Electricity Act | Consumers Facing Power Theft Charges Entitled To Procedural Safeguards Under Section 126; Can File Objections & Appeal Under Section 127: Supreme Court

"In cases of electricity theft, for seeking restoration of the supply of electricity disconnected under sub-section (1A) of Section 135 of the 2003 Act, the 'assessed amount' required to be deposited or paid under the third proviso to sub-section (1A) of Section 135 by the person concerned, in the absence of any specific procedure prescribed under the Supply Code notified under Section 181(2)(x) read with Section 50 of the 2003 Act, is to be determined by adopting the same procedure as is for assessing the electricity charges payable by a person benefiting by the unauthorized use of electricity," Supreme Court of India.

The Supreme Court, in a significant ruling dated October 26, 2026, held that consumers accused of electricity theft are entitled to the statutory procedural safeguards under Section 126 of the Electricity Act, 2003—including the right to file objections and pursue a statutory appeal under Section 127—for determining the "assessed amount" payable to seek restoration of disconnected electricity supply. A bench of Justice Manoj Misra and Justice K.V. Viswanathan observed that while an appellate determination under Section 127 is final for the limited purpose of restoring power supply under the third proviso to Section 135(1A), it remains strictly subject to the final determination of civil liability by the Special Court under Section 154(5) of the 2003 Act.

The litigation arose from supplementary bills raised by Gujarat power distribution licensees against consumers upon allegations of electricity theft under Section 135 of the Electricity Act, 2003. When the consumers challenged these supplementary demands before the Gujarat High Court, learned Single Judges and Division Benches permitted interim reconnection of electricity supply upon deposit of 50 percent of the demanded amounts and directed the distribution licensees to adjudicate objections filed by the consumers. Aggrieved by the High Court's directives allowing objections, statutory appeals, and conditional reconnection on half-deposit, the distribution licensees approached the Supreme Court in appeal.

The primary legal issue before the Supreme Court was whether the "assessed amount" contemplated under the third proviso to Section 135(1A) for reconnection in electricity theft cases must be determined following the procedure outlined in Section 126 of the Electricity Act, 2003. The Court was also called upon to determine whether a person accused of theft has a right of objection and statutory appeal under Section 127, and whether the High Court under Article 226 can direct reconnection upon a deposit of 50 percent of the disputed demand.

No Distinct Assessment Officer Or Mechanism For Theft Under The Act

Examining the statutory framework of the Electricity Act, 2003 alongside the Gujarat Electricity Regulatory Commission (Electricity Supply Code and Related Matters) Regulations, 2015, the Court observed that the parent statute does not contain any independent machinery or designate any distinct assessing officer for assessing theft of electricity outside Section 126. The bench underscored that although Section 135 addresses criminal theft, theft inevitably falls within the broader umbrella of unauthorized use of electricity defined under Section 126.

The bench reasoned that since the statutory formula prescribed in the Supply Code for computing consumption is identical for both theft and unauthorized use, the procedural mechanisms cannot be divorced. Consequently, principles of natural justice embodied under Section 126 must inform the determination of the bill raised following a disconnection.

"The expression 'the assessed amount' as used in the third proviso to sub-section (1A) of Section 135 of the 2003 Act would have to be understood as the amount assessed in accordance with the procedure delineated in Section 126 of the 2003 Act."

Interplay Between Section 126 Assessment And Special Court Under Section 154

Addressing the licensee's apprehension that an appeal under Section 127 would render the Special Court's powers under Section 154(5) redundant, the Court relied heavily on its earlier ruling in West Bengal State Electricity Distribution Company Ltd. v. Orion Metal Pvt. Ltd. to explain the operational harmony between parallel civil assessment and criminal trial regimes. The bench affirmed that the determination by an appellate authority under Section 127 is final only for the narrow objective of immediate power restoration.

The Court clarified that the Special Court alone retains exclusive jurisdiction to try offences under Sections 135 to 140 and conclusively determine civil liability under Section 154(5). If the final civil liability fixed by the Special Court is less than the amount deposited by the consumer, the excess amount must be refunded by the licensee with interest under Section 154(6).

"Merely because the Special Court is empowered to determine civil liability under Section 154(5) of the Act, in cases where a complaint is lodged, it cannot be said that there is no power conferred on authorities to make provisional assessment / final assessment under Section 126 of the Act."

Circumspection Required While Exercising Writ Powers In Theft Cases

Deliberating on the High Court’s equitable discretion under Article 226 of the Constitution, the Supreme Court acknowledged that electricity is an essential commodity necessary for life and livelihood, whose deprivation entails grave consequences. However, the bench sounded a note of caution, stating that since theft of electricity involves mens rea and criminal intent, constitutional courts should not adopt a routine or unduly lenient approach towards accused consumers.

The bench held that each case must be scrutinized on its individual facts, and constitutional courts may, in severe instances, decline restoration until the entire provisional amount is deposited. Nevertheless, given that the assessment process involves objections and hearings that consume significant time, the High Court retains jurisdiction to intervene where demands appear arbitrary on their face.

"Where the provisional assessment is prima facie arbitrary, in our view, the High Court may, for reasons to be recorded, order restoration of the supply by directing the writ petitioner to pay such amount, out of the demanded amount, which should not be less than 50%."

Appeals Dismissed With Clarification On Special Court Primacy

Applying these settled principles to the appeals, the Court affirmed the Gujarat High Court’s directions allowing the writ petitioners to file objections against the supplementary bills and granting reconnection upon depositing 50 percent of the provisionally assessed demand. The bench noted that this interim deposit benchmark aligned with the statutory pre-deposit requirement of fifty percent prescribed under Section 127(2) of the 2003 Act.

The Supreme Court dismissed the appeals filed by the distribution licensees, modifying the High Court's order only to clarify that any assessment by the authority or appellate authority under Section 127 remains strictly subject to the ultimate determination of civil liability by the Special Court under Section 154(5).

The Supreme Court concluded by dismissing the distribution licensees' appeals, holding that procedural safeguards of provisional assessment, objections, and appeal under Sections 126 and 127 apply to electricity theft assessments for restoration purposes under Section 135(1A). This ruling provides significant procedural clarity for advocates handling electricity litigation, ensuring consumers facing disconnection on theft allegations are shielded from arbitrary ex-parte demands while preserving the Special Court's ultimate authority to adjudicate civil liability.

Date of Decision: October 26, 2026