Andhra Pradesh HC Quashes Rs 5.27 Crore Back Billing Demand on RINL, Holds Clause 22.3.3.3 Cannot Apply Where Meter Itself Is Not Defective

Justice Ninala Jayasurya held that APEPDCL had no jurisdiction to invoke Clause 22.3.3.3 of its Terms and Conditions of Supply when the meter was functioning but recording less due to melted wires, and that the dispute ought to have been referred to the Chief Electrical Inspector to Government under Section 26(6) of the Indian Electricity Act, 1910.

The High Court of Andhra Pradesh at Amaravati has quashed a back billing demand of Rs 5,27,66,471 raised against Rashtriya Ispat Nigam Limited (RINL), the public sector undertaking that operates Visakhapatnam Steel Plant. Justice Ninala Jayasurya, sitting singly, allowed Writ Petition No. 5501 of 2004 on 15 June 2026, after reserving orders on 18 February 2026. The court found that the Eastern Power Distribution Company of Andhra Pradesh Ltd. (APEPDCL) had invoked a clause meant for defective meters in a situation where the meter was working correctly but recording less consumption because of melted secondary circuit wires — a distinction the court held was legally decisive. The impugned order of the second respondent dated 23 September 2003, which had confirmed the assessment, was set aside.

The Dispute Before the Court

RINL operates a Captive Power Plant at Visakhapatnam with a total generation capacity of 247.5 MW, comprising three 60 MW generators and a fourth turbo generator of 67.5 MW added in 1995, along with auxiliary generators. Because the captive plant is adequate for normal operations, RINL exports surplus power to AP Transco. To cover contingencies such as annual shutdowns or unexpected generator trips, RINL entered into an agreement with the first respondent—APEPDCL—for supply of energy with a Contracted Maximum Demand of 150 MVA, later revised to 100 MVA.

On 25 October 2001, RINL noticed an unusual difference between net import figures recorded by its own Supervisory Control and Data Acquisition System (SCADA) and those recorded by APEPDCL's meters at the main receiving station. RINL tested its transducers, found them in order, and installed a precision meter on one incoming circuit. The precision meter showed that APEPDCL's meters were recording 30% less consumption. RINL reported the discrepancy to APEPDCL by letter dated 9 November 2001.

An Assistant Divisional Engineer visited on 10 November 2001 and observed unequal and abnormal current variations across the three phases. A thorough inspection on 19 November 2001 identified a defect in the wiring between the secondary of 220 KV current transformers and summation current transformers in the R and Y phases of Circuit-II. APEPDCL officials rectified the defect on 21 November 2001 by replacing the defective wires. The meter itself was not replaced because it was not found to be defective.

Based on the 19 November 2001 inspection, the fourth respondent — the Divisional Electrical Engineer — issued an Assessment Notice dated 4 December 2001 under Clause 22.3.3.3 of the Terms and Conditions of Supply, assessing energy consumption for the period July 2001 to October 2001 at Rs 5,27,66,471. RINL submitted a representation on 1 January 2002, pointing out that APEPDCL had not followed required maintenance practices. The third respondent, the Superintending Engineer, confirmed the back billing by order dated 5 February 2002. RINL appealed to the second respondent, the Chief General Manager, who confirmed the assessment on 23 September 2003, prompting the writ petition.

The Legal Issue: Clause 22.3.3.3 Versus Section 26(6)

The central question was whether Clause 22.3.3.3 of APEPDCL's Terms and Conditions of Supply could be invoked in a situation where the meter was not defective but was recording less because of melted wires in the secondary circuit.

Clause 22.3.3 sets out the procedure for arriving at consumption “when the meter is defective.” Sub-clause 22.3.3.1 provides for averaging over the preceding three months; 22.3.3.2 for any consecutive three months in the preceding twelve months when conditions were not different; and 22.3.3.3 — the sub-clause invoked here — applies where it is not possible to select three months under the earlier sub-clauses, or where no meter is installed at all. Under 22.3.3.3, the Assistant Divisional Engineer assesses consumption on the basis of connected load and hours of usage, with due regard to production figures for industrial consumers.

Section 26(6) of the Indian Electricity Act, 1910 provides that where any difference or dispute arises as to whether a meter is or is not correct, the matter shall be decided by an Electrical Inspector on the application of either party. The Inspector may estimate the amount of energy supplied during such time, not exceeding six months, as the meter was not correct. Rule 30(1) of the Indian Electricity Rules, 1956 separately requires the supplier to ensure that all supply lines, wires, fittings and apparatus on consumer premises are in a safe condition and fit for supplying energy.

RINL's counsel argued that the problem was not a defective meter but defective wiring maintained by APEPDCL, that Clause 22.3.3.3 was therefore not attracted, and that any dispute about the period of under-recording should have gone to the Chief Electrical Inspector to Government (CEIG) under Section 26(6). APEPDCL's counsel countered that the defect was in the wires, not the meter, and that this distinction actually took the matter outside Section 26(6), which applies to meter disputes; that RINL had never raised a jurisdictional objection before the authorities; and that RINL's real grievance was only about the period of assessment, not the method.

How the Court Reasoned

Justice Jayasurya began by noting two undisputed facts: the meter was recording less at the time of the 19 November 2001 inspection, and the meter was not defective — which is why it was not replaced after the inspection. The only issue was whether Clause 22.3.3.3 could be invoked and what period of back billing was permissible.

The court examined the letter dated 24 November 2001 from the ADE/DPE/HT to the fourth respondent, which described the meter box as completely rusted with rats and squirrels moving freely inside through rusted holes. The letter contained no finding that the meter itself was defective. The court found that the obvious reason for less recording, even on APEPDCL's own case, was that the 'B' phase CT secondary wires were intact while others had melted, causing current imbalance in the meter. This was a case of a functioning meter recording less because of melted wires, not a case of a defective meter.

On that basis, the court held that invoking Clause 22.3.3. and assessing consumption under it was without jurisdiction. The clause and the procedure it prescribes apply only where the meter fixed is found defective. Since the meter was not defective, the clause could not be triggered.

The court then turned to Section 26(6). It acknowledged that RINL had not specifically raised the jurisdictional objection before the DISCOM authorities, but had objected to the period of assessment. The court held that since a dispute had been raised about the period during which the meter — otherwise perfect — was recording less, APEPDCL ought to have referred the matter to the CEIG under Section 26(6) at the relevant time.

The court drew on the Karnataka Division Bench decision in Karnataka Electricity Board v. Topasa, ILR 1991 KAR 909, which held that in a case of under-recording, it is the Board that is the aggrieved party and therefore the Board must raise the dispute before the Electrical Inspector under Section 26(6) if it wishes to make back billing.

The court also examined the Supreme Court's three-judge bench decision in Bombay Electricity Supply & Transport Undertaking v. Laffans (India) Pvt. Ltd., (2005) 4 SCC 327, at length. The Supreme Court in that case had explained that Section 26(6) contemplates a running meter that registers energy supply beyond the prescribed limits of error — one running slow or fast. Where a meter is completely non-functional or burnt, Section 26(6) cannot apply because the Electrical Inspector cannot estimate the extent of error. But where the meter is running and recording, even if incorrectly, the Inspector can determine the percentage of error.

Applying that reasoning, Justice Jayasurya held that the present case — a functioning meter recording less due to melted wires — fell squarely within the purview of Section 26(6) and the CEIG's jurisdiction. The issuance of the notice under Clause 22.3.3.3 and the orders passed pursuant to it were therefore not sustainable for want of jurisdiction.

The court expressly declined to apply the Supreme Court's decision in Uttar Haryana Bijli Vitran Nigam Limited & Another v. Adani Power (Mundra) Limited & Another, (2023) 14 SCC 731, relied upon by APEPDCL, finding it inapplicable to the facts and contentions before it.

Directions on Refund

The court noted that, as per instructions of RINL's counsel, the back billing amount had already been adjusted or collected from RINL. In view of the quashing of the impugned order, the court directed that the back billing amount collected or adjusted by the respondents shall either be refunded to RINL or credited to its monthly consumption bills. No costs were awarded. All pending applications were closed.

Order

The order dated 23 September 2003 of the second respondent, confirming the order of the third respondent dated 5 February 2002, was quashed. Writ Petition No. 5501 of 2004 was allowed. The respondents were directed to refund or credit the back billing amount of Rs 5,27,66,471 that had been collected or adjusted from RINL.