M/S Vardhman Ispat Udyog vs Himachal Pradesh State Electricity … on 23 December, 2024

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Himachal Pradesh High Court

M/S Vardhman Ispat Udyog vs Himachal Pradesh State Electricity … on 23 December, 2024

Author: Sandeep Sharma

Bench: Sandeep Sharma

2024:HHC:15726

IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA

CWP No. 4345 of 2023 a/w CWP Nos.

1571 of 2022, 2503 of 2022, 3972 of
2023, 9497 of 2023, 9498 of 2023 and
CWP No.2487 of 2024.

Reserved on: 21.11.2024
Date of Decision: 23.12.2024
_______________________________________________________

1. CWP No.4345 of 2023

M/s Vardhman Ispat Udyog …….Petitioner

Versus

Himachal Pradesh State Electricity Board Limited … Respondent

2. CWP No. 1571 of 2022

MT Autocraft …….Petitioner

Versus
Himachal Pradesh State Electricity Board Limited & others
… Respondents

3. CWP No.2503 of 2022

M/s Vardhman Ispat Udyog …….Petitioner
Versus

Himachal Pradesh State Electricity Board Limited … Respondent

4. CWP No.3972 of 2023
M/s Kundlas Loh Udyog …….Petitioner

Versus

Himachal Pradesh State Electricity Board Limited … Respondent
______________________________________________________
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5. CWP No.9497 of 2023

M/s Fujikawa Power …….Petitioner

Versus

Himachal Pradesh State Electricity Board Limited … Respondent
6. CWP No.9498 of 2023

M/s MT Autocraft …….Petitioner

Versus

Himachal Pradesh State Electricity Board Limited … Respondent

7. CWP No.2487 of 2024

M/s Prime Steel Industries Pvt. Ltd.& Anr. …….Petitioners

Versus
Himachal Pradesh State Electricity Board Limited & others
… Respondents

Coram:

Hon’ble Mr. Justice Sandeep Sharma, Judge.

Whether approved for reporting? 1 Yes.

For the Petitioner(s): Mr. Shrawan Dogra, Senior Advocate with
Mr. Manik Sethi, Advocate.

For the Respondents: Ms. Sunita Sharma, Senior Advocate with
Mr. Dhananjay Sharma, Advocate.

_______________________________________________________
Sandeep Sharma, Judge(oral):

Since common questions of facts as well as law are

involved in the above captioned cases and similar reliefs have been

1
Whether the reporters of the local papers may be allowed to see the judgment?

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claimed, all the matters were heard together and are being disposed

of vide common judgment.

2. Though, facts in all the petitions are common, as such,

same are not required to be specifically referred from one particular

petition, but since, certain documents, pursuant to which demand

notices came to be issued by the respondent-Board, are required to

be taken note, this court for the sake of clarity, shall take note of

pleadings as well as documents, adduced on record in the lead case

i.e. M/s Vardhman Ispat Udyog vs. Himachal Pradesh State

Electricity Board Limited ( CWP No. 4345 of 2023).

3. Petitioners herein, in all the petitions, are aggrieved on

account of inaction of the respondent-Board, which while raising

demand of additional security, has also proceeded to reject the

request made by the petitioners herein for installation of pre-paid

meter in terms of Section 47(5) of the Electricity Act, 2003 ( for short

‘Act’), as a result thereof, petitioners herein, besides bearing burden

of additional security payable under Section 47(1) of the Act are also

losing out on the benefit of 3% rebate with interest from the date of

preparedness for installation of prepaid meter i.e. from 16.04.2021 as

per tariffs notified by the respondent-HPERC for the financial year

2022-23 and 2023-24.

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4. Precisely, the facts of the case as emerge from the

pleadings adduced on record by the respective parties are that

petitioners herein, which fall under the category of Large Scale

Industry are involved in industrial production in the State of Himachal

Pradesh. Petitioners are consumers of electricity and as such, they

fall under the definition of ‘consumer’ as per Section 2(15) of the Act.

Since respondent-Board is authorized to operate and maintain a

distribution system for supplying electricity to the consumers in its

area of supply, it is a ‘distribution licensee’ in terms of Section 2(17) of

the Act qua the petitioners. On account of consumption of energy for

industrial production, petitioners herein are provided post paid meters

for measurement of consumption of energy by the petitioners, but

they are required to deposit Advance Consumption Deposit (for short

‘ACD’) in terms of Section 47 of the Act and Regulation 3 of HPERC

(Security Deposit)(Fourth Amendment) Regulations 2021, which

provides that distribution licensee is empowered to require reasonable

security from the consumer, who requires electricity supply.

Reasonable security is to be determined by regulations framed under

the Act. Section 47(2) of the Act further provides that in the event of

failure on the part of the consumer to deposit the security as per

Section 47(1) of 2003 Act, the licensee may, by notice, require that

person, within thirty days to give reasonable security for the payment
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of all monies. Section 47(3) of the Act provides that in case, consumer

fails to give such security deposit despite being served demand notice

under Section 47(2) of the Act, the licensee may discontinue the

supply of electricity for the period during which the failure continues.

Section 47(5) of the Act provides that if a person is prepared to take

supply through a pre-payment meter, distribution licensee will not be

entitled to require security in terms of Section 47(1) of the Act.

5. Respondent-Himachal Pradesh Electricity Regulatory

Commission (for short ‘HPERC’) vide Notification No. HPERC/414,

dated 03.03.2005 notified the regulations called Himachal Pradesh

Electricity Regulatory Commission (Security Deposit) Regulations,

2005 in exercise of powers conferred by clause (v) and (w) of Sub-

section (2) of Section 181 r/w Section 47 of the Act. Regulation 3

requires every person, who wants supply of electricity to his premises

to give security to distribution licensee and as per sub-clause (1) such

security should be an amount equivalent to consumption charges for

the billing cycle period. However, Regulation 4(3) provides that if any

person is prepared to take supply of electricity through a pre-payment

meter, distribution licensee shall not be entitled to collect the security

deposit (Annexure P-2). On 09.07.2021, respondent-HPERC,

amended the regulation for the purpose of Section 47 of the Act, to be

called Himachal Pradesh Electricity Regulatory Commission (Security
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Deposit) (Fourth Amendment) Regulations, 2021, thereby amending

certain clauses of 2005 legislation wherein the rates of security were

increased for the first time since 2005 (Annexure P-3).

6. Afore notification of fourth amendment was laid challenge

before this Court by way of CWP 351 of 2022, whereby this Court, in

the interim, directed respondent-Board to strictly comply with the

provisions of Section 47(5) while raising any demand for security, vide

order dated 12.01.2022 (Annexure P-4). In pursuance of fourth

amendment regulation of 2021, respondent-Board issued a demand

notice dated 07.03.2022, as per which respondent-Board raised

demand of additional security, which varies in all the cases.

7. In a similar case i.e. CWP 1571 of 2022, this Court vide

order dated 22.03.2022 stayed the operation of two demand notices

dated 04.02.2022 and 05.02.2022 (Annexure P-6). In the meantime,

Tariff Order for financial year 2022-23, dated 29.03.2022 and financial

year 2023-24, dated 31.03.2023 came into existence, whereby 3%

rebate on energy chargers was proposed to be given to the Large

Scale Industries having pre-paid connection. In response to aforesaid

demand letter dated 07.03.2022, petitioner-industry wrote

communication dated 16.04.2022 to respondent-Board, requesting

therein to withdraw the demand notice and refund the existing security

already deposited with the respondent-Board and provide pre-paid
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meter in terms of Section 47(5) of the Act. Petitioner specifically

stated in the aforesaid communication that provisions under Section

45(7) of Act bars recovery of security from the persons requiring

supply through a pre-paid meter (Annexure P-7). Despite there being

aforesaid communications sent by the petitioners, no steps were ever

taken by the respondent-Board, rather again demand notice, thereby

asking petitioners to give additional security was issued and as such

one of the petitioner filed petition bearing CWP 2503 of 2022 before

this Court, which is part of the instant proceedings, wherein this Court

vide order dated 26.04.2022, stayed the operation of demand notice,

but directed the petitioner to deposit regular electricity bills from time

to time, subject to final outcome of afore petition (Annexure P-8).

8. Vide communications dated 06.05.2023 and 18.05.2023

petitioners herein while again requesting the respondent-Board to

dispense with advance security by installation of prepaid meter

(Annexure P-4 and P-5) also claimed that it is losing out on the

incentive of 3% rebate on the energy chargers, as notified by the

HPERC for the financial years 2022-23 and 2023-24, due to the

inaction of respondent-Board and as such, needful may be done at

the earliest. However, respondent-Board vide communication dated

26.05.2023 informed the petitioner that it cannot accede to the

request of industry as industry has filed a writ petition bearing CWP
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No.2503 of 2022, laying therein challenge to Security Deposit (fourth

amendment) Regulation, 2021, which is subjudice before the this

Court. In the aforesaid background, petitioner-industry has

approached this Court in the instant proceedings filed under Article

226 of the Constitution of India seeking quashment of demand notices

of additional security with further directions to respondent-Board to

install pre-paid meter in terms of Section 47(5) of the Act and grant

3% rebate as per tariff order FY 2022-23 & FY 2023-24 with interest

from the date of preparedness for installation of prepaid meter.

9. Pursuant to the notices issued in the instant proceedings,

respondent-Board has filed the reply, wherein facts as have been

noticed hereinabove are not in dispute, rather attempt has been made

to refute the claim of the petitioner on the ground that provision

contained under Section 47(5) of the Act are not applicable to the

petitioner-Industry. At this stage, it would be profitable to reproduce

para-8 of the reply filed by the respondent-Board herein-below:-

“i) That Bureau of Indian Standard has prescribed Indian
Standard for “Alternating Current Direct Connected Static
Prepayment Meters for Active Energy (Class I and Class)
specifications under – IS 15884 where in following terms have
been defined :-

Payment meter: Electricity meter with additional functionality
that can be operated and controlled to allow the flow of energy
according to agreed payment mode.

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Prepayment method: Payment mode in which automatic
interruption occurs when available credit is exhausted.

ii) That the pre-requisite for a prepayment meter is to
disconnect the electricity supply when the prepaid amount is
exhausted. That for this functionality, the prepayment meters
are provided with inbuilt load break switch. The limit of line to
line voltage for this operation is 600 voltage (line to line in
case of polyphase systems) and current is 50 Amp.

iii) That the petitioner industrial connection is for voltage and
current above that specified for prepayment mode (11 kV, 33
kV, 66 kV, 132 kV & 220 kV) and the meter is not directly
connected to the AC Voltage rather connected through
static transformer (CT/ PT) and therefore, it is technically
not feasible to install prepaid meter in favour of the
petitioner industrial consumer(s). Hence the instant petition
deserve dismissal with exemplary cost since already a similar
petition has filled by the petitioner on similar basis facts which
is already pending adjudication before this Hon’ble Court and
as of now that petition has been tagged with some other
similar petition wherein the vires of HPREC (Security Deposit
)Regulations 2021 (Forth Amendment”) has been challenged
Despite having this fact the petitioner is time and again
approaching the replying Respondents/HPSEBL with a
request of prepaid meter just to evade itself from security to be
deposited as per HPERC (Security Deposit) Regulation 2021
(“forth Amendment”)

iv) That as per Central Electricity Authority (Installation and
Operation of Meters) (Amendment) Regulations, 2019, the
timeframe for replacement of existing meters with smart
meters with prepayment feature shall be notified by Central
Government. Ministry of Power vide notification dated
17.08.2021 has notified the following timelines for the
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replacement of existing meters with smart meters with
prepayment feature:-

All consumers (other than agricultural consumers) in areas
with communication network, shall be supplied electricity with
Smart Meters working in prepayment mode, conforming to
relevant IS, within the timelines specified below:

(i) All Union Territories, electrical divisions having more than
50% consumers in urban areas with AT&C losses more than
15% in financial year 2019-20, other electrical divisions with
A7’&C losses more than 25% in financial year 2019-20, all
Government offices at Block level and above, and all industrial
and commercial consumers, shall be metered with smart
meters with prepayment mode by December, 2023:

Provided that the State Regulatory Commission may, by
notification, extend the said period of implementation, giving
reasons to do so, only twice but not more than six months at a
time, for a class or classes of consumers or for such areas as
may be specified in that notification;

(ii) All other areas shall be metered with smart meters with
prepayment mode by March, 2025:

Provided that in areas which do not have communication
network, installation of prepayment meters, conforming to
relevant IS, may be allowed by the respective State Electricity
Regulatory Commission:

(iii) All consumer connections having current carrying capacity
beyond that specified in relevant IS, may be provided with
meters with smart meters having AMR facility.

Copy of the notification dated…..is appended hereto as
Annexure R1/A for the kind perusal of this Hon’ble Court.
In this context, it is respectful submission of the replying
respondent that the petitioner’s industrial connection is
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covered under Sr. No. (iii) above for which meters with smart
meter having AMR facility is to be provided and there is no
mention of prepayment facility since it is not technically
feasible to go for the prepayment mode for such high voltage
connections. The petitioner is thus trying to mislead this
Hon’ble Court and trying to escape from payment of security
as per the regulations notified by HPERC and therefore the
petition is liable for dismissal with heavy costs.”

10. Besides above, prayer has been made to dismiss the

petition on the ground that the petitioner has an alternate remedy to

approach the Consumer Grievances Redressal Forum, established

under the regulations No.16, 17, and 18 framed by the Himachal

Pradesh Electricity Regulatory Commission (Consumer Grievances

Redressal and Ombudsman Regulations, 2013).

11. Mr. Shrawan Dogra, learned Senior Counsel duly

assisted by Mr. Manik Sethi, Advocate representing the petitioner(s),

in all the petitions, vehemently argued that the respondent-Board is

not acceding to the request of installation of prepaid meters on the

ground that since petitioner-industry has already initiated legal

proceedings, laying therein challenge to Security Deposit(Fourth

Amendment) Regulation. 2021 against the Board, but such plea of the

respondent-Board is totally misconceived because afore writ petition

was only filed against the demand notices issued under the Fourth

Amendment Regulation of 2021 (Annexure P-13). Mr. Dogra, further

argued that the respondent-Board is statutorily bound to implement
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the mandate of Section 47(5) of the Electricity Act and Regulation

4(2), which gives a right to the consumer to opt for a pre-paid meter.

He further submitted that afore provisions also bar the respondent-

Board to demand security in case the consumer is prepared to take

the electricity supply through a pre-paid meter. Mr. Dogra vehemently

argued that respondent-Board has erred in not appreciating the

communication sent by of petitioner-industry dated 16.04.2022

(Annexure P-7), wherein the petitioner-industry has shown its

‘preparedness’ for the installation of pre-paid meter as it is statutory

duty of the Board to provide pre-paid meters upon the ‘preparedness’

shown by the petitioner-industry. He substantiated his arguments by

referring to Section 47(5), as per which distribution licensee

(HPSEBL) shall not be entitled to require security, if person requiring

the supply is prepared to take the supply through a pre-paid meter.

He further argued that Section 181 of the Act provides for State

Commissions to make regulations consistent with the Act, perusal

whereof nowhere permits regulations to be made for matters under

Section 47(5) of the Act. Mr. Dogra, contended that despite there

being specific direction issued by this Court vide order dated

12.01.20222 passed in CWP No.351 of 2022 (Annexure P-4) to the

respondent-Board to comply with the provisions of Section 47(5) of

the Act, before raising any additional demand for security, the
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respondent-Board issued a demand notice (Annexure P-5) for

depositing the additional security in terms of Fourth Amendment

Regulation, which is in violation of the afore order. Mr. Dogra further

argued that since respondent-Board is not acceding to the request for

installation of pre-paid meter, petitioner-industry is continuously

suffering loss on account of inaction of the Board, as petitioner-

industry is not being granted 3% rebate on electricity chargers (on

monthly basis) as provided in the tariff order passed by Commission

for the FY 2022-23 and FY 2023-24.

12. Ms. Sunita Sharma, learned Senior Counsel duly

assisted by Mr. Dhananjay Sharma, Advocate, representing the

respondent-Board, contended that after the notification of Fourth

Amendment Regulation 2021, rates for initial security deposit has

been changed for the first time after 2005 and as such, petitioner-

industry is liable to pay additional security as per HPERC regulation.

She submitted that since as per calculation of average of monthly

energy bill, the bill comes to the tune of Rs 3,66,00,547/- for previous

FY 2021-22 and industry’s initial security stands as Rs 1,39,50,000/-

in shape of cash and 15,50,000/- in shape of bank guarantee, hence it

is short of Rs 2,11,00,547/- and petitioner-industry is liable to pay the same.

She further submitted that petitioner-industry is not paying the security

amount for supply of electricity as per Regulations on the pretext that

petitioner-Industry is willing to take supply of electricity
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through prepaid meter, but said provision of pre-paid meter is not

applicable to the petitioner-industry for the reason that pre-payment

meters are provided with inbuilt load break switch and the limit of line

to lone voltage for this operation is 600 voltage and current is 50

Amp., whereas, petitioner-industry’s industrial connection is for

voltage and current above specified limit for pre-payment mode (11

kV, 33kV, 66kV, 132kV and 220kV). Ms. Sunita Sharma, further

argued that the meter is not directly connected to the AC Voltage,

rather it is connected through static transformer (CT/PT) and

therefore, it is not technically feasible to install prepaid meter in favour

of petitioner-industry. She argued that petitioner-industry is time and

again approaching respondent-Board with a request of prepaid meter

just to evade itself from security to be deposited as per Fourth

Amendment Regulation of 2021. Ms. Sunita, vehemently argued that

as per Central Electricity Authority (Installation and Operation of

Meters) (Amendment) Regulation 2019, the timeframe for

replacement of existing meters with smart meters with prepayment

features are notified by the Central Government. She further argued

that Ministry of Power vide notification dated 17.08.2021 (Annexure

R-1) has notified the timelines for the replacement of existing meters

with smart meters having pre-payment feature, wherein petitioner-

industry is covered by Regulation 1 (iii), which provides that “all
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consumer connections having current carrying capacity beyond that

specified in relevant IS, may be provided with meters with smart

meters having AMR facility”, and as such, there is no mention of pre-

payment facility in the said regulation. She further submitted that the

petitioner-industry is a large industrial power consumer having CT/PT

arrangement, the technology for which related to pre-paid meters is

not available in India and as such, it is not technically feasible for the

Board to install prepaid meter in favour of petitioner-industry.

13. Lastly, Ms. Sunita, submitted that the present writ petition

is not maintainable as the petitioner has an alternate remedy to

approach the Consumer Grievances Redressal Forum established

under the regulations framed by HPERC by exercising powers under

Sections 85 and 86 of the Act instead of approaching this Court

against the demand notice. She submitted that the Regulation Nos.

16, 17 and 18 of HPERC (Consumer Redressal and Ombudsman)

Regulations, 2013 provides a provision of filling an appeal before

CGRF, thus the petitioner has an alternate remedy, this Court may

not allow the petitioner to invoke extra ordinary jurisdiction. In this

regard, she placed reliance upon the judgment passed by Hon’ble

Apex Court in case titled M/s South Indian Bank Ltd & Ors vs

Naveen Mathew Philips & anr., SLP (Civil) Nos. 22021-22022 of

2022, wherein it has been held that when
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a statute prescribes a particular mode, an attempt to circumvent shall

not be encouraged by way of writ petition. She further submitted that

regulations framed by HPERC are to be implemented in its letter and

spirit by respondent-Board being a regulated entity and they are

required to follow the Regulations notified by HPERC.

14. I have heard learned counsel for the parties and gone

through the record carefully.

15. Precisely, the question, which needs to be determined in

the case at hand, is that “whether person, who is prepared to take

supply of electricity through pre-paid meter in terms of Section 47(5)

of the Act can be compelled to pay security as contemplated under

Section 47 of 2003 Act or not?”.

16. Before exploring the answer to aforesaid provision of

law, it would be apt to take note of Sections 43, 47 and 181 of the Act

herein-blow:-

“43. Duty to supply on request:-(1) 1 [Save as otherwise provided in
this Act, every distribution] licensee, shall, on an application by the
owner or occupier of any premises, give supply of electricity to such
premises, within one month after receipt of the application requiring
such supply:

Provided that where such supply requires extension of distribution mains,
or commissioning of new sub-stations, the distribution licensee shall supply
the electricity to such premises immediately after such extension or com-
missioning or within such period as may be specified by the Appropriate
Commission:

Provided further that in case of a village or hamlet or area wherein no pro-
vision for supply of electricity exists, the Appropriate Commission may ex-
tend the said period as it may consider necessary for electrification of such
village or hamlet or area.

[Explanation.–For the purposes of this sub-section, “application”

means the application complete in all respects in the appropriate
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form, as required by the distribution licensee, along with documents
showing payment of necessary charges and other compliances.]
(2) It shall be the duty of every distribution licensee to provide, if re-
quired, electric plant or electric line for giving electric supply to the
premises specified in sub-section (1):

Provided that no person shall be entitled to demand, or to continue
to receive, from a licensee a supply of electricity for any premises
having a separate supply unless he has agreed with the licensee to
pay to him such price as determined by the Appropriate Commis-
sion
(3) If a distribution licensee fails to supply the electricity within the
period specified in sub-section (1), he shall be liable to a penalty
which may extend to one thousand rupees for each day of default.”

“47Power to require security.__(1) Subject to the provisions of
this section, a distribution licensee may require any person, who
requires a supply of electricity in pursuance of section 43, to give
him reasonable security, as may be determined by
regulations, for the payment to him of all monies which may become
due to him____

(a) in respect of the electricity supplied to such persons; or

(b) where any electric line or electrical plant or electric meter is to be
provided for supplying electricity to such person, in respect of the
provision of such line or plant or meter,
and if that person fails to give such security, the distribution licensee
may, if he thinks fit, refuse to give the supply of electricity or to
provide the line or plant or meter for the period during which the
failure continues.

(2) Where any person has not given such security as is mentioned
in sub-section (1) or the security given by any person has become
invalid or insufficient, the distribution licensee may, by notice,
require that person, within thirty days after the service of the notice,
to give him reasonable security for the payment of all monies which
may become due to him in respect of the supply of electricity or
provision of such line or plant or meter.

(3) If the person referred to in sub-section (2) fails to give such
security, the distribution licensee may, if he thinks fit, discontinue
the supply of electricity for the period during which the failure
continues.

(4) The distribution licensee shall pay interest equivalent to the bank
rate or more, as may be specified by the concerned State
Commission, on the security referred to in sub-section (1) and
refund such security on the request of the person who gave such
security.

(5) A distribution licensee shall not be entitled to require security in
pursuance of clause (a) of sub-section (1) if the person requiring the
supply is prepared to take the supply through a pre-payment meter.”

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“181 Powers of State Commissions to make regulations. __(1)
The State Commissions may, by notification, make regulations con-
sistent with this Act and the rules generally to carry out the provi-
sions of this Act.

(2) In particular and without prejudice to the generality of the power
contained in sub-section (1), such regulations may provide for all or
any of the following matters, namely:

(a) period to be specified under the first proviso to section 14;

(b) the form and the manner of application under sub-section (1) of
section 15;

(c) the manner and particulars of application for licence to be pub-
lished under sub-section (2) of section 15;

(d) the conditions of licence section 16;

(e) the manner and particulars of notice under clause (a) of sub-
section (2) of section 18;

(f) publication of the alterations or amendments to be made in the li-
cence under clause (c) of sub-section (2) of section 18;

(g) levy and collection of fees and charges from generating compa-
nies or licensees under sub-section (3) of section 32;

(h) rates, charges and the terms and conditions in respect of inter-
vening transmission facilities under proviso to section 36;

(i) payment of the transmission charges and a surcharge under sub-
clause (ii) of clause (d) of sub-section (2) of section 39;

(j) reduction 1*** of surcharge and cross subsidies under second
proviso to sub-clause (ii) of clause (d) of sub-section (2) of section
39
;

(k) manner and utilisation of payment and surcharge under the
fourth proviso to sub-clause (ii) of clause (d) of sub-section (2) of
section 39;

(l) payment of the transmission charges and a surcharge under sub-
clause (ii) of clause (c) of section 40;

(m) reduction 1*** of surcharge and cross subsidies under second
proviso to sub-clause (ii) of clause (c) of section 40;

(n) the manner of payment of surcharge under the fourth proviso to
sub-clause (ii) of clause (c) of section 40;

(o) proportion of revenues from other business to be utilised for re-

ducing the transmission and wheeling charges under proviso to sec-
tion 41;

(p) reduction 1*** of surcharge and cross-subsidies under the third
proviso to sub-section (2) of section 42;

(q) payment of additional charges on charges of wheeling under
sub-section (4) of section 42; (r) guidelines under sub-section (5) of
section 42;

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(s) the time and manner for settlement of grievances under sub-
section (7) of section 42;

(t) the period to be specified by the State Commission for the pur-
poses specified under sub-section (1) of section 43;
(u) methods and principles by which charges for electricity shall be
fixed under sub-section (2) of section 45;

(v) reasonable security payable to the distribution licensee under
sub-section (1) of section 47;

(w) payment of interest on security under sub-section (4) of section
47
;

(x) electricity supply code under section 50;

(y) the proportion of revenues from other business to be utilised for
reducing wheeling charges under proviso to section 51;(z) duties of
electricity trader under sub-section (2) of section 52;
(za) standards of performance of a licensee or a class of licensees
under sub-section (1) of section 57;

(zb) the period within which information to be furnished by the licen-
see under sub-section (1) of section 59;

2

[(zc) the manner of reduction of cross-subsidies under clause (g) of
section 61;]
(zd) the terms and conditions for the determination of tariff under
section 61;

(ze) details to be furnished by licensee or generating company un-
der sub-section (2) of section 62;

(zf) the methodologies and procedures for calculating the expected
revenue from tariff and charges under sub-section (5) of section 62;
(zg) the manner of making an application before the State Commis-
sion and the fee payable therefor under sub-section (1) of section
64
;

(zh) issue of tariff order with modifications or conditions under sub-
section (3) of section 64;

(zi) the manner by which development of market in power including
trading specified under section 66;

(zj) the powers and duties of the Secretary of the State Commission
under sub-section (1) of section 91;

(zk) the terms and conditions of service of the secretary, officers
and other employees of the State Commission under sub-
section (2) of section 91;

(zl) rules of procedure for transaction of business under sub-
section (1) of section 92;

(zm) minimum information to be maintained by a licensee or the ge-
nerating company and the manner of such information to be main-
tained under sub-section (8) of section 128;

20

2024:HHC:15726

(zn) the manner of service and publication of notice under section
130
;

(zo) the form of preferring the appeal and the manner in which such
form shall be verified and the fee for preferring the appeal under
sub-section (1) of section 127;

(zp) any other matter which is to be, or may be, specified.
(3) All regulations made by the State Commission under this Act
shall be subject to the condition of previous publication.”

17. Careful perusal of Section 47 of the Act provides that if a

person requires the supply of electricity, in pursuance of Section 43 of

the Act, he is subjected to reasonable security as may be determined

by regulations. Similarly, Section 43 of 2003 Act provides statutory

duty of distribution licensee to give supply of electricity as provided

under the Act. Section 181 of the Act empowers the State

Commission to make regulations by notification consistent with the

Act. Most importantly, Section 181(2)(v) of the Act provides that such

regulation may provide provision of security payable to the distribution

licensee under sub-section (1) of section 47 of the Act. In terms of

aforesaid provision of law, respondent-HPERC provides for security

under Regulations 3 & 4, which are reproduced herein below:-

“HPERC Regulation dated March, 2005

3. Power to require security.- (1) The distribution licensee shall
require every person, who requires a supply of electricity to his
premises in pursuance of section 43 of the Act, to give security as
provided in regulation 4, for the payment of all monies, which may
become due to the licensee –

(a) (a) in respect of the electricity supplied to such person; or/and
21
2024:HHC:15726

(b) where any electric line or electrical plant or electric meter is to be
provided for supplying electricity to such person, in respect of the
provision of such line, plant and/or meter.

(2) If such person fails to give such security under sub-regulation
(1), the distribution licensee may refuse to give the supply of
electricity or to provide the line or plant or meter for the period
during which the failure continues.

4. Security deposit for the supply of electricity: – (1) The
consumer shall, at all times maintain with the licensee an amount
equivalent to consumption charges for the billing cycle period, as
security during the period the agreement for supply of energy to
such consumer remains in force:

Provided that where billing cycle is changed the security deposit
shall be reduced/increased on pro-rata basis.
(2) If any person is prepared to take the supply through a pre-

payment meter, the distribution licensee shall not be entitled to
collect the security deposit in respect of the electricity supplied to
such person:

Provided that in the case of existing consumer who opts for the
supply through the pre-payment meter, the licensee shall refund the
amount of the security deposit of such consumer lying with the
licensee.

(3) The initial security deposit payable at the time of releasing the
supply shall be at flat rates mentioned in regulation 5.
(4) The amount payable towards security shall be in the form of
cash/demand draft (DD) drawn in favour of the licensee;

Provided that where the amount payable towards security exceeds
rupees 5.00 lacs, the consumer may opt to furnish the security in
the form of Bank Guarantee.

“HPERC (Fourth Amendment) Regulation dated 9th July, 2021

2. Amendment of regulation 3.-

In proviso to sub-regulation (1) of regulation 3, for the words
“required for its own use”, the words “required by it for its own use”

shall be substituted.

3. Amendment of regulation 4.-

22

2024:HHC:15726

In regulation 4 of the said regulations –

(i) in sub-regulation(1), for the words “at the rates worked out”

shall be omitted ;

(ii) in sub-regulation (2) –

(a) for the word “is prepared to take”, the word “takes” shall
be substituted; and

(b) in the existing proviso, for the words “such consumer
lying with the licensee”, the words and figure “such
consumer lying with the licensee, after making adjustments
for the amounts outstanding from the consumer to the
licensee, within the timelines given in regulation 8, starting
from the date of replacement of postpaid meter with prepaid
meter” shall be substituted.

(iii) in sub-regulation(3), for the words, figures and sign “the
amount equivalent to the average bill (excluding arrears but
including late payment surcharge, if any) for (n+1.35)
months based on the bills raised in relation to the period of
twelve billing months (April to March) of the immediately
preceding year”, the words, figures and sign “the amount
equivalent to the average monthly bill (net of arrears and
subsidy, if any) for (n+1.0) months based on the bills raised
in relation to the twelve billing months immediately
preceding the date of such demand ” shall be substituted;

(iv) in sub-regulation (4), for the words, figure and sign “in
the form of cash/demand Draft (DD) drawn in favour of the
licensee” , the words and sign “paid in the form of
cash/demand Draft (DD) drawn in favour of the licensee or
through electronic mode” shall be substituted ;

(v) in sub-regulation (5), for the words, figure and sign “in
the form of cash/demand Draft (DD) drawn in favour of the
licensee” , the words and sign “paid in the form of
cash/demand Draft (DD) drawn in favour of the licensee or
through electronic mode” shall be substituted;

(vi) in item (b) of sub-regulation (6), for the words, figure and
sign “in shape of cash/demand draft”, the words and sign “in
23
2024:HHC:15726

the form of cash/demand draft or through electronic mode”

shall be substituted; and

(vii) in sub-regulation (7), for the words and sign “in shape of
cash/demand draft etc.”, the words and sign “in the form of
cash/demand draft or through electronic mode” shall be
substituted.”

18. In terms of aforesaid regulation demand for additional

security has been raised by the respondent-Board, but bare perusal of

Section 47 of the Act makes it abundantly clear that provision

contained under Section 47 of the Act, is subject to other provisions

contained in said section including Section 47(5) of the Act.

19. As per un-amended regulation if any person is prepared

to take the supply through pre-paid meter, the distribution licensee

shall not be entitled to collect the security deposit in respect of the

electricity supplied to such person. Aforesaid regulation 4(2) came to

be amended, as detailed hereinabove, wherein words, “is prepared to

take” came to be substituted with word “takes”. Learned Senior

counsel representing the respondent-Board, while referring to

amended regulation 4(2), vehemently argued that till the time

consumer takes the supply through pre-paid meter, distribution

licensee shall be entitled to collect the security deposit in respect of

the electricity supplied to such person. She further submitted that

since the word “takes” has been substituted with the word “is

prepared to take”, plea of the petitioners that they were prepared to

take the pre-paid meter is outside the purview of Forth Amendment
24
2024:HHC:15726

Regulation 2021. No doubt, amended regulation, as detailed

hereinabove, provides that if the person “takes” the supply through a

pre-payment meter, then only he/she will not be required to pay

security deposit in respect of the electricity supply to distribution

licensee in terms of section 47(1) of the Act, but there appears to be

merit in the contention of learned Senior counsel representing the

petitioner that though by way of amendment expression ‘prepared to

take’ has been substituted with the words ‘takes’, but same shall have

no consequence, inasmuch as power of the respondent-Board to call

for security under Section 47, because Section 47(5) itself provides

that distribution licensee shall not be entitled to require security in

pursuance of clause (a) of sub section 1 of the Act, if person

requiring supply of electrify is prepared to take the supply through pre-

payment meter. Once parent Act itself imposes a duty on the

distribution licensee not to demand security under Section 47(1) from

a person who is willing to take the supply through a pre-paid meter,

such statutory right cannot be overridden under the guise of

Regulations framed under Section 181 of the Act.

20. Though, this Court is of the definite view that right, if any,

granted under the Parent Act cannot be taken away by the regulation

framed under the Act, but even otherwise, this Court having perused

Section 181 of the Act, as reproduced hereinabove, is of the view that
25
2024:HHC:15726

HPERC has no power to frame the regulation with regard to provision

contained under Section 47(5) of the Act, which makes it mandatory

for distribution licensee to provide pre-paid meter to a person

prepared to take it. If Section 181 of the Act is read in its entirety, it

clearly provides for areas, wherein HPERC can proceed to frame

regulations.

21. Though, Ms. Sunita Sharma, learned Senior counsel

representing the respondent-Board, while referring to Section

181(2)(v)&(w), attempted to argue that HPERC can frame regulation

with regard to reasonable security deposit payable to the distribution

licensee under sub section (1) of Section 47 of the Act as well as

payment of interest on security under sub-section (4) of Section 47 of

the Act, but she was unable to dispute that afore section nowhere

empowers the Commission to frame regulation, if any, with regard to

pre-paid meter in terms of Section 47(5) of the Act.

22. Despite having conceded that provision of Section 47(5) is

mandatory, reliance placed by the respondents upon the amended

Regulation 4 is wholly misplaced. Once there is specific provision

under the Act to provide pre-paid meter and pursuant to such

provision, petitioners herein being consumers, may become entitled to

some benefit, rightful claim of the petitioners cannot be permitted to

be defeated on the ground that respondent-Board is not yet ready to
26
2024:HHC:15726

provide pre-paid meter in terms of Section 47 of the Act. For the sake

of repetition, it is again reiterated that Section 47(1) of the Act is

subject to the provisions contained under Section 47(5) and not vice

versa and secondly power to make regulation vested in the State

Commission is governed by the provision contained under Section

181 of the Act. Though, the Commission is provided with an authority

to make regulation for reasonable security payable to the distribution

licensee under Section 47(1) of the Act, but as has been observed

hereinabove, Commission could not have formulated regulation qua

provision of installation of pre-paid meter in terms of Section 47(5) of

the Act. Section 181(2)(w)of the Act, provides for regulation qua

payment of interest on security under Section 47(4) of the Act, but

certainly there is no power vested in the State Commission to

formulate any regulation in respect of provision contained under

Section 47(5) of the Act. Since provision contained under Section

47(1)of the Act is subject to that of Section 47(5) of the Act,

regulations framed under Section 181 for the purpose of Section 47(1)

of the Act can have no effect over Section 47(5) of the Act. Reliance

in this regard is placed upon the judgment passed by Hon’ble High

Court of Karnataka in case tilted Universal Air Products Private

Limited vs. Bangalore Electricity Supply Company Limited in Writ

Appeal No.6342 of 2017, wherein it has been held as under:-
27

2024:HHC:15726

“3. Learned Counsel for the appellant draws the attention of this
Court to a judgment dated 24.07.2018 in W.A.Nos.6090-91/2017 in
the case of Bangalore Electricity Supply Company Limited and
Another Vs. M/s.Vijaya Steels and Others, where a co-ordinate
Bench of this Court upheld the decision of the learned Single Judge
in W.P.No.13836/2015 noticing that in view of Sub- section (5)
of Section 47 of the Electricity Act, 2003, if the person requiring the
supply is prepared to take the supply through a pre-paid meter, he
shall not be liable to furnish security as contemplated under Clause

(a) of Sub-section (1) of Section 47. It was noticed that if the
consumer is prepared to take the supply through a pre-paid meter,
and as Prepayment meter was presently not available, it was held
that respondent-BESCOM should supply electricity to the consumer
by collecting approximate monthly energy charges in advance
without insisting for any security as contemplated under Clause (a)
of sub-section (1) of Section 47 of Electricity Act, 2003. It was also
directed by the learned Single Judge that the amount of the
petitioner lying in deposit with the respondent-BESCOM shall be
adjusted towards energy charges. When the respondent-BESCOM
took up the matter in appeal, the co-ordinate Bench in
W.A.Nos.6090-91/2017 noticed that the submissions of the
respondent-BESCOM that no prepayment meters for High Tension
Consumers (HT-IIA) was available and proceeded to uphold the
decision of the learned Single Judge in W.P.No.13836/2015. Further
by order dated 16.12.2019 in Review Petition No.53/2019 in the
case of M/s. Bangalore Electricity Supply Company Limited and
Another Vs. M/s. Vijayaa Steels and Others, this Court dismissed the
review petition preferred by the respondent-BESCOM.

4. In that view of the matter, this issue stands covered by a decision
of the co-ordinate Bench in W.A.Nos.6090-91/2017 dated
24.07.2018. Therefore, this appeal is allowed. The impugned order
dated 10.10.2017 passed by the learned Single Judge in
W.P.No.30906/2014 is set aside.”

23. Reliance is also placed upon the judgment passed by

Hon’ble High Court of Orissa in case titled as Maruti Steel Moulding

Private Limited vs. O.E.R.C. and others, 2015 SCC OnLine Ori.

514, wherein it has been held as under:-

“19. The cumulative effect of the provisions discussed above
makes it clear that if a consumer expresses his willingness to
avail the power supply through prepayment meter, the supplier
is obliged under law to provide the same as it is otherwise
beneficial for the consumer. Though the Act does not define
“prepayment meter” both the Code, 2004 and Regulation 2006
define a prepaid meter as a meter which facilitates use of power
only after advance payment. Both the Code, 2004 and Regula-
tion, 2006 have been framed in exercise of powers conferred
under the Code and Regulation making provisions of the Acts.

28

2024:HHC:15726

But the opposite party-supplier instead of installing the prepay-
ment meter by providing the same has been insisting upon for
payment of additional security by issuing impugned Annexures.
Under compelling circumstances to retain the power supply to
the premises, the petitioner has been depositing the same as
and when the demand was made by the authority. But every
time plea has been taken by the opposite party-supplier that in-
stead of best efforts, they are not able to get prepayment meter
for the consumers of electricity but that itself is not a ground to
exonerate the supplier to supply the prepayment meter, when
the provisions of the Act, 2003, Code, 2004 and Regulation,
2006 are clear and specific and there is no ambiguity in the
provision itself, the opposite party-supplier is obliged under law
to provide prepayment meter.

20. In Vijayaa Steel Limited (supra), the Karnatak High Court
has considered the same question and paragraph-5 states as
follows:

“5. In view of sub-section (5) referred to above, if the per-
son requiring the supply is prepared to take the supply
through a pre-payment meter, he shall not be liable to fur-
nish security as contemplated under clause (a) of sub
section (1) referred to above. In this case, as the petition-
er is prepared to take the supply through a pre-payment
meter, and as pre-payment meter is presently not availa-
ble, it is appropriate that respondent Nos. 1&2 shall
supply electricity to the petitioner by collecting approx-
imate monthly energy charges in advance without insist-
ing for any security as contemplated under clause (a) of
sub-section (1) W.P. No. 13836/2015 referred to above.
The amount of the petitioner lying in deposit with respon-
dent Nos. 1&2 shall be adjusted towards energy charges.
This order shall cease to be in force once respondent
Nos. 1&2 provide a pre-payment meter to the petitioner.
The writ petition is disposed of in the above terms.”

21. The same question has also been considered by the Jhark-
hand High Court in T&T Metals Pvt. Ltd. (supra), wherein para-
graphs-8, 9, 10 and 11 read as follows:

“8. From perusal of the aforesaid provisions, it is clear that
if a consumer prepare to take supply of electricity through
prepayment meter, then the licensee have no other option
than to supply the electricity to the consumer through pre-
payment meter. It is also clear that in that event the licen-
see is not entitled to demand security deposit as provided
under Section 47(1) of the Electricity Act. Admittedly the
petitioner vide annexure-2 had shown his desire to take
supply of electricity through prepayment meter. From the
various counter affidavits filed by the respondent, it is
clear that the respondent is denying the claim of the peti-
tioner, merely on the ground that it has not yet made ar-
rangement to supply the electricity through prepayment
29
2024:HHC:15726

meter. The aforesaid excuse of the respondent appears to
be against the law.

9. The respondent being a ‘State’ within the meaning of
Article 12 of the Constitution is duty bound to follow the
law if it wants to do business of supply of electricity. It is
not open to the respondent to take a plea that it will not
follow the law because it had not made arrangement for
the same. Therefore, on the basis of the above excuse,
the prayer made by the petitioner cannot be denied.

10. The second excuse given by the respondents in its
counter affidavit before the Forum that the meter is not
available in the market, is also not correct. According to
the petitioner, such meters are available in the market.
Even the respondent had stated in the counter affidavit
filed before the forum that the consumer may be directed
to make available the prepayment meter to the respon-
dents so that the Board may install it after making proper
testing. This shows that such meters are available in the
market. It is worth mentioning that Section 55(1) and
Clause 13.2.1 of the Electricity Supply Code Regulations,
2005 cast a duty upon the respondent to install the said
meter for supply of the electricity. Under the aforesaid cir-
cumstances, the respondent, being a licensee for the
supply of electricity, is duty bound to provide prepayment
meter in the premises of the petitioner and make electrici-
ty supply in accordance with law.

11. In view of the discussions made above, I allow this
application and I hereby quash the impugned orders
passed by the Electricity Ombudsman, Jharkhand. I also
quash the demand made by the respondent from the peti-
tioner to deposit revised security money for the financial
years 2010-11 and 2012-13. I further direct the respon-
dents to make arrangement for supply of electricity to the
premises of the petitioner by installing prepayment meter
as per Section 47(5) of the Act and second proviso to
Clause 10.1 of the Electricity Supply Code Regulations,
2005. I further restrain the respondents from demanding
security money from the petitioner as per Section 47(1) of
the Act. However, I direct the petitioner to make payment
of the current bill regularly.”

23. Therefore, taking into consideration the above facts and cir-
cumstances and also the provisions of law governing the field, it
is made clear that there is no ambiguity in the provisions of law
governing the field.”

24. Reliance is also placed upon the judgment dated 17.03.2023

passed by Hon’ble Punjab and Haryana High Court in case tilted M/s

Dasmesh Alloys vs. Punjab State Power Corporation Limited and
30
2024:HHC:15726

others alongwith connected matters, in CWP No.22544 of 2018.

Relevance para No.14 of the afore judgment is reproduced herein below:-

“14. In the considered opinion of this Court, the arguments raised at the
hands of the respondents-Corporation is misplaced. For the sake of
repetition it must be reminded that Section 47(1) of the 2003 Act is subject
to the provision contained in Section 47 (5) and not vice versa and
secondly power to make regulation vested in the State Commission is
governed by the provisions contained in Section 181 of the 2003 Act. The
Commission is provided with an authority to make regulation for
reasonable security payable to a distribution licensee under Sub Section
1
of Section 47. Further Section 181(2) (w) of the 2003 Act provides for
regulation qua payment of interest on security under sub- section (4)
of Section 47 of the 2003 Act. There is no power vested in the State
Commission to formulate any regulation with respect to provision contained
in Section 47 (5) of the 2003 Act. Since provision contained in Section 47
(1)
of the 2003 Act is subject to that of Section 47 (5) of the 2003 Act,
regulations framed for the purpose of Section 47(1) of the 2003 Act can
have no effect over Section 47(5) of the 2003 Act.”

25. From the bare perusal of aforesaid exposition of law laid down

by the various High Courts, this Court finds that Section 47(5) of the Act is

mandatory and shall preside over Section 47(1) of the Act, meaning

thereby, if a consumer expresses his preparedness to avail supply of

electricity through a pre-paid meter, distribution licensee/supplier is under

the obligation to provide the same. Respondent-Board being ‘State’ within

the meaning of Article 12 of the Constitution of India is duty bound to follow

the law and as such, respondent-Board was duty bound to consider the

request of the petitioners for installation of pre-paid meter.

26. Before issuing necessary direction in light of discussion made

hereinabove, this Court wishes to answer the question of maintainability

raised by the learned Senior counsel representing the respondent-Board.

Even though there is availability of alternative remedy, but that ipso

facto will not disentitle the petitioners to invoke the jurisdiction under

Article 226 of the Constitution of India when there is clear violation of
31
2024:HHC:15726

fundamental rights and provisions of statute, as has been held in

Maruti Steel Moulding Private Limited case (supra). Besides laying

challenge to demand notice, petitioners have further laid challenge to

inaction of respondent-Board in providing pre-paid meters within

reasonable time because of which they are losing out on the incentive

of 3% rebate, such violation can be redressed in present writ petition

filed under Article 226 of the Constitution of India.

27. Though, this Court understands the practical/

infrastructural difficulties faced by the respondent-Board in providing

the pre-paid meter to the petitioners, but that cannot be a ground to

defeat the rightful claim of the petitioners on this sole ground, rather

best efforts should be made by the respondent-Board to make the

arrangement for supply of electricity to the petitioners by installing

pre-paid meter as per the provision contained under Section 47(5) of

the Act. Moreover, Section 42 of the Act casts duty upon the

distribution licensee to develop and maintain an efficient, coordinated

and economical distribution system in its area for supply of electricity

in accordance with the provision contained under the Act. However, in

peculiar facts and circumstances where on account of practical

difficulties, as pointed out in the reply, respondent-Board is finding it

difficult to provide pre-paid meters in terms of Section 47(5), this

Court finds that rights of the petitioners as borne out from Section
32

2024:HHC:15726

47(5) of the Act and practical difficulty being faced by the respondent-

Board need to be equitably balanced.

28. Consequently, in view of detailed discussion as well as

law taken into consideration, this Court finds merit in the present

petitions and accordingly same are allowed and demand notices in all

the petitions are quashed and set-aside. Further, in order to balance

the equities, the respondent-Board is directed to make arrangement

for supply of electricity to the premises of the petitioners by installing

pre-paid meters as per the provision contained under Section 47(5) of

the Act. It is further directed that the respondent-Board shall grant

incentive of 3% rebate to the petitioners from the date of

preparedness of the petitioners to take prepayment meter in terms of

Section 47(5) of the Act. Needles to say, petitioners are directed to

pay monthly energy charges in advance and amount, if any, of the

petitioners lying as security with the respondent-Board, shall be

adjusted towards energy charges. However, it is made clear that this

arrangement shall continue till respondent-Board is equipped for

providing prepaid meter to the petitioners. All pending applications

stand disposed of, in all the petitions. Interim directions, in all the

cases stand vacated.

(Sandeep Sharma),
Judge
December 23, 2024
(shankar)



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