M/S. THE KOTHARI WHEELS LTD. AND ANRversusEXECUTIVE ENGINEER MAHARASHTRA STATE ELECTRICITY DISTRIBUTION COMAPNY LTD

2026:BHC-AS:14837

                                                                      12 WP 4588-2023.doc



                               IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                                       CIVIL APPELLATE JURISDICTION

                                    WRIT PETITION NO. 4588 OF 2023

                    1.   M/s. The Kothari Wheels Ltd.
                         24B, Hadapsar Industrial Estate, Hadapsar
                         Pune 411 013.

                    2.   M/s. The Maharashtra Light Industries
                         24B, Hadapsar Industrial Estate, Hadapsar    ... Petitioners.
                         Pune 411 013
                         Versus
                    1.   Executive Engineer
                         Maharashtra State Electricity Distribution
                         Company Ltd. (MSEDCL)
                         Bund Garden Division
                         St. Mary’s substation premises,
                         Exhibition Road, opposite Bishop School,
                         Camp, Pune – 411 011

                    2.   The Addl. Executive Engineer,
                         M.S.E.D.C.Ltd.,                              ... Respondents.
                         Hadapsar Sub – Div. (4603)
                         Dist. - Pune 411 013


                                            —————
                Mr. Abhishek Pungliya, Advocate for the Petitioners.
                Mr. Rahul Sinha a/w. Mr.Soham Bhalerao and Harshit Tyagi i/by DSK
                Legal for the Respondents.
                                            —————

                                               Coram : Sharmila U. Deshmukh, J.
                                        Reserved on   : March 23, 2026
                                        Pronounced on : March 27, 2026


                sa_mandawgad                     1 of 13
                                                        12 WP 4588-2023.doc


JUDGMENT :

1.       Rule. With consent of parties, Rule made returnable forthwith

and taken up for >nal hearing.

2.       By the present Petition >led under Article 227 of the

Constitution of India, the challenge is to the judgment and order

dated 15th May, 2019 passed by the Electricity Ombudsman (Mumbai),

the order dated 7th February, 2019 passed by the Consumer Grievance

Redressal Forum (“CGRF”) and order dated 12th June, 2018 issued by

the Additional Executive Engineer of the Respondents’ Flying Squad

only to the extent that it directs retrospective recovery from

Petitioner No.2.

3.       The facts necessary to be exposited is that the Gying squad of

the Respondent visited the Petitioner’s premises on 15 th May, 2018

and the report was that the tariH being applied was for industrial use

whereas the activity being carried out was of automobile repairs

workshop/maintenance centre of Maruti Suzuki. Pursuant to the spot

inspection as communication dated 18th May, 2018 was addressed by

the Gying squad to the Additional Executive Engineer to issue bills

under Section 126 of Electricity Act, 2003 (“Electricity Act”).

4.       Accordingly,   the   Additional   Executive   Engineer     issued

provisional assessment bill of Rs.23,65,340/- on 21st May, 2018 to

which a detailed reply was submitted by the Petitioner on 7 th June,


sa_mandawgad                     2 of 13
                                                     12 WP 4588-2023.doc


2018. After hearing the Petitioners, the Additional Executive Engineer

on 7th June, 2018 in his capacity as Assessing OJcer ordered that the

bill issued under Section 126 be cancelled and plain tariH diHerence

for the period of one year prior to the date of change of tariH by

charged from the consumer.

5.       Accordingly, revised bill of Rs.3,61,320/- was issued to the

Petitioner No.1 towards the diHerence in tariH between industrial and

commercial category for the period June 2017 to June 2018 which

was paid under protest. The Petitioners >led       grievance with the

Consumer Grievance Redressal Forum on 13 th November, 2018 which

dismissed the grievance. The order of dismissal came to be challenged

before the Electricity Ombudsman and was dismissed vide impugned

order dated 15th May, 2018. Hence, the present Petition has been

>led.

6.        Learned counsel appearing for the Petitioners submit that by

order of 12th June, 2018, as the Assessing Authority cancelled the bill

issued under Section 126 of Electricity Act, there could not have any

retrospective imposition of tariH diHerence of one year.     He would

submit that the CGRF has held that the consequence of the order of

12th June, 2018 is that the revised bill was required to be issued

considering the actual activity carried out by the consumer without

noticing that the issuance of revised bill for one year was under


sa_mandawgad                    3 of 13
                                                      12 WP 4588-2023.doc


Section 126(5) of Electricity Act. He would further point out the order

of the Electricity Ombudsman and would submit that the impugned

order of 15th May, 2019 erroneously records that the case involves an

error through oversight in not making the appropriate changes in the

system.

7.       He would further submit that the present case is not a case of

raising additional or supplementary demand beyond the period of

limitation due to mistake or negligence. He would point out the order

of this Court passed on 1st April, 2014 in the petition >led by

Petitioner No.1 against the Respondents where this Court had held

that the activities of Petitioner No.1 is manufacturing activity and

that the >nding of the Superintendent Engineer therein that the

Respondent No.1 had used electricity for commercial purposes cannot

be faulted with. He submits that the Respondents did not initiate any

proceedings under Section 126 of the EC Act and did not change the

applicable tariH after the spot inspection which was conducted on 9 th

August, 2016 by reason of the order of this Court dated 1 st April, 2014.

He submits that the same is con>rmed by the fact that the second

spot inspection dated 15th May, 2018 led to Section 126 proceedings

only after the commercial Circular No.302 was made applicable from

1st April, 2018. He submits that as the amount of Rs.3,61,320/- was

paid under protest, the said amount be refunded.


sa_mandawgad                     4 of 13
                                                      12 WP 4588-2023.doc


8.       Per contra, learned counsel appearing for the Respondents

submits that the challenge before the Bombay High Court in Writ

Petition No.11197 of 2013 was by reason of categorising the

Petitioners’ Chinchwad plan which is unrelated to the subject petition.

He submits that as per commercial Circular No.284 dated 3 rd

November, 2016, the Petitioners’ activities namely automobile and

other types of repairs fall under the commercial category. He submits

that by way of commercial Circular No.302 dated 31 st March, 2018,

there was a revision in tariH order by MERC and that the circular did

not make any changes in reference to the tariH category and the

Petitioners’    activity   remained   under   commercial   category    as

applicable from 1st April, 2017. He submits that order of 12th June,

2018 was issued by the statutory Assessing Authority under Section

126 of the EC Act, who also assumes the role of an oJcer of the

Respondent-Company having designation as Additional Executive

Engineer and that both the directions though issued in a single

document are liable to be read separately and independently.

9.       He further submits that a supplementary bill for the period of

June, 2017 till June, 2018 came to be issued by the Respondents as

per the said order dated 12th June, 2018. He submits that the

Additional Executive OJcer acting as an Assessing OJcer ordered

cancellation of the bill issued under Section 126 of the EC Act holding


sa_mandawgad                     5 of 13
                                                        12 WP 4588-2023.doc


it to not be an unauthorized use of electricity however, as an

Additional Executive Engineer, he had all the powers to issue

diHerential bill for the period preceding the date of knowledge. He

submits that it was always the case of the Respondents that the

Additional Executive Engineer has considered the commercial Circular

No.284 dated 3rd November, 2016 whereby the Petitioners’ activity

was categorized under the commercial tariH category and accordingly,

the Petitioners were issued the supplementary bill dated 6 th July,

2018 for the amount of Rs.3,61,320/- for a period from June, 2017 to

June, 2018.

10.      He submits that under the provisions of Section 56(2) of the EC

Act, it is permissible to recover the diHerential arrears within a period

of two years from when it is >rst due i.e. the date of raising a valid bill

upon a consumer. He would submit that although the Assessing

Authority would not have the power to direct issuance of a

diHerential bill without a case of unauthorized usage, the directions

appears to be stray remark in the order dated 12 th June, 2018 and the

supplementary bill has been issued under Section 56(2) of the

Electricity Act. He submits that the proceedings pertaining to issuance

of tariH diHerence bill operates independently from the proceedings

under Section 126 of which is well settled. He would submit that the

contentions raised now were not raised before the CGRF as well as


sa_mandawgad                     6 of 13
                                                         12 WP 4588-2023.doc


the Electricity Ombudsman. He submits that there is no embargo on

the Respondents to issue a fresh supplementary bill for the applicable

period independent of the assessment proceedings under Section 126

of the Electricity Act and accordingly liberty be allowed.

11.      Rival contentions now fall for determination.

12.      It is an undisputed position that the Petitioners connection was

classi>ed as industrial by the Respondents. Though the learned

counsel for the Petitioners would refer to the spot inspections of the

year 2016, perusal of the impugned orders does not indicate any

reference to the earlier spot inspections. The order of Electricity

Ombudsman records the submission of the Petitioners as regards the

order passed by this Court in Writ Petition No.11197 of 2013, which

was also not pressed before the Electricity Ombudsmen.

13.      The issue is therefore required to be considered on the basis of

spot inspection of 15th May, 2018 and the order of Assessing Authority

dated 12th June, 2018.

14.      The Assessing Authority by order of 12 th June, 2018 considered

the spot inspection report of 15th May, 2018 as well as the commercial

Circular No.302 of 31st May, 2018.The Assessing Authority vide order

dated 12th June, 2018 noted that the premises was taken on rent by

the Petitioner No 1 from the Petitioner No.2 and there is no

agreement placed on record. It noted that the Petitioner No.2 was


sa_mandawgad                      7 of 13
                                                               12 WP 4588-2023.doc


carrying out manufacturing activities whereas the Petitioner No.1 is

carrying on business of service and repairs of automobiles alongwith

>xing of new spare parts and denting and painting. It noted that there

is no authorisation letter as regards the Petitioner No.1 being

authorised service station of Maruti Suzuki. It was held by the

Assessing Authority that though the premises of the consumer was

behind the MSEDCL Sub Division OJce of Hadapsar Industrial Sub

Division till date of inspection by Flying Squad no action for tariH

change or under Section 126 was initiated. The Assessing Authority’s

conclusion reads as under:

               “Thus, the exact date of, period of occupying said premises by

               M/s Kothari Wheels cannot be concluded. Hence, I as an

               assessing oJcer comes to a conclusion that the tariH of the

               said consumer should be immediately changed from LT V B II to

               LTII Commercial and the bill issued u/s 126 be cancelled and

               plain tariH diHerence for the period of 1 year prior to the date

               of change of tariH be charged from the said consumer. The

               consumer should be given 10 equal installments for this plain

               tariH diHerence and if he fails to pay the instalments and tariH

               diHerence amount the action as per prescribed procedure of

               MSEDCL should be taken from your end for disconnection.”

15.      What was challenged before the Assessing Authority was the

provisional bill issued under Section 126 of the EC Act, which provides


sa_mandawgad                           8 of 13
                                                       12 WP 4588-2023.doc


for provisional assessment upon arriving at a >nding that the

consumer is indulging in unauthorised use of            electricity after

conducting an inspection. Sub section (5) of Section 126 provides that

if the Assessing Authority comes to a conclusion that unauthorized

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 cannot be ascertained it

shall be limited to period of 12 months preceding the date of

inspection.

16.      The provisions of section 126 therefore make it clear that it is

only where there is an unauthorized use of electricity and it is diJcult

to ascertain the period during which the unauthorized use of

electricity has taken place, that the period shall be con>ned to a

period of 12 months immediately preceding the date of inspection.

The order of the Assessing Authority records a categorical >nding that

the period of taking premises on rent cannot be concluded. After

arriving at the said >nding it orders that the bill issued under Section

126 be cancelled. After having ordered the cancellation of bill under

Section 126, it was thereafter not open for the Assessing Authority to

further direct the plain tariH diHerence to be charged for a period of

one year prior to the date of change of tariH from the consumer. The

Assessing Authority while exercising powers under Section 126 was


sa_mandawgad                     9 of 13
                                                     12 WP 4588-2023.doc


deciding the issue of correctness of the provisional assessment bill

and was required to pass a >nal order of assessment after hearing the

objections as contemplated under Section 126(3) of the EC Act. The

order of cancellation the bill under section 126, constitutes setting

aside of the provisional assessment and thereafter there was no

question of issuing any further directions for charging the tariH

diHerence for period of one year prior to the date of change of tariH.

The wordings of the order of the Assessing Authority are in terms of

Section 126(5) of EC Act, which directions could not have been issued

once the provisional bill has been ordered to be cancelled.

17.      Though it is sought to be contended by learned counsel

appearing for the Respondents that two diHerent directions have

been passed by the Assessing Authority in two diHerent capacities as

Assessing Authority and Additional Executive Engineer respectively

and that the directions for issuance of a diHerential bill could be

directed in the capacity as an Additional Executive Engineer can only

be stated to be rejected. The proceedings which were being

conducted before the Assessing Authority was under Section 126(3)

of the EC Act in the capacity as an Assessing OJcer and there was no

question of diHerent directions being passed in diHerent capacity in a

composite order passed under Section 126(3) of the EC Act. The

revised bill which was subsequently issued makes a speci>c reference


sa_mandawgad                  10 of 13
                                                         12 WP 4588-2023.doc


to the order of 12th June, 2018 and was therefore passed not on the

basis of the applicability of the wrong tariH code and relatable to

Section 56(2) of the Electricity Act but was in furtherance of the order

of 12th June, 2018 which was an order passed by the Assessing

Authority.

18.      The CGRF has held that the activity of the petitioner No.1 falls in

commercial activity and the said change of establishment were not

informed to the utility properly. The CGRF accepts the submission of

the Petitioners that the proceedings under Section 126 of the EC Act

is cancelled by the order of 12th June, 2018, however, erroneously

holds that a consequence of the order is that revised bill will have to

be issued considering the actual activity carried out by the consumer

between the period June 2017 to June 2018. The CGRC has therefore

conGated the powers under Section 126 of the EC Act and Section

56(2) of the EC Act to uphold the directions passed in the order of 12 th

June, 2018. Neither the Assessing Authority nor the CGRC has based

on its >ndings on the applicability of commercial Circular No.284 and

even accepting the applicability of the said commercial circular, the

revised bill in accordance with the commercial circular could not have

been directed by the order passed under Section 126 (3) of the EC Act.

19.      The Electricity Ombudsman has considered the submissions of

the Petitioners that as per the tariH order of 3 rd November, 2016, the


sa_mandawgad                      11 of 13
                                                      12 WP 4588-2023.doc


commercial Circular No.284 was issued which directed the proper

categorization by actual >eld inspection. It held that inadvertently due

to oversight the tariH was not changed and that it is not an abrupt

change to tariH category but an error through oversight and the

Respondent is entitled to recover the arrears to the extent of two

years prior to the date of detection. The Electricity Ombudsman failed

to consider the submissions of the Petitioners that the action under

Section 126 was dropped by the order of 12 th June, 2018 and has

erroneously held that through oversight an appropriate change was

not made by the Respondents in the appropriate tariH.

20.      The >ndings of the Electricity Ombudsman is contrary to the

material on record as regards the order of 12 th June, 2018 and the

revised bill which clearly states that the same is in furtherance of the

order dated 12th June, 2018. It was therefore not a case of issuance of

a bill as per the revised tariH category but issuance of a bill in

furtherance of order of 12th June, 2018, which could not have been

issued once the Assessing Authority orders the cancellation of the

provisional assessment bill.

21.      In light of the above discussion, the impugned dated 15 th May,

2019 passed by the Electricity Ombudsman, Mumbai, the impugned

order dated 7th February, 2019 passed by the CGRC and the directions

in the order of 12th June, 2018 directing levying of tariH diHerence for


sa_mandawgad                    12 of 13
                                                                                   12 WP 4588-2023.doc


                             the period of one year prior to the date of change of tariH are clearly

                             unsustainable and are hereby quashed and set aside.

                             22.      The Assessing Authority could not have passed the direction of

                             levying plain tariH diHerence while adjudicating the objections

                             against the provisional assessment bill under Section 126 of EC Act. It

                             is open for the Respondents to issue a fresh diHerential bill in

                             accordance with law notwithstanding the fact that the impugned

                             orders are being quashed and set aside. In event such a diHerential bill

                             is raised, the same if challenged, be considered on its own merits and

                             in accordance with law and uninGuenced by the quashing and setting

                             aside of the impugned orders in the present proceedings. As the

                             Petitioner have paid the amount of Rs.3,61,320/- under protest, the

                             Respondents are directed to refund the sum of Rs 3,61,320/ within a

                             period of eight weeks from date of uploading of the order failing

                             which the amount to carry interest @ 6% p.a. till payment or

                             realisation.

                             23.      The Petition is allowed. Rule is made absolute in the above

                             terms.



                                                                         [Sharmila U. Deshmukh, J.]




                             sa_mandawgad                    13 of 13
Signed by: Sanjay A. Mandawgad
Designation: PA To Honourable Judge
Date: 27/03/2026 17:26:17