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by sayum
22 August 2026 7:11 AM
“Lessee Using Electricity Without Change of User Is Not a Consumer Under the Electricity Act”, In a decisive ruling Bombay High Court (Bench of Justice Amit Borkar), while allowing a batch of writ petitions, reinstated the final assessment order issued by the distribution licensee under Section 126 of the Electricity Act, 2003. The Court held that a lessee using electricity in an industrial premises for a commercial purpose without authorisation constitutes “unauthorised use” under the Act, and cannot claim the status of a 'consumer'.
Setting aside the contrary order of the Appellate Authority under Section 127, the Court clarified that the issue was not a mere tariff misclassification, but an undisclosed change in the very nature of use, attracting mandatory assessment at twice the applicable tariff rate, as per the statute.
Tenant Using Electricity in Another’s Name Without Disclosure Is Not a 'Consumer' Under Section 2(15), and Cannot Seek Benefits of Regular Supply
The High Court began its analysis by underscoring the definition of "consumer" under Section 2(15) of the Electricity Act. According to Justice Amit Borkar, the provision clearly contemplates either a sanctioned connection in one’s name or express authorisation from the licensee for such use.
“The definition is clear. It has two parts. First, the connection must be sanctioned in the name of the person. Second, if the connection is not in his name, there must be evidence that the licensee has authorised supply to him for his own use,” the Court noted.
Finding that Respondent No. 2—a lessee—had not applied for change of name, had no supply agreement with the distribution company, and failed to disclose his activity as required under Regulations 10 and 11 of the MERC Supply Code, the Court held:
“Physical occupation alone does not confer that legal right. If mere occupation were enough, any sub-tenant, caretaker or trespasser could claim the status of a consumer. That would defeat the scheme of the Act.”
The Court rejected the Appellate Authority’s view that every user of electricity is a consumer, stating this "ignores the statutory safeguards" built into the Act and the regulatory regime.
Final Assessment Under Section 126 Was Lawful; Appellate Authority Acted Without Jurisdiction in Treating the Lessee as a Consumer
The case arose when MSEDCL’s Flying Squad inspected the premises of Respondent No. 1, the registered consumer, and found that Respondent No. 2 (the tenant) was operating a commercial laboratory, whereas the supply was sanctioned for industrial purposes only. The licensee issued a provisional assessment on 8 January 2010, followed by a final order on 26 March 2010, under Section 126.
The tenant challenged the assessment before the Appellate Authority under Section 127, which set aside the statutory assessment and directed the licensee to issue a revised bill as a mere tariff difference. The Appellate Authority also held that lack of publicity of the revised MERC tariff order of June 2008 weakened the licensee’s case.
The High Court rejected each of these findings as “without jurisdiction and contrary to law”. The Court held:
“The inspection proves commercial activity in premises sanctioned for industrial use. Section 126 applies whenever electricity is used for a purpose other than authorised. The Authority cannot reduce this statutory infraction into a reclassification issue. It has rewritten the statute. This is impermissible.”
On the question of the tenant’s locus, the Court clarified that a person who is served with a provisional or final assessment under Section 126 can be treated as a “person aggrieved” under Section 127. However, such a person does not become a consumer merely by virtue of occupation:
“A tenant or any other occupant who has been served with the assessment order is a person aggrieved under Section 127. He suffers legal injury. He has a statutory right to challenge the assessment.”
“But that does not confer upon him the status of a consumer under Section 2(15).”
Undisclosed Commercial Use in Industrial Premises Is Not a Classification Error — It Is Statutory Unauthorised Use
Referring to the inspection report of 5 January 2010, which was not disputed at the time of inspection, the Court held that the commercial nature of activity in a premises sanctioned for industrial use clearly attracted Section 126(6)(b)(i).
The Court observed:
“The Electricity Act does not look at the label attached by the user. It looks at the nature of the activity actually carried out. The activity found during inspection was commercial. The connection sanctioned was industrial. This difference squarely attracts Section 126.”
Dismissing the tenant’s argument that this was merely a tariff categorisation issue, the Court observed:
“The attempt of Respondent No. 2 to describe the issue as a simple tariff dispute is not supported by the record… Once the factual deviation is established, the law mandates that unauthorised use must be assessed in accordance with the statutory formula.”
Citing the Supreme Court’s ruling in Executive Engineer v. Sri Seetaram Rice Mill (2012) 2 SCC 108, the Court reiterated that change in purpose without permission is a clear case of unauthorised use.
Ignorance of MERC Tariff Orders Is No Excuse—Once Gazetted, They Bind All Consumers
One of the grounds on which the Appellate Authority allowed the tenant’s appeal was the alleged failure of MSEDCL to publicise tariff changes, and the tenant’s ignorance of the MERC tariff order of June 2008. The Court strongly rejected this reasoning.
Relying on the Supreme Court's judgment in BSES Ltd. v. Tata Power Co. Ltd., (2004) 1 SCC 195, the Court held:
“Tariff becomes binding upon publication in the Official Gazette. From that moment, it acquires statutory force. The law does not require the distribution licensee to personally intimate each consumer.”
“Ignorance of the tariff not only fails as a defence, it is also irrelevant to the question whether Section 126 applies.”
The Court held that the Appellate Authority erred by introducing a non-existent requirement of “wide publicity” and wrongly shifted the statutory responsibility from the consumer to the licensee.
Small-Scale Industry (SSI) Registration Is Unit-Specific—Cannot Be Used to Justify Activity in Other Galas
Respondent No. 2 had sought to justify his activities across multiple galas by relying on a single SSI registration certificate. The Court found this untenable, holding that SSI registrations are location-specific, and cannot validate activity in unregistered premises.
“Industrial registrations are limited to the premises inspected and cannot be used as a blanket authorisation… This omission is significant. It shows that his activity in the new galas was carried out without the knowledge or approval of the competent authority.”
Thus, the Court held that the commercial use discovered during inspection could not be validated by an SSI certificate pertaining to another location.
Penalty at Twice the Tariff Rate Is Mandatory Under Section 126(6)—No Discretion to Reduce or Waive
In emphatic terms, the Court rejected the plea that the assessment at twice the tariff rate under Section 126(6) could be reduced or waived.
Referring to the statute, the Court held:
“The law here directs that the user must be charged at twice the normal tariff. The use of the word ‘shall’ shows that the authority has no choice.”
The Court cautioned that allowing waiver or reduction would "completely defeat the object of Section 126" and observed:
“The higher rate is not a punishment in the criminal sense. It is a statutory consequence meant to protect public revenue and discourage misuse of electricity.”
It was held that “neither the Assessing Officer nor the Appellate Authority had any power to dilute the rate.”
Appellate Authority’s Order Quashed, MSEDCL’s Assessment Restored
The Bombay High Court concluded that the Appellate Authority mischaracterised the dispute as a tariff issue, failed to appreciate the undisputed unauthorised use, and acted beyond its jurisdiction by granting consumer status to an unauthorised lessee.
Accordingly, the Court ordered:
“(i) The impugned order dated 1 August 2011 passed by Respondent No. 3 is set aside; (ii) The final assessment dated 26 March 2010 issued by the Petitioner under Section 126 is restored.”
Justice Amit Borkar held that the petitioner's action was lawful, supported by inspection evidence, and strictly within the framework of the Electricity Act, 2003, leaving no room for discretionary sympathy or recharacterisation by the appellate body.
Date of Decision: 28 November 2025
