Hindustan Engineering Industries vs The Assistant Divisional Engineer, O and M, Madras Electricity System and Others

Kanakaraj, J.—The petitioners are running Small Scale Industry. They have an electricity supply to their factory and their Account No. is

27:116:C4. The premises were inspected by the Anti-Power Theft Squad and it was found that there was enough materials to suggest pilferage of

electrical energy. The officers found a hole intentionally drilled on the bottom side of the meter. From the above artificial hole it was possible for the

consumer to stop the meter from rotating. Consequently, the respondents found that the petitioner had been guilty of stealing electricity energy.

Apart from initiating action to prosecute the petitioner a notice was issued on 23.5.1983 proposing to recover an estimated loss to the Board to

the tune of Rs. 1,66,413. The petitioner was given an option to pay 50 per cent of the amount and get reconnection of the electricity supply. On

28.5.1983 a final order was passed assessing the damage to the tune of Rs. 1,65,442 and a working sheet was annexed to the order. The working

sheet proceeds on the basis that there were two shifts in the factory and the total working hours was 14 hours. On that basis the consumption for

the month is worked out as 7806 Units in accordance with the terms and conditions of the supply and the same is multiplied by 12. In other words,

the loss is estimated for the period of one year on the assumption that the theft must have taken place one year before the date of inspection.

Challenging the said order, Writ Petition No. 5241 of 1983 was filed. Sathiadev, J. gave directions in the said writ petition in identical terms as

contained in W.P. No. 6935 of 1983. Therefore one has to look into the directions given in W.P. No. 6935 of 1983. The directions are as

follows:

It is now for the respondent to hold the enquiry in which full and fair opportunity to be extended to the petitioner and after entertaining the

representations by it, to proceed to pass orders furnishing reasons for each one of the conclusions arrived at therein. Thereafter, the amount, if any

which becomes payable to be paid by the petitioner in two quarterly instalments to begin from the date of the receipt of the order passed. Until

then, the service connection to be maintained.

Thereafter a notice was given on 19.9.1985 fixing the date of enquiry as 30.9.1985. On the date of the enquiry the petitioner had raised several

objections, some of which may be noticed here. The assumption that the factory was run in two shifts was disputed. It was also contended that on

the basis of the average consumption of electricity, it would be gathered that there was no theft of electricity. The petitioners also allege that there

must have been a sabotage of the factory on the date of inspection. Necessary monthly statements of electrical consumption was also furnished. It

was also pointed out that in the year 1983 there was a power cut and the meter was being regularly inspected. The assessment to the tune of Rs.

1,65,442 was disputed. After the said enquiry and the explanation of the petitioner the respondents have passed the impugned order on 13.2.1986

wherein they have assessed the penal charges to Rs. 1,65,442 and they have only added other charges and making a grand total of Rs. 1,66,413.

No explanation is offered for arriving at the penal charges as Rs. 1,65,442. The order is attacked by the learned Senior Counsel for the petitioner

on the following grounds:

(i) It is not in accordance with the directions given by Sathiadev, J.

(ii) The respondents have not considered the various objections raised by the petitioners.

(iii) It is not a speaking order.

(iv) There is no finding regarding theft of electrical energy.

In the counter-affidavit filed by the respondents, reference is made to the date of Inspection and the artificial means adopted by the petitioners.

It is stated that the estimate was made on the basis of Terms and Conditions of Supply as framed in BP. 780 dated 21.6.1977. No explanation is

given for the assessment of the loss at Rs. 1,65,442.

I have considered the rival arguments. One has to refer to Section 39 of the Indian Electricity Act, 1910, before proceeding to consider the

arguments of the learned Counsel for the petitioners. Section 39 as amended is as follows:

Theft of energy: Whoever dishonestly abstracts consumes or uses any energy shall be punishable with imprisonment for a term which may

extend to three years, or with fine which shall not be less than one thousand rupees, or with both; and if it is proved that any artificial means or

means not authorised by the licensee exist for the abstraction, consumption or use of energy by the consumer, it shall be presumed, until the

contrary is proved, that any abstraction, consumption or use of energy has been dishonestly caused by such consumer.

Therefore, the respondents are entitled to proceed on the basis that there has been theft of electricity energy if they find on inspection that artificial

means had been adopted by the consumer. Unless the petitioners are able to establish that there were no such artificial means in the meter box or

that the artificial means were not intended for abstracting electrical energy, one has to proceed on the basis that such artificial means indicate that

the consumer had indulged in pilferage of electricity energy. The court can take judicial notice of the fact that the pilferage of electrical energy

especially in factories and industries is very rampant in this State. It is true that the petitioner has been acquitted of the charge of theft in the criminal

case instituted against him in C.C. No. 583 of 1989. But that will not absolve the consumer from the departmental action to assess the loss

suffered by the Board. A reference may be made in this connection to the decision of a Divisional Bench of this Court in W.A. No. 411 of 1987

dated 9.11.1991. Therefore, the last argument that there is no finding of theft of electrical energy cannot be accepted by. this Court.

But the more important question is the manner of assessment of the loss sustained by the Board. For this purpose, the Board has framed

Regulations u/s 49 of the Electricity (Supply) Act, 1948, Rule 8(b) provides for the manner of assessment in the case of theft of electricity energy.

There is a provision which says that such assessment shall be made for a maximum period of one year. This clause was introduced only on

13.6.1986. In the present case, the inspection had been made long earlier and therefore, the said clause will not apply to the facts of the present

case. Therefore it follows, that the respondents have to fix the date of theft on the basis of past consumption of electricity charges in the factory. In

this case, the respondents have adopted a period of one year as the period for which the loss is estimated. In my opinion, this assumption that the

Board has suffered loss for one year, is not based on any material and the respondents have not made any attempt to fix the date of theft. Further,

the petitioner had disputed the number of shifts and the number of working hours in the factory. The respondents have not made any attempt to

answer these objections raised in the writ petition. In the impugned order the respondents have simply adopted the working sheet dated 21.5.1983

which was attached to the provisional assessment order. In other words, the respondents have not taken care to obey the directions of Sathiadev,

J. in W.P. No. 6935 of 1983 and have not given an acceptable explanation for the assessment of damages. No doubt, an assessment like this is

more or less equal to a best judgment assessment in a sales tax case and may involve some amount of guess work. Even so, a consumer must be

made known as to the basis on which an assessment is made. That is the minimum requirement of law. Any other method of arriving at the loss

without disclosing the reasons therefore can be characterised as an arbitrary action. In this view of the matter, the impugned order is set aside.

Liberty is given to the respondents to make an assessment in accordance with the observations contained in this order. The writ petition is,

therefore, allowed with costs. Counsel''s fee is Rs. 1,000.