ORDER
Ramesh Ranganathan, J.
1. W.P. No. 3211 of 2006 was filed seeking to have the provisional assessment notice dated 17.02.2006, issued by the Assistant Divisional Engineer, Electrical Operation of the Central Power Distribution Company of A.P. Ltd., declared as illegal, arbitrary, unjust and contrary to Section 126 of the Electricity Act, 2003. When the matter came up for admission on 17.3.2006 the learned Single Judge, while examining the question, whether the provisions of the Electricity Act, 2003 empowered the inspecting officer to disconnect power supply if a person was found indulging in unauthorized use of electricity, noticed an apparent conflict between two earlier Division Bench Judgments in Komarapu Chiranjeevulu v. Eastern Power Distribution Co. of A.P. Ltd. Judgement in W.A. No. 194 of 2004 dated 9.7.2004, and Mallikarjuna Polishing Industries v. Chief Managing Director, Transmission Corporation of A.P. Ltd. Judgment in W.A. Nos. 452 and 477 of 2004 dated 11.3.2004, While the Division Bench, in Komarapu Chiranjeevulu, had held that, if the assessing officer on inspection finds that a person is indulging in unauthorized use of electricity, he cannot be a silent spectator and permit such unauthorized use of electricity until final assessment is made, the Division Bench, in Mallikarjuna Polishing Industries Judgment in W.A. Nos. 452 and 477 of 2004 dated 11.3.2004, had observed that Section 126 of the Electricity Act, 2003 does not confer any authority to discontinue or disconnect power supply or call upon the consumer to pay even a part of the provisionally assessed amount till a final assessment is made and it is only after a final assessment order is passed can the authority proceed further in the matter.
2. The learned Single Judge was of the opinion that there was a need for an in-depth analysis of the several provisions of the Act, and the subordinate regulatory instruments made thereunder, to determine whether the legal domain enabled disconnection of supply and demand and collection of a provisionally assessed amount and that it was appropriate that the conflict be resolved by an authoritative pronouncement of a Larger Bench.
3. Sri D.V. Nagarjuna Babu, learned Counsel for the petitioners, would contend that the only power conferred on the inspecting officer, when he comes to the conclusion that the consumer is indulging in unauthorized use of electricity, is to make a provisional assessment and, after complying with the procedural requirements under Section 126 of the Electricity Act, 2003, to pass a final order of assessment of the electricity charges payable by such person at the rate equivalent to one and half times the applicable tariff. Learned Counsel would submit that the only liability on the consumer, even if he is finally assessed to have indulged in unauthorized use of electricity, is to pay the enhanced tariff and that even this final assessment is subject to appeal under Section 127 of the Act. Learned Counsel would submit that, with a view to avoid unnecessary harassment of consumers by unscrupulous officers of the Corporation, no provision has been made in the Electricity Act, 2003 for disconnection of power supply for alleged unauthorized use of electricity and, in the absence of a specific provision conferring power on the officials of the respondent corporation in this regard, it must necessarily be held that the corporation is precluded from disconnecting power supply at any time prior to the passing of a final assessment order or even thereafter. Learned Counsel would submit that, while the enquiry under Section 126 of the Electricity Act, 2003 is summary, a full-fledged enquiry is contemplated under Section 154 of the Act and, while a consumer can be prosecuted before a Special Court for an offence of theft of electricity, neither Section 135 nor Section 154 confer power or authority to disconnect power supply, for alleged unauthorized use of electricity, pending finalization of assessment. Learned Counsel would contend that since this question, with regards the power/authority to discontinue supply of electricity, for alleged unauthorized use thereof, did not arise for consideration before the Division Bench in Komarapu Chiranjeevulu Judgement in W.A. No. 194 of 2004 dated 9.7.2004, and was directly in issue in M/s. Mallikarjuna Polishing Industries Judgment in W.A. Nos. 452 and 477 of 2004 dated 11.3.2004, there was no conflict between the aforesaid judgments of co-ordinate benches and it is, therefore, not necessary for this Full Bench to answer the reference. Learned Counsel would contend that Section 135, which prescribes punishment for theft of electricity, cannot be construed as empowering the respondents to disconnect supply of electricity, as an interim measure, pending assessment proceedings under Section 126 or criminal prosecution/determination of civil liability under Section 154 of the Act. Learned Counsel would contend that Clause 39, of the terms and conditions of supply made under Section 49(4) of the Electricity (Supply) Act 1948, is not saved under Section 185 of the Electricity Act, 2003 and that no reliance can be placed thereupon to contend that the respondents have the power to disconnect supply of electricity, for its unauthorized use, even after the Electricity Act, 2003, has come into force. Learned Counsel would submit that, even otherwise, Regulation 39 deals with pilferage and not theft of electricity. He would contend that the power to disconnect future supply of electricity, as provided for under Regulation 7-A of Regulation 5 of 2004, is ultra vires the Electricity Act, 2003 and even otherwise, as Regulation 7-A came into force only on its publication in the A.P. Gazette on 4.3.2006, the respondents did not have authority, prior thereto, to disconnect supply of electricity for its unauthorized use. Learned Counsel would rely on Sohan Lal v. North Delhi Power Ltd. 2004 AD. (Del.)-7-548 and Hasi Mazumdar v. West Bengal State Electricity Board .
4. Sri N. Subba Reddy, learned Counsel for the respondent corporation, on the other hand, would contend that the power conferred under the earlier enactments to discontinue supply of electricity to a consumer, found indulging in its unauthorized use, is saved under the Electricity Act, 2003. Learned Counsel would refer to the provisions of the Indian Electricity Act, 1910, the Electricity (Supply) Act, 1948, the A.P. Electricity Reforms Act, 1998, the Electricity Act, 2003, and to the terms and conditions of supply made thereunder, to contend that the power which the authorities earlier had to discontinue supply of electricity remains available even after the Electricity Act, 2003 came into force. Learned Counsel would submit that, even otherwise, the competent authority under the Act must be held to have the inherent power to disconnect power supply or to possess such a power as ancillary and incidental to its powers of inspection. Learned Counsel would submit that any other interpretation of the provisions of the Electricity Act, 2003 would defeat the very object of the enactment and permit continued unauthorized use of electricity which would be against larger public interest. Learned Counsel would submit that sale of electrical energy is under the terms and conditions of the licence, that the licence provided for disconnection of power supply, that failure of the consumer to conform to the prescribed norms, and their unauthorized use of electricity, would enable the competent authority to exercise its inherent powers to disconnect power supply. Learned Counsel would rely on Hyderabad Vanaspathi Ltd v. A.P. State Electricity Board and M.P. Electricity Board v. Harsh Wood Products .
5. Before examining the rival contentions it is useful to refer to the relevant Statutory provisions, Orders and Regulations made under the Electricity Act, 2003 which came into force with effect from 10.6.2003. Section 2(7) thereof defines the “Board” to mean the State Electricity Board, constituted under Section 5(1) of the Electricity (Supply) Act, 1948. Section 2(17) defines ‘distribution licensee’ to mean the licensee authorized to operate and maintain distribution systems for supplying electricity to consumers in his area of supply. Section 2(24) defines ‘Electricity Supply Code’ to mean the Electricity Supply Code specified under Section 50. Section 2(39) defines licensee’ to mean a person who has been granted a licence under Section 14. Section 2(57) defines ‘regulations’ to mean regulations made under the Act. Section 2(58) defines ‘repealed laws’ to include the Indian Electricity Act, 1910 and the Electricity (Supply) Act, 1948. Section 2(64) defines the ‘State Commission’ to mean the State Electricity Regulatory Commission constituted under Sub-section (1) of Section 82. Section 2(70) defines ‘supply’, in relation to electricity, to mean the sale of electricity to a licensee or a consumer and Section 2(73) defines ‘transmission licensee’ to mean a licensee authorized to establish or operate transmission lines. Under Section 12, no person shall transmit or distribute electricity unless he is authorized to do so by a licence issued under Section 14 or is exempt under Section 13 of the Act. Under Section 14, the appropriate commission may, on an application made to it under Section 15, grant a licence to any person to transmit electricity as a transmission licensee or distribute electricity as a distribution licensee in any area as may be specified in the licence. Section 16 relates to the conditions of licence and empowers the appropriate commission to specify any general or specific conditions which shall apply either to a licensee or a class of licensees and such conditions shall be deemed to be the conditions of such licence. Under the proviso to Section 16, the Appropriate Commission is required, within one year from the appointed date, to specify any general or specific conditions of licence applicable to the licensees, referred to under the proviso to Section 14, after expiry of one year from the commencement of the Act. Section 30 relates to transmission within the State and thereunder the State Commission shall facilitate and promote transmission and supply by economical and efficient utilization of electricity. Part VI of the Electricity Act, 2003 relates to distribution of electricity and contains the provisions with respect to distribution licensees. Section 42 relates to duties of distribution licencees and open access. Section 43 requires the distribution licensee, on an application made by the owner or occupier of any premises, to supply electricity to such premises. Under Section 45(1) the price to be charged for supply of electricity shall be in accordance with such tariffs fixed from time to time and the conditions of the licence. Section 45(4) provides that, subject to the provisions of Section 62, in fixing charges the distribution licensee shall not show undue preference to any person or class of persons or discriminate against any person or class of persons. Section 45(5) provides that the charges fixed by the distribution licensee shall be in accordance with the provisions of the Electricity Act, 2003 and the regulations made in this behalf by the State Commission. Section 47(1) enables the distribution licensee to require any person, who seeks supply of electricity in pursuance of Section 43, to give reasonable security, as may be determined by the Regulations, for payment of all monies which may become due to him in respect of the electricity supplied to such person. Under Section 48, a distribution licensee may require any person, who seeks supply of electricity under Section 43, to accept any restriction which may be imposed for the purpose of enabling the distribution licensee to comply with the regulations made under Section 53. Section 50 requires the State Commission to specify an Electricity Supply Code to provide, among others, for recovery of electricity charges, tampering, distress or damage to electrical plant, electric lines or meter, entry of the distribution licensee, or any person acting on his behalf, for disconnecting supply and removing the meter etc., Section 53 is the provision relating to safety and electricity supply. Section 56(1) enables the licensee, after giving not less than fifteen clear day’s notice in writing to such person, and without prejudice to his rights to recover such charge or other sum by way of suit, to cut off supply of electricity where the person neglects to pay any charge for electricity or any sum other than a charge for electricity due from him to a licensee in respect of supply, transmission or distribution of electricity and for that purpose to disconnect any electric supply line or other works being the property of such licensee through which electricity may have been supplied, transmitted, distributed and to discontinue supply until such charge or other sum together with any expenses incurred by him in cutting off and reconnecting the supply are paid, but no longer. Part VII of the Electricity Act, 2003 relates to Tariff and section 61 to the Tariff Regulations. Under the proviso to Section 61, the terms and conditions for determination of tariff under the Electricity (Supply) Act, 1948, the Electricity Regulatory Commission Act, 1998, and the enactments specified in the schedule, including the A.P. Electricity Reforms Act, 1998, as they stood immediately before the appointed date, shall continue to apply for a period of one year or until the terms and conditions for tariff are specified under Section 62, whichever is earlier. Under Section 62(1), the appropriate Commission shall determine the tariff in accordance with the provisions of the Act for transmission and retail sale of electricity. Under Section 62(3), the appropriate Commission, while determining the tariff under the Act, shall not show undue preference to any consumer of electricity but may differentiate according to the consumer’s load factor, power factor, etc., Section 82(1) requires every State Government, within six months from the appointed date, by notification, to constitute for the purposes of the Act, a Commission for the State to be known as the Electricity Regulatory Commission. Under Section 82(2) the State Commission is a body corporate having perpetual succession and a common seal. Section 86 relates to the functions of the State Commission. Part XII of the Electricity Act, 2003 relates to Investigation and Enforcement. Section 126, which relates to assessment, reads thus:
(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 officer comes to the conclusion that such person is indulging in unauthorized uses of electricity, he shall provisionally assess to the best of his judgment the electricity charges payable by such person or by any other person benefited 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 a notice has been served under Sub-section (2), shall be entitled to file objections, if any, against the provisional assessment before the assessing officer, who may, after affording a reasonable opportunity of hearing to such person, pass a final order of 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:
PROVIDED that in case the case deposits the assessed amount, he shall not be subjected to any further liability or any action by any authority whatsoever.
(5) If the assessing officer reaches to the conclusion that unauthorized use of electricity has taken place, it shall be presumed that such unauthorized use of electricity was continuing for a period of three months immediately preceding the date of inspection in case of domestic and agricultural services and for a period of six months immediately preceding the date of inspection for all other categories of services, unless the onus is rebutted by the person, occupier or possessor of such premises or place.
(6) The assessment under this section shall be made at a rate equal to one-and-half times the tariff applicable for the relevant category of services specified in Sub-section (5).
Explanation: For the purposes of this section,-
(a) “assessing officer” means an officer 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 artificial means; or
(ii) by a means not authorized 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 authorized.
6. Section 127 provides for an appeal to the appellate authority. Part XIV of the Electricity Act, 2003 relates to offences and penalties and Section 135 thereunder to theft of electricity. Section 135(1) provides that whoever dishonestly, taps, makes or causes to be made any connection with overhead, underground or under water lines or cables, or service wires, or service facilities of a licensee; or tampers a meter or installs or uses a tampered meter which interferes with accurate or proper registration, calibration or metering of electric current or otherwise results in a manner whereby electricity is stolen or wasted; or damages or destroys an electric meter, so as to abstract or consume or use electricity shall be punishable with imprisonment for a term which may extend to three years or with fine or with both. Section 135(2) provides that any officer, authorized in this behalf by the State Government, may enter, inspect, break open and search any place or premises in which he has reason to believe that electricity is used unauthorisedly; and search, seize and remove all such devices, instruments, wires or articles which has been or is being used for unauthorized use of electricity. Under Section 135(4) the provisions of the Code of Criminal Procedure, relating to search and seizure, shall apply to searches and seizures under the Act. Under Section 147, the penalties imposed under the Electricity Act, 2003 shall be in addition to, and not in derogation of, any liability in respect of payment of compensation. Part XV relates to Special Courts and Section 153 to the Constitution of Special Courts. Under Section 153(1) the State Government may, for the purpose of providing speedy trial of offences referred to in sections 135 to 139, by notification in the Official Gazette, constitute as many Special Courts as may be necessary for such area or areas, as may be specified in the notification. Section 154 prescribes the procedure and power of Special Courts and, under Sub-section (1) thereof, every offence, punishable under Sections 135 to 139, shall be triable only by the Special Courts. Section 154(5) enables the Special Court to determine the civil liability against a consumer, or a person, in terms of money for theft of energy which shall not be less than an amount equivalent to two times the tariff rate applicable for a period of twelve months preceding the date of detection of theft of energy or the exact period of theft, if determined, whichever is less and the amount of civil liability so determined shall be recovered as if it were a decree of the Civil Court. In the Explanation to Section 154 “civil liability” is defined to mean the loss or damage incurred by the Board or the licensee or the concerned person, as the case may be, due to the commission of an offence referred to in Sections 135 to 139. Section 183(1) enables the Central Government, if any difficulty arises in giving effect to the provisions of the Electricity Act, 2003, by an order published, to make such provisions, not inconsistent with the provisions of the Electricity Act, 2003, as may appear to be necessary for removing the difficulty. Section 185 relates to Repeal and saving.
7. As the distribution licensees had expressed difficulty in taking appropriate action in controlling theft of Electricity, as it became necessary to enable them to take timely and appropriate action in cases of theft or diversion of electricity to other areas and as difficulties had arisen in giving effect to the provisions of the Electricity Act, 2003, in controlling theft of electricity by the distribution licensees, the Central Government, in exercise of the powers conferred under Section 183 of the Electricity Act, 2003, made the Electricity (Removal of Difficulties) Order, 2005 which was notified in S.O. 790(E) Ministry of Power dated 08.06.2005. The said Order came into force on the date of its publication in the Official Gazette on 08.06.2005. Clause 2 of the said order, which relates to inclusion of measures to control theft in the Electricity Supply Code, reads thus:
(1). The Electricity Supply Code as specified by the State Commission under Section 50 of the Act shall also include the following, namely:
i. method of assessment of the electricity charges payable in case of theft of electricity pending adjudication by the appropriate court;
ii. disconnection of supply of electricity and removing meter, electric line, electric plant and other apparatus in case of theft or unauthorized use of electricity; and
iii. measures to prevent diversion of electricity, theft or unauthorized use of electricity or tampering, distress or damage to electrical plant, electric lines or meter.
(2). The above provisions in the Electricity Supply Code shall be without prejudice to other rights of the licensee under the Act or any other applicable laws to recover the sum due and to protect the assets and interests of the liceensee.
8. The A.P. Electricity Regulatory Commission in its proceedings dated 06.01.2006, after considering the draft general terms and conditions submitted by the distribution companies, the responses, comments and suggestions received from organizations and others and the Central Government Order dated 08.06.2005, approved the general terms and conditions of supply of distribution and retail supply licensees within the State of Andhra Pradesh. These general terms and conditions of supply superseded the earlier general terms and conditions of supply and all clauses therein, except clause 10, came into force with effect from 08.06.2005 whereas Clause 10 was to take effect from the date of the notification of the first amendment to Regulation 5 of 2004. Clause 2.2.2 of the general terms and conditions of supply defines “Agreement” or “Supply Agreement” to have the meaning ascribed to it under Clause 5.9. Clause 2.2.27 defines HT agreement to have the meaning ascribed to it in Clause 5.9 and Appendix II A. Clause 2.2.28 defines Inspecting Officer to mean the officer or person authorized by the company to carry out inspections as stated in the Designated Officer’s notification. Clause 2.2.32 defines LT agreement to have the meaning ascribed to it in Clause 5.9 and as is described in Appendix IA for certain categories and Appendix I for other LT categories. Clause 5.9 relates to the agreement with consumers to avail of supply and, under Clause 5.9.1.1, all applicants for LT categories are required to fill in and sign the undertaking contained in the application for supply of electricity for low tension, in the prescribed format in Appendix I and that the application containing the undertaking shall become a binding agreement governing supply of electricity by the Company to the consumer. While Low Tension consumers, in categories III and IV, are requires to fill in and sign the L.T agreement in Appendix 1A, Clause 5.9.1.2 requires all applicants to fill in and sign the HT agreement as provided in Appendix II A and that the HT agreement shall govern the supply of electricity by the Company for HT consumers. Under Clause 5.9.4.1, the distribution companies are empowered to terminate the agreement, after expiry of the minimum period of the agreement, by giving one month’s notice if the consumer violates the terms of the agreement or GTCS or the provisions of any law touching upon the agreement including the Electricity Act, 2003, the A.P. Electricity Reforms Act, 1998 and the Rules and Regulations made thereunder. Clause 10 relates to theft of electricity. Under Clause 10.1.1 the officers, authorized to inspect various services/premises for the purpose of detection of theft of electricity, shall be those who are authorized by the State Government under Section 135(2) of the Electricity Act, 2003. Appendix 1A is the agreement for Supply of Electricity for LT-III and LT-IV consumers. Clause 12 thereunder requires consumers to agree that, in case they are found indulging in theft or unauthorised use of electricity, the company shall, in addition to levy of additional charges, have the right to disconnect supply of electricity to their premises as provided in the general terms and conditions of supply approved by the Commission from time to time. A similar clause is found in Appendix IIA which is the agreement for supply of electricity at High Tension.
9. The A.P. Electricity Regulatory Commission, took note of the Electricity (Removal of Difficulties) Order, 2005 made by the Central Government, under Section 183 of the Electricity Act, 2003, on 08.06.2005 and the general terms and conditions of supply of distribution licensees which, inter alia, contained matters covered in the order dated 08.06.2005. In exercise of the powers vested in it under Section 181 of the Electricity Act, 2003, the A.P. Electricity Regulatory Commission amended Regulation 5 of 2004 called the A.P. Electricity Regulatory Commission Electricity Supply Code (first amendment) Regulations, 2005. These regulations came into force from the date of its publication in the A.P. Gazette on 04.03.2006. The amendment incorporated Clause 7-A in Regulation 5 of 2004. Regulation 7-A reads thus:
7A: Measures to be taken by distribution licensees for control of theft of electricity:
1). The Distribution Licensees shall follow the procedure approved by the Commission in terms and Conditions of Supply of Distribution Licensees under clauses 21 of their Distribution Licences for assessment of electricity charges payable in the case of theft of electricity, pending adjudication by the appropriate court.
2). The Distribution Licensees shall be entitled to disconnect supply of electricity in the case of theft of unauthorized use of electricity as provided in the Terms and Conditions of Supply of Distribution Licensees approved by the Commission under Clause 21 of the licence granted to the Distribution Licensees.
3). The licensees shall take measures to prevent diversion of electricity, theft or unauthorized use of electricity, or tampering distress or damage to electrical plant, electric lines or meter in accordance with the provisions of the Act and clauses 7 and 7A herein.
4). The provisions of Clause 7A shall be without prejudice to the other rights of the Licensee under the Act, or any other applicable laws to recover the sums due, and to protect the assets and interests of the Licensees.” (emphasis supplied).
10. The contention of Sri D.V. Nagarjuna Babu, learned Counsel for the petitioner-consumers, that the question with regards the power to discontinue supply of Electricity for its alleged unauthorized use did not arise for consideration before the Division bench in Komarapu Chiranjeevulu Judgement in W.A. No. 194 of 2004 dated 9.7.2004 and that there is no conflict between the judgments of co-ordinate Division benches, in Komarapu Chiranjeevulu Judgement in W.A. No. 194 of 2004 dated 9.7.2004 and M/s. Mallikarjuna Polishing Industries Judgment in W.A. Nos. 452 and 477 of 2004 dated 11.3.2004, necessitating a reference to the Full Bench, does not merit acceptance.
11. In Komarapu Chiranjeevulu Judgement in W.A. No. 194 of 2004 dated 9.7.2004 it was specifically contended before the Division bench that there was no provision under the Electricity Act, 2003, enabling the inspecting authorities to disconnect/discontinue supply of electricity pending final assessment and, while dealing with this contention, the Division bench observed that they were not impressed by the submission that, in the absence of any specific power under Section 126 of the Act, the assessing officer, even after coming to the conclusion on inspection of the premises that a person was indulging in unauthorized use of electricity, could not order disconnection of power supply. The Division Bench held that if, on inspection, the authorized officer finds that a person is indulging in unauthorized use of electricity, he cannot be a silent spectator and permit such unauthorized use until final assessment is made. To quote:
…Sri Gopal Chowdary, learned Counsel for the appellant mainly contended that the whole of the procedure adopted by the 2nd respondent is contrary to Section 126 of the Act, which specifically provides the procedure for the provisional assessment by an assessing officer. Respondents 2 and 3 are not assessing officers as contemplated by the Act. There is no provision in the Act enabling the inspecting authorities to disconnect electricity supply pending final assessment….
(emphasis supplied)
…That so far as the contention that there can be no disconnection of electricity supply pending provisional assessment or pending final assessment is concerned, the learned single Judge had taken the view that the respondents have acted under the terms and conditions of supply under which they admitted that they had the power to effect disconnection on noticing pilferage of energy. At any rate, we are not impressed by the submission made by the learned Counsel for the appellant that in the absence of any specific power conferred under Section 126 of the Act, the Assessing Officer even after coming to the conclusion on inspection of the premises that a person was indulging in unauthorized use of electricity cannot order disconnection of power supply but can only provisionally assess to the best of his judgment the electricity charges payable by such person benefited by the illegal use of energy. That according to the learned Counsel for the appellant, under Sub-section (6) of Section 127 of the Act whenever a person makes default in making payment of assessed amount, he may be liable to pay an amount of interest at the rate of 16% per annum compounded every six months on the expiry of 30 days from the date of assessment. But under no circumstances power can be disconnected. In our considered opinion, the assessing officer if on inspection finds that a person is indulging in unauthorised use of electricity, cannot be a silent spectator and permit such unauthorized use of electricity until the final assessment is made. That Section 56 of the Act provides for disconnection of power supply in default of payment. It provides that notwithstanding the right to recover the charges or other sums, the licencesee of the generating company may after giving not less than 15 days clear notice in writing, to such person and without prejudice to his rights to recover such charge or other sum by suit, can cut off the supply of electricity and for that purpose can cut or disconnect any electric supply line or other works being the property of such licensee or the generating company through which electricity may have been supplied, transmitted, distributed or wheeled and may discontinue supply until such charge or other sum, together with any other expenses incurred by him are paid. It is true that even Section 56 of the Act which enables disconnection of supply in default of payment requires a prior notice for disconnection. That Section 126 does not provide or enable the assessing officer to disconnect supply of power immediately. Even Sub-section (4) of Section 126 enables and provides an option to a person served with the order of provisional assessment either to accept such assessment and deposit the assessed amount within seven days of service of such provisional assessment order or prefer objections against the provisional assessment as provided for under Sub-section (3) of Section 126 of the Act.
That at any rate we do not propose to examine the question in detail for the reason that power had already been restored to the appellant’s industry under the directions of this Court and he will be entitled for the benefit of the directions issued by this Court until the final assessment is made by the 3rd respondent….
(emphasis supplied)
12. Since the question with regards the power to disconnect supply of electricity, for its unauthorized use, arose for consideration and was examined by the Division bench in Komarapu Chiranjeevulu Judgement in W.A. No. 194 of 2004 dated 9.7.2004, the conflict between the two co-ordinate Division Bench judgments, in Komarapu Chiranjeevulu Judgment in W.A. Nos. 452 and 477 of 2004 dated 11.3.2004 and M/s. Mallikarjuna Polishing Industries Judgment in W.A. Nos. 452 and 477 of 2004 dated 11.3.2004, can only be resolved by a Full bench of this Court on a reference made to it.
13. Sri N. Subba Reddy, learned Counsel for the respondents, would contend that, since the A.P. Electricity Reforms Act, 1998, continues to apply to the extent it is not inconsistent with the provisions of the Electricity Act, 2003 and as, under Section 56 of the A.P. Electricity Reforms Act, 1998, the provisions of the Electricity (Supply) Act, 1948 prevail, except to the extent of inconsistency, Section 49 of the Electricity (Supply) Act, 1948 and the Regulations made thereunder continue to operate even after the Electricity Act, 2003 came into force.
14. Section 49 of the Electricity (Supply) Act, 1948 provided for the sale of electricity by the Board to persons other than licensees and, under Sub-section (4) thereof, in fixing the tariff and terms and conditions for supply of electricity, the Board was required not to show undue preference to any person. In exercise of its power to fix tariff, and terms and conditions for supply of electricity, under Section 49 of the Electricity (Supply) Act, 1948, the A.P. State Electricity Board notified the Electricity Supply Regulations in B.P. Ms. No. 690 dated 17.9.1975. Regulation 39 thereunder related to malpractice including pilferage of energy. Regulation 39.2 authorised officers of the Board to enter upon the consumer’s premises and check installations where there was scope for suspecting that the consumer was guilty of any malpractice in respect of the use of electrical energy or was using devices to commit pilferage of electrical energy. Under Regulation 39.3, if any consumer obstructed or prevented the Board’s Officers or employees, in any manner, from entering upon the premises to which supply was being afforded and, if there was scope for suspecting that a consumer was guilty of any malpractice in respect of use of electrical energy or pilferage of energy, the Board’s officers or employees were entitled to cause supply to be disconnected without notice and keep such supply so disconnected till the consumer afforded due facilities for inspection. Regulation 39.3 also provided that the Board was not to be responsible for any loss or inconvenience occasioned to the consumer on account of such disconnection of power supply. Under Regulation 39.5 where, on inspection of the consumer’s installations, there was scope for suspecting that the consumer was guilty of pilferage of energy, the officer authorized in this behalf by the Board could, without prejudice to the Board’s other rights, cause supply of electricity to such consumer to be forthwith disconnected without any notice and report the matter to the final assessing authority.
15. The question which arises for consideration is whether Regulation 39, made by the Board under Section 49 of the Electricity (Supply) Act 1948, and notified in B.P. Ms. No. 690 dated 17.09.1975, continues to operate even after the Electricity Act, 2003 has come into force.
16. Under Section 185(1) of the Electricity Act, 2003 the Indian Electricity Act 1910, the Electricity (Supply) Act, 1948 and the Electricity Regulatory Commissions Act, 1998 stand repealed, save as provided in the Electricity Act, 2003. In view of Section 185(3), read with the schedule to the Electricity Act, 2003, the provisions of the A.P. Electricity Reforms Act, 1998, which are not inconsistent with the provisions of the Electricity Act, 2003, shall continue to apply in the State of Andhra Pradesh. Part XIV of the A.P. Electricity Reforms Act, 1998 relates to the effect of the State Act on existing Central Legislation and Section 56 details the effect of the said Act on the Indian Electricity Act, 1910 and the Electricity (Supply) Act, 1948. Under Sub-section (1) thereof, except as provided in Section 57, the provisions of the A.P. Electricity Reform Act, 1998, notwithstanding that they are inconsistent with or contrary to the provisions of the Indian Electricity Act, 1910 or the Electricity (Supply) Act, 1948, shall prevail in the manner and to the extent provided in Sub-section (3). Under Section 56(3), on the establishment of the Commission, the provisions of the Indian Electricity Act, 1910 and the Electricity (Supply) Act, 1948 shall, in so far as the State of A.P. is concerned, be read subject to the modifications and reservations provided thereunder. Under Clause (vi), in respect of matters provided for in the Sections specified therein, including Section 49 of the Electricity (Supply) Act 1948, to the extent that the A.P. Electricity Reforms Act, 1998 has made a specific provision, the provisions of the Electricity (Supply) Act, 1948 shall not apply to the State of A.P. Under Clause (vii), the provisions of all other sections of the Electricity (Supply) Act, 1948 shall apply, except in respect of items mentioned in Clause (viii)(a) to (viii)(c) therein. No provision in the A.P. Electricity Reforms Act, 1998, which is inconsistent with the provisions of Section 49 of the Electricity (Supply) Act, 1948, has been brought to our notice. As such both Section 49 of the Electricity (Supply) Act, 1948, and the Regulations made thereunder, continued even after the A.P. Electricity Reforms Act, 1998 came into force.
17. Since the provisions of the A.P. Electricity Reforms Act, 1998, continue to remain in force, only to the extent it is not inconsistent with the provisions of the Electricity Act, 2003, it must be examined whether the power to make Regulations for pilferage of energy or unauthorized use of electricity, under Section 49 of the Electricity (Supply) Act, 1948, (which, not being inconsistent with the provisions of the A.P. Electricity Reforms Act, 1998, continued to remain in force even after the said Act came into force), is not inconsistent with the provisions of the Electricity Act, 2003. As stipulated under the proviso to Section 61 of the Electricity Act, 2003, the Regulations, made under Section 49 of the Electricity (Supply) Act, 1948, prescribing the terms and conditions for determination of tariff, continued to apply only for a period of one year after the appointing date i.e., from 10.6.2003 upto 09.06.2004 and not thereafter. As such, on or after 10.6.2004, the power to disconnect power supply, for pilferage of energy or unauthorized use of electricity, can no longer be traced to Regulation 39 of the Regulations, notified in B.P. Ms. No. 690 dated 17.9.1975, made in exercise of the powers under Section 49 of the Electricity (Supply) Act, 1948, and such regulations no longer confer power to disconnect power supply for pilferage of energy or unauthorized use of electricity. After 10.06.2004 it is only if the State Commission, which has been conferred the power to specify the Electricity Supply Code to provide for tampering of electricity, disconnecting supply of electricity, removing the electricity meter etc., has made necessary provision in this regard would such provisions apply. While the Electricity Supply Code (Regulation 5/04) came into force on 17.6.2004, (three months after its publication in the Gazette on 17.03.2004), it did not provide for measures to be taken by distribution licencees for control of theft of electricity. It is only after the said regulations were amended, by introduction of Regulation 7-A published in the A.P. Gazette on 4.3.2006, was a specific provision made in the Electricity Supply Code for disconnection of power supply for pilferage of energy or unauthorized of electricity by a consumer. In the interregnum, between 10.6.2004 and 4.3.2006, there is no Statutory provision, Rule, Regulation or Order which explicitly confers power/authority on the distribution licensees to disconnect supply of electricity for pilferage of energy or for its unauthorized use.
18. The question which, however, remains to be considered is whether such a power to disconnect supply of electricity, for pilferage of energy/unauthorized use of electricity by a consumer, can be said to inhere in the distribution licensees as ancillary or incidental to the power of inspection.
19. Under Section 135(2) of the Electricity Act, 2003, an officer authorized in this behalf by the State Government may enter, inspect, break open and search any place or premises in which he has reason to believe that electricity has been or is being used unauthorisedly and to search, seize and remove all such devices, instruments which has been or is being used for unauthorised use of electricity. Section 126 relates to assessment and if, on inspection, the assessing officer comes to the conclusion that a person is indulging in unauthorized use of electricity, he is empowered to provisionally assess, to the best of his judgment, the electricity charges payable by such person or by any other person benefited by such use. Section 126(2) requires the order of provisional assessment to be served and under Sub-section (3) thereof a person, on whom the notice is served, is entitled to file his objections, against the provisional assessment, before the assessing officer who may, after affording a reasonable opportunity of hearing, pass final orders of assessment of electricity charges payable by such person. Under Section 126(4) where a person, served with an order of provisional assessment, accepts such assessment and deposits the assessed amount he is not to be subjected to any further liability or any action by any authority whatsoever. Section 126(5) is a deeming provision and, thereunder, if the assessing officer reaches the conclusion, that unauthorized use of electricity has taken place, it shall be presumed that such unauthorized use has been continuing for a period of three months immediately preceding the date of inspection in case of domestic and agricultural services and for a period of six months for all other categories of services, unless the onus is rebutted by the person, occupier or possessor of such premises. For this period, of unauthorized use of electricity, assessment is required to be made at one-and-half times the tariff applicable to the relevant category. It is clear from Section 126(5) of the Electricity Act, 2003 that the presumption of unauthosed use of electricity is for a period of three months/six months preceding the date of inspection and not subsequent thereto. Section 126 does not provide for assessment of continued unauthorized use of Electricity after the date of inspection. Accepting the contention of the petitioner-consumers that, in the absence of any specific provision in this regard in the Electricity Act, 2003, even in cases where, on inspection, the authority comes to the conclusion that the person is indulging in unauthorized use of electricity, he would not be entitled to disconnect supply of electricity, can only mean that even after the date of inspection, unauthorised use of electricity should be permitted to be continued. That a presumption of unauthorized use of electricity for a period of three months/six months preceding the date of inspection, and not subsequent thereto, is statutorily stipulated under Section 126(5) can only mean that the Inspecting Officer has the incidental and ancillary power to disconnect/discontinue supply of electricity from the date of inspection till orders of assessment are passed, either provisional or final, as the case may be, for otherwise it would result in an anomalous situation of a consumer, though found on Inspection to be indulging in unauthorized use of electricity, being permitted to continue to do so without even being required to pay the higher tariff which he is required to pay for the period preceding the date of inspection. Disconnection/discontinuance of supply of electricity as an interim measure from the date of the inspection till orders of assessment are passed would, on the other hand, obviate this absurdity.
20. The Electricity Act, 2003 is an Act to consolidate the laws relating to generation, transmission, distribution, trading and use of electricity and for taking measures conducive to the development of electricity industry, promoting competition therein, protecting interests of the consumers, supply of electricity to all areas, rationalization of electricity tariff, ensuring transparent policies regarding subsidies and promotion of efficient and environmentally benign policies. Section 30 requires the State Commission to facilitate and promote transmission and supply by economical and efficient utilization of electricity. Permitting continued unauthorized use of electricity even when, on inspection, the consumer is found to be indulging in pilferage or unauthorised use of electricity, would not be conducive to the development of the electricity industry or in ensuring supply of electricity to all areas or in facilitating and promoting supply by economical and efficient utilization of electricity, for such unauthorized use of electricity by certain consumers would deprive bonafide and honest consumers of much needed supply of electricity which is invariably less than its ever increasing demand. That the power to disconnect power supply is incidental and ancillary to the power of inspection is clear from Section 126(4) and its proviso. Thereunder when a person, served with an order of provisional assessment accepts such assessment and deposits the assessed amount within seven days of service of such provisional assessment, he shall not be subjected to any “further” liability or any action by any authority whatsoever. The word “further” must be given its proper meaning and, in case an assessee complies with the provisional assessment and makes payment accordingly, he shall not be subjected to any liability or any action by any authority thereafter. Afortiorari, till payment is made pursuant to the provisional assessment within the period stipulated, the competent authority must be held to have the incidental or ancillary power to take steps to ensure that the consumer is not permitted to continue indulging in unauthorized use of electricity after the date of inspection till the amount assessed is paid or till final orders of assessment are passed under Section 126(3) or orders are passed in appeal under Section 127 of the Act. We make it clear that, while necessary provision can be made in the electricity supply code for disconnection of power supply even after final orders of assessment are passed under Section 126(3), in the absence of any statutory prescription for disconnection of power supply, the incidental and ancillary power of discontinuing supply of electricity as an interim measure would be available only from the date of inspection till final assessment orders are passed under Section 126(3) and, in case any amount is required to be deposited pursuant thereto, till such amount is deposited by the assessee or the order of final assessment is set aside in appeal under Section 127 of the Electricity Act, 2003.
21. While the contention of Sri D.V. Nagarjuna Babu, that conferment of such power may result in needless harassment of consumers, at the hands of unscrupulous officers, cannot be said to be without any basis, any construction of the provisions of the Electricity Act, 2003 denying power to the Inspecting officer to disconnect power supply, even if the consumer is found indulging in pilferage of energy/unauthorized use of electricity, would result in large scale misuse of electricity which would not only deny the distribution licensees of their legitimate revenues but would also deprive bonafide and honest consumer of much needed electricity, availability of which is invariably far less than its demand. A purposive construction of the provisions of the Electricity Act, 2003, would necessitate such a power to discontinue supply of electricity being held to be incidental and ancillary to the power of inspection.
22. Section 154 of the Electricity Act, 2003 enables a person indulging in theft of electricity to be punished by the Special Court. In addition to the power to punish a person indulging in theft of electricity, with imprisonment for a term which may extend to three years or with fine or with both, the Special Court under Section 154(5), is also empowered to determine the civil liability against a consumer or a person in terms of money, for theft of energy, which shall not be less than an amount equivalent to two times the tariff rate applicable for a period of twelve months preceding the date of detection of theft of energy or the exact period of theft, if determined, whichever is less. The criminal and civil liability under Section 154 or assessment, either provisional or final, under Section 126, for unauthorized use of electricity cannot be read as denuding the Inspecting Officer of the ancillary and incidental power to disconnect power supply if, on inspection, he finds that electricity is being used unauthorizedly. In Harsh Wood Products 1996(4) S.C.C. 522 and Hyderabad Vanaspathi Ltd 1998(4) S.C.C. 470, the Supreme Court held that, when power theft is found by officials, immediate disconnection of supply of electricity is not violative of Article 14 of the Constitution and that principles of natural justice would not apply. As held in Komarapu Chiranjeevulu Judgement in W.A. No. 194 of 2004 dated 9.7.2004, if the assessing officer, on inspection finds that a person is indulging in unauthorized use of electricity, he cannot be a silent spectator and permit such unauthorized use of electricity until final assessment is made.
23. In M/s. Mallikarjuna Polishing Industries Judgment in W.A. Nos. 452 and 477 of 2004 dated 11.3.2004 the Division Bench observed:
…Obviously, the provisional notice was issued under the terms and conditions issued under the Electricity (Supply) Act, 1948, which stood repealed by the Electricity Act, 2003, which came into force with effect from 10.6.2003. Chapter XII of the new Act deals with the investigation and enforcement. Section 126 provides for the process for making assessment, provisional and final, if on an inspection the equipments gadgets, machines, devices are found to be tampered with or there is unauthorized use of electricity. There is no such power, while issuing provisional assessment, to forthwith stop or disconnect electricity supply. Provisional assessment is in the nature of a show cause notice against which the consumer is entitled to have an opportunity of hearing before passing oral order of assessment by the concerned authority. As such the notices dated 07.01.2004 will be deemed to have been issued only under Section 126 of the Electricity Act under which there is no authority or power to respondents to discontinue or disconnect the electricity supply or call upon the appellants to pay even part of the provisional assessment amount till final assessment is made. Only on the appellants not complying with the final assessment orders, the respondents can proceed further in the matter and that will also be subject to the appeals to be filed by the appellants….
(emphasis supplied)
24. The question whether the power, to disconnect supply of electricity, is incidental or ancillary to the power of Inspection neither arose for consideration nor was it examined by the Division Bench in M/s. Mallikarjuna Polishing Industries Judgment in W.A. Nos. 452 and 477 of 2004 dated 11.3.2004, or by the Delhi High Court in Sohan Lal 2004 A.D. (Del)-7-548 or the Calcutta High Court in Hasi Mazumdar A.I.R. 2006 Calcutta 59. We are unable to subscribe to the opinion that, while issuing provisional assessment, there is no power to forthwith stop or disconnect supply of electricity. The Division bench judgment, in M/s. Mallikarjuna Polishing Industries Judgment in W.A. Nos. 452 and 477 of 2004 dated 11.3.2004, is overruled.
25. As noted above, the amended Regulation 7-A, of Regulation 5 of 2004 of the Electricity Supply Code, came into force from 04.03.2006 and a provision has been made therein conferring power on distribution licensees to disconnect supply of electricity in case of theft or unauthorized use of electricity as provided in the terms and conditions of Supply of Distribution licensees approved by the Commission under Clause 21 of the licence granted to them. In the present batch of cases, detection of unauthorized use of electricity was prior to the amendment of Regulation 5 of 2004 and introduction of Regulation 7-A thereto with effect from 04.03.2006. We refrain from examining the contention of Sri D.V. Nagarjuna Babu that Regulation 7-A is ultravires the Electricity Act, 2003, as this question is beyond the scope of the reference.
26. We answer the reference declaring that:
1. As stipulated by the proviso to Section 61 of the Electricity Act, 2003, the Regulations made under Section 49 of the Electricity (Supply) Act, and notified in B.P. Ms. No. 690 dated 17.09.1975, continued to operate for a period of one year after the appointed date i.e., from 10.06.2003 till 09.06.2004 and not thereafter.
2. On or after 10.06.2004, the power/authority to disconnect supply of electricity, for pilferage/unauthorized use, can no longer be traced to Regulation 39 of B.P. Ms. No. 690 dated 17.09.1975.
3. Regulation 7-A of the Electricity Supply Code, which came into force on 04.03.2006, specifically provides for disconnection of power supply for theft or unauthorized use of electricity.
4. In the interregnum between 10.06.2004 and 04.03.2006 there is no Statutory Provision, Rule, Regulation or Order which explicitly confers authority on the distribution licensees to disconnect supply of electricity for pilferage or unauthorized use.
5. The power/authority to disconnect/discontinue supply of electricity for theft, pilferage or unauthorized use is incidental and ancillary to the power of Inspection provided for under Section 126 and 135 of the Electricity Act, 2003.
6. This incidental and ancillary power to disconnect/discontinue supply of electricity, for pilferage or unauthorized use, can be exercised only as an interim measure, from the date of Inspection till final assessment orders are passed under Section 126(3) of the Electricity Act, 2003 and, in case any amount is required to be deposited pursuant thereto, till such amount is deposited by the consumer or the order of final assessment is set aside in appeal under Section 127 of the Act.
7. The Judgment of the Division bench in M/s. Mallikarjuna Polishing Industries Judgment in W.A. Nos. 452 and 477 of 2004 dated 11.3.2004 is overruled.