Justice Manoj Misra, Justice K.V. Viswanathan, Supreme Court

The Supreme Court has held that where a provisional assessment arising from alleged electricity theft is prima facie arbitrary, a High Court, in exercise of its writ jurisdiction, may, for recorded reasons, restore the disconnected supply upon payment of an amount not less than 50% of the demand.

Upholding the Gujarat High Court’s order granting reconnection on a 50% deposit, the Court dismissed the distribution licensees’ appeals, subject to a clarification concerning the appellate remedy and determination of civil liability.

The Court was hearing two appeals by Gujarat electricity distribution companies concerning whether electricity disconnected over alleged theft could be restored on payment of half the provisionally assessed amount and whether the assessment procedure and appellate remedy under Sections 126 and 127 of the Electricity Act, 2003, applied in theft cases.

A Bench of Justice Manoj Misra and Justice K.V. Viswanathan observed: “… we cannot be oblivious to the time-consuming procedure of making an assessment. An order of provisional assessment under sub-section (1) of Section 126 is to be served upon the person concerned, under sub-section (2) of Section 126 of the 2003 Act, to enable him to file an objection. Final assessment takes shape only after affording a reasonable opportunity of hearing to the person concerned. Against the final assessment, the person concerned has a right to file an appeal. This entire process of assessment may, therefore, take considerable time”.

The Bench, thus, added: “In such circumstances, where the provisional assessment is prima facie arbitrary, in our view, the High Court may, for reasons to be recorded, order restoration of the supply by directing the writ petitioner to pay such amount, out of the demanded amount, which should not be less than 50%. We have said 50% because under sub-section (2) of Section 127 of the 2003 Act an appeal is be entertained only upon deposit of half of the assessed amount.”

Senior Advocate Ranjit Kumar appeared for the distribution licensees. Advocate Raghenth Basant appeared for the consumers.

Background

In the first appeal, Vaibhav Metal Crusher was accused of electricity theft and served with a supplementary bill demanding ₹92,99,077.55 towards energy consumption and ₹23,45,845 as compounding charges. A Single Judge permitted it to deposit 50% of the bill and directed reconnection. The Division Bench subsequently allowed it to object to the assessment and held that the deposit and reconnection would be subject to the assessing authority’s decision and the appellate remedy under Section 127.

The connected appeal arose from another supplementary bill issued over alleged electricity theft. The Single Judge stayed recovery of the balance demand after directing a 50% deposit and permitted an application for a fresh connection. The Division Bench remanded that matter to the Single Judge for reconsideration.

The distribution licensees argued that an assessment for theft under Section 135 differed from an assessment for unauthorised use under Section 126. According to them, reconnection required payment of the entire assessed amount, while the Special Court alone could determine civil liability under Section 154(5).

The consumers submitted that Section 126 provided the only statutory assessment procedure and therefore governed the “assessed amount” required for restoration under the third proviso to Section 135(1A). They maintained that the final assessment was appealable under Section 127, while remaining subject to the Special Court’s determination of civil liability.

Court’s Observations

Section 126 Procedure Governs The Amount Payable For Reconnection

The Court observed that electricity theft necessarily involved unauthorised use, although every instance of unauthorised use would not amount to theft. Since neither the Electricity Act nor the applicable Supply Code prescribed another assessment procedure for theft cases, the amount required for reconnection had to be determined through the procedure under Section 126.

The Bench relied on West Bengal State Electricity Distribution Company Ltd. v. Orion Metal Pvt. Ltd. (2020), which recognised that assessment proceedings under Section 126 could operate even where a complaint alleging electricity theft was filed under Section 135.

The Court held: “The benefit of the third proviso to sub-section (1A) of Section 135 qua restoration of the supply of electricity disconnected under sub-section (1A) of Section 135, in the absence of any specific provision in the Supply Code notified under Section 181(2)(x) read with Section 50 of the 2003 Act, is available on deposit or payment of the amount assessed in accordance with the provisions of Section 126 of the 2003 Act read with the provisions of the Supply Code, as are applicable to cases of unauthorized use of electricity. However, since an appeal is considered as a continuation of the original proceeding, the amount so assessed under Section 126 is subject to the order in an appeal under Section 127.”

The Court clarified that the appellate determination was final only for deciding the amount payable for reconnection. Where a criminal complaint was filed, it remained subject to the civil liability ultimately determined by the Special Court under Section 154(5). Any excess deposit had to be refunded under Section 154(6).

No Automatic Right To Reconnection On 50% Payment

The Court observed that although a High Court’s constitutional powers could not be entirely restricted by statutory provisions, self-imposed restraint was necessary when dealing with a self-contained statutory code. Electricity was essential for life and livelihood, but allegations of theft involved criminal intent and could not receive an invariably liberal approach.

The Bench stated: “Therefore, in an appropriate case, the High Court may be justified in exercising its constitutional powers to protect a person from an arbitrary action of the State and its instrumentalities including a distribution licensee. However, in cases of theft, which necessarily involves a criminal intent (i.e. mens rea), adoption of a liberal approach may not be appropriate. Rather, each case should be addressed on its own facts and if the facts so warrant, the High Court might be justified in even declining the prayer for restoration of electricity supply till entire amount, provisionally assessed, is deposited. In short, a circumspect approach is required while dealing with petitions seeking restoration of supply of electricity disconnected on ground of theft.”

Gujarat High Court’s 50% Deposit Direction Upheld

In the first appeal, the Court held that the High Court was within its jurisdiction in directing restoration upon payment of 50% of the provisionally assessed amount. The consumer had also been permitted to object to the assessment and deposit the balance amount finally determined, thereby protecting the licensee’s interests.

The Court observed: “In the present case, the High Court was well within its jurisdiction in directing for restoration of the supply of electricity to the writ petitioner on deposit of 50 percent of the amount provisionally assessed as due and payable. Besides, the High Court justifiably permitted the writ petitioner (i.e., the respondent herein) to contest the provisional assessment by filing its objection and thereafter deposit the balance amount finally assessed. These stipulations sufficiently protect the interest of the appellant.”

The Bench nevertheless clarified that the assessment would first remain subject to an appeal under Section 127 and, where the consumer was prosecuted, ultimately to the civil liability determined by the Special Court under Section 154(5).

Conclusion

The Supreme Court dismissed the appeal concerning Vaibhav Metal Crusher and upheld restoration on a 50% deposit, subject to its clarification regarding the Section 127 appeal and the Special Court’s determination of civil liability.

The Court also dismissed the connected appeal because the Division Bench had merely remanded the matter to the Single Judge for a fresh decision in accordance with law. All pending applications were disposed of.

Cause Title: Dakshin Gujarat Vij Company Limited and Another v. Vaibhav Metal Crusher with Paschim Gujarat Vij Company Limited and Another v. Jamanbhai Nanajibhai Bhuva (Neutral Citation: 2026 INSC 1157)

Appearances

Appellants: Senior Advocate Ranjit Kumar; Advocate-on-Record Pradeep Misra

Respondents: Advocate Raghenth Basant; Advocate-on-Record Jaikriti S. Jadeja

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