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CASE NO.: Appeal (civil)  3615 of 1996

PETITIONER: Bombay Electric Supply & Transport Undertaking

RESPONDENT: Laffans (India) Pvt. Ltd. & Anr.

DATE OF JUDGMENT: 21/04/2005

BENCH: CJI R.C. Lahoti, Dr. AR. Lakshmanan & G.P. Mathur

JUDGMENT: J U D G M E N T

R.C. Lahoti, CJI

       This appeal, by special leave, has been preferred against  the judgment dated 10.3.1995 of the Division Bench of Bombay  High Court, by which the Letters Patent Appeal filed by first  respondent, Laffans (India) Pvt. Ltd. was allowed, the  judgment   dated 17.3.1993 of the learned Single Judge dismissing the writ  petition was set aside and the notice of disconnection of  electricity supply issued by the appellant was quashed.

       The appellant, Bombay Electricity Supply and Transport  Undertaking is an undertaking of Municipal Corporation of  Greater Bombay (second respondent) and is a licensee under the  Indian Electricity Act, 1910 (hereinafter referred to as  "the  Act").  The appellant was supplying electricity to the first  respondent, Laffans (India) Pvt. Ltd. who had a showroom at  Veer Nariman Road, Bombay, for carrying on business of retail  trade in textiles.  The appellant had installed two meters at the  premises of the first respondent, for measuring the quantity of  electricity consumed : one __  by lights, fans and other small  fixtures, and, the other __  by the air-conditioning unit. The  dispute here relates to the meter measuring the quantity of  electricity consumed by the air-conditioning unit.  Initially, meter  No. 850050 had been installed but the same got burnt and a  new meter bearing No. 860154 was installed on 2.5.1988.   According to the appellant, in a routine checking the said meter  was found to be running slow and accordingly the first  respondent was informed on 14.6.1989 that the meter would be  replaced and revised bills would be issued.  Thereafter,  a  new  meter bearing No. 890324 was installed on 30.6.1989.  This  meter was also found to be running slow and accordingly the  first respondent was informed on 25.9.1989 that the meter  would be replaced and revised bills would be issued.  On  18.12.1989, a new meter bearing No. 880272 was installed.   This also got burnt and was replaced by meter No. 890272 on  30.12.1989. The appellant then taking the preceding one year’s  period i.e. from 2.2.1987 to 1.2.1988 as the base period and on  the pattern of consumption recorded therein, revised the bills  and sent a demand notice dated 5.9.1990 for Rs. 2,19,602/73  paise for the period 1.2.1988 to 30.12.1989 on the footing that  the first respondent had been undercharged by 1,13,212 units.   A perusal of the contents of the demand letter shows that for the  period for which the meter is alleged to have recorded incorrect  readings, bills were sent month by month on the basis of  readings as recorded by the meter. As, according to the

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appellant, the first respondent had been undercharged due to  the meter not accurately recording the readings, a revised bill,  based on the average consumption of the respondent for the  period 2.2.1987 to 1.2.1988 i.e. for such period for which the  meters had recorded incorrect readings was raised. As the first  respondent did not pay the amount, a notice of disconnection  was sent to it on 25.10.1990 calling upon it to pay the amount  within a week, failing which the electricity supply would be  disconnected.  The first respondent then challenged the notice of  demand and disconnection by filing a writ petition which was  dismissed by a learned Single Judge of the High Court on  17.8.1993. The Letters Patent Appeal preferred by the first  respondent was allowed by the Division Bench and the demand  notice was quashed.

       The learned Single Judge held that it was for the consumer  (first respondent) to raise a dispute before the Electrical  Inspector under Section 26(6) of the Indian Electricity Act in  case he challenged or disputed the assertion of the appellant  that the meter was not recording correctly and was running  slow.  Since the consumer did not raise any such dispute, the  appellant was entitled to replace the meter if the same was  defective and to raise a demand on the basis of average  consumption in the past period. The Division Bench has reversed  this view and has held that if the appellant disputed the  correctness of the meter, it should have referred the dispute to  the Electrical Inspector as provided in Section 26(6) of the Act  and it was for the Electrical Inspector to estimate the amount of  energy supplied to the consumer.  The appellant having not  referred any such dispute to the Electrical Inspector and  consequently no estimate of the energy supplied by it to the first  respondent (consumer) having been made, it was not open to  the appellant to raise a bill on the basis of average of past one  year’s consumption.  The Division Bench further held that the  demand notice was for a period exceeding six months  immediately preceding the date thereof and, therefore also, the  same was illegal.

       The main question, which requires consideration, centres  around sub-section (6) of Section 26 of the Indian Electricity Act,  1910 __ whether the applicability of said provision is attracted to  the facts and circumstances of the present case and, if so, to  what extent?

The relevant parts of Section 26 of the Indian Electricity  Act, 1910 and Rule 57 of the Indian Electricity Rules, relevant for  the purpose of this judgment, are reproduced hereunder:-

The Indian Electricity Act, 1910

"26. Meters.- (1) In the absence of an agreement to  the contrary, the amount of energy supplied to a  consumer or the electrical quantity contained in the  supply shall be ascertained by means of a correct  meter, and the licensee shall, if required by the  consumer, cause the consumer to be supplied with  such a meter:

       Provided that the licensee may require the  consumer to give him security for the price of a  meter and enter into an agreement for the hire  thereof, unless the consumer elects to purchase a  meter.

(2)             xxx             xxx             xxx

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(3)             xxx             xxx             xxx          (4) The licensee or any person duly authorized by  the licensee shall, at any reasonable time and on  informing the consumer of his intention, have access  to, and be at liberty to inspect and test, and for that  purpose, if he thinks fit, take off and remove, any  meter referred to in sub-section (1); and, except  where the meter is so hired as aforesaid, all  reasonable expenses of, and incidental to, such  inspecting, testing, taking off and removing shall, if  the meter is found to be otherwise than correct, be  recovered from the consumer; and, where any  difference or dispute arises as to the amount of such  reasonable expenses, the matter shall be referred to  an Electrical Inspector, and the decision of such  Inspector shall be final:

       Provided that the licensee shall not be at  liberty to take off or remove any such meter if any  difference or dispute of the nature described in sub- section (6) has arisen until the matter has been  determined as therein provided.

(5)             xxx             xxx             xxx

(6) Where any difference or dispute arises as to  whether any meter referred to in sub-section (1) is  or is not correct, the matter shall be decided, upon  the application of either party, by an Electrical  Inspect; and where the meter has, in the opinion of  such Inspector ceased to be correct, such Inspector  shall estimate the amount of the energy supplied to  the consumer or the electrical quantity contained in  the supply, during such time, not exceeding six  months, as the meter shall not, in the opinion of  such Inspect, have been correct; but save as  aforesaid, the register of the meter shall, in the  absence of fraud, be conclusive proof of such amount  or quantity:

       Provided that before either a licensee or a  consumer applies to the Electrical Inspect under this  sub-section, he shall give to the other party not less  than seven days’ notice of his intention so to do.

(7)             xxx             xxx             xxx

Explanation. __  A meter shall be deemed to be  "correct" if it registers the amount of energy  supplied, or the electrical quantity contained in the  supply, within the prescribed limits of error, and a  maximum demand indicator or other apparatus  referred to in sub-section (7) shall be deemed to be  "correct" if it complies with such conditions as may  be prescribed in the case of any such indicator or  other apparatus."

                Indian Electricity Rules, 1956

"57. Meters, maximum demand indicators and  other apparatus on consumer’s premises. \026 (1)

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Any meter or maximum demand indicator or other  apparatus, placed upon a consumer’s premises in  accordance with Section 26 shall be of appropriate  capacity and shall be deemed to be correct if its  limits of error are within the limits specified in the  relevant Indian Standard Specifications and where  no such specification exits, the limits of error do not  exceed 3 per cent, above or below absolute accuracy  at all loads in excess of one-tenth of full loads and  up to full load.

Provided that for extra high voltage consumers  the limit or error shall be  1 1 per cent.

(2)     No meter shall register at no load.

(3)     Every supplier shall provide and maintain in  proper condition such suitable apparatus as may be  prescribed or approved by the Inspector for the  examination, testing and regulation of meters used  or intended to be used in connection with the supply  of energy:

Provided that the supplier may with the approval  of the Inspector and shall, if required by the  Inspector, enter into a joint arrangement with any  other supplier for the purpose aforesaid.   

(4)     Every supplier shall examine, test and regulate  all meters, maximum demand indicators and other  apparatus for ascertaining the amount of energy  supplied before their first installation at the  consumer’s premises and at such other intervals as  may be directed by the State Government in this  behalf.

(5)     Every supplier shall maintain a register of  meters showing the date of the last test, the error  recorded at the time of the test, the limit of accuracy  after adjustment and final test, the date of  installation, withdrawal, re-installation, etc. for the  examination of the Inspector or his authorized  representative.

(6)     Where the supplier has failed to examine, test  and regulate the meters and keep records thereof as  aforesaid, the Inspector may cause such meters to  be tested and sealed at the cost of the owner of the  meters in case these are found defective."                      

The abovesaid provisions have been the subject-matter of  consideration by this Court in three cases which have been  brought to our notice.  They are M.P. Electricity Board v.  Basantibai __ (1988) 1 SCC 23, Belwal Spinning Mills Ltd. &  Ors. v. U.P. State Electricity Board & Anr. __ (1997) 6 SCC  740 and J.M.D. Alloys Ltd. v. Bihar State Electricity Board __  (2003) 5 SCC 226. The first and the last of the cases are  decisions by three learned Judges and the second one is a  decision by two learned Judges.  We have carefully perused the  three decisions and we find ourselves in entire agreement with  the view of the law taken in these cases.  In particular, in  Belwal Spinning Mills’s case, this Court has examined the  provisions of Section 26, specially sub-section (6) thereof, in  very many details, also taking into consideration the legislative

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intention and the object sought to be achieved by substituting  sub-section (6) by Act 32 of 1959 in its present form over the  predecessor provision.  We would be referring to the relevant  findings of law recorded in these cases. However, at the outset  and here itself, we would like to mention that the applicability of  sub-section (6) of Section 26 is attracted only when the meter is  not correct. Section 26(6) will have no applicability (i) if the  consumer is found to have committed a fraud with the licensee  and thereby illegally extracted the supply of energy preventing  or avoiding its recording, or (ii) has resorted to a trick or device  whereby also the electricity is consumed by the consumer  without being recorded by the meter. In effect the latter class of  cases would also be one of fraud.  Tampering with the meter or  manipulating the supply line or breaking the body seal of the  meter resulting in non-registering of the amount of energy  supplied to the consumer or the electrical quantity contained in  the supply -  are the cases which were held to be not covered by  Section 26(6) in the case of Basantibai (supra), while the  provision was held applicable to any case of meter being faulty  due to some defect and not registering the actual consumption  of electrical energy.  Similar is the view taken in the case of  J.M.D. Alloys Ltd. (supra).

What is a correct meter?  The language of sub-section (6)  of Section 26 starts with __ "where any difference or dispute  arises as to whether any meter referred to in sub-section (1) is  or is not correct\005".  The dictionary meaning of the word  "correct" is: Adhering or conforming to an approved or  conventional standard; Conforming to or agreeing with fact;  Accurate.

As to what would be a "correct" meter, there is sufficient  indication in the Act and the Indian Electricity Rules, 1956 in    the explanation given at the end of sub-section (7) of Section 26  of the Act and sub-rules (1) and (2) of Rule 57, quoted  hereinabove.  Where the meter is completely non-functional on  account of any fault or having been burnt, it will not register the  supply of energy at all.  Since a burnt meter does not record any  supply of energy, it virtually means "no meter".

What is contemplated by Section 26(6) is a running meter,  but which on account of some technical defect registers the  amount of energy supplied or the electrical quantity contained in  the supply beyond the prescribed limits of error.  It contemplates  a meter which is either running slow or fast with the result that  it does not register the correct amount of energy supplied.   There is an additional reason for coming to such a conclusion.   Section 26(6) confers power upon the Electrical Inspector to  estimate the amount of energy supplied to the consumer or the  electrical quantity contained in the supply, during such time, not  exceeding six months, as the meter shall not, in the opinion of  such Inspector, have been correct.  Where the meter is running  slow or fast, it will be possible for the Electrical Inspector to  estimate the amount of energy supplied to the consumer by  determining the extent or percentage of error in recording the  supply, whether plus or minus.   However, where the meter is  burnt or is completely non-functional, such an exercise is not at  all possible.  Therefore, Section 26(6) can have no application in  a case where a meter has become completely non-functional on  account of any reason whatsoever.

In Belwal Spinning Mills’s case, this Court has held inter  alia:-  (1)     Any difference or dispute arising between the  licensee and the consumer, as to whether any meter

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has recorded or is recording correct reading or not,  can be raised by either party and referred, upon the  application of either party, for decision by an  Electrical Inspector.

(2)     If the Electrical Inspector comes to the finding that  the meter has ceased to be ’correct’, he has to  determine the quantum of electricity consumed for  the statutory period of six months, referred to in  sub-section (6). The determination made by the  Electrical Inspector on twin questions (i) whether  meter was correct or not, and (ii) if the meter was  not correct then the estimate of supply of electricity  to the consumer for the statutory period of six  months, is binding on the licensee and the consumer  (subject only to judicial review by a competent  Court).

(3)     For any other period anterior to the statutory period,  the legislature has in no uncertain terms indicated in  the latter part of sub-section (6) that reading  registered in the disputed meter will not only be  presumed to be correct but such reading shall be  conclusive proof of the quantity of electricity  consumed or the amount of electricity supplied to  the consumer. For any period other than the  statutory period of six months, referred to in sub- section (6), the legislature has intended by the  amendment of sub-section (6) of Section 26 (as  made by Act 32 of 1959) to put an end to such  contest between the licensee and the consumer and  has set at rest any dispute relating to any period  anterior to the statutory period on estimation by  providing that in a case of dispute as to functioning  of meter, the reading in the meter for the period  beyond the period of statutory estimation, will be  final.

(4)     Any unilateral decision of either of the parties about  the correct status of the meter is not to be accepted  by the other party if the other party raises objection  as to the status of the meter.

(5)     The estimate to be prepared by the Electrical  Inspector, on the dispute being referred to him, may  go only up to six months prior to the date of raising  the dispute and reference but such estimate will only  cover that period prior to raising the dispute during  which, according to the Electrical Inspector, the  meter had ceased to be correct.

(6)     The estimate of supply of energy by the Electrical  Inspector is to be made for a period not exceeding  six months calculated backwards from the date of  reference to the Electrical Inspector. Thus, it is the  date of reference to Electrical Inspector which is  conclusive of the period of six months; the date of  inspection, the date of raising dispute and the date  of adjudication are immaterial. (Here, we may add,  that such period of six months shall apply).

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The above said deductions, drawn in the case of Belwal  Spinning Mills, are accompanied by in-depth analysis of several  provisions of the Act, the historical background and practical  aspects of supply and consumption of electricity.  As we find  ourselves in entire agreement with the abovesaid statement of  law, it is not necessary for us to make a detailed independent  discussion of our own of the reasons as the same is available in  the case of Belwal Spinning Mills.

In the present case, the demand raised by the appellant  against the first respondent can be divided into two parts: (i) for  the period during which the meter was burnt, and (ii) for the  period for which the meter was not correct.  For the period for  which the readings could not be recorded or retrieved because  the meter was burnt there is nothing wrong in the licensee  having raised the demand based on the average consumption for  the similar period during the previous year.  It is a reasonable  basis.  Nothing has been brought on record by respondent No.1  to show or even suggest that any basis other than the one  adopted by the appellant could have been more reasonable and  more appropriate for calculating the quantity of electricity  consumed during the period of no-meter or no-meter-reading.    

For the period for which, according to the appellant, the  meter was not correct, none of the parties has referred the  dispute to the Electrical Inspector. The meter though it is alleged  by the appellant to have remained not correct, readings have  been regularly recorded, bills raised and also paid by the  consumer-respondent No. 1.  According to Section 26(6), the  readings would bind the appellant and respondent No. 1 both.  It  has never been the case of the appellant at any stage that the  meter was not correctly recording the consumption of electricity  on account of being non-functional due to any fraud committed  or device or trick adopted by the consumer-respondent No. 1 or  that the body seal of the meter was found broken or tampered  with.   The respondent No. 1 was accepting and honouring the  demands raised by the appellant and, therefore, respondent No.  1 cannot be expected to have raised a dispute and sought for a  reference for determination by Electrical Inspector. The appellant  could not have, therefore, revised the demand for such period  based on average consumption during the previous year. There  is yet another reason why the entitlement of the appellant to  recover charges from the respondent No. 1 may have to be  denied.  According to the proviso appended to sub-section (4) of  Section 26, the licensee cannot take off or remove any such  meter as to which difference or dispute of the nature described  in sub-section (6) has arisen until the matter has been  determined by the  Electrical Inspector. The purpose is to  preserve the evidence.  The dispute shall be expeditiously  disposed of by the Electrical Inspector by applying scientific  method of investigation to find out if the meter was incorrect  and if so then what was the extent of error. In the present case,  the meters said to be incorrect have been removed and replaced  by the appellant.  Admittedly, no dispute has been raised and  referred to the Electrical Inspector. The most material evidence  being the meter itself has been lost by the act of the appellant in  removing the incorrect meter. The appellant cannot be permitted  to take advantage of its own act and omission \026 the act of  removing the meter and the omission to make a reference to the  Electrical Inspector.

The material available on record before us does not enable  the separation of the impugned demand by bifurcating the same  into two on the criterion discussed hereinabove.  The appellant

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shall have to be left free to examine its records and then revise  its demand.   We may clarify that the demand raised by the  appellant based on the average consumption during the similar  period in the last year is justified, in the facts and circumstances  of the present case, for the period for which the reading was lost  on account of the meter having been found burnt.  Accordingly,  the calculation based on the record of consumption for the  corresponding period from the previous year shall hold good.  The appellant shall raise a demand accordingly and the first  respondent shall be bound to honour the same.  So far as the  period for which the meter is said to be incorrect, the demand  has not been revised by basing it on the finding arrived at by the  Electrical Inspector and hence is not available to be revised.      The meter is alleged by the appellant to be not correct and yet  the appellant has not made a reference to the Electrical  Inspector under Section 26(6).  The appellant cannot now be  allowed to raise an additional demand over and above the  demand raised through the bills which were issued for that  period and paid by the first respondent.  The right to raise  additional bills stands lost by the appellant for its failure to  proceed in accordance with Section 26(6) of the Electricity Act,  1910.

We direct accordingly and dispose of the appeal in the  above terms with no order as to the costs.