Court Rules Captive Power Use for In-House Construction Does Not Constitute Unauthorized Electricity Usage
In a significant ruling, the Telangana High Court has set aside a provisional assessment order under Section 126 of the Electricity Act, 2003, against ITC Limited. The court held that the electricity generated by ITC's captive power plants and used for in-house construction activities does not amount to unauthorized use under the Act. The judgment, delivered by Justice Nagesh Bheemapaka, emphasized that proceedings under Section 126 cannot be invoked for electricity generated and used within the same premises for construction purposes.
The case arose when the Northern Power Distribution Company of Andhra Pradesh Ltd. (NPDCL) accused ITC of unauthorized electricity use, asserting that ITC supplied power to its contractor, M/s Shapoorji Pallonji & Co. Ltd., for construction activities, which they claimed constituted resale of electricity and unauthorized usage. NPDCL assessed a charge of Rs. 81,18,300 against ITC for the alleged misuse.
ITC contended that the electricity was generated from its captive power plants and was used solely for constructing additional facilities within its premises, which did not require external supply or violate any statutory provisions. The company argued that the power was not drawn from the distribution licensee and thus did not fall under the purview of Section 126.
The court found that the foundational fact necessary for invoking Section 126 was not established by NPDCL, as the electricity was not supplied by them but generated by ITC itself. The judgment underscored that the jurisdiction under Section 126 could not be assumed merely based on regulatory compliance issues related to open access and supply regulations. It further clarified that using electricity for in-house construction by a contractor does not equate to unauthorized usage or resale.
Justice Bheemapaka noted that the allegations did not satisfy the statutory requirements for theft under Section 135 of the Act and that the proceedings under Section 126 were legally unsustainable. The court also addressed the question of alternative remedies, stating that when jurisdictional competence is challenged, the availability of such remedies does not bar the writ jurisdiction of the High Court under Article 226 of the Constitution.
With this judgment, the court has provided clarity on the scope of Section 126, particularly concerning captive power generation and usage, marking a precedent for similar disputes in the future.
Bottom Line :
Proceedings under Section 126 of the Electricity Act, 2003 cannot be invoked in cases involving electricity generated by a captive generating plant and utilised within its own premises for construction purposes, as such usage does not constitute "unauthorised use of electricity" under the Act.
Statutory provision(s): Electricity Act, 2003 Sections 126, 135; Constitution of India, 1950 Article 226
