No Interest Payable On Statutory Pre-Deposit Under Section 127(2) Of The Electricity Act: Bombay High Court

Summary

The Bombay High Court in the case of Illiyas Mangroo Shaikh v. Bombay Electricity Supply and Transport Undertaking & Ors. held that a consumer has no statutory right to claim interest on the mandatory pre-deposit made under Section 127(2) of the Electricity Act, 2003 when the assessment of unauthorised use of electricity is set aside in appeal. The Court clarified that the deposit is only a condition precedent for maintaining an appeal and is not a payment towards tariff or consumption charges. In the absence of an express statutory provision creating a corresponding liability on the distribution licensee to pay interest, the Court refused to grant interest on equitable or reciprocal considerations. The writ petition challenging the denial of interest was dismissed.

Case Timeline

An assessment of unauthorised use of electricity under Section 126 of the Electricity Act was made against the petitioner, who operated a plastic granule manufacturing unit. To challenge this assessment, the petitioner deposited 50% of the assessed amount, amounting to ₹6,75,000, in compliance with Section 127(2) as a precondition for filing an appeal. The Appellate Authority set aside the final assessment order but declined to grant interest on the pre-deposit, directing only refund or adjustment. Aggrieved by the refusal to grant interest, the petitioner filed a writ petition before the Bombay High Court under Article 227 of the Constitution. The High Court heard the matter and ultimately upheld the Appellate Authority’s decision.

Issue Raised

The central issue was whether a consumer is entitled to claim interest on the statutory pre-deposit made under Section 127(2) of the Electricity Act, 2003, when the assessment order for unauthorised use of electricity is subsequently set aside in appeal.

Arguments

The petitioner argued that once the assessment was set aside, the statutory pre-deposit made under Section 127 ought to be refunded with interest, since the compulsory deposit restricted the consumer’s use of funds during the appeal. Relying on principles of restitution and unjust enrichment, and by analogy with Section 62(6) of the Electricity Act, it was contended that fairness required compensation by way of interest.

The respondents opposed the claim, submitting that Section 127 creates no statutory obligation to pay interest on such deposits, which are merely procedural conditions for appeal. They emphasised that while the statute provides for interest payable by consumers in default, it imposes no reciprocal liability on the licensee, and the amount had already been adjusted against subsequent bills.

Judgment

The Bombay High Court affirmed the ruling of the Appellate Authority following the dismissal of a writ petition by the court. According to the court, when filing an appeal under Section 127(2), the consumer, by making a 50% deposit of the assessed sum, shall fulfil the obligation placed upon the parties by the statute. The consumer’s deposit is not like a tariff or consumption charge; rather, it is a required condition to maintain an appeal. It is further indicated by the specific wording of the statute that Section 127(6) provides for interest liability to the consumer only in cases of failure to pay an assessed amount, and there is no equivalent.

The court declined to create an explicit reciprocity principle from the statute and warned against the creation of a casus omissus. Additionally, the court concluded that Section 62(6) applies in a distinct context concerning excess tariff recovery and cannot be applied to statutory pre-deposits. Finally, because the deposit was previously applied, the court rejected any unjust enrichment argument and found no error by the appellate authority in refusing to award interest; as such, it did not exercise supervisory authority pursuant to Article 227.

Analysis

This ruling upholds a conventional statutory and textual reading of the Electricity Act, 2003, in particular in relation to Sections 126 and 127. The Court has clearly identified a line of demarcation between the issue of pre-deposit and substantive payments, such as your tariff or charges for electricity consumption, and has created a clear distinction between amounts you have been obliged to pay by law in order to access your rights of appeal to the appellate courts, and amounts that you have paid in relation to your commercial arrangement to supply you with electricity.

One key component of the ruling is that the Court has held that it cannot apply equitable principles where the law and statute are silent on the subject of equity. The ruling again confirms the principle of judicial restraint, whereby the Courts will not read into the law or the statutes implied rights or obligations. The Court’s emphasis on casus omissus supports the view that the Judiciary is unable to make new laws or substitute implied obligations in the absence of a clear language of the legislation and it is particularly true in the context of legislation or statutes that govern the economy or regulated environments. As such, all conditions precedent and consequences of the operation of such statutes are very clearly defined by the legislature.

The second significant aspect of the ruling is the Court’s approach to the provisions of Section 62(6). The Court declined to extend to amounts that have been paid for the purpose of excess tariffs and acknowledged that there exists a separate and distinct area of law when considering amounts which have been paid for the purpose of excess tariff refunds. The Court was careful to maintain a distinction between the regulatory pricing and procedures that govern the operation of an appeal. Finally, the Court’s final approach to the adjustment of the deposit has further minimised the argument of unjust enrichment. The consumer effectively received the benefit of the adjustment in future bills.

Conclusion

The decision confirms that interest on pre-deposit under Section 127(2) of the Electricity Act cannot be claimed unless the statute expressly grants such a right. The Court treated the deposit as a procedural requirement rather than a substantive charge and declined to introduce reciprocity or equity-based claims into a clear statutory scheme.