Holding

The appellate authority’s order setting aside the assessment bill was illegal, arbitrary and contrary to law and is hereby quashed and set aside.

Summary

Madhya Gujarat Vij Company Ltd, an electricity supplier, issued a provisional assessment and a final bill of Rs 22,70,458.89 against Panoli Intermediates (consumer) for allegedly extending its high‑tension supply to adjacent plots without permission. The consumer appealed under Section 127 of the Electricity Act, 2003. The Appellate Authority set aside the bill, relying on an earlier order in Special Civil Application No. 6748 of 2010, which the petitioner argued had been stayed by a Letters Patent Appeal (LPA No. 135 of 2019) and subsequently settled. The petitioner filed a constitutional petition under Articles 14, 19(1)(g), 226 and 227 challenging the appellate order. The High Court held that the appellate authority erred by relying on a stayed order, ignored the precedent of Paschim Gujarat Vij Co. v. Paras Ship Breakers, and failed to give the petitioner a hearing, rendering the order illegal and arbitrary. Consequently, the court quashed and set aside the impugned order dated 7 September 2022.

Issues considered

Whether the Appellate Authority could validly set aside the assessment bill by relying on Special Civil Application No. 6748 of 2010 which had been stayed and superseded by LPA No. 135 of 2019.
Whether the alleged extension of electricity to adjacent plots constitutes ‘unauthorised use’ under Section 126 of the Electricity Act, 2003.
Whether the appellate authority complied with principles of natural justice and the statutory procedure under the Electricity Act.

Legislation cited

Electricity Act, 2003s. 126, s. 127

Subjects

unauthorised use of electricitySection 126Section 127electricity bill assessmentappellate authorityquashing orderconstitutional challengeRegulation 7.51Gujarat Electricity Regulatory Commission

Judgment

C/SCA/23464/2022 JUDGMENT DATED: 17/03/2026

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

R/SPECIAL CIVIL APPLICATION NO. 23464 of 2022

FOR APPROVAL AND SIGNATURE:

HONOURABLE MR. JUSTICE HEMANT M. PRACHCHHAK Sd/-
==========================================================
Approved for Reporting Yes No
No
==========================================================
MADHYA GUJARAT VIJ COMPANY LIMITED
Versus
PANOLI INTERMEDIATES (INDIA) PVT. LTD. & ANR.
==========================================================
Appearance:
MR DIPAK R DAVE(1232) for the Petitioner(s) No. 1
MR ASHISH JHA(5591) for the Respondent(s) No. 1
MS NIRALI SARDA AGP for the Respondent(s) No. 2
==========================================================

CORAM:HONOURABLE MR. JUSTICE HEMANT M. PRACHCHHAK

Date : 17/03/2026

JUDGMENT

1. Rule returnable forthwith. Mr. Ashish Jha, learned
counsel waives service of notice of rule on behalf of
respondent No.1 and Ms. Nirali Sarda, learned AGP
waives service of notice of rule on behalf of respondent
No.2.

2. Present petition is led by the petitioner under Articles
14, 19(1)(g), 226 and 227 of Constitution of India r/w the
provisions of the Electricity Act, 2003 challenging the
impugned order dated 7.9.2022 passed by respondent

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No.2 in Appeal No.2153 of 2022 under Section 127 of the
Electricity Act whereby respondent No.2-Chief Electrical
Inspector, Appellate Authority has quashed and set aside
the supplementary bill issued by the petitioner for
unauthorized use of the electricity.

3. The facts giving rise to present petition are that
respondent No.1 was having an HT electricity connection
bearing Consumer No.13076 with a contracted load of
1500 KVA. The installation of respondent No.1 was
inspected by the representatives of the petitioner on
26.04.2018. During the inspection, it was found that
respondent No.1 was utilizing electricity supply in
adjacent Plot Nos.156A and 156B, which are owned by
respondent No.1. Such extension and use of electricity
was unauthorized and carried out without any prior
intimation or permission from the petitioner.

3.1 In view of the above facts, a provisional assessment
under Section 126 of the Electricity Act, 2003 was issued
on 03.05.2018. After granting an opportunity of hearing
to respondent No.1 and considering its reply, the
assessment was nalized on 05.06.2018 and a bill
amounting to Rs.22,70,458.89 came to be issued to
respondent No.1.

3.2 Being aggrieved by the said nal assessment bill,
respondent No.1 preferred an appeal before respondent

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No.2 under Section 127 of the Electricity Act, 2003. The
petitioner appeared in the said proceedings and led its
reply opposing the appeal.

3.3 The appeal was heard by respondent No.2. However,
during the course of hearing, respondent No.1 neither
relied upon nor brought to the notice of the petitioner any
order passed by this Hon’ble Court in Special Civil
Application No.6748 of 2010. The said order was neither
pressed into service nor referred to in the pleadings or
oral submissions made before respondent No.2.

3.4 It was only after the impugned order came to be
received that the petitioner came to know that
respondent No.2 had relied upon the aforesaid decision
and, on that basis, set aside the assessment bill. Thus, the
petitioner was deprived of an opportunity to deal with or
distinguish the said judgment, and the same was
considered behind the back of the petitioner.

3.5 The reliance placed on the order passed in Special
Civil Application No.6748 of 2010 is wholly misplaced.
The said order is contrary to the law laid down by the
Division Bench of this Hon’ble Court in Paschim Gujarat
Vij Company Ltd. vs. Paras Ship Breakers, reported
in 2010 (3) GLR 1917.

3.6 Against the said order passed in Special Civil

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Application No.6748 of 2010, a Letters Patent Appeal
being LPA No.135 of 2019 was preferred, which came to
be admitted and the operation of the impugned order was
stayed. The said interim protection continued, and
subsequently, the concerned consumer paid the entire
assessed amount. In view thereof, the said Letters Patent
Appeal came to be disposed of in Lok Adalat.

3.7 In these circumstances, the order passed in Special
Civil Application No.6748 of 2010 had ceased to have any
binding e@ect and could not have been relied upon. Had
the said order been brought to the notice of the petitioner
during the appellate proceedings, the petitioner would
have pointed out these crucial facts, including the stay
granted in the Letters Patent Appeal and the subsequent
settlement. However, without a@ording any such
opportunity, respondent No.2 has erroneously relied upon
the said order and set aside the assessment.

4. Being aggrieved by and dissatis ed with the impugned
order dated 07.09.2022 passed by respondent No.2 in
Appeal No.2153 of 2022, the petitioner has preferred the
present petition.

5. Heard Mr. Dave, learned counsel for the petitioner, Mr.
Ashish Jha, learned counsel for respondent No.1 and Ms.
Nirali Sarda, learned AGP for respondent No.2.

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6. Mr. Dave, learned counsel for the petitioner has
submitted that since it is an admitted fact that the
respondent was consumer of the petitioner company then
by using an extension they have extended the power
supply to its adjacent plot and thereby they have
committed an o@ence and committed breach of provision
of Regulation 7.51 of the Gujarat Electricity Regulatory
Commission. Mr. Dave, learned Counsel for the petitioner
has submitted that without considering the decision of
this Court passed in the matter of Paschim Gujarat Vij
Company Ltd. (supra) the respondent authority has
passed the impugned order.

6.1 Mr. Dave, learned counsel for the petitioner has also
submitted that respondent No.2 without hearing the
petitioner on the aspect of order passed in Special Civil
Application No. 6748 of 2010, suo motu take cognizance
of the said order and the bill has been set aside. He has
further submitted that the said order would no longer
hold the eld in view of order passed in Letters Patent
Appeal No.135 of 2019 and despite that the said order
has been relied upon by the respondent No.2 and the bill
has been set aside.

6.2 Mr. Dave, learned counsel for the petitioner has also
submitted that the impugned order came to be passed de
hors the provisions of law, provisions of the supply code
and evidence on record and therefore, the same deserves

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to be quashed and set aside.

6.3 Mr. Dave, learned counsel for the petitioner has
submitted that the impugned order is illegal, arbitrary,
unjust, improper and bad in law and therefore, the same
deserves to be quashed and set aside.

7. As against that , Mr. Jha, learned counsel for
respondent No.1 relied upon the a idavit-in-reply led on
behalf of respondent No.1 and submitted that the
respondent No.1-consumer is using the electricity supply
in adjacent plot and there is no extension as alleged by
the petitioner and being aggrieved and dissatis ed with
that and by producing relevant documents the respondent
has preferred the Appeal before the Appellate Authority
under Section 127 of the Electricity Act and after
considering the facts of the case the Appellate Authority
has passed the impugned order which is just and proper
and in consonance with the settled legal principle and
thus, the petition is devoid of any merits and the same
deserves to be dismissed.

7.1 Mr. Jha, learned counsel for the respondent No.1 has
further submitted that the allegations made against the
present respondent No.1 that the said respondent
connected the load to the adjacent plot but it is used in
the same premises and therefore, there is no allegation
that it was extended and it was used by the adjacent plot

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and therefore, the impugned bill which is issued under
Section 126 of the Electricity Act is not tenable in the eye
of law and therefore, the Appellate Authority has after
appreciating the said contention and after considering
the facts of the case has made relevant observation in
paragraph No.5 which is in consonance with the settled
legal principle and therefore, there is no interference is
required to be called for in present petition and there is
no illegality committed by the Appellate Authority in
passing the impugned order.

7.2 Mr. Jha, learned counsel for respondent No.1, has
submitted that though it is an admitted position that the
respondent was a consumer of the petitioner company,
the allegation regarding unauthorized extension of power
supply to the adjacent plots is misconceived and not
established in accordance with law. It is submitted that
there is no breach of Regulation 7.51 of the Gujarat
Electricity Regulatory Commission, as alleged by the
petitioner.

7.3 Mr. Jha, learned counsel for respondent No.1 has
also submitted that the Appellate Authority has after
taking into account all the relevant aspect and after
evaluating the evidence placed on record, passed
impugned order which is in consonance with the
provisions of law and therefore, this Court may not
entertain present petition.

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7.4 Learned counsel for respondent No.1 has further
submitted that the impugned order has been passed in
accordance with law, after due consideration of the
provisions of the Supply Code and the evidence on
record, and therefore, it does not su@er from any
illegality, arbitrariness or perversity.

8. I have gone through the relevant documents and
materials placed on record. I have also gone through the
record of the petition and impugned order passed by the
Appellate Authority.

9. It appears that the against the order passed in Special
Civil Application No.6748 of 2010, a Letters Patent
Appeal being LPA No.135 of 2019 was preferred, which
came to be admitted and the operation of the impugned
order was stayed and the said interim protection
continued, and subsequently, the concerned consumer
paid the entire assessed amount and the said Letters
Patent Appeal came to be disposed of in Lok Adalat..

10. In the decision of the Division Bench of this Court
relied upon by learned counsel for the petitioner in case
of Paschim Gujarat Vij Company Ltd (supra), the
Division Bench of this Court held as under:-

"On this basis, we are of the view that this is a
clear case of unauthorized use of electricity covered

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under Section 126 of the Act. We may recall that the
erstwhile consumers namely Khodiyar Rolling Mills and
Paras Ship Breakers who had factories situated in plot
no. 2/B and 4 respectively had defaulted in paying their
electricity bills. Their electricity connections were
therefore, disconnected. In ordinary circumstances, by
virtue of agreement between the parties, particularly, if
those consumers had sold their plots to some other
entities through private negotiations, the Electricity
Company would have resisted granting any new electric
connection on such premise without the past dues being
paid up in toto either by the previous owner or by the
new purchaser. If we were to accept the contention of
the consumer that all that the consumer has done is an
innocuous extension of electricity connection in a
neighboring plot, use of which is being enjoyed by the
same consumer for which the consumer also pays the
full electricity charges, we would be negating and totally
bypassing the right of the Electricity Company to seek
full recovery of its past dues of electricity before
granting new electrical connection on the same
premises.

11. After considering the relevant facts and provision, the
Division Bench of this Court, disposed of the petition and
observed in paragraph No.14 as under:

"We may recall that in Special Civil Application No.
16707/2007,the consumer has challenged order dated
19.2.2007 passed by the Electrical Inspector. Same
order to the extent it is adverse to the Company has
been challenged in Special Civil Application
No.6665/2008. We 8nd that the Electrical Inspector,
having accepted the case of unauthorized use of
electricity by the consumer, interfered with the disputed
bill on other grounds which were not tenable. The
Electrical Inspector relied on the meter installed by the
consumer on its furnace to hold that such consumption
should be excluded from consideration of unauthorized
consumption.
We 8nd that the approach of the Electrical

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Inspector was wholly incorrect. It is undisputed that the
meter installed on the furnace was purchased by the
consumer and was not supplied by the Company.
Reading recorded by such a meter cannot form the basis
for segregating the consumption of electricity.
The Company in its petition has taken following ground
in this respect :

“(e) The Learned Appellate Authority has failed to
appreciate that only the energy meter (TVM)
installed by the petitioner is considered to be
standard apparatus to measure energy because
this apparatus is checked from time to time in the
premises of the consumers by the o icials of the
petitioner. No other meter present in the premises
of the consumer is taken in consideration except
meter installed by the petitioner because the meter
installed other than the petitioner are purchased
and installed by the consumer themselves for
getting various bene8ts lie electricity duty
exemption, D.G. Set, O ice Lighting, recording,
factory lighting recording, etc. The reading of
furnace meter considered by the learned Appellate
Authority is totally misleading since the said
furnace meter is not tested or sealed by the
petitioner. The respondent no.1 had failed to
produce any sealing certi8cate in respect of the
said furnace meter.”

No reply has been 8led refuting the
averments. Even otherwise factual aspects are not
in dispute. We uphold the said objection, conclude
that interference by the Electrical Inspector in this
case was uncalled for. The order is therefore,
quashed."

12. Considering the facts of the case and in view of
Section 126 of the Electricity Act, the Division Bench of
this Court came to the conclusion that the order passed
by the Electrical Inspector to the extent is against the

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provision of law and requires to be quashed and set aside.
The said Section 126 of the Electricity Act reads as
under:-
"Section 126: (Assessment): --- (1) If on an inspection of
any place or premises or after inspection of the
equipments, gadgets, machines, devices found
connected or used, or after inspection of records
maintained by any person, the assessing o icer comes to
the conclusion that such person is indulging in
unauthorized use of electricity, he shall provisionally
assess to the best of his judgement the electricity
charges payable by such person or by any other person
bene8ted by such use.

(2) The order of provisional assessment shall be served
upon the person in occupation or possession or in charge
of the place or premises in such manner as may be
prescribed.

[(3) The person, on whom an order has been served
under sub- section (2) shall be entitled to 8le objections,
if any, against the provisional assessment before the
assessing o icer, who shall, after a ording a reasonable
opportunity of hearing to such person, pass a 8nal order
of assessment within thirty days from the date of service
of such order of provisional assessment of the electricity
charges payable by such person.]

(4) Any person served with the order of provisional
assessment, may, accept such assessment and deposit
the assessed amount with the licensee within seven days
of service of such provisional assessment order upon
him:

2 [***]

[(5) If the assessing o icer reaches to the conclusion
that unauthorised use of electricity has taken place, the
assessment shall be made for the entire period during
which such unauthorized use of electricity has taken
place and if, however, the period during which such

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unauthorised 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.]

(6) The assessment under this section shall be made at a
rate equal to [twice] the tari rates applicable for the
relevant category of services speci8ed in sub-section (5).

Explanation.- For the purposes of this section,-

(a) “assessing o icer” means an o icer of a State
Government or Board or licensee, as the case may be,
designated as such by the State Government;

(b) “unauthorised use of electricity” means the usage of
electricity –

(i) by any arti8cial means; or
(ii) by a means not authorised by the concerned
person or authority 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 authorized.”

13. It is crystal clear that the respondent No.1 has
misused the power connection originally granted in its
favour by extending the supply to an adjacent plot, which
is an admitted fact. However, without considering this
fact and the ratio laid down by the Division Bench of this
Court in the case of Paschim Gujarat Vij Company Ltd.
(supra), the Electrical Inspector has passed the
impugned order, which, in my view, does not deserve to
be sustained and is required to be quashed and set aside.

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14. For the foregoing reasons, the petition is hereby
allowed. The impugned order dated 7.9.2022 passed by
respondent No.2 in Appeal No.2153 of 2022 under
Section 127 of the Electricity Act is hereby quashed and
set aside. Rule is made absolute.

Sd/-
(HEMANT M. PRACHCHHAK,J)
SURESH SOLANKI

Original copy of this order has been signed by the Hon'ble Judge.
Digitally signed by: SURESHKUMAR MOTIBHAI SOLANKI(HC00208), PRINCIPAL PRIVATE SECRETARY, at High Court of Gujarat on 24/03/2026 17:26:56

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