The Himachal Pradesh High Court has reaffirmed that provisional assessments under Section 126 of the Electricity Act, 2003 cannot be sustained without physical inspection of premises and disclosure of critical technical data to the affected party. This judgment reinforces procedural fairness in utility enforcement actions, setting a binding standard for electricity boards across India.
Background & Facts
The Dispute
The petitioner, M/s Merion Care Private Ltd., operates a healthcare facility in Baddi, Himachal Pradesh, with a sanctioned contract demand of 95 KVA. On 24.05.2024, Respondent No.3, the Assessing Officer-cum-Senior Executive Engineer of H.P. State Electricity Board Ltd., issued a provisional assessment order alleging unauthorized use of electricity. Based solely on data from a Meter Reading Instrument (MRI), the officer claimed the petitioner was drawing a load of 150.6 KVA, exceeding the sanctioned limit. The provisional assessment levied charges of Rs. 24,85,277/-.
Key Facts
- The petitioner’s sanctioned contract demand was 95 KVA (equivalent to 95 KW)
- On 15.03.2024, the petitioner applied for enhancement of power load from 100 KW to 150 KW
- The Deputy Director of Industries, Solan, issued a No Objection Certificate (NOC) on 20.04.2024 for the proposed enhancement
- Respondent No.3 relied exclusively on MRI data collected remotely, without any physical inspection of the petitioner’s premises
- The MRI data was not shared with the petitioner prior to the provisional assessment
- The petitioner filed objections on 05.06.2024, challenging the absence of inspection and non-disclosure of MRI records
- Respondent No.3 issued a final assessment order on 08.07.2024, reducing the demand to Rs. 7,38,828/- but retaining the core finding of unauthorized usage
- The petitioner appealed under Section 127 of the Electricity Act before Respondent No.2, the Divisional Commissioner, Shimla, on 15.07.2024
Procedural History
- 15.03.2024: Petitioner applied for enhancement of power load from 100 KW to 150 KW
- 20.04.2024: NOC issued by Deputy Director of Industries, Solan
- 24.05.2024: Provisional assessment order issued by Respondent No.3 under Section 126
- 05.06.2024: Petitioner filed written objections to provisional assessment
- 08.07.2024: Final assessment order issued reducing demand to Rs. 7,38,828/-
- 15.07.2024: Appeal filed under Section 127 before Respondent No.2
- 08.12.2025: Appellate Authority dismissed the appeal without addressing key objections
- 12.01.2026: Writ Petition (CWP No. 6705/2026) filed before the High Court
- 05.05.2026: Judgment delivered by the High Court
The Parties' Positions
For the Petitioner:
- No physical inspection of premises was conducted by the Assessing Officer
- MRI data forming the basis of assessment was never disclosed, denying the right to rebut
- The NOC from the Industries Department implied lawful authorization for higher load
- Section 126 mandates inspection before concluding unauthorized use
- Violation of principles of natural justice under Article 14 of the Constitution
For the Respondents:
- Section 126 permits assessment based on records maintained by the electricity board, including MRI data
- The petitioner was given opportunity to file objections
- The reduction in assessment from Rs. 24.85 lakh to Rs. 7.38 lakh demonstrated fairness
- Physical inspection is not mandatory if electronic records are reliable
- The NOC from the Industries Department does not override electricity regulations
Relief Sought
The petitioner sought quashing of the final assessment order dated 08.07.2024 and the appellate order dated 08.12.2025, and directed the Appellate Authority to re-adjudicate the appeal after providing access to MRI records and conducting a physical inspection.
The Legal Issue
The central question was whether Section 126 of the Electricity Act, 2003 permits a provisional assessment for unauthorized electricity use without physical inspection of the premises and without disclosing the underlying MRI data to the affected party, and whether such omission violates the principles of natural justice.
Arguments Presented
For the Petitioner
The petitioner relied on State of H.P. v. M/s R.K. Enterprises and Bharat Sanchar Nigam Ltd. v. Union of India to argue that Section 126 requires a physical inspection before concluding unauthorized usage. It was contended that MRI data constitutes the sole evidence of violation and its non-disclosure rendered the petitioner incapable of mounting a defense. The petitioner emphasized that the right to be heard under natural justice includes access to all material evidence relied upon. The NOC from the Industries Department, though not a license under the Electricity Act, was submitted as contextual evidence of good faith.
For the Respondent
The respondents argued that Section 126 does not mandate physical inspection, as the provision allows assessment based on records maintained by the electricity board, including automated meter readings. They asserted that the petitioner had ample opportunity to file objections and that the reduction in the assessment amount demonstrated procedural fairness. The NOC from the Industries Department was dismissed as irrelevant to compliance with the Electricity Act.
The Court's Analysis
The Court undertook a detailed textual and purposive interpretation of Section 126 of the Electricity Act, 2003. The provision states: "The Assessing Officer may, after inspection of the premises or records maintained by any person, determine the unauthorized use of electricity." The Court observed that the phrase "inspection of the premises or records" is conjunctive, not disjunctive, meaning the Assessing Officer must either inspect the premises or the records - but not merely rely on records without context.
"The language of Section 126 does not permit the Assessing Officer to act as a remote data analyst without any grounding in physical verification or transparency in evidence. The right to a fair hearing is not a formality; it is the bedrock of administrative justice."
The Court rejected the Appellate Authority’s reasoning that "plain reading" of Section 126 dispensed with inspection. It held that the Appellate Authority failed to address two critical objections: (1) the non-disclosure of MRI data, and (2) the absence of physical inspection. The Court emphasized that natural justice requires that a party be given access to all evidence used against them, particularly when such evidence is technical and inaccessible without expert interpretation.
The Court further noted that the Appellate Authority’s order was conclusory, lacking any analysis of whether the petitioner suffered prejudice due to non-disclosure. The failure to engage with the petitioner’s specific submissions rendered the order legally unsustainable.
The Verdict
The petitioner succeeded. The Court set aside the appellate order dated 08.12.2025 and directed Respondent No.2 to re-adjudicate the appeal under Section 127 of the Electricity Act, 2003. The Appellate Authority must conduct a fresh hearing, provide the petitioner with a copy of the MRI records, and conduct a physical inspection of the premises before arriving at any conclusion. The parties are directed to appear before the Appellate Authority on 14.05.2026. All pending applications are disposed of.
What This Means For Similar Cases
Inspection Is Mandatory Under Section 126
- Practitioners must now argue that Section 126 requires either physical inspection of premises or, at minimum, corroboration of electronic records with on-site verification
- Electricity boards cannot rely solely on remote meter data without demonstrating reliability or providing access to raw data
- Failure to inspect may render assessments voidable, even if the quantum is reduced
Disclosure of Technical Evidence Is Non-Negotiable
- MRI, smart meter, or any proprietary technical data used to prove unauthorized usage must be disclosed to the affected party before final assessment
- Denial of access to such data violates the audi alteram partem principle under Article 14
- Petitioners in similar cases may now seek production of raw data under Section 127 appeals or writ petitions
NOCs from Other Authorities Do Not Override Electricity Regulations
- While NOCs from departments like Industries or Municipalities may indicate intent or planning, they do not constitute legal authorization for increased electricity consumption
- Practitioners should advise clients to obtain formal load enhancement approval from the electricity board, not rely on peripheral clearances
