On 16th December 2022, the Supreme Court in a division bench consisting of Justice Dinesh Maheshwari and Justice J.B. Pardiwala observed that a delegated power to legislate, by making rules or regulations ‘for carrying out the purpose of the Act’, is a general delegation without laying down any guidelines; it cannot be exercised so as to bring into existence the substantive rights or obligations or disabilities not contemplated by the provisions of an Act itself. (Kerala State Electricity Board & Ors. Vs. Thomas Joseph Alias Thomas M. J. & Ors.)
Facts of the case:
The appellant Board is a company incorporated under the Companies Act, 1956, and is controlled by the Government of Kerala. It is engaged in the business of generation, transmission, and distribution of electricity in the State of Kerala. All the respondents are commercial/industrial consumers having LT (Law Tension) connections and were drawing electricity in excess of the connected/contracted load.
The issue that arose was whether the respondents can be assessed at a rate equal to twice the tariff applicable as stipulated in Section 126(6) of the Act 2003. Therefore, respected writ petitions were filed by the consumers seeking an authoritative pronouncement on the quantification of penalty under Section 126(6) of the Act 2003. The petitions were heard by the Division Bench after an order of reference was made by a learned single Judge of the HC observing an increase in the number of petitions filed challenging the orders imposing penalty involving ‘excess/additional load’ falling under explanation (b)(ii) to Section 126 of the Act 2003 and ‘unauthorized use of electricity’ falling under explanation (b)(iv) to Section 126 of the Act 2003, in which cases, the energy charges are already metered and paid by the consumers. The learned single Judge also observed that “different yardstick may have to be applied to cases falling under the explanation (b)(i), (iii) and (v) to Section 126 of the Act 2003 as the energy charges are not metered.”
The HC took the view that an ‘unauthorized additional load’ in the same premises and under the same tariff shall not be reckoned as ‘unauthorized use of electricity’ except in cases of consumers billed on the basis of the connected load. The High Court took such a view, relying upon Regulation 153(15) of the Kerala Electricity Supply Code, 2014 (for short, ‘the Code 2014’). Being dissatisfied with the judgment and order passed by the HC, the board filed the present appeals.
Contentions of the Board:
The counsel vehemently submitted that “if Section 50 and Section 181 reply, of the Act, are read closely, then, the two Sections do not provide any power for such clarification/explanation. Regulation-making power cannot be used to bring into existence substantive rights which are not contemplated under the Act 2003.” The counsel invited the attention of the Court to Regulation 153(15) which provides that an unauthorized additional load in the same premises and under the same tariff shall not be reckoned as ‘unauthorized use of electricity’ except in cases of consumers billed on the basis of the connected load.
The counsel referred to the case of Executive Engineer, Southern Electricity Supply Company of Orissa Limited (Southco) and Another v. Sri Seetaram Rice Mill and said that “such an act of consumption in excess of the sanctioned/connected load is prejudicial to the public at large, as the same would affect the entire system.”
The counsel further submitted that “the overdrawal of excess electricity from the grid would result into a penalty to the Board while purchasing electricity from the Central grid. The connected load is calculated based on the number of devices connected by the consumer at its premises.”
He further added that “the collapse of the system would be as a result of many consumers drawing electricity in excess of the connected load/ contracted load and therefore, to penalize only the last consumer/customer for the collapse of the system would be unworkable and would not act as a deterrent for the consumers from drawing excess electricity.”
Contentions of the respondents:
The counsel for the respondents vehemently submitted that “no error has been committed by the High Court in taking the view that if the overdrawal of electricity is detected in the same premises and for the very same purpose, then, the same would not amount to the unauthorized use of electricity within the meaning of Section 126 of the Act 2003.” Regulation 153(15) provides further that the unauthorized additional load in the same premises and under the same tariff shall not be reckoned as unauthorized use of electricity, except in the case of consumers billed on the basis of the connected load.
“The High Court was well within its scope when it rendered the Regulations intra vires. This Court has emphasized that the Legislature and its delegate are the sole repositories of the power to take decisions. Further, there is no scope of interference by the Court unless the particular provision impugned suffers from (i) any legal infirmity, or (ii) being wholly beyond the scope of regulation-making power, or (iii) being inconsistent with any of the provisions of the parent enactment.”
The Kerala state electricity regulatory commission submitted that the observations of the court in the case of Seetaram Rice Mill were specifically in the context of the Orissa Electricity Regulatory Commission Distribution (Conditions of Supply) Regulations, 2004, and the Standard Agreement Form for Supply of Electrical Energy by the Grid Corporation of Orissa Ltd. Hence, the said judgment cannot be uniformly applied to the present matter. Moreover, there is no challenge to the vires of any of the provisions of the Code 2014 in the present proceedings. “The supply regulations applicable to the State of Orissa may not be applied in a straitjacketed manner to Kerala. Each State has its own generation, supply and distribution capacities and other relevant considerations before the Supply Code regulations are framed by the respective State Commissions.”
Observation and Judgement of the Court:
The Hon’ble court observed that “the purpose sought to be achieved with the aid of the provisions of Section 126 of the Act 2003 is to ensure stoppage of misuse/unauthorized use of the electricity as well as to ensure prevention of revenue loss. An overdrawal of electricity amounts to a breach of the terms and conditions of the contract and the statutory conditions, such overdrawal being prejudicial to the public at large, as it is likely to throw out of gear the entire supply system undermining its efficiency, efficacy, and even-increasing voltage fluctuations. This aspect of the matter has been completely overlooked by the High Court.”
Moreover, the court said that the reliance on Regulation 153(15) of the Code 2014 framed under Section 50 of the Act 2003 by the respondent was thoroughly misconceived, as the same does not conform to the provisions of the Act 2003. “The High Court in its impugned judgment says that Regulation 153(15) does not lead to any loss of revenue. The stance of the Commission also is that there is no loss of revenue if Regulation 153(15) is permitted to be operated. However, we are of the view that it is not just a question of loss of revenue. At the cost of repetition, we emphasize on the fact that overdrawal of electricity is prejudicial to the public at large”.
The appeals succeeded and the declaration issued by the High Court was set aside. Moreover, Regulation 153(15) of the Code 2014 was declared to be invalid being inconsistent with the provision of Section 126 of the Act 2003.
Case: Kerala State Electricity Board & Ors. Vs. Thomas Joseph Alias Thomas M. J. & Ors.
Bench: Justice Dinesh Maheshwari and Justice J.B. Pardiwala
Citation: Civil Appeal Nos. 9252-9253 Of 20222
Date: December 16, 2022.
Read Judgment ;
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