# M/s Santosh Preservation Pvt. Ltd. & Anr v. Dakshinanchal Vidyut Vitran Nigam Ltd. & Anr

- **Citation:** (2023) 8 ILRA 1123
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2023-07-24
- **Case number:** Writ-A No. 27553 of 2019
- **Bench:** Manoj Kumar Gupta, Prashant Kumar
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/m-s-santosh-preservation-pvt-ltd-anr-v-dakshinanchal-vidyut-vitran-nigam-ltd-anr-50509
- **Pages:** 11

## Headnote

Sri Baleshwar Chaturvedi, Ms. Usha Kiran, Ms.
Usha Kiran

Facts: The petitioners, operating a cold storage
with a 280 KVA power load under HV-2 tariff,
were inspected on 12.06.2019. The inspection
revealed tampering with the main meter and
pole meter, with cut wires in R and B phases,
resulting in zero recorded consumption despite
transformer readings indicating usage. An
inspection report confirmed electricity theft
under Section 135 of the Electricity Act, 2003.
The petitioners paid Rs. 56 lakhs as a
compounding fee and Rs. 10 lakhs towards
anticipated
assessment.
A
provisional
assessment of Rs. 23,48,452 was issued, later
reduced
to
Rs.
20,54,895
in
the
final
assessment dated 22.08.2019. The petitioners
challenged the assessment, alleging procedural
lapses, including the lack of opportunity to test
the meter at an independent laboratory, and
sought a refund of the deposited amounts. The
1124 INDIAN LAW REPORTS ALLAHABAD SERIES
court dismissed the petition, holding that the
tampering was evident during inspection, as the
meter recorded nil consumption, making the
conclusion of electricity theft independent of a
test report. Clause 5.6(c)(iii) was deemed
inapplicable, as the finding of theft did not rely
on laboratory testing. The assessment for 59
days was unchallenged, and the court found no
illegality in the final assessment order. The Rs.
56 lakhs was confirmed as a compounding fee
to avoid criminal prosecution, not electricity
charges, and the petitioner's claim for a refund
was rejected. The court emphasized that
electricity is a public good and upheld the
assessment to prevent meter tampering.

Keywords: Electricity theft, meter tampering,
U.P. Electricity Supply Code 2005, Clause
5.6(c)(iii), compounding fee, assessment order,
unauthorized use of electricity, Section 135
Electricity Act 2003, public good, independent
laboratory testing, writ petition, Article 226.

Petition Dismissed.

Case Law Discussed:

## Text

8 All. M/s Santosh Preservation Pvt. Ltd. & Anr. Vs. Dakshinanchal Vidyut Vitran Nigam Ltd.
 & Anr.
1123

26. For the aforementioned reasons,
the impugned order cannot be sustained
and is set aside accordingly. The appeal is
allowed accordingly. The High Court is
requested to consider the matter on merits.
No costs."

13. Hon'ble Apex Court recently in
the case reported in AIR 2023 Supreme
Court 781 M/s Godrej Sara Lee Ltd. Vs.
Excise
and
Taxation
Officer-CumAssessing Authority and others has held
that power to issue prerogative writs under
Article 226 is plenary in nature and does
not impose any limitation or restraint on the
exercise of power to issue writs.

14. In the instant case, petitioners'
ancestors were recorded since 27.10.1952
and even during consolidation operation
petitioners' right were recognized, as such,
petitioners should be afforded proper
opportunity of hearing by respondent no.3
so that petitioners as well as contesting
respondents may demonstrate as to whether
long standing entry can be expunged in
summary proceedings or not.

15. Considering the ratio of law laid
down by this Court in Chatrugan (Supra)
as well as by Apex Court in Committee of
Management and another (Supra), the
impugned
orders
dated
17.2.2018,
19.3.2021 passed by respondent no.3 and
13.4.2023 passed by respondent no.2 are
liable to be set aside and the same are
hereby set aside. The writ petition is
allowed in part and the matter is remitted
back before the respondent no.3, SubDivisional Magistrate, Sadar, Varanasi to
register the proceeding on its original
number and implead the petitioners in the
proceeding under Section 31/32 of the U.P.
Revenue Code, 2006. It is further directed
that
respondent
no.3,
Sub-Divisional
Magistrate, Sadar, Varanasi shall decide the
case after affording opportunity of hearing
to the parties expeditiously preferably
within period of three months from the
date of production of certified copy of this
order.
----------
(2023) 8 ILRA 1123
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 24.07.2023

BEFORE

THE HON'BLE MANOJ KUMAR GUPTA, J.
THE HON'BLE PRASHANT KUMAR, J.

Writ-A No. 27553 of 2019

M/s Santosh Preservation Pvt. Ltd. & Anr.
 ...Petitioners
Versus
Dakshinanchal Vidyut Vitran Nigam Ltd. &
Anr. ...Respondents

Counsel for the Petitioners:
Sri Mayank Kumar Agarwal

Counsel for the Respondents:
Sri Baleshwar Chaturvedi, Ms. Usha Kiran, Ms.
Usha Kiran

Facts: The petitioners, operating a cold storage
with a 280 KVA power load under HV-2 tariff,
were inspected on 12.06.2019. The inspection
revealed tampering with the main meter and
pole meter, with cut wires in R and B phases,
resulting in zero recorded consumption despite
transformer readings indicating usage. An
inspection report confirmed electricity theft
under Section 135 of the Electricity Act, 2003.
The petitioners paid Rs. 56 lakhs as a
compounding fee and Rs. 10 lakhs towards
anticipated
assessment.
A
provisional
assessment of Rs. 23,48,452 was issued, later
reduced
to
Rs.
20,54,895
in
the
final
assessment dated 22.08.2019. The petitioners
challenged the assessment, alleging procedural
lapses, including the lack of opportunity to test
the meter at an independent laboratory, and
sought a refund of the deposited amounts. The
1124 INDIAN LAW REPORTS ALLAHABAD SERIES
court dismissed the petition, holding that the
tampering was evident during inspection, as the
meter recorded nil consumption, making the
conclusion of electricity theft independent of a
test report. Clause 5.6(c)(iii) was deemed
inapplicable, as the finding of theft did not rely
on laboratory testing. The assessment for 59
days was unchallenged, and the court found no
illegality in the final assessment order. The Rs.
56 lakhs was confirmed as a compounding fee
to avoid criminal prosecution, not electricity
charges, and the petitioner's claim for a refund
was rejected. The court emphasized that
electricity is a public good and upheld the
assessment to prevent meter tampering.

Keywords: Electricity theft, meter tampering,
U.P. Electricity Supply Code 2005, Clause
5.6(c)(iii), compounding fee, assessment order,
unauthorized use of electricity, Section 135
Electricity Act 2003, public good, independent
laboratory testing, writ petition, Article 226.

Petition Dismissed.

Case Law Discussed:

1. Mohd. Sagir Vs Dakshinanchal Vidyut Vitran
Nigam Ltd.

2. Smt. Amrawati Devi Vs Purvanchal Vidyut
Vitran Nigam Ltd. & anr.

3. KC Ninan Vs Kerala St. Electricity Board & ors.

(Delivered by Hon'ble Manoj Kumar
Gupta, J. & Hon'ble Prashant Kumar, J. )

BACKDROP

1. The petitioners were having a
contracted power load of 280 KVA for
running a cold storage. The tariff applicable
was
HV-2,
with
facility
of
MRI
downloading. On 12.06.2019, a checking
was made at the petitioners' premises and
window seal of Main meter and TP seal of
NET meter were found tampered. On
opening TP cover, it was found that R and
B phases wire had been cut. As a result,
metering of electric current got disrupted.
The meter was showing NIL consumption.

2. The seal of window cover of Pole
meter was also found tampered. Two seals
of TP cover were also tampered. In said
meter also, on account of cutting of wires
of R and B phases, the meter was recording
zero
consumption.
However,
the
transformer was recording 112 Amp on R
phase, 120 Amp on Y phase and 125 Amp
on B phase when tested with trunk tester.
Apparently, the petitioner had rendered the
meter dysfunctional so as not to record any
electricity consumption. The respondents
took MRI reading and thereafter all the
three meters were dismantled and sealed in
presence of the petitioners' representative
and sent for testing. An inspection report
was prepared on the spot mentioning the
aforesaid facts and that it amounted to theft
of electricity, punishable under Section 135
of the Electricity Act, 2003 (for short 'the
Act'). It bears signatures of the inspecting
team and also the representative of the
petitioner's Company.

3. The petitioners, on the same date,
handed over a cheque of Rs.56 lakhs to the
Electricity Department. According to the
respondent-Electricity Department, the said
cheque was given by the petitioner towards
compounding fee with oral request not to
encash the same as the petitioner would
deposit the amount by online mode through
RTGS within 48 hours.

4. On very next date i.e. 13.06.2019,
respondent no.2 wrote to Superintending
Engineer, Electricity Distribution DivisionIII, Saifai, Etawah that assessable unit
would be 138221 for a period of 59 days.

5. According to the respondentElectricity Department, as the petitioner
8 All. M/s Santosh Preservation Pvt. Ltd. & Anr. Vs. Dakshinanchal Vidyut Vitran Nigam Ltd.
 & Anr.
1125
had handed over cheque of Rs. 56 lakhs
towards compounding fee and had also
assured the Department that he would
substitute the cheque with cash amount
within 48 hours, therefore on 13.6.2019, a
new meter was installed at the petitioner's
premises and the electricity supply was
restored.

6. It is relevant to note that the petitioner
deposited Rs. 56 lakhs through RTGS (Rs.
30 lakhs on 14.6.2019 and Rs. 26 lakhs on
15.6.2019). A consolidated receipt of Rs.
56 lakhs was issued by the respondentElectricity Department on 17.6.2019 and
the cheque was returned. The receipt states
that the amount deposited was towards
compounding fee, on basis of checking
carried out at the petitioner's premises on
12.6.2019.

7. The petitioner also deposited Rs. 10
lakhs, mentioning it as a deposit made
towards
"electrical
expenses".
This,
according to the petitioner, was to partially
satisfy the assessment that would be made
against him. It is alleged that the electricity
supply was restored only after the said
amount was deposited.

8. On 15.06.2019, the petitioner was
served with a show cause notice alongwith
a provisional assessment of Rs.23,48,452/-
calling upon the petitioner to file objection
within fifteen days. On 29.06.2019, the
petitioner submitted its reply denying theft
of electricity and challenging the procedure
adopted by the respondents.

9. On 22.8.2019, the respondents
issued a final assessment order. The order
mentions that it was a case of theft of
electricity by tampering the meter. The
assessment amount of Rs. 23,48,452/-
proposed earlier, was reduced to Rs.
20,54,895/-. The
petitioner
who had
deposited Rs. 10 lakhs on provisional basis
in anticipation of the final assessment
order, was given due adjustment of the said
amount. Rs. 2,000/- was appropriated
towards dis-connection and re-connection
charges and remaining Rs. 9,98,000/- was
adjusted against the assessment amount.
The said fact was duly mentioned in the
office memo dated 27.8.2019, issued under
the signatures of the Executive Engineer,
Electricity Distribution Division - III,
Saifai, Etawah.

10. Initially, the petitioner had
challenged the recovery notice dated
27.7.2019. Subsequently, by amendment in
the writ petition, the petitioner has also
assailed the final assessment order dated
22.8.2019. He has also prayed for a
mandamus directing the respondents to
refund Rs. 56 lakhs and Rs. 10 lakhs
realized from him so far, along with interest
@ 18% per annum.

RIVAL CONTENTIONS

11. The case of the petitioner is that
the assessment made by the respondents is
based on test report of Executive Engineer
(Test Division) DVVNL dated 13.6.2019. It
is submitted that when assessment is made
on basis of test report, it was mandatory to
give opportunity to the petitioner to get the
meter
tested
from
an
independent
laboratory. Since the aforesaid option was
not given to the petitioner, therefore, the
assessment made was illegal. In support of
his contention, he has placed reliance on
two Division Bench judgements of this
Court
-
(i)
Mohd.
Sagir
Vs.
Dakshinanchal Vidyut Vitran Nigam
Ltd.1 and (ii) Smt. Amrawati Devi Vs.
Purvanchal Vidyut Vitran Nigam Ltd.
and another2.
1126 INDIAN LAW REPORTS ALLAHABAD SERIES

12. It is further submitted that the
proposed
assessment
was
of
Rs.
23,48,452/-, whereas the notice dated
22.8.2019 mentions that Rs. 10,56,895/-
was
recoverable
from
the
petitioner.
Moreover, no reason has been given in the
final assessment order for arriving at the
aforesaid figure. It is also urged that the
assessment order is a non-speaking order
and therefore, not sustainable in law.

13. On the other hand, learned counsel for
the
respondent-Electricity
Department,
submitted that it was a case of theft of
electricity. The petitioner was caught redhanded, extracting electrical energy by
tampering the Main meter, as well as the
Pole meter. In order to save itself and its
directors from criminal proceedings, the
petitioner
chose
to
get
the
offence
compounded
by
depositing
the
compounding fee. The petitioner deposited
another sum of Rs. 10 lakhs against the
proposed assessment and requested for
electric
supply
being
restored.
The
Department having regard to the fact that
the petitioner was running cold storage,
sympathetically considered the request of
the petitioner and replaced the old meter
with a new meter and also restored the
electric supply. It is submitted that since
theft of electricity was evident to naked eye
therefore, there was no impediment in
proceeding
to
make
best
judgment
assessment. It is urged that when a
consumer uses any artificial means, or
means not authorized by the Board, or
licensee and thereby commits theft of
electricity, there is a presumption under law
that the abstraction, consumption or use of
electricity has been dishonestly caused by
the consumer. The petitioner had failed to
rebut the said presumption. The conclusion
relating to theft of electricity in the instant
case, is not based on the test result. It was
discovered at the time of inspection itself.
Therefore, it was not necessary to get the
meter tested or to afford opportunity to the
petitioner to have the same tested at an
independent laboratory of its choice. It is
further submitted that the petitioner had in
fact, accepted its guilt and deposited the
compounding fee and for the said reason,
no other coercive action was taken against
it. Having regard to the above admitted
fact, it cannot be said that the order of final
assessment is in any manner illegal, or
warrant
interference
in
exercise
of
equitable and discretionary jurisdiction.

ISSUE

14. The main issue which falls for
consideration is whether in the facts and
circumstances of the instant case, the
assessment proceedings can be held to be
illegal for the reason that the petitioner was
not given option to get the meter tested at
an independent laboratory of its choice, as
contemplated under Clause 5.6(c)(iii) of the
U.P. Electricity Supply Code, 2005.

RELEVANT
STATUTORY
PROVISIONS

15. Section 126 of the Electricity Act,
2003 (for short, hereinafter referred to as
"the Act") empowers the assessing officer
to provisionally assess to the best of its
judgment, the electricity charges payable
by any person who on an inspection of any
place or premises, or after inspection of
equipments, gadgets, machines, devices,
found
connected,
or
used,
or
after
inspection of records maintained by any
person, comes to the conclusion that such
person is indulging in unauthorized use of
electricity. The phrase "unauthorized use of
electricity"
has
been
defined
under
Explanation to Section 126(6), thus:
8 All. M/s Santosh Preservation Pvt. Ltd. & Anr. Vs. Dakshinanchal Vidyut Vitran Nigam Ltd.
 & Anr.
1127

"(b) "unauthorised use of electricity"
means the usage of electricity

(i) by any artificial means; or

(ii) by a means not authorised by the
concerned person or a or licensee; or

(iii) through a tampered meter; or

(iv) for the purpose other than for
which
the
usage
of
electricity
was
authorised; or

(v) for the premises or areas other than
those for which the supply of electricity
was authorised."

(emphasis supplied)

16. According to sub-section (5), such
an assessment would be for the entire
period during which such unauthorized use
of electricity has taken place and if,
however, the period during which such
unauthorized use of electricity has taken
place cannot be ascertained, such period
shall be limited to a period of twelve
months immediately preceding the date of
inspection.

17. Relevant part of Section 135
which deals with "theft of electricity" is as
follows: -

"135.
Theft
of
electricity.-[(1)
Whoever, dishonestly, (a) taps, makes or
causes to be made any connection with
overhead, underground or under water
lines or cables, or service wires, or
service facilities of a licensee or supplier,
as the case may be; or

(b) tampers a meter, installs or uses
a tampered meter, current reversing
transformer, loop connection or any
other device or method which interferes
with accurate or proper registration,
calibration
or
metering
of
electric
current or otherwise results in a manner
whereby electricity is stolen or wasted; or

(c) damages or destroys an electric
meter, apparatus, equipment, or wire or
causes or allows any of them to be so
damaged or destroyed as to interfere
with the proper or accurate metering of
electricity; or

(d)
uses
electricity
through
a
tampered meter; or

(e) uses electricity for the purpose
other than for which the usage of electricity
was authorised,

so as to abstract or consume or use
electricity
shall
be
punishable
with
imprisonment for a term which may extend
to three years or with fine or with both:

Provided that in a case where the load
abstracted, consumed, or used or attempted
abstraction or attempted consumption or
attempted use-

(i) does not exceed 10 kilowatt, the
fine imposed on first conviction shall not
be less than three times the financial gain
on account of such theft of electricity and
in the event of second or subsequent
conviction the fine imposed shall not be
less than six times the financial gain on
account of such theft of electricity;

(ii) exceeds 10 Kilowatt, the fine
imposed on first conviction shall not be less
than three times the financial gain on
account of such theft of electricity and in
the
event
of
second
or
subsequent
conviction,
the
sentence
shall
be
imprisonment for a term not less than six
months, but which may extend to five years
and with fine not less than six times the
financial gain on account of such theft of
electricity:

Provided further that in the event of
second and subsequent conviction of a
person
where
the
load
abstracted,
consumed, or used or attempted abstraction
or attempted consumption or attempted use
exceeds 10 kilowatt, such person shall also
be debarred from getting any supply of
1128 INDIAN LAW REPORTS ALLAHABAD SERIES
electricity for a period which shall not be
less than three months but may extend to
two years and shall also be debarred from
getting supply of electricity for that period
from any other source or generating station:

Provided also that if it is provided
that any artificial means or means not
authorised by the Board or licensee or
supplier, as the case may be, exist for the
abstraction, consumption or use of
electricity by the consumer, it shall be
presumed, until the contrary is proved,
that any abstraction, consumption or use
of electricity has been dishonestly caused
by such consumer.

(1A) Without prejudice to the
provisions of this Act, the licensee or
supplier, as the case may be, may, upon
detection of such theft of electricity,
immediately disconnect the supply of
electricity:

Provided that only such officer of the
licensee or supplier, as authorised for the
purpose by the Appropriate Commission or
any other officer of the licensee or supplier,
as the case may be, of the rank higher than
the rank so authorised shall disconnect the
supply line of electricity:

Provided further that such officer of
the licensee or supplier, as the case may be,
shall lodge a complaint in writing relating
to the commission of such offence in police
station having jurisdiction within twenty
four hour from the time of such disconnect:

Provided also that the licensee or
supplier, as the case may be, on deposit or
payment of the assessed amount or
electricity charges in accordance with the
provisions of this Act, shall, without
prejudice to the obligation to lodge the
complaint as referred to in the second
proviso to this clause., restore the supply
line of electricity within forty-eight hours
of such deposit or payment;"

(emphasis supplied)

18. Sub-section (2) of Section 152
which speaks of compounding of offences
reads thus: -

"(2) On payment of the sum of
money in accordance with sub-section
(1), any person in custody in connection
with that offence shall be set at liberty and
no proceedings shall be instituted or
continued against such consumer or
person in any criminal court."

(emphasis supplied)

19. The State Commission has framed
the U.P. Electricity Supply Code, 2005 in
exercise of its powers under Section 50 of
the Act. The aforesaid provisions have been
made to effectuate the objects of the Act.
Clause 5.6 of the Code relates to defective
meters. The relevant part thereof is
reproduced below: -

"5.6 Defective Meters: (a) The
Licensee shall have the right to test any
meter and related apparatus if there is a
reasonable doubt about the accuracy of
the meter and the consumer shall
provide the Licensee necessary assistance
in conduct of test. However, the consumer
shall be allowed to be present during the
testing.

(b) A consumer may request the
Licensee to test the meter installed on his
premises if he doubts its accuracy of
meter readings not commensurate with
his consumption of electricity, stoppage
of meter, damage to seal, by applying to
the
Licensee
in
prescribed
format
(Annexure 5.1) along with the requisite
testing fee. The Licensee shall test the
meter:

(1) Within 15 days of the receipt of the
application, at consumer's premises, or

(ii) Within 30 days at licensee's lab, or
Independent lab, or
8 All. M/s Santosh Preservation Pvt. Ltd. & Anr. Vs. Dakshinanchal Vidyut Vitran Nigam Ltd.
 & Anr.
1129

(iii) By installing a tested check meter
in series with the existing meter within 7
days of filing of application.

(c) In case of testing of meter at
consumer's premises, the testing of meter
shall be done for a minimum consumption
of 1 kWh. The meter testing team of the
licensee shall carry heating load of
sufficient capacity to carry out the testing.
Optical Scanner may be used for counting
the pulses / revolutions or meter shall be
tested as per the procedure described in
IS/IER 1956 or through aqua-check for LT
meters and through RSS for others. The
aqua Check and RSS shall be calibrated in
laboratory of national repute once in a year.

(i) In case the meter is found O.K.,
no further action shall be taken.

(ii) In case the meter is found fast /
slow by the licensee, and the consumer
agrees to the report, the meter shall be
replaced by a new meter within 15 days,
and bills of previous three months prior
to the month in which the dispute has
arisen
shall
be
adjusted
in
the
subsequent bill as per the test results. In
case meter is found to be slow, at the
request of the consumer, these charges may
be recovered in installments not exceeding
three.
(iii) If the consumer disputes the results
of testing, or testing at consumer's
premises is difficult, the defective meter
shall be replaced by a new tested meter by
the Licensee, and, the defective meter
after sealing in presence of consumer,
shall
be
tested
at
licensee's
lab/Independent lab/Electrical Inspector,
as agreed by consumer. The option once
exercised by consumer shall not be
changed. The decision on the basis of
reports of the test lab shall be final on the
Licensee as well as the consumer.

(i) Consumer shall be informed of the
proposed date of testing at least 7 days in
advance so that he may be present at the
time of testing, personally or through an
authorized representative.

(ii) The signature of the consumer or
his
authorized
representative,
if
any
present, shall be obtained on the Test Result
Sheet.

(iii) The results of testing, billing,
and in case the consumer disputes the
results of testing, shall be same as
provided in clause 5.6 (c) above.

Note: (i) The licensee may submit a
proposal, with a list of reputed and
approved test labs, along with their test
charges to the Commission.

(ii) The provisions of IER 1956 shall
however be followed until rules are made
under Section 53 and 55 of the Act.

(e) In case a check meter is installed,
and if after 7-15 days of the period of test,
the existing meter is found to be fast or
slow beyond the permissible limits, and the
test results are not disputed by the
consumer, then the same would be removed
leaving the check meter in its place for
future metering, and bills of previous three
months prior to the month in which the
dispute has arisen shall be adjusted in the
next bill as per the test results. Where the
test results are disputed, the procedure as
per clause 5.6 (c) as above, as the case may
be, shall be followed."

(emphasis supplied)

ANALYSIS

20. In Smt. Amrawati Devi (supra),
the checking team found that the meter was
running slow and therefore it was sent for
testing at the laboratory of the Department.
During testing, it transpired that the meter
had been tampered. The consumer was not
given option to get the meter tested at an
independent laboratory. In the aforesaid
backdrop, relying on Clause 5.6(c)(iii), it
1130 INDIAN LAW REPORTS ALLAHABAD SERIES
was held that when the demand for
additional electricity charges was based on
test report, the consumer should have had
the opportunity to get the meter tested from
outside agency, in view of Clause 5.6(c)(iii)
of the Code. The relevant extract from the
said judgment is as follows: -

"6. From reading of Clause 5.6 (c) it is
clear that this clause in unequivocal terms
declares that the defective meter after
sealing in presence of consumer, shall be
tested.
at
licensee's
lab/independent
lab/Electrical Inspector, as agreed by the
consumer. Therefore, the agreement by the
consumer is essential for testing of the
meter either at the laboratory of the Nigam
or at the laboratory of some other
independent agency. It further provides that
option exercised by consumer once cannot
be
changed.
The
clause,
therefore,
empowers the authorities to seal the meter
and
get
it
tested
with
consumer's
agreement. Since the clause operates
harshly against the consumer it has to be
construed strictly. The consumer has a right
to get the meter tested with independent
agency. The authorities, therefore have a
corresponding duty to apprise the consumer
of the right. Failure to discharge this duty,
which flows from sub-clause (c) (ii) by the
authorities while exercising their right to
send the meter for testing, renders the
entire proceedings for sealing the meter
irregular and illegal."

21. In Mohd. Sagir (supra), on which also,
heavy reliance has been placed by learned
counsel for the petitioner, it is noteworthy
that at the time of inspection, the meter
seal, lead seal, ultrasonic welding seal,
were found in order. However, since the
respondents were suspecting tampering in
the meter, therefore, they took the meter in
their custody. A date was fixed under due
intimation to the consumer and on which
date, the meter was opened before a
Committee constituted for the said purpose.
It was found that although outer seals were
intact, but the petitioner had inserted extra
wires and remote control sensing device
inside the meter. Thereafter, the consumer
was assessed for unauthorized use of
electricity on basis of inspection of the
meter done by the Committee. The
assessment order was assailed on the
ground that the consumer was not given
opportunity to get the meter tested at an
independent laboratory in terms of Clause
5.6(c)(iii).
On
the
other
hand,
the
Electricity Department contested the claim
by contending that it was a case of
tampering of meter, as a foreign device was
found inside the meter, therefore, Clause
5.6 which deals with "defective meters"
would not be applicable. The aforesaid
contention was repelled by holding that
Clause 5.6(a) cannot be interpreted in a
narrow manner so as to exclude from it
cases of meter tampering, as it would not
advance the object of the Act. It is held that
a tampered meter would also be a defective
meter and will fall within the ambit of
Clause 5.6. The relevant observations are as
under: -

"25. Now the submission and the stand
taken by the learned counsel for the
respondents in the impugned order as well
as in the counter affidavit is that Clause of
5.6 of the Code, 2005 is not applicable
when there is an allegation that the meter
has been tampered. Clause 5.6 (a) of the
Code, 2005 provides The Licensee shall
have he right to test any meter and related
apparatus". Although the heading of the
word is "defective meters", but the said
heading cannot control the substantive
provision when the provision is clear and
categorical. The right of a licensee to test
8 All. M/s Santosh Preservation Pvt. Ltd. & Anr. Vs. Dakshinanchal Vidyut Vitran Nigam Ltd.
 & Anr.
1131
the
meter
where
licensee
has
a
reasonable doubt that the meter is
tampered cannot be taken away and in
event the right is only confined to
defective meters as alleged by the
respondents, the said interpretation shall
not advance the object of the Act, 2003.

26. Clause 5.9 of the Code, 2005 deals
with cost of Replacement of Defective/
Burnt Meters. Sub-clause (a) (ii) of the
Code, 2005 uses the words "as a result of
testing, that the meter was rendered
defective due to tampering or any other
deliberate act by the consumer to interfere
with the meter". Thus, when the subclauses 5.6 and 5.9 are read together, it is
clear that the meter is to be treated as a
defective meter consequent to tampering or
any other deliberate act by the consumer.
Thus, in the cases where the allegations are
that the consumer has tampered the meter
the said meter is fully covered by the
definition of defective meters as given in
Cause 5.6 of the Code, 2005 and the case of
the respondents that Clause 5.6 is not
attracted is incorrect."

22. The aforesaid interpretation
definitely advances the object of the Act.
However, the seminal issue is whether in
all cases of tampering, is it mandatory to
give option to the consumer to get the
meter tested at an independent laboratory,
failing which assessment made would be
rendered illegal?

23. Clause 5.6 of the Code gives right
to both licensee and consumer to get the
meter tested. In the first instance, the
testing is done at consumer's premises. If
no defect is detected, no further action is
taken. However, if the meter is found
running fast/slow and the consumer agrees
to the report, the meter shall be replaced by
a new meter and bills of previous three
months prior to the month in which the
dispute has arisen, shall be adjusted in the
subsequent bills as per the test results. On
the other hand, if he disputes the test result
or the testing at his premises is not
possible, the defective meter shall be tested
at
licensee's
laboratory/independent
laboratory/ Electrical Inspector, as agreed
by
the
consumer.
The
option
once
exercised, by the consumer shall not be
changed. The decision on the basis of
reports of the test lab shall be final and
binding on the licensee as well as the
consumer.

24. The Scheme of the Code reveals
that the above procedure is required to be
followed only in cases where it is to be
ascertained on basis of test report as to
whether meter is running slow or fast. It
could happen on account of mechanical
defect in metering apparatus or because of
tampering which may or may not be visible
to naked eye. When visible to naked eye, as
in the instant case, and meter was recording
'NIL' consumption, the conclusion of theft
of electricity is not dependent upon test
report.

25. The object of Clause 5.6(c) (iii) is
to rule out any complaint of bais if meter is
tested in the licensee's Lab or by electrical
inspector in a case where it is to be
ascertained from test report whether meter
is running fast/slow because of tampering
or any other reason. There, option has to be
given to the consumer under Clause
5.6(c)(iii) to get the meter tested at a lab of
his choice. However, when the conclusion
of tampering is not based on report of test
laboratory/Electrical Inspector, the mere
fact that Department had sent the meter for
testing, would not result in conferment of
any new right in favour of the consumer,
which in fact, never existed. Clause
1132 INDIAN LAW REPORTS ALLAHABAD SERIES
5.6(c)(iii) would not be attracted in such
cases.

26. Recently, the Supreme Court in
KC Ninan vs. Kerala State Electricity
Board and others3 held that "electricity
constitutes a 'public good'. The Courts
interpretation of the law must foster this
position". In our opinion, the above
interpretation would help combat brazen
acts of meter tampering and prevent loot of
'public good' apart from advancing the
object of the Act and the Code.

27. Mohd. Sagir (supra) was a case
where tampering was not obvious at the
time of inspection. The licensee had only
a suspicion and therefore, it sent the
meter for testing. As the ultimate
conclusion
regarding
tampering
was
based on test report of three member
committee, therefore, the consumer was
rightly held to have right to get the meter
tested at laboratory of his choice. Same
was the position in Smt. Amrawati Devi.
In the instant case, there is no iota of
doubt that the tampering was obvious.
Moreover, the meter was recording zero
consumption, therefore, even the extent
to which the meter was running slow was
not in issue.

28. The instant case is akin to a case
of theft of electricity by tapping the main
line, by-passing the meter. The formula for
making assessment in such cases is
governed by sub-section (5) of Section 126
which states that the assessment would be
made for the entire period during which
such unauthorized use of electricity has
taken place and if the said period is
unascertainable, such period shall be
limited to a period of twelve months
immediately
preceding
the
date
of
inspection.

29.

In
the
instant
case,
the
respondents have made assessment only for
59 days. It has not come on record why the
assessment was made for 59 days only, but
the period of assessment has also not been
disputed by the petitioner, therefore, we
find no illegality in the same.

30. As a result of above discussion,
we find no merit in the contention that
assessment order is liable to be quashed
because it is a non speaking one inasmuch
as the finding relating to tampering of
meter, as noted above, was a foregone
conclusion. Moreover, it is not at all a fit
case for interference in exercise of power
under Article 226 of the Constitution.

31. Before parting, we note one more
contention which though taken in the
pleadings was not specifically argued. It is
that Rs.56 lakhs was not paid towards
compounding fee but as electricity charges
and is liable to be adjusted against the
assessment amount. We find that the receipt
issued by the respondents clearly mentions
that the aforesaid sum was paid towards
compounding fee. The specific case of the
respondents in the counter affidavit is that
the petitioner, having regard to the fact that
all seals were found broken and meter was
not
recording
any
consumption
of
electricity, accepted the offence and itself
offered to pay compounding fee so that
criminal proceedings are not taken against
the petitioner and its directors and officers.
Concededly, under the provisions of the
Act, in such cases, criminal prosecution is
launched against the offender. In the instant
case, the petitioner has nowhere pleaded
that the licensee instituted any criminal
proceeding against the petitioner or its
directors. Therefore, we find no reason to
disbelieve the case of the respondents that
Rs.56 lakhs was deposited by the petitioner
8 All. Bata India Ltd. & Anr. Vs. U.P. State Micro & Small Entp. Facilitation Council & Anr.
1133
on 14/15.06.2019 towards compounding
fee to save itself from criminal prosecution.
The contention, therefore, has no merit and
is rejected.

32. The petition is dismissed.
----------
(2023) 8 ILRA 1133
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 31.05.2023

BEFORE

THE HON'BLE MAHESH CHANDRA
TRIPATHI, J.
THE HON'BLE MANJIVE SHUKLA, J.

Writ-C No. 27768 of 2019

Bata India Ltd. & Anr. ...Petitioners
Versus
U.P. State Micro & Small Entp. Facilitation
Council & Anr. ...Respondents

Counsel for the Petitioners:
Sri Chandra Bhan Gupta, Sri Neeraj Grover

Counsel for the Respondents:
Sri Ashok Kumar Singh, Sri Ashok Kumar Singh,
Sri Sujeet Kumar, Sri Anil Kumar Mehrotra, Sri
Srijan Mehrotra

Civil Law - Micro, Small and Medium
Enterprises Development Act, 2006 -
Sections 18(3) & 24 - Arbitration and
Conciliation Act, 1996 - Section 80 -
Overriding
Effect
of
MSMED
Act
-
Facilitation
Council's
Jurisdiction
to
Arbitrate - Prohibition under Section 80 -
Applicability

Held: The Micro, Small and Medium Enterprises
Development Act, 2006 (MSMED Act), being a
special legislation, overrides the provisions of
the Arbitration and Conciliation Act, 1996, by
virtue of Section 24. The Facilitation Council,
under Section 18(3) of the MSMED Act, has
absolute discretion to either arbitrate the
dispute itself or refer it to an institution
providing alternate dispute resolution services,
notwithstanding the prohibition under Section
80 of the Arbitration and Conciliation Act, 1996,
which bars a conciliator from acting as an
arbitrator. The Supreme Court's decision in
Gujarat St. Civil Supplies Corporation Ltd. Vs
Ramkrishna Foods Pvt. Ltd. (2022 SCC OnLine
SC 1492) and the Division Bench judgment of
the Allahabad High Court in Writ - C No. 7785 of
2020 affirm that the Facilitation Council, having
acted as a conciliator, is not barred from
arbitrating the dispute under Section 18(3). The
Council's composition as a statutory body with
expert members negates concerns of bias, and
its jurisdiction to arbitrate is not affected by an
independent arbitration agreement between the
parties. The orders of the Facilitation Council
dated 11.6.2019 and 24.7.2019, deciding to
arbitrate the dispute itself, were upheld as legal
and valid. The petitioners' argument that the
dispute should be referred to the Delhi
International Arbitration Centre for its expertise
was rejected, as the Facilitation Council is
equipped with experts to handle such disputes.

Writ petition dismissed.

Case Law Discussed:

1. Gujarat St. Civil Supplies Corp. Ltd. Vs
Ramkrishna Foods Pvt. Ltd., 2022 SCC OnLine
SC 1492.

2. Gujrat St. Petronet Ltd. Vs Micro and Small
Enterprises Facilitation Council, Writ Petition No.
5459 of 2015 (Bombay High Court, 06.08.2018)
(partly set aside by Supreme Court).

3. Principal Chief Engineer Vs Mani Bhai and
Brothers (Gujarat High Court), affirmed by
Supreme Court in SLP No. 17434/2017.

4. Writ - C No. 7785 of 2020 (Allahabad High
Court, 03.03.2020).

5. Silpi Industries (Supreme Court) - on supplier
registration under MSMED Act.

(Delivered by Hon'ble Manjive Shukla, J.)

1. Heard Mr. Neeraj Grover and Mr.
Chandra Bhan Gupta, learned counsel for