Sri Hanuman Steel Rolling Mill And Another v. C.E.S.C Ltd.

1. All these writ applications-involving common questions of law and fact were taken up for hearing together and are being disposed of by this common judgment.

2. The petitioners in all the cases are consumers of electrical energy having obtained electrical connection from the respondent-company but their electrical connection had been disconnected on diverse dates by the Officers of Loss Control Cell of C.E.S.C Ltd. upon surprise inspections and having allegedly found that the petitioners have indulged in theft or pilferage of electrical energy.

3. In some matters, affidavits-in-opposition have been filed by the C.E.S.C Ltd. where in almost stereo type statements have been made that upon inspection the meter body of the meter installed in the premises of the consumers were found spurious and/or the seals of the service cut out were found missing or the seals on the meter body were found tampered.

4. In almost all the cases the petitioners carry on business or trades and their grievance is that by reason of an arbitrary action on the part of the C.E.S.C Ltd. and its Officers in disconnecting the electrical energy they have suffered immense loss and injury. In some of the writ applications it has specifically been averred that the officers of C.E.S.C Ltd. sought for illegal gratification from them but on their refusal to pay the same, the electrical connections had been disconnected and false First Information Reports have been lodged. It is stated that thereafter the C.E.S.C Ltd. had sent a bill and in the cases where the consumers having no other alternative had paid the amount and approached this Court and obtained an interim order, no further action has been taken by the Respondents. It also appears from the records that in some of the cases despite liberty granted to C.E.S.C Ltd. to take off the meter from the premises of the consumer no such action had been taken and supply of electrical energy was continued through the old meter without taking any corrective measure or without sending the meter to the Chief Electrical Inspector for his examination in terms of Section 26(6) of the Indian Electricity Act. Moreover the criminal cases were also not proceeded with. It was, therefore, contended that the plea of theft or pilferage of electrical energy in most of the cases is merely a ruse or a ploy to extract a huge amount from the consumer without any authority of law in an arbitrary manner which is violative of the provisions of Indian Electricity Act and the rules framed thereunder.

5. It is also the case of the petitioners that in the letter issued to them, C.E.S.C Ltd. had acted mechanically and apart from the allegation of commission of an offence under Section 44 of the Indian Electricity Act, a violation of conditions of supply has also been alleged. In that situation it has been submitted that the entire action on the part of the respondent in disconnecting the electrical energy without any prior notice must be held to be illegal being violative of the principles of natural justice and fair play.

6. The fact of the matter, however, in one of the cases, namely, Matter No. 29/93 Sri Hanuman Steel Rolling Mills Co. may be noticed in a bit details.

7. The writ petitioners had a Rolling Mill at Howrah, it is consumer of high-tension electrical energy wherefor an agreement had been entered into by and between the petitioners and C.E.S.C Ltd. So far as the supply of high-tension electrical energy is concerned a meter book is provided and two meters i.e COS meter and Sin meter are installed in the meter board. The COS meter is meant for recording the power factor whereas the Sin meter records consumption of units of electrical energy. The meters are checked by competent engineers and any defect in the meter, if found, is duly recorded in the meter book and corrective measures are taken.

8. According to the petitioners, the factory was closed from 6-12-1992 to 30-12-1992 and during the said period the meters were inspected and found to be in order. Again meters were inspected on 12-1-1993. In Annexure ‘B’ of the Affidavit-in-opposition being an internal letter of C.E.S.C Ltd. dated 12th January, 1993 it was stated:—

“It is very difficult to reset D/I of COS Meter as D/I knob is defective. (But it was reset with difficulty).

9. Thus, it is contended that the meters were being closely scrutinised. The transformer of the factory got burnt on 17-1-1993. The petitioners sought for the quotation form a Private Co. for repair of the Transformer. Again on 19-1-1993/29-1-1993 the meters were inspected and found to be in order and no endorsement was made in the meter book which also goes to show that no defect was found therein. However, in an internal letter dated 30-1-1993 which appears at page 22 of the affidavit-in-opposition it was stated that plastic seals fixed on the body cover of the COS Meter was found to be spurious. According to the petitioner the said internal letter is a manufactured one.

10. On 2-2-1993 the electrical connection was disconnected but no endorsement was made stating the reason for such disconnection in the meter reading book. On the same day a First Information Report was lodged. On 2-2-1993 the respondent issued a letter to the petitioner alleging that during inspection it was revealed that the arrangement of the meter in circuit had been tampered with by the consumer of electricity by passing registration of consumption of electrical energy, which was, inter alia, in violation of C.E.S.C's conditions of supply. The petitioner contends that as consumption of electrical energy is recorded in the Sin meter, the question of stealing of electricity by using spurious seal on the COS Meter appears to be absurd as in such a meter only the power factor is recorded.

11. The petitioner thereafter filed writ application and on 10th Feb. 1993 an interim order was passed by this court that on petitioner's depositing a sum of Rs. 1,50,000/-, the electrical connection was divided to be restored and the respondents were given liberty to remove the existing meter upon notice to the petitioner which was to be sent to the Chief Electrical Inspector, Government of West Bengal for necessary checking and the respondents were further given liberty to instal a new meter forthwith in the premises of the petitioner. The electrical connection was restored on 20th Feb. 1993 and the alleged spurious plastic seals were removed behind the back of the meter and the new seals has been affixed. On 20th Feb. 1993 the Transformer was also replaced. According to the petitioner the replacement of existing meter was delayed for 10 months which show mala fide on the part of the respondent.

12. It is not disputed that the repondent-corapany has framed conditions of supply upon obtaining approval therefor in term of sub-section (2) of Section 21 of the Indian Electricity Act. Clause 12 of the said conditions of Supply empowers the licensee to require the consumer to enter into a written agreement. Clauses 26 and 27 of the said condition read thus:—

26. “In the event of the consumer failing to comply with the provisions of these conditions of supply or the terms of the agreement which have been approved by Government under Section 21, sub-section (2) of the Indian Electricity Act, 1910, or any revision thereof, then, in addition to the powers conferred on the Licensee by this license and current legislation, it shall be lawful for the licensee after giving seven days' notice in writing to the consumer to discontinue the supply of energy to the consumer. The licensee shall, however, on the cessation of the act which entitled him disconnect the supply and on payment by the consumer of the expenses incurred by him in disconnecting and reconnecting the supply, reconnect the supply with all reasonable speed.

27. Nothing in these conditions or in any agreement between the licensee and consumers shall abridge or prejudice the right of the licensee under his license and under the Acts of the Government of India or the Government of West Bengal, or any rule thereunder.”

13. The contention raised by the learned Counsel for the petitioners is that principles of natural justice must be complied with before disconnecting the electrical connection for any reasons whatsoever inasmuch by reason thereof the consumers suffer civil consequences. The learned counsel in this connection have referred to the provision of Sections 24(1), 26, 26(4) and 26(6) of the Indian Electricity Act and submitted that in the event the meter installed at the premises of the consumer is found to be incorrect, the only remedy open to the parties is to refer the matter to the Electrical Inspector in terms of sub-section (6) of Section 26 of the Indian Electricity Act in the light of the decision of the Supreme Court of India in Maharashtra State Electricity Board v. Basantibai reported in AIR 1988 SC 71. Reliance has also been placed on a decision of the Supreme Court in Municipal Corporation of Delhi v. Ajanta Iron and Steel Co. Pvt. Ltd. reported in AIR 1990 SC 882. It was urged that the respondent, C.E.S.C Ltd. being a licensee and Indian Electricity Act and the rules framed thereunder exercises a public function and being a public body must comply with the principles of natural justice keeping in view the fact that supply of electrical energy is essential for human existence. Reliance in this connection has been placed on a judgment of mine in Dumraon Textiles Ltd. v. Bihar State Electricity Board reported in AIR 1995 Pat 43, and various other decisions. It has, however, been contended that except the allegations that the petitioners have tampered with the meter or similar such allegations, they have been asked to pay a huge amount assessed by the respondents without their being any guideline therefor. In one of the cases, it has been alleged by the C.E.S.C Ltd. that the charges were not in consonance with the load installed therein which must be held to be ex face illegal inasmuch as the respondents had all along been aware of the load installed at the petitioner's premises and there having been no change therein from the inception, the electrical connection could not have been disconnected on such filmsy ground. Such an unilateral action, contends the barred Counsel, being penal in nature must proceed investigation of charges levelled as against the petitioner and adjudication thereof by an independent agency like the Chief Electrical Inspector. It was submitted that the C.E.S.C Ltd. being a monopolistic profit making commercial organisation cannot be permitted to be a judge of its own cause.

14. Mr. Samaraditya Pal, the learned Senior Counsel appearing on behalf of the C.E.S.C Ltd. on the other hand, submitted to the provisions of Sections 24 and 26 of the Indian Electricity Act have no application whatsoever in the facts and circumstances of this case. According to the learned counsel the right of licensee to disconnect the electrical energy arises in terms of Paragraph (b) and (d) of Schedule appended to the Indian Electricity Act. The learned Counsel would urge that on a proper comparison of Clause (a) vis-a-vis clauses (b) and (d) of 2nd proviso appended to Paragraph VI of Schedule it would be clear that whereas principle of natural justice is required in one case, the same is not so required in the other cases. According to the learned Counsel stealing of electrical energy of committing theft thereof being penal offence in terms of the provision of Sections 39 and 44 of the Indian Electricity Act, the supplier has a right of self-defence to prevent theft of such electrical energy and/or to take recourse to such action in exercise of its rights under Sections 97 and 99 of the Indian Penal Code. The learned Counsel contends that principle of natural justice cannot have any application as the same cannot be put in a strait-jacket or rigid formula in a case of urgency of emergency or in public interest. Having regard to the importance of necessity of preservation of electrical energy it is open to the licensee, contends the learned Counsel, to prevent theft thereof. Such principles according to the learned Counsel is applicable also in case of tort. Reliance in this connection has been placed on a decision of the Supreme Court of India in Ram Rattan v. State of Uttar Pradesh reported in 1977 (1) SCC 188 : (AIR 1977 SC 619). The learned counsel submits that the question as to whether a notice should priced such disconnection would depend upon the relevant regulations. Distinguishing the case of Municipal Corporation of Delhi v. Ajanta Iron & Steel Co. Pvt. Ltd. reported in AIR 1990 SC 882 it was pointed out that there existed such a provision under the agreement. According to the learned counsel this aspect of the matter is also covered by a decision of this Court in Waldorf Restaurant v. State of West Bengal reported in 1985 (2) CHN (Note) 196 wherein this Court has categorically held that no such notice is necessary before effecting disconnection of electrical energy. However, the said decision does not appear to an authority on the aforesaid proposition.

15. Mr. B.P Gupta, the learned Counsel appearing on behalf of C.E.S.C Ltd. in some of the cases, raised some additional contention. It was submitted that the meter installed by the respondent being the subject-matter of bailment the provisions of Indian Contract Act shall apply and in this connection the learned Counsel referred to the provisions of Sections 148, 193 and 154 of the Contract Act and submitted on the basis thereof that in the event of misuse of the bailed property by the bailee the contract of bailment can be terminated. The learned Counsel contends that upon disruption of electrical energy, the contract, to supply electrical energy comes to an end.

16. It was further submitted that sale of electrical energy is sale of goods within the meaning of provisions of Sale of Goods Act and reliance in this connection has been placed in The Commissioner of Sales Tax v. M.P Electricity Board reported in AIR 1970 SC 732, paragraph 9 and Associated Power Company Pvt. Ltd. v. Ramtaran Roy reported in AIR 1970 Cal 75.

17. There cannot be any doubt that the conditions of supply of electrical energy is governed by the provisions of Indian Electricity Act and thus the schedule appended to the said Act, would be deem to be the conditions of license which includes the powers and duties of the licensee vis-a-vis the consumer. The C.E.S.C Ltd. as noticed hereinbefore, has also framed conditions of supply. Supply of electrical energy is, thus, governed by the said conditions of supply as also the rules framed thereunder. It is true that before commencement of supply of electrical energy a written agreement has to be entered into but the same does not mean that the rights and obligations of the parties are governed under the terms and conditions of the said agreement. Such agreement is statutory in nature. It cannot deviate or make any departure therefrom. See Pyrites, Phosphates and Chemicals Ltd. v. Bihar Electricity Board reported in AIR 1996 Pat 1.

18. The Court while considering an action of the licensee in disconnecting the electrical energy has to bear in mind that respondents are public utility concerns and license has been granted to it to fulfil a basic need of the society. Electricity is not a luxury but is a basic necessity so far as the consumers are concerned. In absence of electricity the industries and business are not possible to be run or carried put and it is also essential for domestic-purposes.

19. C.E.S.C Ltd. is a licensee under the provisions of Indian Electricity Act. Its rights and obligations to supply electrical energy are, therefore, governed by the provisions of the said Act as also the rules framed thereunder and/or the conditions of supply. Section 24 entitles the licensee to disconnect the electrical energy in the event the consumers neglect to pay and charge of energy but such disconnection can be effected only after service of a statutory notice of 7 clear days.

20. Section 26 of the Act provides that in the absence of agreement to the contrary that the amount of electrical energy supplied to the consumer shall be ascertained by means of correct meter.

21. A notice under Section 26(4) is not required to be given for the purpose of reading of a meter. It empowers the licensee or any person duly authorised by it to inspect and test the meter installed in the premises of the consumer in the event the same is found to be necessary. In such an event it is open to the authorised emplyees to enter the premises of the petitioner for the purpose of reading the meter but there is no provision under the Act that when an employee enters the premises of the consumer only for the purpose of reading a meter, prior notice is to be given. Sub-section (4) of Section 26 contemplates a notice for the purpose of ‘testing’ and ‘inspect’. The said provision has to be read along with sub-sections (1), (2) and (3) wherefrom it would be clear that the ‘inspection’ and ‘test’ ought to be conducted in connection for verifying as to whether the meter is faulty or not. It is clear that the ‘test’ and ‘inspection’ are in relation to the purposes mentioned therein as in terms thereof even costs therefor are to be borne by the consumer. Such as ‘inspection’ or ‘testing’ may be necessary in order to remove the meter for the purpose of adjudicating the correctness thereof by the electrical inspector on the application of either party as provided under sub-section (6) of Section 26 of the Indian Electricity Act. Such reference can only be made if the meter is faulty and not in a case where the meter records wrong reading of consumption of electrical energy because of other reasons as for example defects in the line etc., Reference in this connection may be made to Southern India Marine Products Pvt. Ltd. v. Kerala State Electricity Board reported in 1995 AIHC 4959.

22. In Bihar State Electricity Board v. State of Bihar reported in 1992 (2) BLJR 1272, a Division Bench of the Patna High Court of which I was a member, has held that the power of Electrical Inspector is governed by the statute and he has to exercise such power as provided under Sections 24(2), 26(6), 33(2), 37(2) (ii)(g), 37(2)(ii)(k), 50 and 55 and Clauses VI, XIII, XV, XVI and XVII of the Schedule appended to the Indian Electricity Act, 1910 as also Rules 4 to 10 of the Indian Electricity Rules.

23. Sub-section (8) of Section 26 imposes an obligation on the part of the consumer not to connect any meter with any electric supply line through which energy is supplied by licensee or disconnecting the same from any such electric supply line and for that purpose he has got to be given a notice of not less than 48 hours in writing to the licensee requring it to connect or disconnect such meter and or receipt of any such requisition the licensee shall comply with it within the period of such notice.

24. Sub-section (6) of Section 26 provides for an adjudication by the Chief Electrical Inspector where the meter, according to a party to a contract, was not recording correct consumption of electrical energy.

25. Sections 24 and 26, therefore, do not deal with a situation where the consumer is alleged to have committed pilferage and/or theft of electrical energy, Such a power has specifically been conferred by the 2nd proviso, appended to paragraph VI of the Schedule appeneded to the said Act.

26. It may be noticed that clause (a) of the said proviso requires service of 7 days' notice by the licensee upon the consumer in the case of non-furnishing of security or in the event such security has become invalid or insufficient.

27. Sub-clause (3) of the said provision provides for arbitration in the cases specified thereunder, which includes:—

(a)………………………..

(e) improper use of energy, defect in any wires, fittings works or apparatus.

28. It is significant that Section 44 of the Indian Electrcity Act also makes improper use of electrical energy as punishable. This aspect of the matter shall be dealt with at a later stage.

29. Any dispute as to whether the action of the parties come within the purview of “improper use of electrical energy” being involving question of fact would fall within the scope of sub-clause (3) of paragraph VI of the Schedule despite the fact that the said terminology is used also in Section 44 of the said Act.

30. The question as to whether a prior notice is required to be given in the circumstances of this nature and compliance with the principles of natural justice go hand in hand.

31. In Municipal Corporation of Delhi v. Ajanta Iron and Steel Co. Pvt. Ltd. reported in AIR 1990 SC 882, there existed a specific provision for service of notice in the condition of supply being condition No. 36 thereof. The Apex Court held that service of notice is a pre-requisite for disconnection and the appellant cannot be allowed to go back upon his words and refuse the consumer the benefits of notice as contemplated by the agreement. However, the Supreme Court held that as the plaintiff of the said suit was denying the allegation of theft; it is not possible to assume the accusation as correct without a fullfledged trial on the said issue.

32. The said decision has been followed by the Delhi High Court in Kuldeep Singh Dhingra v. Municipal Corporation of Delhi, reported in AIR 1992 Delhi 228 wherein it has been held that show cause notice is required to be issued in terms of Clause 36 of the regulation which is mandatory in nature. Reference in this connection may also be made to Hindustan Ferro Alloys Ltd. v. The Executive Engineer U.P State Electricity Board, reported in AIR 1995 All 209. Similarly in 1982 (1) Mad LJ 17 (Notes) it has been held that principles of natural justice are required to be complied with before disconnecting the electrical energy. Many decisions appear to have been rendered in this jurisdiction and other jurisdiction also. In Auckland International Ltd. v. The CESC Ltd., reported in 1992 (2) Cal LT HC 176, a learned single Judge took into consideration the fact that a meter book is kept in the premises and endorsement are made therein from time to time. The learned Judge relying on a decision of the Supreme Court, inter alia, observed that in the case of pilferage the allegation cannot reach any conclusion without having a fullfledged trial. However, in that case the right of C.E.S.C to disconnect the electrical energy was not considered. However, it was held that CESC Ltd. being complainant cannot be a Judge of his own cause and to deal conclusively that there was pilferage. In the facts of that case and on the report of the police authority the Court did not find that there was any justifiable reason to disconnect the supply without notice in that case.

33. In Gautam Roy… v. C.E.S.C Ltd. & Ors.…, reported in 1994 (1) Cal LT 444, this Court again held:—

“If the petitioner has committed an act of pilferage the respondent-authorities must proceed against him in accordance with law and without the decision of the competent authority the allegations simpliciter cannot reach the finality.”

It was also observed:—

“It is also made clear that the allegations of pilferage would not be sustained unless CESC pursues the matter and the case is decided before a competent forum of criminal jurisdiction.”

34. In Ganges Manufacturing Co. Ltd. v. West Bengal State Electricity Board, reported in 1993 (3) Cal LJ 210, a learned single Judge held that so long as the bills are raised on the basis of the reading of a meter, correct or otherwise, no further question arises and the consumer is bound to pay the amount of the bill raised in accordance with the reading of the meter subject to the provisions of sub-section (6) of Section 26 of the Indian Electricity Act.

The learned Judge further observed:—

“It is once again made clear that Court does not say that a licensee is not entitled to realise its past dues for under charging a consumer but all that this Court says is that such dues are to be realised through a procedure established by law and by taking recourse to legal proceedings. Only in such a way the consumer is protected from the vagaries and arbitrariness of a licensee.”

35. Although the fact of the matter is different, the said decision is at least an authority for the proposition that the dues, if any, can be realised only by taking recourse to law.

36. In Dumraon Textiles Ltd. v. Bihar State Electricity Board, reported in AIR 1995 Pat 43, a Division Bench of this Court of which I was a member, observed:—

“The Board being a public authority discharge Government function. A consumer depends upon the authorities of the Board for its day to day amenities which are essential for human existence. It is the State within the meaning of Article 12 of the Constitution of India. It thus require to act fairly, judiciously and in accordance with the principles of natural justice. Its action thus must be fair and conform to the standards of public morality. Its officers cannot act arbitrarily or raise demand for substantial amount of money without affording opportunity of hearing to the consumer.”

37. In Sankardas Paul v. State of West Bengal, reported in 1989 (2) Cal LJ 311, it has been held that even a municipality is superseded on emergency ground rule of natural justice to the minimum extent must be followed.

37A. The U.P State Electricity Board made a regulation known as Electricity Supply (Consumer) Regulation, 1994, Section 22A whereof conferred a right upon the licensee to issue the bill for the value of the electrical energy so obstructed, consumed or used beside the right to disconnect electrical energy without notice. Interpreting the said provisions, the Allahabad High Court in AIR 1991 All 196 held that in a case of extreme urgency where public interest is jeopardise by the delay involved in the hearing, a hearing before condemnation would not be required. The Division Bench distinguished the case of Municipal Corporation of Delhi (AIR 1990 SC 882) (supra) stating that the regulations are the part of contract.

38. However, in the instant case, no regulation has been framed by the State and in absence of such regulation the principles of natural justice are required to be complied with as it is not disputed that disconnection of electric energy involves civil consequences and thus the said principles have to be read into the statute.

39. As indicated hereinbefore, Clause (a) of the 2nd Proviso appended to paragraph VI of the schedule provides for a notice whereas clauses (b) and (d) which are attracted in the instant case do not provide for such a notice. The question which arises for consideration is that whether in absence of an express provision the principles of natural justice are required to be complied with. In my opinion, the principles of natural justice are required to be complied with, be it pre-decisional hearing or a post-decisional one depending on the facts and circumstances of each case.

40. It appears that regulations have also been made by the State of Andhra Pradesh with a view to empower the concerned authorities to disconnect the electrical energy for mal-practice and payment for energy dishonestly used or abstracted. The said regulations were made in exercise of its power under Section 49(1) read with Section 79(1) of the Electricity Supply Act, 1948. From the perusal of the said regulation it appears that a special post of Assistant Engineer was created therefor. Regulation 10 provided for a forthwith disconnection of electrical energy by the consumer was conducted and the commission of any mal-practice with reference to his use of electrical energy including unauthorised alterations, installations, unauthorised extensions and uses and devices to commit theft of electrical energy. The Board had also made a regulation providing for procedures to be followed under the aforementioned regulations as also the regulation 10 in terms whereof it is inter alia provided that Assistant Engineer immediately disconnection the electrical energy shall intimate the consumer the reasons of disconnection and invite his representation as regards damage sustained by the Board. The Assistant Engineer was to submit his proposal together with all necessary information to the concerned Superintendent, Engineer who was to estimate the damages after giving the opportunities to the consumer to make his representation in that regard. The said regulation also provides for the guidelines to be used in the matter of assessment of damanges. Thus the said provisions set out in details the mode and manner of application thereof.

41. In the light of the aforementioned provisions the Andhra Pradesh High Court in Matadin v. Assistant Engineer, DPE Hyderabad, reported in (1969) 1 Andh LT 313 and S.M Sanjeeva Rao v. Andhra Pradesh State Electricity Board, Hyderabad, reported in 1993 (1) Andh LT 293, held that prior notice is not necessary for such disconnection.

42. In C.G Plastic v. Karnataka State Electricity Board, reported in AIR 1995 Kant 47 (sic), similar provision existed in Regulation 44.07 of Karnataka Electric Supply Regulation, 1980 wherein it has been held that such a provision has been made in consonance with the basic principles of natural justice. The learned Judges held that at least a summary enquiry is necessary.

43. Although the said provision did not contemplate compliance of the provisions of natural justice, the Division Bench held that keeping in view the fact that electricity is a scare commodity, in emergent situation the electric connection can be disconnected where after the aggrieved party can be heard in the matter and such a post decisional hearing may also serve the requirement of the principles of natural justice. The Division Bench observed:—

“Even while exercising the drastic power installation forthwith, liberty is reserved to the Board to disconnect the electric line without notice and it is not bound to disconnect. It depends on the facts and circumstances of each case. The consumer would in that connection, inter alia, put forward own case against the theft alleged at his premises and his version taken into consideration by the Board.”

44. The said decisions are, therefore, based on the interpretation of the regulations framed by the State Governments. Even in the regulations, applicability of the principles of natural justice have been ruled out altogether. The said regulations have also been interpreted in the light of the said principles.

45. Principles of natural justice has a deep rooted foundation. It brings within its sweep the concept of fair play and justice. However, it should be viewed in circumstantial flexibility. There cannot be any doubt that the principles of natural justice cannot be put in a strait-jacket or rigid formula. There are several except to the principles of natural justice.

46. As the principles are well settled, it is not necessary to notice a large number of decisions.

47. In R.S Dass v. Union of India, reported in 1986 (Suppl) SCC 617, it has been held:—

“The principles of audi alteram partem is a basic concept of principles of natural justice. No one should be condemned without hearing is the essence of justice. Courts of law apply this principle to ensure fair play and justice in judicial and quasi-judicial matters. Of late these principles have been extended even to administrative action also. However, the application of the audi alteram partem rule is not applicable to all eventualities or to cure all ills. Its application is excluded in the interest of administrative efficiency and expedition. Sometimes legislation itself excludes the application of the rule. It is difficult to conceive exhaustively all eventualities and circumstances for application or exclusion of the rule. In A.K Kraipak v. Union of India, a Constitution Bench of this Court held these rules operate only in areas not covered by any law validly made. In other words they do not supplant the law of the land but supplement it. They are not embodied rules and their air is to secure justice or to prevent miscarriage of justice.”

It was further observed:—

“It is well established that rules of natural justice are not rigid rules, they are flexible and their application depends upon the setting and the background of statutory provision, nature of the right which may be affected and the consequences which may entail, its application depends upon the facts and circumstances of each case. These principles do not apply to all cases and situations. Application of these uncodified rules are often excluded by express provision or by implication.”

48. Recently the Supreme Court in Delhi Development Authorities v. Skipper Construction, reported in (1995) 8 JT (SC) 352 at 355 observed:—

“The rules of procedure and/or principles of natural justice are not meant to enable the guilty to delay and defeat the just retribution.”

49. Section 39 of the Act as it stood prior to its amendment by Act 31 of 1986 raised a legal presumption to the effect that whoever dishonestly abstracts, consumes or uses any energy shall be deemed to have committed theft within the meaning of Indian Penal Code nd the existence of artificial means for such abstraction shall be prima facie evidence of such dishonest abstraction. The said provision has since undergone an amendment. Section 39, Indian Electricity Act as it now stands, reads thus:—

“Whoever dishonestly abstracts, consumes or uses any energy shall be punishable with imprisonment for a term which may extend to three years, or with fine which shall not be less than one thousand rupees, or with both and if it is proved that any artificial means or means not authorised by the licensee exist for the abstraction, consumes or use of energy by the consumer, it shall be presumed, until the contrary is proved, that any abstraction consumption or use of energy has been dishonestly caused by such consumer.”

50. Burden of proof to prove theft of electrical energy lies on the prosecution. Section 44 of the said Act which makes a consumer liable for punishment in the event the conditions precedent laid down therefor are fulfilled.

51. On the other hand, Section 42 of the Indian Electricity Act makes the licensee liable for punishment if it dishonestly discontinues supply of energy without any reasonable burden of proof whereof would lie on him. The provision of the said Act clearly manifest the intention of the Parliament that there should be continuous supply of electrical energy to the consumers. It is also manifest that the right of the licensee to disconnect electrical energy is under the statute and not under a contract qua contract.

52. The contention of Mr. Pal that a licensee is entitled to exercise his right of private defence as contemplated under Sections 97 and 99 of the Indian Penal Code cannot be accepted inasmuch as electrical energy is not an immoveable or moveable property for the purpose of Indian Penal Code as has been held in a large number of cases. See Abtar Singh v. State, of Punjab, reported in AIR 1965 SC 666 and Ramsankar Sinha v. State of Bihar, reported in AIR 1968 Pat 131 although it may be a property within the meaning of Sale of Goods Act.

53. If electrical energy is not a moveable property, the question of any trespass being committed in relation thereto under the general law or tort may not arise. Reference in this connection may also be made to Jagarnath Singh v. H. Krishna Murthy, reported in AIR 1967 SC 947.

54. Sale of electricity may come within the purview of Sales of Goods Act as has been held in the Commission of Sales Tax v. M.P Electricity Board, reported in AIR 1970 SC 732, para 9; Associated Power Company Pvt. Ltd. v. Ramtaran Roy, reported in AIR 1970 Cal 75 and Damodar Valley Corpn. v. Superintendent Commercial Taxes, reported in AIR 1976 Cal 136 but the provisions of Sales of Goods Act in this case have no application. This Court is only concerned at this stage as to whether electricity is a moveable property so as to attract the provisions of Section 378 of the Indian Penal Code. It is also pertinent to note that the amendment made in Section 39 of the Indian Electricity Act, laid clearly stipulates that now there does not exist even the legal fiction that theft of electricity will be deemed to be a ‘theft’ within the meaning of Section 378 of the Indian Penal Code. The said Act is a self-contained Code and thus, the rights and obligations including the penal consequences are governed by the said Act and reference to any other Act, therefore, is not warranted.

55. If it is not a moveable property within the meaning of aforementioned provision, in my opinion, the question of exercising right of self-defence as has been submitted by Mr. Pal would necessarily fail.

56. In Ramrattan v. State of U.P, reported in 1977 (1) SCC 1 : (AIR 1977 SC 898) the Supreme Court was considering a different fact situation. It was a case of immoveable property and in that case the Supreme Court was considering the question as to whether the accused were entitled to exercise their right of private defence.

57. It is also not possible to accept the contention of Mr. Gupta that the doctrine of bailment will apply in the instant case. It is also not correct to contend that once the electrical connection is disconnected, the entire agreement stands terminated.

58. The contract entered into by and between the petitioner and the licensees is for supply of electrical energy. Such a contract is not a contract of bailment within the meaning of Section 148 of the Indian Contract Act. Supply of meter is merely one of the contractual obligations on the part of the licensee. Such a meter also be installed by the consumer in terms of Section 26 of the Indian Electricity Act. Such meters are required to be installed only for the purposes mentioned in the said provision and not otherwise. In any event by disconnecting the electrical energy, the meter may or may not be taken out.

59. Moreover Clause (d) of the 2nd Proviso appended to paragraph VI of the schedule appended to the Act as also the Clause 26 the conditions of supply provide for reconnection of electrical energy in the event of fulfilment of condition on the part of the consumer relating to such disconnection.

60. In fact contention of Mr. Gupta if accepted, would run counter to the interest of the licensee. As in case of termination of contract the consumer would not be liable to pay the minimum guaranteed charges, meter rent and other charges, if any

61. It, therefore, must be held that by reason of such disconnection, supply of electrical energy merely remains under suspension.

62. This aspect of the matter has been considered by the Supreme Court in Bihar State Electricity Board v. Green Rubber Industries, reported in AIR 1990 SC 699 and General Mariager-cum-Chief Engineer Bihar State Electricity Board v. Rajeswar Singh, reported in AIR 1990 SC 706. It has categorically been held by the Supreme Court that a supply agreement to a consumer makes his relation with the Board mainly contractual, although basis of supply is a statutory rather than contractual.

63. The said submissions appear to have been advanced n desperation. The right of the licensee to take action for commission of a penal offence and disconnection of electrical energy flow from statute. Only in the cases the conditions for exercise of both the rights are satisfied, the licensee may do so. Disconnection of electrical energy must be done in accordance with statutory provision.

64. Thus it must be held that principles of natural justice are applicable. The extent and the stage of such opportunity shall, however, vary from case to case.

65. The question as regards the applicability of the principles of natural justice has to ben viewed in the context of the Respondents' own case that they have been exercising their power of disconnection of electrical energy in terms of paragraph VI of the Schedule appended to the Act. The contention of the respondents that they have such power by way of private defence or under the contract of bailment has thus to be rejected.

66. The submission of the learned Counsel for the petitioner that the respondents cannot be a Judge of their own cause is treated to be rejected. The respondents have teen acting on the basis of the power conferred upon them under the statute and when they do so, the question of their becoming Judge of their own cause does not arise.

67. It is, thus, evident that principles of natural justice are required to be read into the provisions of the statutes. A person cannot be deprived of the basic amenities like supply of electrical energy without any authority of law.

68. The question as to whether such disruption or discontinuance of supply of electrical energy on the part of the authorities of the licensee and/or board is reasonable or not must be decided by the competent authorities at the first instance. Such an action cannot be taken on the basis of pure subjective satisfaction. Such a drastic action can be taken only on objective factors and thus in my opinion, it is necessary to comply with the minimal requirement of the principles of natural justice.

69. In Waldorf Restraurant v. State of West Bengal, reported in 1985 (2) Cal HC (Notes) 196, a learned single Judge of this Court held that when there are serious allegations of pilferage or theft of electric supply where the meter does not actually record actual consumption and in view of such allegations on the basis of conduct on the part of the petitioner it was not obligatory on the part of the C.E.S.C to give any hearing before disconnection. The learned Judge held that there being disputed questions or fact the same requires adjudication by the concerned authorities. The said decison, therefore, was rendered in the fact of that case and particularly in view of the fact that petitioner did not come before this Court with clean hands.

70. It has not been held in the said decision that principles of natural justice are not required to be complied with at all. The question as to whether the prior notice is required or not depends upon the statutory requirements or situations.

71. A person who has prima facie been held to be guilty of theft/pilferage of electrical energy cannot be deprived of electrical energy, till the outcome of criminal case unless one or, the more conditions as noticed hereinbefore is/are fulfilled the authorities concerned, therefore, must act reasonably.

72. There cannot be any doubt that the principles of natural justice cannot be viewed with rigid rules. Principles of natural justice have exceptions. See Wade and Forsyth on Administrative Law, 7th Edition, page 519, Judicial Review of Administrative Action by S.A De-Smith, 5th Edition, paragraph 10.005 and paragraph 10.015, Wiseman v. Burman, reported in 1971 App Cases 297, Union India v. W.N Chadda, reported in 1993 (Suppl) 4 SCC 260. Schwlz's Administrative Law, A case book 3rd Edition, page 357 American Jurisprudence 2D 403, 406, Union of India v. Tulsir Patel, reported in AIR 1985 SC 1416 at page 1462 as also a recent decision or the Apex Court in Delhi Development Authority v. Skipp Construction, reported in 1995 (8) JT (SC) 352 at 358. But the question which arises for consideration would be as to whether the compliance of principles of natural justice is to be ruled out altogether. As indicated hereinafter the rules and regulations framed by different State Electricity Boards vary. Even in cases where provision has been made for disconnection of electrical energy, principles of natural justice have been directed to be followed by taking recourse to post-decisional hearing. Some of the rules, as noticed hereinbefore themselves provide for post-decisional hearing.

73. Although no such regulation has been framed, indeed the C.L.S.C Ltd. in paragraphs 26 of the Condition of Supply received (sic) itself its right to discontinue the supply of energy to the petitioner after giving seven days' notice in the event the consumer fails to comply with the provisions of the said conditions of supply or the terms of agreement which have been approved by the State Government in exercise of its power under sub-section (2) of Section 2 of the Indian Electricity Act.

74. In this view of the matter any disconnection of electrical energy for violation of conditions of supply would require seven days' prior notice in writing.

75. In most of the cases apart from Section 44 of the Indian Electricity Act, violation of conditions of supply has also been mentioned. There cannot be any doubt that 7 days' prior notice therefor was required to be given on the respondents' own showing inasmuch as the clause 26 of the conditions of supply as also the agreement provided for giving of such notice before disconnecting electricity. By way of example it may be stated that in Hanuman Steel Rolling Mill, the C.E.S.C Ltd. in its letter dated 2nd February, 1993, annexed with the affidavit-in-opposition stated that the alleged tampering of the arrangement of the meter in circuit by the petitioners for which the electricity was disconnected was, inter alia, in violation of C.E.S.C's condition of supply.

76. However, it is difficult to agree with the submission of the learned Counsel that principles of natural justice are not required to be complied with in the cases falling within clauses (b) and (d) of Paragraph VI of the said Rule appended to the said Act. Principles of natural justice are required to be complied with unless statute interdicts the same. The said provisions do not exclude the application of the principles of natural justice by necessary implication. For the purpose of interpretation of the 2nd Proviso appended to paragraph VI of the schedule, the intention of the Parliament has to be gathered upon considering the said Act as a whole and not only upon consideration that whereas clause (a) of the said Second Proviso expressly speaks of the principles of natural justice, Clauses (b) and (d) do not.

77. The question thus as to whether principles of natural justice are required to be complied with, depend on facts and circumstances of each cases.

78. However, it is not possible for this Court to lay down exhaustively as to under what circumstances, requirement of prior notice is required to be complied with.

79. It has also to be borne in mind that in many of the writ applications it has been averred that the electrical energy had been disconnected by the officers of the respondents only because when demanded, the petitioners have refused to pay them any amount by way of bribe. Such contingencies in the present socio-economic scenario, cannot altogether be ruled out. Similarly Courts can also take judicial notice of the fact that theft of electrical energy is rampant.

80. It may be recorded that Mr. Pal and Mr. Gupta althoush appeared for C.E.S.C Ltd. made contradictory submissions inasmuch as Mr. Gupta had taken the extreme point that principles of natural justice are not required to be complied with at and the contract of supply, in case of detection of pilferage or theft of electrical energy stands terminated whereas Mr. Pal merely submitted that in such cases post-decisional hearing would be the proper remedy.

81. In A.K Kraipak v. Union of India, reported in AIR 1970 SC 150 : (1969) 2 SCC 262, upon which both Mr. Gupta and Mr. Pal relied upon, the Apex Court clearly held that any administrative order which involves civil or evil consequences would require the compliance of principles of natural justice. Reference in this connection may also be made to D.K Yadav v. J.M.A Industries Ltd.., reported in 1993 (3) SCC 259.

82. In Maneka Gandhi v. Union of India, reported in AIR 1978 SC 596 : 1978 (1) SCC 248, the Supreme Court clearly held that for impounding a passport the principles of natural justice have to be complied with but only in a case of extreme urgency, a post-decisional hearing may be given.

83. However, in that case a post-decisional hearing was directed to be granted only because the passport stood impounded. The Apex Court clearly stated that before doing so, in law the petitioner was entitled to a pre-decisional hearing. It is now well known that post-decisional hearing cannot be a substitute of pre-decisional hearing. Reference in this connection may be made to in Government of India v. Kul Hind (All India) Majlis-e-Millat, reported in 1995 AIHC 6128 and the decision of the Supreme Court of India in AIR 1989 SC 568.

84. In Union of India v. Tulsiram Patel, reported in AIR 1985 SC 1416 the Supreme Court was dealing with absolutely a different situation. In that case it was held that principles of natural justice are excluded in terms of Second Proviso appended to Article 311(2) of the Constitution of India but despite the same it observed that a delinquent officer may produce all materials to show that the charges against him are not which according to the Supreme Court would be a sufficient, compliance with the requirements of natural justice. Second Proviso appended to Clause (2) of Article 311 of the Constitution of India expressly ruled out the applicability of natural justice in that sense, Karnataka Public Service Commission v. B.M Vijaya Shankar, reported in AIR 1992 SC 952 was also rendered in a different fact situation.

85. Mr. Gupta has placed strong reliance upon a decision of Gauhati Htigh Court in Deputy Secretary to the Govt. of Assam v. Maying C.H Pegu, reported in AIR 1983 Gauhati 55, but in the said decision principles of natural justice was held to have no application as it was found as of fact that no useful purpose would be served as ‘there is complete stands till in the function of the Mahkuma Parishad’ and thereby the public interest would be frustrated and public cause would suffer.

86. There cannot be any doubt that the application of the principles of natural justice must also be in confirmity with the scheme of the act and with the subject-matter of the case. The scheme of the act is to supply electrical energy and to prevent discontinuance of such apply. Except by way of regulations framed by some State Electricity Boards principles of natural justice have not been excluded expressly. As has been noticed even such regulations have been held to be in consonance with the principles of natural justice.

87. Section 22 of the said Act mandates the licensee to supply electrical energy. It can disconnect the electrical energy only in exercise of its power under the Act or under the conditions of supply. A Division Bench of this Court in John Earnest Rajwade v. Manager, Telephone Nigam Ltd., reported in AIR 1935 Cal 298 has held that disconnection of electrical energy should be taken recourse to as a last resort. The said decision has recently been followed by me in Dulichand v. Chief General Manager, Calcutta Telephone, reported in 1995 WBLR (Cal) 289 : 1995 AIHC 6590.

88. Section 9 of the Contract Act upon which Mr. Pal relied upon, in my opinion, cannot be said to have any application as admittedly a contract is made in writing and the promise, if any, is express. For the same reasons, in my opinion, the decision in Lister v. Ramford, reported in 1957 (1) All ER 125, cannot be said to have any application inasmuch as therein the Court was dealing with the case of breach of duty on the part of an employee.

89. In Glamorgan County Council v. Garter, reported in 1962 (3) All ER 866, it has been held that ‘use’ means lawful use and does not include use that constitutes a criminal or quasi criminal offence.

90. But in this case we are not concerned with the alleged acts of an offence by the consumer. In the event they are found guilty of a commission of criminal act, they may be punished.

91. It is pertinent to note that in terms of Clause (d) of the 2nd proviso appended to paragraph VI of the schedule mandates the licensee to reconnect the supply with all reasonable speed on the cessation of the Act or default or both, as the case may be, which entitles him to discontinue it i.e on the ground that if the consumer makes any alteration of or addition to, any electrical wires, fitting, works and apparatus in such property as notified and does not notify the same to the licensee before the same are connected to the source of supply with a view to examine and tested.

92. If the allegations of the petitioner are correct, that they have allegedly violated the conditions of supply, in my opinion, the consumers are required to be heard. In the event, however, if the licensee comes to the conclusion that there has been an improper extraction of electrical energy, necessarily the question of recovery of damage would arise. Even in such an event, the petitioners are entitled to a fair opportunity of being heard. In this view of the matter I am of the opinion that principles of natural justice cannot be said to be totally excluded. In fact the respondents by necessary implication have accepted that the principles of natural justice are required to be complied with inasmuch as they themselves, after such disconnection had called the consumers for discussions and according to Mr. Pal himself such discussion would include the question as to whether the consumers have committed unlawful extraction of electrical energy or not.

93. In a recent decision, this Court has inter alia held the importance of supply of electrical energy in Sri Balasari Construction Private Ltd. v. C.E.S.C Ltd., reported in 1996 (1) Cal High Court (Notes) 15, wherein this Court has quoted with approval and observation of the Supreme Court in Isha Marbles v. Bihar State Electricity Board, reported in 1995 (2) JT (SC) 626, wherein it was observed:—

“No doubt, dishonest consumers cannot be allowed to play tyrant with the public property but inadequacy of the law can hardly be a substitute for over zealousness.

94. In Wade's Administrative Law, 6th Edition, page 497, the learned Author observed:—

“The hypethesis on which the courts built up their jurisdiction was that the duty to give every victim a fair hearing was just as much a canon of good administration as of good legal procedure. Even where an order or determination is unchallengeable as regards its substance, the Court can at least control the preliminary procedure so as to require fair consideration of both sides of the case. Nothing is more likely to conduce to good administration.”

95. Apart from the rules of Audi Alteram Partem, which means that no one shall be condemned unheard, corollary of which is that he should be given reasonable notice of the nature of the case to be met, there are other rules of common law to the same effect. (See Franklin v. Minister, Town and Country Planning-194 AC 87 : (1987) 2 All ER 289, John v. Rees, (1970) Chancery Division 345). In case any person has acquired any right in any property or his right is being affected by the process, he would be afforded reasonable opportunity of hearing and also to meet the cause against him.

96. In Cleveland v. Board of Education, (470) U.S 532, 84 Lawyers Edition 2nd 494 (503), it was held:—

“An essential principle of due process is that a deprivation of life liberty or property be preceded by notice and opportunity of hearing appropriate to the nature of the case (See Mullane v. Central Hanover Bank and Trust Company-339 U.S 306-94 L.Ed 865). It has been described that root requirement of the due process clause being that an individual be given an opportunity for hearing before he is deprived of any significant property or interest.”

97. In S.L Kapoor v. Jag Mohan (AIR 1981 SC 136) it was held that even where a statute is silent in respect of observance of this rule, it shall be read into the statute as an inbuilt provision. This rule must be held to be a necessary prerequisite in all the cases where a decision is to be taken affecting a person's right or interest, unless such rule is specifically excluded by the statute either expressly or by necessary implication.

98. Natural justice is a concept which has succeeded in keeping arbitrary action of the State within limits. At the same time a Court has to be circumspect in deciding whether it can extend the rule.

99. A question is always posed as to why the word ‘natural’ has been used and not only the word ‘justice’ or ‘substantied justice’. The answer to the said question was stated to be the (sic) that it is the inherent right of any person and the same to the root of the matter and thus, the same is applicable unless statute interdicts.

100. In De-Smith's Judicial Review of Administrative Action, 5th Edition, at page 403 the learned Authors have referred to various decisions while emphasising the need to comply with the principles of natural justice in a case of forfeiture or deprivation of some right as also in the cases where applications are required to be filed as for example the cases of license.

101. A disconnection takes place at the instance of an officer of C.E.S.C who detects the alleged irregularity and then files a con-plaint and thus, comes a Judge at the same time. Once such disconnection comes into being, a consumer for the purpose of running business would have no choice but subject to his ability would agree to make payments of such amount as demanded of him. He may, however, only later on file a case against such officer whereas in the event a genuine case of theft, a regular inspection in presence of independent persons may be conducted. The meter or the seals or any other articles or compliances used for wrongful abstraction of electrical energy may be seized in accordance with law and then a complaint can be filed in terms of the provision of Section 50 of the Indian Electricity Act. As indicated hereinbefore it is the specific case of the petitioner that in none of the cases where the petitioners have deposited the amount or electrical connection has been restored. On interim, orders passed by this Court, no action has been taken by the C.E.S.C authorities to proceed with the Criminal Case or to get the meter and/or other appliances tested by the Chief Electrical Inspector. The applicability of the principles of natural justice is required to be viewed from this angle also.

102. In Liberty Oil Mills v. Union of India reported in AIR 1934 SC 1271, the apex court while considering the provision of Import and Export (Control) Act and Import Control Order 1955 held that when a right to obtain a licence or allotment of goods becomes crystallised into a licence or an allotment, an order under Clause 8-A having immediate and grave prejudicial repercussions on the person concerned it is desirable that he should be heard before an order of suspension is made and thus the said provision contemplates the pre-decisional hearing. Reference in this connection may also be made to Neelima Mishra v. Harinder Singh Paintel reported in AIR 1990 SC 1402.

103. From the discussions made hereinbefore it is clear that principles of natural justice are required to be complied with by issuing a prior notice unless a situation comes into being as a result whereof it is not possible to comply with such principles as for example a case of emergency or where there is a chance the evidence being lost although the authorities concerned take all steps in that regard i.e by seizure of the offending articles etc.

104. The question which now arises is as to in case of such disconnection and in case any pilferage is alleged whether the respondent can unilaterally assess the alleged damages suffered by it. In my opinion it cannot do so in absence of any regulation. The quantum of damages suffered depends on facts of each case. A licensee in absence of any statute cannot make a unilateral demand purported to be on the basis of a formula which is not within its authority to adopt. It is, therefore, necessary that even in such a case principles of natural justice are required to be complied with. However, as indicated hereinbefore the words “imporper use of electrical energy” find place not only in Subparagraph of paragraph-VI of the schedule appended to the Indian Electricity Act but also in Section 44 thereof. According to Mr. Pal, the words “improper use of electrical energy” cannot amount to a matter which comes within the purview of Sections 39 and 44 of the Indiin Electricity Act. The said submission cannot be accepted in view of the fact that Clause (d) of Section 44 makes improper use of energy of a licensee a punishable office. Thus, where the damages suffered by a licensee is required to be quantified by such improper uses of energy, evidently the Chief Electrical Inspector is entitled to consider as to whether here has been an improper use of electrical energy or not in terms of sub-paragraph 3 of paragraph-VI of the schedule appended to the Act and in all such circumstances, where charge is made that the consumer has improperly used the electrical energy, the Chief Electrical Inspector will have the jurisdiction adjudicate upon the said issue. As a necessary corrollary he will also have the jurisdiction to decide the quantum of losses suffered by the licensees as otherwise a finding on such improper use of electrical energy may become academic Paragraph VI (3) of the schedule providing for an adjudicatory forum should be construed liberaily.

105. A distinction has got to be made between the power of the Chief Electrical Inspector under Section 26(6) of the Indian Electricity Act and Paragraph-VI (3) of the Schedule. Of course in a given case both the powers can be exercised simultaneously.

106. In Hamidullah Khan v. Chairman M.P Electricity Board reported in AIR 1983 MP 1, the learned Chief Justice speaking for the division bench observed that clause 6(3) of the schedule is a general provision.

107. In the cases before this Court the respondents have failed to show cause that it was not possible for it to give any prior notice. In this view of the matter all these applications are allowed and the respondents are hereby directed to give a post-decisional hearing to the petitioners in view of the decisions of Supreme Court in Maneka Gandhi's case, (AIR 1978 SC 596)(supra). However, in future it is expected that they would abide by the law. These applications are therefore, disposed of with the aforementioned directions and observations but in the facts and circumstarces of these cases, there will be no order as to costs.

Applications allowed.