SUPREME COURT CLARIFIES THE RIGHT TO RESTORATION OF ELECTRICITY SUPPLY IN CASES OF ALLEGED THEFT: ASSESSMENT UNDER SECTION 126 AND CIVIL LIABILITY UNDER SECTION 154 CAN OPERATE SIMULTANEOUSLY

INTRODUCTION

The Supreme Court of India, in Dakshin Gujarat Vij Company Limited & Anr. v. Vaibhav Metal Crusher and Paschim Gujarat Vij Company Limited & Anr. v. Jamanbhai Nanajibhai Bhuva, delivered an important Judgment on 26 October 2026, clarifying the legal position concerning assessment and restoration of electricity supply in cases involving allegations of electricity theft. The Judgment examines the relationship between Sections 126, 127, 135 and 154 of the Electricity Act, 2003 and addresses the extent to which a consumer can challenge an assessment raised by a distribution licensee.

The Court clarified that even where electricity theft is alleged, the assessment procedure under Section 126 can be followed for determining the amount required to be deposited for restoration of electricity supply. It further held that such assessment and the determination of civil liability by the Special Court under Section 154(5) operate in distinct spheres and are not mutually exclusive.

 

BRIEF FACTS

The Supreme Court decided two Appeals together as they involved common questions of law.

In the first matter, M/s Vaibhav Metal Crusher was accused of committing an offence under Section 135 of the Electricity Act, 2003. The Distribution Licensee issued a supplementary bill dated 3 January 2024, demanding approximately Rs. 92.99 lakh towards alleged theft of electricity and a further amount of approximately Rs. 23.45 lakh towards compounding charges. The Consumer approached the Gujarat High Court, where the Single Judge permitted it to deposit 50% of the bill amount and directed restoration of the electricity connection upon such deposit.

The Distribution Licensee challenged this direction. It contended that the demand related to electricity theft and that the Consumer was not entitled to an opportunity of hearing or an appeal against the assessment in the manner contemplated under Section 126.

The second matter concerned a similar supplementary bill issued to Jamanbhai Nanajibhai Bhuva on allegations of electricity theft. The Single Judge had directed deposit of 50% of the demanded amount and permitted the Consumer to apply for a fresh electricity connection. The Distribution Licensee challenged the Order before the Division Bench, which remitted the matter to the Single Judge for fresh consideration.

Both matters consequently reached the Supreme Court.

 

ISSUES OF LAW

The principal issues before the Supreme Court were:

• Whether the assessment procedure prescribed under Section 126 of the Electricity Act, 2003, could be adopted in cases involving allegations of theft of electricity under Section 135.
• Whether a consumer accused of electricity theft could file objections against the provisional assessment and pursue an appeal under Section 127 of the Act.
• Whether the assessment under Section 126 and the determination of civil liability by the Special Court under Section 154(5) could operate simultaneously.
• Whether the High Court could direct restoration of electricity supply upon deposit of 50% of the provisionally assessed amount.

 

ANALYSIS OF THE JUDGMENT

The Supreme Court examined the statutory scheme of the Electricity Act, 2003 and the relevant provisions of the Gujarat Electricity Regulatory Commission (Electricity Supply Code and Related Matters) Regulations, 2015.

The Court first recognised the distinction between unauthorised use of electricity and theft of electricity. While every instance of unauthorised use may not amount to theft, theft of electricity would fall within the broader concept of unauthorised use. Section 126 provides the mechanism for assessment of electricity charges in cases of unauthorised use, whereas Section 135 deals with the offence of theft of electricity.

The Court observed that the Electricity Act does not prescribe a separate assessment mechanism for determining the amount required to be deposited for restoration of supply in cases of alleged theft. In the absence of such a separate procedure, the assessment contemplated under Section 126 must be adopted.

An important aspect of the Judgment is the Court’s emphasis on the principles of natural justice. Since Section 126 provides for service of a provisional assessment, filing of objections and a reasonable opportunity of hearing before final assessment, the same procedure must be followed while determining the amount payable for restoration of electricity under the third proviso to Section 135(1A).

The Court also clarified that the Consumer is entitled to challenge the final assessment by filing an Appeal under Section 127. However, the finality of the Appellate Authority’s decision is limited to the amount payable for restoration of electricity supply. It does not take away the jurisdiction of the Special Court to determine civil liability under Section 154(5), where a criminal complaint for theft has been filed.

The Court explained that the assessment under Section 126 and the determination of civil liability under Section 154(5) are not parallel proceedings in the sense of being interchangeable. They serve different purposes and can operate alongside each other. The Special Court’s determination of civil liability remains final for that purpose and where the amount deposited by the Consumer exceeds the civil liability ultimately determined, the excess must be refunded in accordance with Section 154(6).

On the question of restoration of electricity, the Court observed that electricity is an essential commodity necessary for life and livelihood, including business activities. Although a cautious approach is required in cases involving allegations of theft, Constitutional Courts are not completely precluded from protecting Consumers against arbitrary action by Distribution Licensees.

The Court held that where the provisional assessment appears prima facie arbitrary, the High Court may, for reasons recorded, direct restoration of electricity upon deposit of an amount not less than 50% of the demand. In the present case, the High Court was justified in directing restoration upon payment of 50% of the provisionally assessed amount.

 

CONCLUSION

The Judgment provides important clarity on the statutory remedies available to consumers facing allegations of electricity theft. It recognises that the power to disconnect electricity under Section 135 does not exclude the assessment procedure under Section 126 or the consumer’s right to challenge the assessment under Section 127.At the same time, the Court has maintained the distinct jurisdiction of the Special Court to determine civil liability under Section 154(5).

 

SARTHAK KALRA

Senior Legal Associate

The Indian Lawyer & Allied Services

 

Editor’s Comments

 

The decision above strikes a balance between protecting the interests of electricity distribution licensees and ensuring that consumers are not subjected to arbitrary demands or deprived of an essential service without an appropriate opportunity to contest the assessment. Very often consumers are given huge bills which are incorrect. The fear of disconnection forces them to pay these bills. The fact that the Apex Court held that where the provisional assessment appears prima facie arbitrary, the High Court may, for reasons recorded, direct restoration of electricity upon deposit of an amount not less than 50% of the demand comes as a relief for consumers.

 

SUSHILA RAM VARMA

Advocate & Chief Consultant

The Indian Lawyer & Allied Services

 

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