Case at a Glance
Two Gujarat consumers whose electricity was disconnected over alleged theft obtained High Court orders restoring supply on deposit of 50% of the demand. The distribution companies argued that no hearing is needed in theft cases and that only the Special Court can fix civil liability. The Supreme Court held that the ‘assessed amount’ for restoration under the third proviso to Section 135(1A) of the Electricity Act, 2003 is to be worked out through the Section 126 procedure (provisional assessment, objections, hearing, final assessment), appealable under Section 127, and that a High Court may, for recorded reasons, order restoration on a deposit of not less than 50% where the provisional assessment is prima facie arbitrary. Both appeals were dismissed.
In the lead case, the distribution licensee issued Vaibhav Metal Crusher a ‘supplementary bill’ on 3 January 2024 of Rs 92,99,077.55 for alleged theft, plus Rs 23,45,845 as compounding charges, warning of prosecution if unpaid. A Single Judge of the Gujarat High Court on 12 February 2024 allowed reconnection on deposit of 50% of the bill. On 25 June 2024 a Division Bench directed the consumer to file objections before the Executive Engineer, required a decision within a short time, and allowed an appeal under Section 127, keeping the deposits subject to the outcome.
In the connected case, Jamanbhai Nanajibhai Bhuva challenged a supplementary bill dated 1 June 2023. The Single Judge on 23 January 2024 directed a 50% deposit, stayed recovery of the balance and told the licensee to process his application for a fresh connection; the Division Bench later remanded the matter to the Single Judge. The licensees argued before the Supreme Court that no pre-demand hearing is required in theft cases and that the Special Court under Section 154 alone determines civil liability.
The Key Question Before the Court
How is the ‘assessed amount’ for restoring supply under the third proviso to Section 135(1A) determined in electricity theft cases, and can a High Court order restoration on part deposit?
Section 126 procedure, Section 127 appeal and the High Court’s writ power
Justice Manoj Misra, writing for the Bench, held that in theft cases the assessed amount required for restoration is determined by the same procedure used for unauthorised use under Section 126, unless the Supply Code prescribes a separate procedure. That procedure “conforms to the principles of natural justice”: Section 126(3) lets the consumer object to the provisional assessment, and “Final assessment takes shape only after affording a reasonable opportunity of hearing to the person concerned.” The assessment is appealable under Section 127. But in theft cases “the finality attached to the order of the appellate authority is limited to determining the amount required for restoration”; where a criminal complaint is filed, the Special Court under Section 154(5) determines civil liability and any excess deposit is refundable under Section 154(6).
On the writ jurisdiction, the Court noted that “electricity is an essential commodity necessary for both life and livelihood” and that the High Court’s constitutional powers “cannot be totally circumscribed by statutory provisions.” Yet in theft cases “adoption of a liberal approach may not be appropriate” and the High Court might even be justified in declining restoration. Drawing on the 50% pre-deposit in Section 127(2), it held that where the provisional assessment is prima facie arbitrary the High Court may, for reasons to be recorded, direct restoration on a deposit “which should not be less than 50%”. The Court referred to West Bengal State Electricity Distribution Company Ltd. v. M/s. Orion Metal Pvt. Ltd., (2019) 08 SC CK 0070, (2020) 18 SCC 588 and Southern Electricity Supply Company of Orissa Limited v. Sri Seetaram Rice Mill, (2012) 2 SCC 108.
What the Court Actually Held
- The ‘assessed amount’ for restoration under the third proviso to Section 135(1A) is determined through the Section 126 procedure, in the absence of a separate procedure in the Supply Code.
- That assessment is appealable under Section 127; in theft cases the appellate finding is final only for restoration and does not bind the Special Court, which fixes civil liability under Section 154(5), with excess deposits refundable under Section 154(6).
- A High Court may, for recorded reasons, order restoration on a deposit of not less than 50% where the provisional assessment is prima facie arbitrary, but a circumspect approach is required in theft cases.
- Both appeals were dismissed; in the lead case the High Court’s order was clarified to be subject to any Section 127 appeal and the Special Court’s determination.
Why This Judgment Matters
- It gives consumers accused of theft a clear route — objections, hearing, final assessment and appeal — before the restoration amount is fixed.
- It sets a floor (50%) and conditions (prima facie arbitrariness, recorded reasons) for writ courts ordering reconnection.
- It reconciles the restoration process with the Special Court’s power to decide civil liability for theft.
What Should Advocates Take Away From the Judgment?
For Consumers
- File objections to a provisional assessment under Section 126(3) and seek a hearing before final assessment.
- An appeal lies under Section 127 on depositing half the assessed amount; excess deposits are refundable if the Special Court later fixes a lower liability.
For Counsel and Discoms
- Writ petitions for restoration must show the provisional assessment is prima facie arbitrary; courts must record reasons.
- Expect courts to be cautious in theft cases and to insist on at least 50% deposit.
- Restoration orders should be expressed as subject to the Section 127 appeal and Section 154(5) proceedings.
Key Takeaways
- Restoration amount in theft cases is assessed via Section 126, with objections and hearing.
- Section 127 appeal lies; its finality is limited to the restoration amount.
- High Courts may order reconnection on at least 50% deposit if the assessment is prima facie arbitrary.
- Civil liability for theft is ultimately for the Special Court under Section 154(5).
Frequently Asked Questions
Can a consumer accused of electricity theft object to the bill before final assessment?
Yes, for fixing the restoration amount. The Court held the Section 126 procedure applies, under which the consumer may object to the provisional assessment and must be given a reasonable hearing before final assessment.
Can a High Court order reconnection on payment of part of the bill?
Yes, but only where the provisional assessment is prima facie arbitrary, for reasons recorded, and on deposit of not less than 50%. The Court cautioned that a liberal approach may not be appropriate in theft cases.
Is the appellate authority’s decision final on the amount owed for theft?
Only for the purpose of restoration. Where a criminal complaint is filed, the Special Court determines civil liability under Section 154(5), and any excess deposited must be refunded under Section 154(6).
Conclusion
The judgment balances two concerns: the essential nature of electricity for life and livelihood, and the need for firmness where theft is alleged. Consumers get procedural fairness in how the restoration amount is fixed, while writ courts are given a structured, cautious test for ordering reconnection on part payment.
Practical takeaway: Challenge an arbitrary theft assessment by filing objections under Section 126(3); if approaching the High Court, be ready to deposit at least 50% and to show prima facie arbitrariness.
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