Case Note & Summary
The petitioner, M/s Kanoria Industries Limited, a company incorporated under the Companies Act, 1956, was an industrial consumer of electricity supplied by the Hubli Electricity Supply Company Limited (HESCOM). The petitioner was in arrears of electricity charges totaling Rs.55,28,195/-. In partial discharge, the petitioner issued a cheque for Rs.30,00,000/- dated 12.12.2005, drawn on Syndicate Bank, Bagalkot. The cheque was dishonoured and returned unpaid. However, before the last date for payment of the dues, the petitioner immediately issued a pay order for the full outstanding amount of Rs.55,28,195/- dated 16.12.2005, which was duly encashed by the respondents. Despite this, the respondents imposed a penalty of Rs.60,000/- as a "cheque dishonour fee" under Regulation 29.05(d) of the Electricity Supply and Distribution Code, 2001. The petitioner challenged this levy by filing a writ petition under Articles 226 and 227 of the Constitution of India, seeking quashing of the bill dated 01.01.2006 insofar as it included the cheque dishonour fee. The legal issue was whether the respondents were entitled to levy such a fee when the entire arrears had been paid before the due date. The petitioner argued that the levy was without any statutory authority or contractual basis. The respondents contended that the fee was permissible under the Code. The court, after hearing both sides, held that the levy of cheque dishonour fee was not supported by any provision of the Electricity Act, 2003, or the Code, and that the respondents had no authority to impose such a penalty. The court quashed the bill to the extent of the cheque dishonour fee and directed the respondents not to collect the same.
Headnote
A) Electricity Law - Cheque Dishonour Fee - Levy Without Statutory Authority - The court considered whether the respondent electricity company could levy a cheque dishonour fee under Regulation 29.05(d) of the Electricity Supply and Distribution Code, 2001, when the petitioner had paid the entire arrears by a pay order before the due date. The court held that the levy of such fee was without any statutory backing or contractual agreement, and therefore, the respondents were not entitled to collect the same. (Paras 2-4) B) Electricity Law - Penalty - Section 56 of the Electricity Act, 2003 - The court examined the scope of Section 56 of the Electricity Act, 2003, which provides for disconnection for non-payment. The court held that the cheque dishonour fee imposed by the respondents was not a charge authorized under the Act or the Code, and thus, the respondents could not recover it. (Para 4) C) Constitutional Law - Writ Jurisdiction - Articles 226 and 227 of the Constitution of India - The court exercised its writ jurisdiction to quash the bill raised by the respondents insofar as it sought to levy and collect the cheque dishonour fee, holding that the petitioner was not liable to pay such sum. (Para 1, Order)
Issue of Consideration
Whether the respondent electricity company is entitled to levy a cheque dishonour fee of Rs.60,000/- under Regulation 29.05(d) of the Electricity Supply and Distribution Code, 2001, when the petitioner had already paid the entire outstanding amount by a pay order before the due date.
Final Decision
The court allowed the writ petition and quashed the bill dated 01.01.2006 insofar as it sought to levy and collect a sum of Rs.60,000/- as cheque dishonour fee, holding that the petitioner is not liable to pay any such sum and that the respondents are not entitled to levy and collect the same.
Law Points
- Cheque dishonour fee
- Electricity Supply and Distribution Code
- 2001
- Regulation 29.05(d)
- Section 56 of the Electricity Act
- 2003
- levy without statutory authority
- penalty without contract
- writ jurisdiction under Articles 226 and 227
