Suspicion Is Not Theft: Supreme Court Quashes Rs 3.24 Crore Electricity Theft Assessment Against Himadri Steel

Case at a glance: The Supreme Court has restored a Jharkhand High Court Single Judge’s order quashing a provisional assessment of about Rs 3.24 crore raised against a steel company for alleged electricity theft. It held that a writ petition was maintainable against a provisional order, and that an inspection report which records no detection of theft and no satisfaction of the officer cannot found action under Section 135 of the Electricity Act, 2003.

The company held an HTSS connection with a contract demand of 3000 KVA, energised in 2006. After a metering unit blast, the fault was rectified on 16 June 2017 and the B-phase CT was replaced. Officials inspected the premises on 26 September 2017; a police case was lodged on the Assistant Electrical Engineer’s report, the connection was disconnected on 27 September 2017, and a provisional assessment order dated 29 September 2017 fixed liability at Rs 3,23,71,524.

A Single Judge of the Jharkhand High Court quashed the provisional assessment on 5 September 2018. On 8 August 2025 a Division Bench allowed the Nigam’s appeal, holding that the writ petition was not maintainable because the Electricity Act provides a statutory remedy.

The Key Question Before the Court

Was a writ petition maintainable against a provisional assessment for theft, and did the inspection report make out theft under Section 135?

Section 126 versus Section 135 and the Inspection Report

The Court explained that Sections 126 and 127 (assessment of unauthorised use and appeal) form a code in Part XII of the Act, while Section 135 is a criminal provision in Part XIV requiring mens rea. Relying on Southern Electricity Supply Co. of Orissa v. Sri Seetaram Rice Mill, W.B. SEDCL v. Orion Metal and Kerala SEB v. Thomas Joseph, it noted that all theft is unauthorised use, but not all unauthorised use is theft. Since a Section 127 appeal lies only against a final order, a writ against a provisional order was maintainable.

Turning to the inspection report, the Court found that its observations (a welded nut, two holes, a meter cover that opened easily, but plastic seals intact) showed at most suspicion. The report recorded no detection of theft, no evidence and no satisfaction of the officer, and no material was seized as the Supply Code required. The Court observed that “Suspicion, no matter how strong, cannot take the place of strict proof,” and rejected revenue protection as a justification for disconnection.

What the Court Actually Held

• The Division Bench order in LPA No. 648 of 2018 was set aside.
• The Single Judge’s order dated 5 September 2018 in W.P.(C) No. 6054 of 2017 was restored.
• A writ petition against a provisional assessment is maintainable as Section 127 appeals lie only against final orders.
• An inspection report must reveal that theft was detected before Section 135 consequences follow.

Why This Judgment Matters

• It draws a firm line between unauthorised use under Section 126 and theft under Section 135.
• It requires inspection reports to record actual detection and the officer’s satisfaction.
• It keeps the writ remedy open against provisional theft assessments.

What Should Advocates Take Away From the Judgment?

For Consumers

• Scrutinise the inspection report for a recorded finding of theft and seizure of material.
• Consider a writ where a provisional theft order rests on a report showing only suspicion.

For Distribution Licensees

• Follow the Supply Code steps on inspection, seizure and provisional orders strictly.
• Do not treat revenue protection as a ground for disconnection without detected theft.

Key Takeaways

Frequently Asked Questions

A welded nut, two holes and a meter cover that opened easily, with plastic seals found intact; the Court held this amounted at most to suspicion.

Because the challenge was to a provisional order, and the statutory appeal under Section 127 lies only against a final assessment order.

The judgment restores the Single Judge’s order quashing the provisional assessment; the extracted text does not record a separate direction on the police case.

Conclusion