Telangana High Court
M/S. Khaitan Electricals Ltd, Hyd vs Chairman And M.D., Apcpdcl, Hyd And 4 Ot on 11 July, 2025
THE HON'BLE SRI JUSTICE PULLA KARTHIK
WRIT PETITION No.28178 of 2012
ORDER:
This Writ Petition, under Article 226 of the Constitution of India,
is filed seeking the following relief:
“…to issue a writ or order of direction more particularly one in
the nature of Writ of Mandamus (a) declaring the Condition No. 9.3.2.9
of the General Terms and Conditions of Supply of the 1st respondent
as ultra-virus of Section 126 of the Electricity Act, 2003 and (b) the
order passed by the 3rd respondent in Letter No. SEA/HYD/SAH.No.
10934 D.No. 82/11-12 dated 9.4.2012 and as modified by the 2nd
respondent vide Proceedings No. CGM/MZ/Hyd/U&M/F.SC.No.
SZ008494/d.No. 259/12 dated 3.8.2012 as illegal, arbitrary, unjust,
irrationale and contrary to Clause 8 of the A.P. Electricity Regulatory
Commission (Consumers’ Right to Information) Regulation, 2000 and
Section 26 of the Electricity Act, 2003 and consequently, set aside the
same and pass…”
2. The brief facts of the case are that the petitioner is a private
limited company incorporated under the provision of the Companies Act,
1956. It had established a small scale industrial unit, which is engaged
in manufacture of fans and related components, for which, the
petitioner company had obtained an L.T. Category-III (Industrial) Service
Connection bearing No.52008494 from respondent No.1 licensee, under
the provisions of the Electricity Act, 2003. The petitioner’s industrial
unit has been subjected to periodic inspections by the officials of
respondent No.1 at frequent intervals of time, i.e., at least once in every
month, for the purpose of taking meter reading in the first week of every
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month. The said inspections were conducted till December, 2011, and
until then, there was no dispute whatsoever about their service
connection. While so, one more inspection had taken place on
06.01.2012. In pursuance thereof, respondent No.4 issued a provisional
assessment notice vide letter No.ADE/OP/D-XVI/BLNG/D.No.2548/11
dated 24.01.2012, alleging that at the time of inspection on 06.01.2012,
it was found that the petitioner was having three phase healthy
electrical supply under L.T. Category-III and that the petitioner had
connected a load of 41 HP for the office and godown, and 37 HP for the
industrial activity, which comes under the commercial category. On the
said premise, respondent No.4 assessed the value of energy said to have
been put to unauthorized use as Rs.23,42,211/-. Thereafter, the
petitioner Company had filed its objections on the said provisional
assessment notice before respondent No.3. Subsequently, respondent
No.3 passed a final assessment notice dated 09.04.2012 by modifying
the value of alleged energy said to have been put to unauthorized use by
the office of the petitioner Rs.11,20,456/-. Assailing the same, the
petitioner herein had preferred an appeal before respondent No.2 on
18.05.2012, and respondent No.2 vide order dated 03.08.2012, fixed the
liability at Rs.10,25,220/-, for the period from 06.01.2009 to
06.01.2012 (three years period). Hence, the present writ petition.
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3. Heard Smt. K. Jayasree, learned counsel appearing for the
petitioner and Sri N. Sreedhar Reddy, learned Standing Counsel
appearing on behalf of the respondents.
4. Learned counsel for the petitioner contended that respondents
erred in not taking into consideration that the petitioner Company is an
industrial unit, having obtained approvals from competent statutory
authorities like the Ministry of Industries, Government of India, which
issued proceedings No.1641/SIA/IMO/99 dated 19.08.1999, and the
Commercial Taxes Department, Government of Andhra Pradesh, which
issued a Certificate of Registration (Form-B) CST No.HYR/05/1/
1029/77-78 under the Central Sales Tax Act, 1956, is engaged in the
manufacture of fans and its related components. It was further
contended that the respondents failed to appreciate that the petitioner’s
industrial activity involves manufacturing fans and its related
components, with the finished goods being stored in a godown, which is
a part and parcel of the industrial shed where manufacturing operations
are conducted. Further, there is a small office within the industrial
shed premises that monitors these manufacturing activities. As such,
the respondents ought not to have segregated the petitioner’s service
connection load into industrial and commercial categories, which is per
se illegal and arbitrary. It was further contended that the respondents
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failed to appreciate that no notice, as mandated under Clause 8 of the
Electricity Regulatory Commission (Consumers’ Right to Information)
Regulation, 2000, was ever issued to the petitioner before changing the
category of the petitioner’s service connection. As such, the impugned
orders are vitiated and are liable to be set aside for violating mandatory
regulatory provisions.
5. It was further contended that even assuming the respondents had
the authority to split the petitioner’s load into industrial and commercial
categories without a proper enquiry, the maximum period of assessment
that could be made is only one year preceding the date of inspection,
i.e., 07.01.2011 to 06.01.2012. However, the action of the respondents
in adopting the assessment for a three-year period is wholly
impermissible under Section 126 of the Electricity Act, 2003. It was
also contended that the respondents adopted a penal rate at thrice the
normal tariff, which is contrary to Section 126(5) of the Electricity Act,
2003, which mandates that a penal rate of twice the normal tariff shall
be adopted while making the assessments. However, the reliance of the
respondents on Clause 9.3.2.9 of the General Terms and Conditions of
Supply is misplaced, as this condition runs contrary to the statutory
mandate under Section 126(5) of the Electricity Act, 2003. It was
further contended that Clause 9.3.2.9 of the General Terms and
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Conditions of Supply, which provides levy of a penalty at thrice the
normal tariff, is ultra-vires of Section 126(5) of the Electricity Act, 2003,
as the General Terms and Conditions, approved by the Electricity
Regulatory Commission under Section 16 of the Act, does not have
statutory force and it shall yield to the mandatory provisions of Section
126(5) of the Electricity Act, 2003. As such, the application of the
higher penal rate is illegal, arbitrary and irrational. Therefore, learned
counsel for the petitioner prayed this Court to pass necessary orders in
the present writ petition.
6. Per contra, learned Standing Counsel for the respondents
submitted that the petitioner Company is a factory under the Factories
Act, 1948, for manufacture of fans and its related components. Thus,
electricity connection was provided to the petitioner under L.T.
Category-IIIA, which stipulates that the power supply has to be utilized
for industrial purposes only. However, as per the inspection notes, the
power supply was being utilized for godown and office purposes apart
from the industrial purposes. The eligibility criteria of incidental
lighting for L.T. Category-III consumers as per Tariff Order is 10% of the
total contracted load, i.e., 7.3 HP/5445 watts only (contracted load is 73
HP), but in the petitioner’s case, the other than industrial load is 40.5
HP/30200 watts, which exceeds the eligibility norms as per the Tariff
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Order. Hence, the excess load of power consumption for godown and
office comes under commercial activity only, as it does not fulfill the
requisite criteria required for availing supply of electricity under L.T.
Category-IIIA. It was further contended that the petitioner’s claim that
the godown and office are integral part of its industrial activities is
untenable, as the inspection notes clearly shows that the godown was
used for storing the products not manufactured at their factory, such as
rice cookers, water heaters, CFLs, etc., both new and rejected. Thus,
the godown does not qualify as an integral part of the industrial shed.
Further, though the petitioner claims it is a small office, it actually
comprises of two floors, which include branch, sales, purchase, EDP,
accounts, and other offices. As per the connected load particulars
recorded by the Inspection Officer, in the presence of Mr. Vijay Kumar,
Assistant General Manager (Finance) of the petitioner Company, a total
of 12 Air Conditioners were running in the office, besides lighting and
other loads, totaling approximately 40 HP, exceeding the permissible
incidental lighting load of 7.3 HP (10% of the contracted load of 73 HP)
under the tariff order for LT Category-IIIA consumers. As such, the
activities of the petitioner Company are categorized as
commercial activities, and since the petitioner had unauthorizedly
extended the power supply to purposes other than the
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sanctioned industrial use, without prior intimation to the authorities, it
is liable to pay the assessed amounts as per the General Terms and
Conditions of Supply (GTCS) for the unauthorized use.
7. It was further submitted that during the inspection, the statement
of Mr. Vijay Kumar, AGM (Finance) was also recorded, wherein, he
admitted that the office building was modified and utilized for the last 6-
7 years, thus, the load consumed is more than the earlier load. As
such, the assessment period adopted is correct and the assessment was
rightly made for the entire period of unauthorized use. Further, as per
Section 126(6) of the Electricity Act, 2003, the penal tariff was rightly
imposed at twice the normal rate, and not at thrice the rate as alleged
by the petitioner. It was further contended that Clause 9.3.2.9 of the
GTCS is not ultra-vires of Section 126 of the Electricity Act, 2003, and
thus, the assessment was made strictly in accordance with the statutory
provisions. As such, the respondents are fully justified in booking a
case against the petitioner, as the electricity was being utilized
unauthorizedly for commercial purposes, which is established by the
Inspection Officer and the statement of the petitioner’s representative,
Mr. Vijay Kumar, AGM (Finance), and thus, the petitioner is liable to pay
the entire assessed amount. Therefore, it was prayed to dismiss the
present writ petition.
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8. This Court has taken note of the rival submissions made by the
learned counsel for the respective parties and perused the material
available on record.
9. Admittedly, respondent No.2 has passed the present impugned
order dated 03.08.2012, confirming the final assessment notice issued
by respondent No.3 dated 09.04.2012, fixing the liability on the
petitioner at Rs.10,25,220/-, for the unauthorized usage of electricity for
a period of three years, i.e., from 06.01.2009 to 06.01.2012. However,
the petitioner herein contended that as per Section 126 (5) of the
Electricity Act, 2003, the period of assessment has to be limited to one
year preceding the date of inspection. In this context it is pertinent to
refer to the Section 126 (5) of the Act, which is extracted hereunder:
“126. Assessment.-
(5) If the assessing officer reaches to the conclusion that
unauthorised use of electricity has taken place, the assessment
shall be made for the entire period during which such
unauthorised use of electricity has taken place and if, however,
the period during which such unauthorised use of electricity
has taken place cannot be ascertained, such period shall be
limited to a period of twelve months immediately preceding the
date of inspection.”
From the above, it is clear that the period of assessment has to be
restricted to one year preceding the date of inspection, only if the
authority is unable to ascertain the period of unauthorized usage.
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However, in the instant case, it is to be noted that the Assistant General
Manager (Finance) of the petitioner, Mr. Vijay Kumar, in whose presence
the inspection took place, himself gave a written statement admitting
that the office building had been modified six to seven years ago, and is
in usage since then. Further, the petitioner has not filed any rejoinder
or reply to deny this admission. In the absence of such denial, it can be
inferred that the period of unauthorized usage spanned for almost six to
seven years. As such, the authorities were well within their powers to
carry out assessment for the entire period. However, the appellate
authority has reasonably restricted the period of assessment to three
years only. Thus, the contention of the petitioner with regard to the
assessment period of one year cannot be countenanced.
10. Further, the petitioner also contended that the authority has
imposed a penal rate of thrice the tariff, in contravention of Section 126
(6) of the Act, which is extracted hereunder:
“(6) The assessment under this section shall be made at a
rate equal to twice the tariff rates applicable for the relevant
category of services specified in sub-section (5).”
11. In this regard, it is pertinent to note that the respondents have
categorically clarified, in their counter affidavit, that the assessment was
carried out at twice the applicable tariff, in strict compliance of the
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statutory requirement under Section 126 (6) of the Act. Further, there is
no material on record to support the contention of the petitioner that the
authority has imposed a higher penal rate.
12. In the light of the foregoing discussion, this Court is of the
considered view that respondent No.2, rather than mechanically
confirming the entire liability of Rs.23,42,211/-, has rightly exercised its
quasi-judicial discretion and categorically assessed the case and
imposed a liability of Rs.10,25,220/- upon the petitioner. Therefore,
this Court does not find any infirmities in the impugned order, and
thus, the writ petition is liable to be dismissed.
13. Accordingly, the Writ Petition is dismissed.
Miscellaneous applications, if any, pending in this writ petition,
shall stand closed. No costs.
_________________________________
JUSTICE PULLA KARTHIK
Date: 11.07.2025.
GSP
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