 to P10 orders of assessments require modification in so far as they levy tax on the purchase of materials used by the petitioner in the execution of works contracts. The claim made in Ext. P11 has got to be examined by the respondents and whatever amount has been paid by the petitioner on such purchases should be refunded to them.” ## 21.In the case of **Saseendrakumari (supra)** has held ``` 2024:KER:60098 ``` **==> picture [58 x 57] intentionally omitted <==** ## **`WP(C) NO. 30927 OF 2021`** `13` that if money has been paid by mistake and the suit is filed within 3 years from the date of detection of mistake, the interest can be claimed from the date of demand. Paragraph 10 of the said judgment which is relevant is extracted hereunder:- 10. In such a case, S.72 of the Contract Act applies with full force. The aforesaid section of the Contract Act stipulates that a person to whom money had been paid or delivered by mistake or coercion, must repay or return it. The apex Court, in The Sales Tax Officer and others v Kanhaiya Lal Makund Lal Saraf, 1959 KHC 462 : AIR 1959 SC 135 : 1959 SCR 1350 : 1958 (9) STC 747 : 1959 Mys LJ 38, dealing with the aspect of mistake under S.72 of the Contract Act has held thus: 'True principle is that if one party under a mistake, whether of fact or law, pays to another party money which is not due by contract or otherwise that money must be repaid. The mistake lies in thinking that the money paid was due when in fact it was not due and that mistake, if established, entitles the party paying the money to recover it back from the party receiving the same.' So much so, the benefit and advantage obtained by the defendant by virtue of the wrongful credit in the duplication of the remittance made by the bank cannot be allowed to be retained and the bank is entitled to recovery of the amount credited by mistake from the defendant. In the facts of the case, the decree granted in favour of the plaintiff allowing to recover the amount credited by mistake in the account of the defendant is unassailable. ## 22.The Supreme court in the case of **Assistant** **Engineer (D1) (supra)** has held that limitation to recover the electricity charges / dues without disconnecting the electricity supply would commence from the date of finding of the mistake through audit account. Under Section 17(1) (c) of the Limitation Act, in case ``` 2024:KER:60098 ``` **==> picture [58 x 57] intentionally omitted <==** ## **`WP(C) NO. 30927 OF 2021`** ``` 14 ``` of a mistake, the limitation period begins from the date when the mistake is discovered for the first time. ## Paragraph 8 of the said judgment which is relevant is ## extracted hereunder:- 8. Applying the aforesaid ratio to the facts of the present case, the licensee company raised an additional demand on 18/03/2014 for the period July, 2009 to September, 2011. The licensee company discovered the mistake of billing under the wrong Tariff Code on 18/03/2014. The limitation period of two years under S.56(2) had by then already expired. S.56(2) did not preclude the licensee company from raising an additional or supplementary demand after the expiry of the limitation period under S.56(2) in the case of a mistake or bona fide error. It did not however, empower the licensee company to take recourse to the coercive measure of disconnection of electricity supply, for recovery of the additional demand. As per S.17(1)(c) of the Limitation Act, 1963, in case of a mistake, the limitation period begins to run from the date when the mistake is discovered for the first time. In Mahabir Kishore and Others v. State of Madhya Pradesh [1989 KHC 961 : (1989) 4 SCC 1 : AIR 1990 SC 313 : 1989 (24) ECC 199] this Court held that: "S.17(1)(c) of the Limitation Act, 1963, provides that in the case of a suit for relief on the ground of mistake, the period of limitation does not begin to run until the plaintiff had discovered the mistake or could with reasonable diligence, have discovered it. In a case where payment has been made under a mistake of law as contrasted with a mistake of fact, generally the mistake become known to the party only when a court makes a declaration as to the invalidity of the law. Though a party could, with reasonable diligence, discover a mistake of fact even before a court makes a pronouncement, it is seldom that a person can, even with reasonable diligence, discover a mistake of law before a judgment adjudging the validity of the law." In the present case, the period of limitation would commence from the date of discovery of the mistake i.e. 18/03/2014. The licensee company may take recourse to any remedy available in law for recovery of the additional demand, but is barred from taking recourse to disconnection of supply of electricity under sub-section (2) of S.56 of the Act. In view of the aforesaid discussion, it can be seen that the petitioner discovered the mistake only in the year 2016, **==> picture [58 x 57] intentionally omitted <==** ``` 2024:KER:60098 ``` ``` WP(C) NO. 30927 OF 2021 ``` `15` and therefore, the limitation to claim the refund for the excess amount paid by him under the mistake of fact and mistake of law would commence from the year 2016. Thus, I am of the considered view that there is no error in the Ext P4 impugned order in this Writ petition passed by the Electricity Ombudsman. Thus, the writ petition is dismissed and the impugned order is upheld. **Sd/-** **DINESH KUMAR SINGH JUDGE** ## **SJ** ``` 2024:KER:60098 ``` ``` WP(C) NO. 30927 OF 2021 ``` ``` 16 ``` **==> picture [58 x 57] intentionally omitted <==** ## **`APPENDIX OF WP(C) 30927/2021`** ``` PETITIONER EXHIBITS ``` ``` EXHIBIT P1TRUE COPY OF THE COMPLAINT SUBMITTED BY THE 3RD RESPONDENT BEFORE THE CGRF. ``` ``` EXHIBIT P2TRUE COPY OF THE OBJECTION SUBMITTED BY THE PETITIONERS DATED NIL. ``` ``` EXHIBIT P3TRUE COPY OF THE ORDER OF THE 2ND RESPONDENT DATED 04.12.2020 IN O P NO.62/2020-21. ``` ``` EXHIBIT P4TRUE COPY OF THE ORDER PASSED BY THE 1ST RESPONDENT IN APPEAL PETITION P. 1/2021. ``` ``` RESPONDENT EXHIBITS ``` ``` EXHIBIT R1ATRUE COPY OF THE REPRESENTATION DATED 21.06.2017 BY THE 3RD RESPONDENT TO THE KSEB ``` ``` EXHIBIT R3BTRUE COPY OF THE REPLY DATED 14.09.2017 FROM THE KSEB OFFICE ``` ``` EXHIBIT R3CTRUE COPY OF THE REPRESENTATION DATED 25.09.2017 SUBMITTED BY THE 3RD RESPONDENT BEFORE THE PETITIONER ```