The AC Zone Pvt. Ltd. vs The Superintending Engineer, The Executive Engineer (O and M), Tamil Nadu Electricity Board, and The Assistant Executive Engineer, Tamil Nadu Electricity Board

V. Dhanapalan, J.—Challenging the order of the 1st respondent dated 31.12.2004 confirming the assessment order issued by the 2nd

respondent dated 17.07.2004, the petitioner has filed this writ petition.

The petitioner, a Company incorporated under the Companies Act is carrying on the business of sales and service of Air Conditioners. The

petitioner has stated that they occupied the premises comprising ground and first floors situated at No. 2, Mahalinga Chetty Street,

Nungambakkam, Chennai 600 034, as a lessee in August 2003; the premises is owned by Mrs.Hadhiz Faliha and the electricity connection stands

in the name of the previous owner, Mrs.G.Lalitha. According to the petitioner, they have been prompt in paying the electricity bills. The impugned

demand is made on the said Mrs.G.Lalitha and on the petitioner in their capacity as Enjoyer and according to the petitioner, it is with respect to the

electricity service connection for the first floor and that the consumption charges for ground floor is higher compared to that of the first floor and it

was increasing every month.

2a. The petitioner has further stated that during the middle of June 2004, they noticed wire melting in the meter box and on their complaint to the

respondents, the wire was replaced. Prior to their complaint made on 19.06.2004, the respondents inspected the premises and took electricity

meter reading. According to the petitioner, the last meter reading was taken by the respondents on 19.06.2004 and a sum of Rs. 7,446/- was

levied towards electricity consumption charges. It is the further case of the petitioner that on 24.06.2004, about 12.30 pm, i.e., after 5 days from

the date of recording the bimonthly meter reading, the third respondent made a sudden visit to their premises along with their officials to check the

meter. After checking the meter, the petitioner was informed that the electricity meter bearing connection No. 171-039-109 was tampered with

inasmuch as the seals were found removed.

2b. Thereafter, the petitioner was served with a show cause notice bearing K. No. AEE/EB/Chetput/7 Na.A./04 dated 23.06.2004 by the 3rd

respondent calling upon them to pay a sum of Rs. 85,639/- towards extra levy for energy stolen, a sum of Rs. 60,000/- towards compounding fee

and raise objections if any with the 2nd respondent within seven days. The demand levied by the respondents in the said show cause notice is on

the basis of 180 working days of 12 hours at the connected load of 5.99 kws., thus arriving at 12,939 units.

2c. According to the petitioner, they have paid a sum of Rs. 60,000/- towards compounding fee and a sum of Rs. 28,639/- towards the alleged

extra levy for the alleged theft of energy immediately under protest. The petitioner has raised objections before the 2nd respondent and the 2nd

respondent after hearing them and considering their representation dated 24.06.2004, by order dated 17.07.2004, held that on examination of

their explanation to the show cause notice dated 24.06.2004 and the records available at the time of enquiry, it was found that theft of energy was

confirmed and directed the petitioner to pay the balance amount of Rs. 57,000/- in three instalments of Rs. 19,000/- each, between 19.08.2004

and 19.10.2004.

2d. Against the said order of the 2nd respondent dated 17.07.2004, the petitioner preferred an appeal before the 1st respondent urging that (a)

they did not have any intention to commit theft of energy (b) they are not carrying on any manufacturing activity (c) they are not carrying on any

activity that would require substantial consumption of energy and (d) that the basis for calculating the impugned demand by the 2nd respondent is

erroneous. The petitioner has also stated that they have their show room of Air Conditioners and their service centre is located elsewhere.

2e. According to the petitioner, the formula on which the demand was levied was irrational and without any basis. The petitioner has also stated

that the 1st respondent after considering their representation dated 03.08.2004 and hearing them on 28.09.2004, confirmed the order of the 2nd

respondent dated 17.07.2004, except modifying the number of instalments in paying the balance amount into five. Aggrieved by the impugned

order passed by the 1st respondent, the petitioner is before this Court.

In the counter affidavit filed by the 3rd respondent, it is stated that on 24.06.2004, the petitioner''s Electricity Service Connection No.

171:39:109 Tariff V at Door No. 2, Mahalinga Chetty Street, Chennai - 34 was inspected by the Plying Squad and it was noticed that the MRT

seals in the energy meter bearing No. 334930, 3 Phase 10-40 A were tampered, which will reduce the meter reading to the nearest minimum.

According to the 3rd respondent, such act is theft of energy under Sections 39(1) and 44(1) C of the I.E. Act, 1910.

3a. The 3rd respondent has submitted that the collected load in the Meter was 5.99 Kilo Watts; the energy loss to the respondent Board is 9526

units and the Revenue loss to the Board is Rs. 85,639/-. It is further stated in the counter that the 3rd respondent was also invited to check the

security seal of the energy Meter and he reported that it is concluded beyond doubt that the seal arrangement of Security Seal of the energy meter

bearing Seal No. 334930 are tampered and the petitioner has paid a sum of Rs. 60,000/- as compounding charges to avoid police complaint.

3b. In addition, the 3rd respondent has submitted that the bi-monthly Current consumption meter reading at the petitioner''s premises was taken on

19.06.2004 by the Assessor of the Tamil Nadu Electricity Board; the Assessor takes meter reading only and he is not well-versed to detect the

tampering of seal and that the technical person and MRT people alone can find out seal tampering. The 3rd respondent has also stated that the 2nd

respondent had conducted enquiry and the petitioner''s representative had also participated in it and that the petitioner had been given all

opportunity to produce evidence regarding the theft of energy.

3c. According to the 3rd respondent, every calculation according to the connected Loads cover 12739 units, but the meter reading shows 3413

units only. The 2nd respondent in his letter dated 17.04.2004 has directed the petitioner to pay the balance amount of Rs. 57,000/- in three equal

instalments of Rs. 19,000/- per instalment and the 1st respondent had conducted enquiry and passed a final order dated 31.12.2004, confirming

the theft of energy with a direction to the petitioner to pay the balance extra levy of Rs. 57,000/- in 5 instalments of Rs. 11,400/- each.

Heard Mr. Harikrishnan, learned Counsel for the petitioner and Mr. A.Selvendran, learned Counsel for the respondent Board.

Learned Counsel for the petitioner would submit that the petitioner''s electricity installation and points such as fans, lights, computer, printer and

Air Conditioner do not warrant heavy power consumption and in any event, the petitioner''s nature of business does not warrant heavy power

consumption nor does it give any room to hold that there is theft of energy. It is his contention that the 1st respondent has held that there is theft of

energy on the only ground that the seals were found tampered, but, he has failed to appreciate that merely because the seals were allegedly

tampered does not mean that there is theft of energy.

5a. Learned Counsel would further submit that on 19.06.2004, the respondent Board has taken meter reading at the petitioner''s premises and on

that day the respondent has not noticed broken seal or tampering of any nature. While so, suddenly on 24.06.2004, the respondents made a

surprise visit to the petitioner''s premises and alleged that the seal has been tampered and raised the impugned demand on the petitioner. In this

regard, it is the contention of the learned Counsel that while determining the number of days for which pilferage took place, it has to be kept in

mind that the petitioner cannot be held guilty of theft of energy for the period anterior to 19.06.2004. In support of his case, learned Counsel for

the petitioner has relied on a decision of the Allahabad High Court reported in M/s. Sharda Oil Industries Pvt. Ltd., Nunaihi Vs.

Authority/Superintending Engineer, U.P. State Electricity Board and another, . Relevant paragraphs of the said decision are extracted hereunder:

I find substance in the submission made by the learned Counsel for the petitioner that the assessment order, for its sustenance, must be based

on correct application of statutory formula i.e. L x H x F x D. I am of the view that an assessment order must for its sustenance, be passed after

affording the consumer an opportunity to state his point of view and must also contain reasons rejecting the stand taken by the consumer and

further that it must be based on correct application of the formula. Opportunity, in my opinion, would be illusory if the consumer is not informed of

the basis on which the assessment is proposed to be made. He must be given an effective opportunity to contest the correctness of each of the

various factors used in the statutory formula on which the assessment is proposed to be made. But since an order of assessment is appealable its

correctness, if challenged, can be examined by the appellate authority inasmuch as the power of the appellate authority in this regard is co-

extensive with that of the assessing authority. It can also examine the extent of prejudice, if any, caused to a consumer due to non-observance of

the rules of natural justice embodied in regulation 23(i) of the Regulations. Question which is, therefore, required to be considered is whether the

appellate authority order is in accordance with law ?

Before examining the legality of the appellate order it may be observed that Annexure - 19 to the writ petition which is sought to be quashed is

not the order rejecting petitioner''s appeal. It is only a letter issued by the appellate authority to the Executive Engineer directing the latter to

recover the balance amount due against the petitioner in view of the appellate order a copy of which has been annexed as Annexure -C.A.9 to the

counter affidavit, whereby the appeals preferred by the petitioner were rejected and the petitioner was required to deposit the balance 50% of the

amount assessed against it.

It is evident that the duty to record reasons is explicitly enjoined on the appellate authority. This necessarily means that the appellate authority

would examine the points raised as also materials on record. Union of India (UOI) Vs. Mohan Lal Capoor and Others, , Beg, J. (as he then was)

with whom Mathew, J. agreed, has explained reasons in the following words:

Reasons"" are the links between the materials on which certain conclusions are based and the actual conclusions. They disclose how the mind is

applied to subject matter for a decision whether it is purely administrative or quasi judicial. They should reveal a rational nexus between the facts

considered and the conclusions reached. Only in this way can opinion and decisions recorded be shown to be manifestly just and reasonable.

As noticed above, the main grievance of the petitioner was that the statutory formula ''LHFD'' was not correctly applied and the appellate

authority had failed to direct itself to the real issue and return a finding thereon. It is evident from the statutory formula that L stands for ''connected

load'' in KW. According to the petitioner the connected load was 260 KVA. Whereas the respondents have taken 350 KVA as the connected

load. In fact 350 KVA was the sanctioned contracted load which is distinct from ''connected load'' as defined in regulation 2(e). Further the

petitioner was not liable to penal assessment in accordance with the statutory formula for the period between 22.10.1992 - the date of installation

of the new meter and 30.11.1992, the date on which the last reading was taken and no irregularity found. Admittedly, the respondents have

assessed right from 22.10.1992 to 22.12.1992 for total period of 61 days, as would be evident from the final assessment-cum-bill (Annexure - 10

to the writ petition). The appellate authority has failed to address itself to the fact that the meter was found in order on 30.10.1992 and on

30.11.1992 and the irregularities giving rise to the impugned assessment were detected in surprise checking/inspection conducted on 22.12.1992.

The petition, in my opinion, is not liable to any penal assessment for the energy consumed by it up to the date of last meter reading i.e. 30.11.1992.

It is true that in case there is no possible evidence to establish the period of pilferage, the factor ''D'' in the statutory formula is taken to be

equivalent to 180 or the number of days elapsed from the date of connection/installation of the meter till the date of detection of pilferage,

whichever is less. But this applies to a case where there is no evidence on record to find out the number of days for which pilferage took place. As

stated above, meter readings were taken on 30.10.1992 and again on 30.11.1992 and no fault was found. Therefore, while determining the

number of days for which pilferage took place it has to be kept in mind that the petitioner cannot be held guilty of pilferage/theft for the period

anterior to 30.11.1992. But the appellate authority has erred in taking into consideration the period from the date of installation of meter.

On the other hand, learned Counsel for the respondent Board would submit that during the inspection at the petitioner''s premises, the 3rd

respondent reported that it is concluded beyond doubt that the seal arrangement of Security Seal of the energy meter bearing Seal No. 334930 is

tampered and that the petitioner has paid a sum of Rs. 60,000/- as compounding charges to avoid police complaint. He would further submit that

the petitioner had been given all opportunity to produce evidence regarding the theft of energy during the enquiry conducted by the 2nd

respondent. Learned Counsel would also submit that MRT technicians alone can detect seal tampering, whereas, the Assessor who takes meter-

reading is not well-versed to detect seal tampering.

I have carefully considered the submissions made by the learned Counsel on either side and perused the material documents.

It is seen that on inspection of the Electricity Meter at the petitioner''s premises, the respondents found that the MRT seals therein were

tampered and the petitioner was issued with a show cause notice dated 23.06.2004 by the 3rd respondent calling upon them to pay a sum of Rs.

85,639/- towards extra levy for energy stolen and a sum of Rs. 60,000/- towards compounding fee. The petitioner has raised objections before

the 2nd respondent and the 2nd respondent after hearing them and considering their representation dated 24.06.2004, by an order dated

17.07.2004, confirmed the theft of energy and directed the petitioner to pay the balance amount of Rs. 57,000/- in three instalments of Rs.

19,000/- each, between 19.08.2004 and 19.10.2004. Aggrieved by the same, the petitioner went on appeal before the 1st respondent, who, after

considering the petitioner''s representation dated 03.08.2004, confirmed the order of the 2nd respondent dated 17.07.2004, except modifying the

number of instalments in paying the balance amount of Rs. 57,000/- towards extra levy, into five instead of three.

The case of the petitioner is that they are not carrying on any manufacturing activity that would require substantial consumption of energy and

that the basis for calculating the impugned demand by the 2nd respondent is erroneous. In the show cause notice, the demand is levied on the basis

of 180 working days of 12 hours at the connected load of 5.99 kws., thus arriving at 12,939 units. According to the petitioner, they do not open

their show room on Sundays and Public Holidays and hence they could not have worked for 180 days and for 12 hours a day. It is their case that

they could not have worked beyond 10 hours a day and in any event, their nature of business does not warrant heavy power consumption nor

does it give any room to hold that there is theft of energy.

While so, it is the case of the respondent Board that the Assessor who takes bi-monthly Current Consumption meter reading can only take

meter reading, but, he is not well versed to detect the seal tampering and the technical person alone can find out seal tampering. It is the case of the

respondent Board that every calculation according to the connected Loads cover around 12,739 units, but, the meter reading shows only 3413

units. Hence, the 2nd respondent passed an order dated 17.04.2004 directing the petitioner to pay the balance amount of Rs. 57,000/- in three

equal instalments, which on appeal before the 1st respondent was confirmed except for the modification in the number of instalments into five.

According to the respondent Board, the impugned order has been passed as per para 8.02 Clause 37 of terms and conditions of the supply of

electricity and after affording an opportunity of hearing to the petitioner.

The impugned order passed by the respondent Board would reveal as to how the mind is applied to the s ubject matter for a decision, whether

it is purely administrative or quasi judicial. The contention of the petitioner that the MRT seals which were not found tampered on 19.06.2004, the

day on which bi-monthly meter reading was taken by the Assessor, were suddenly found tampered on 24.06.2004 during the respondents'' visit to

their premises cannot be acceded to, as it is clear from the records that only an MRT technician can detect tampering of MRT seals in the energy

meter.

The decision relied on by the counsel for the petitioner in Sharda Oil Industries case rendered by the Allahabad High Court does not help the

petitioner herein, since the petitioner has been given an opportunity of hearing to produce evidence regarding the theft of energy.

A perusal of the material records would show that the respondent Board had conducted enquiry, the petitioner''s representative had

participated in the enquiry and the petitioner had been given sufficient opportunity to produce evidence regarding theft of energy. In such view of

the matter, this Court is of the opinion that the authorities have assigned proper reasons while passing the order in question and hence, does not

find any infirmity with the same. Therefore, the writ petition deserves no merit and the same stands rejected. However, in the circumstances of the

case, as the respondents have already permitted the petitioner to pay the balance amount in five equal instalments, the petitioner is hereby directed

to pay the balance amount to the respondent Board in five equal instalments within a period of five (5) months from the date of receipt of a copy of

this order.

The writ petition stands dismissed with the above direction. No costs.