The Supreme Court has famously observed that the Electricity Act, 2003 is a ‘consumer-friendly’ statute, constituting of provisions designed to suit best interests of the consumers. Furthermore, best interests of distribution licensees and suppliers have also been accounted for.[1]
A five judge Bench declared in the case of State of Andhra Pradesh v. National Thermal Power Corporation Ltd[2], that electricity is a ‘good.’ Thereby, like any other good, electricity can be traded based on contractual agreements and so, agreements relating to sale or purchase of electricity have an inherent contractual binding obligation. A buyer is responsible for payment of goods at the time of purchase or consumption. The relevant clause from the contract will be used to determine the amount, and time for such payment.
Q) Can a distributing company disconnect supply of electricity in default of payment?
When a customer defaults on clearing electricity bills, the distributing company can use its power to suspend electricity service under Section 56(1). The distributor must make ‘a demand’ to the consumer for payment within stipulated time before discontinuation of supply. Only once the stipulated period is over and payment is still not made, distributor can discontinue supply of electricity.
Further, if the consumer has paid electricity charges due from him for each month calculated based on average sum paid by him during past six months, or if he has deposited an amount equal to the sum claimed against him then the supply should not be interfered with.
Furthermore, if demand for outstanding dues has been raised two years after the sum became ‘first due,’ the licensee is not authorised to recover such dues.
In the case of Assistant Engineer (D1), Ajmer Vidyut Vitran Nigam Limited v Rahmatullah Khan[3], the question which came before the Supreme Court was when does an electricity bill become ‘first due?’ In this regard, the court observed electricity charges would only become ‘first due,’ after the bill is issued to consumer, even though the liability to pay arises on consumption of electricity.
Q) What legal remedies does a consumer have if he is dissatisfied with the electricity bill generated against him?
On most occasions, electricity bill comprises of the time-period within which the bill must be paid.
If a bill or demand is raised by the supplier or distributing company, which is disputed by the consumer, his first step should be approaching the ‘Consumer Grievance Redressal Forum’ (CGRF) of the distribution licensee. All distribution licensees are required to establish a forum for redressal of grievances of consumers relating to matters of billing, metering, delay in providing new connection or change in name or enhancement of loads etc. Further, if any consumer is aggrieved by non-redressal of grievances placed under CGRF, such consumer can make a representation for redressal before the office of ‘Ombudsman.’ Both, CGRF and the office of ‘Ombudsman’ constitute the first appellate authority in cases relating to disputed bills. State commissions are not the appropriate authority to deal with such matters.
Alternatively, consumers can take recourse to other remedies available in law. Aggrieved consumers can file a consumer complaint before the respective District Consumer Forum, who upon verifying the veracity of the complaint can hold the distribution company to not bill the consumer with such unjustified amount, as was disputed.
Further, a suit for declaration and injunction can be filed at the respective District Court, where the aggrieved party resides.
If the governing agreement provides for arbitration (out of court settlements), consumers can initiate an arbitration proceeding against the said distributor and avail an order requiring the distributing company to not bill the consumer with such unjustified amount.
Q) Can electricity dues against the previous owner of property be transferred to the new owner, upon default of payment by previous owner?
In a case before the Delhi High Court in 2006, the petitioner purchased a property and had applied for new electricity connection. However, his electricity connection was soon disrupted. Upon checking, he found that since the previous occupant had not cleared the electricity dues, his connection had been disrupted. Delhi High Court held that it was immaterial whether or not the new owner had information of such outstanding bills, he must clear the dues before the supply is restored based on Clause 2.1 (iv) of the General Conditions of Supply.
The Supreme Court held in 2008 that since electricity is regarded as ‘goods,’ the sale of electricity would be regarded as sale of any goods. Thereby, there must be a contractual agreement between supplier and consumer. Previous owner had entered a contract for purchase of electricity with the distributor; however, the new owner remains distant from any such contract. Thereby, in absence of any agreement, new owner cannot be made to pay for outstanding dues of the previous owner.
However, Supreme Court noted that it was very reasonable on part of distributing companies to impose such charges on new owners, based on provisions of ‘General Conditions of Supply.’ Otherwise, it would lead to a tendency where customers involved in unscrupulous activities obtain electricity supply for a time-period, and to escape payment, sell the property and move on to another property. This would make it difficult, rather impossible for distributors to recover the dues. Importantly, it is the duty of new occupants to make sure that the property in which they intend to shift, does not have any outstanding bills.
Appropriate clauses must be made in the deed of sale or lease, to avoid payment of any outstanding bill of the erstwhile owner.
Q) In terms of dispute relating to grant of open access, what is the correct forum to approach?
APTEL (Appellate Tribunal for Electricity) has held that the Electricity Act expressly states that it is the responsibility of Commissions (State or Central) to ensure that obligations to meet Open Access requirements are fulfilled. This could include giving orders to grant Open Access, and that the respective commission would be the only entity authorised to handle disputes relating to grant of Open Access. Consumer Grievance Redressal Forum (CGRF) is not permitted to assume authority over this matter. In other words, the CGRF formed by distribution licensees will not have authority to hear or determine a case in which the distributor has breached the law’s requirement to provide non-discriminatory Open Access. Therefore, the Commissions (Central or State) alone can resolve such an issue.
Q) How does compounding of offence take place under the Electricity Act, 2003?
If any person has committed, or is suspected of committing the offence of theft of electricity (punishable under the Act), such person can deposit a sum of money to discharge himself off the liability. This process is known as compounding of offence. The sum must be deposited to the ‘authorised officer’ of the State government, who will then accept such sum of money for compounding of offence.
Before institution of case, the accused is served with option of getting the offence compounded. If accused accepts the option, authorised officer gets jurisdiction to compound the offence and call upon the accused to pay the same. Upon compliance therewith, any existing proceedings against the accused would be terminated, and he will be set at liberty. No new proceedings would be brought in any criminal court regarding the same offence.
However, power vested with the authorised officer is discretionary in nature and he can decide to accept or reject a case for compounding, based on gravity of the offence. Further, an offer for compounding can only be allowed once for one person.
Rate at which the sum of money for compounding must be collected based on per Kilowatt (KW)/Horsepower (HP) is:
| Nature of Service | Rate per Kw/HP |
| A) Industrial Service | INR 20,000 |
| B) Commercial Service | INR 10,000 |
| C) Agricultural Service | INR 2,000 |
| D) Other Services | INR 4,000 |
Q) Can a consumer raise a dispute when standard of performance is not met by the distribution licensee?
It is the responsibility of State commissions to specify ‘standards of performance’ for licensees. If the licensee fails to meet such specified standards, such licensee or licensee company is liable to pay compensation to the person affected by this. Amount for such compensation will be decided by State commissions.
Further, based on principles of natural justice, compensation can only be granted after hearing the licensee company and their reason for such default. After hearing, if the commission is of an opinion that compensation should be granted, it will order the concerned licensee to compensate the affected party within ninety days of passing of such order.
[1] (2008) 10 SCC 321
[2] (2002) 5 SCC 203
[3] (2020) 4 SCC 650
