Section 126 Electricity Act | Assessment Based Solely on Board’s Internal Data Without Site Inspection is Void Ab Initio: Himachal Pradesh High Court

“This 'any person', by no stretch of imagination, can be the Board... Section 126 can be invoked by the assessing authority only if it finds that a person who maintains the record is found indulging in unauthorized use of electricity.”— In a seminal ruling, the High Court of Himachal Pradesh, comprising Justice Ajay Mohan Goel, quashed a provisional assessment order of ₹4.55 Crores issued by the Himachal Pradesh State Electricity Board Limited (HPSEBL), holding that a demand raised solely on internal MRI data without a physical inspection of the consumer's premises or records is legally unsustainable.

The Controversy: A ₹4.55 Crore Demand Without Inspection

The case arose when M/s Kundlas Loh Udyog challenged a provisional assessment order dated March 15, 2021. The HPSEBL had raised a demand of ₹4,55,18,952/- alleging unauthorized use of electricity through meter tampering between August 2014 and May 2015. The Board admitted that the assessment was based entirely on the scrutiny of MRI energy data available with the Board itself.

The Petitioner contended that the impugned order was non est in the eyes of law as the Assessing Officer had failed to conduct any inspection of the premises, equipment, or records maintained by the consumer, which is a mandatory statutory prerequisite under Section 126 of the Electricity Act, 2003.

“The provisional assessment order is based on the record of the Electricity Board itself, which could not have formed the foundation of the invocation of Section 126 of the Electricity Act.”

Statutory Interpretation: ‘Records Maintained by Any Person’

The central legal issue was the interpretation of Section 126(1), which allows assessment upon inspection of "records maintained by any person." The HPSEBL argued that "any person" could include the Board itself, justifying the use of internal data.

Rejection this contention, Justice Goel held that the phrase "records maintained by any person" refers strictly to the consumer or the person alleged to be indulging in unauthorized use. The Court clarified that the legislative intent requires the Assessing Officer to form a conclusion based on an inspection of the consumer's premises or the consumer's records. Relying on the Board's own data to allege tampering, without corroborative physical inspection, violates the statutory scheme.

Procedural Sanctity and The Supply Code

The Court also scrutinized the Himachal Pradesh Electricity Supply Code, 2009. Clauses 6.1.1 to 6.1.7 mandate that an Assessing Officer must inspect the premises, prepare a detailed inspection report indicating the condition of seals/meters, and serve it upon the consumer.

In this case, the Court noted that despite directions, the Board failed to produce any original inspection report. The Court observed that the procedure prescribed under Section 126 is sacrosanct. Since the assessment was not preceded by the mandatory inspection, the initiation of proceedings was held to be impermissible.

“When procedural violation is writ large on the face of record, intervention is justified at the provisional stage itself.”

Writ Jurisdiction Against Provisional Orders

The HPSEBL raised a preliminary objection regarding the maintainability of the writ petition, arguing that the petitioner should have filed objections to the provisional order and awaited the final assessment.

The High Court rejected this argument, establishing that where an authority exercises power arbitrarily and in complete breach of statutory provisions, the High Court can exercise its extraordinary jurisdiction under Article 226 of the Constitution. The Court held that forcing a litigant to undergo the statutory process is unnecessary when the foundational order is void ab initio.

Relying on the Supreme Court’s decision in Executive Engineer, Southco v. Sri Seetaram Rice Mill (2012), the High Court reiterated that proceedings under Section 126 must commence with an inspection. Consequently, the Court allowed the petition and quashed the provisional assessment order dated 15.03.2021.

Date of Decision: 29/12/2025