N THE judgement of a bunch of writ petitions filed by the Maharashtra Electricity Distribution Company Ltd. v. Supreme Metal Industries and other commercial consumers, Justice Amit Borkar has ruled on November 28, 2025, at the Bombay High Court in Mumbai, that once it is held that Respondent-consumers used electricity for commercial activity in a premises sanctioned for industrial use, section 126(6) of the Electricity Act, 2003 applies in full. Neither the assessing officer nor the appellate authority had any power to dilute the rate. The statute binds them. They must apply the twice –tariff multiplier. The HC has stated further that therefore the request of the respondent-consumers that the charges be confined only to “tariff difference” and that the penalty be waived has no foundation in law.

 

The assessing officer acted correctly in applying the double rate. The appellate authority had no jurisdiction to reduce or modify this statutory consequence. The Multiplier fixed by section 126(6) is mandatory. It cannot be reduced, waived or substituted by any authority under the Act. For these reasons, the request for penalty has no basis. The liability under section 126 must be enforced in full as mandated by the statute. Respondent-1, in each petition is the registered consumer. The sanctioned supply stands in the name of respondent-1 alone. The contractual relationship under the Act, the Supply Code of 2005 and the conditions of supply exists only with respondent-1. Respondent-2 is a lessee. He has never applied for change of name.

 

He has never entered into a supply agreement with the petitioner. He has never disclosed his occupation or activity as required by Regulations 10 and 11 of the Supply code. He is not a consumer within section 2(15) of the Act. In spite of this, he has assumed the role of respondent-1 and contested the statutory assessment under section 126. The statute does not permit such participation.Respondent-3 is the Appellate Authority under section 127. It passed the impugned orders. The dispute arose from detection of commercial use in premises sanctioned only for industrial purpose. The Flying Squad of the petitioner inspected the premises and found commercial laboratory and testing activity. This use falls under unauthorized use under section 126(6)(b). The assessment was issued to respondent -1. Respondent-2 filed the appeal and secured the impugned order, though he had no right to do so. The premises of respondent No. 1 were used for commercial activity without disclosure and without permission.

 

The petitioner has challenged the order of respondent-3- the Appellate Authority, which is patently unsustainable, being without jurisdiction and contrary to law. At all times, the records of MSEDCL showed respondent No. 1 as the only consumer responsible for compliance with the Act and Supply Code. On January 5, 2010, the Flying Squad carried out inspection. It found that no industrial activity was carried out. Instead, it was found that respondent-2 was operating a commercial laboratory and testing unit. This was admitted on site. The inspection report clearly established commercial use. Such use falls in section 126(6)(b)(i) because electricity was used for a purpose other than that authorised. Unauthorised use is determined by purpose, not by tariff awareness. The tariff order did not create unauthorised use; the change in nature of activity did. Therefore, ignorance of tariff not only fails as defence, it is also irrelevant to the question whether section 126 applies. Respondent-2’s plea of lack of ignorance cannot protect him from the statutory consequences of unauthorised use.

 

The tariff order was validly notified. It became binding from that date. The respondent had a duty to comply with it. His alleged ignorance does not absolve him of liability. The law is clear about how tariff changes are to be made known .Every tariff order is made known by MERC in the official Gazette. Once published, the order becomes binding on all consumers and licensees. This method of publication is recognized by law as sufficient notice to everyone. No further steps are required. The licensee has no such duty. The statute places responsibility on MERC, not on MSEDCL. Consumers are expected to be aware of the tariff schedule notified by the regulator. The law does not permit shifting of burden. Publicity by licensee is not a condition for applying section 126.The only question is whether the consumer used electricity for a purpose other than the sanctioned one.

 

This erroneous shifting of burden on the MSEDCL by the Appellate Authority affected entire reasoning of the impugned order and weakened the foundation on which it rests. Courts have repeatedly held that the registration granted for industrial purposes is always unit-specific and location –specific. It does not automatically extend to any other premises unless a separate application is made and a separate inspection is carried out for that unit. Such licenses do not “travel with a business entity” from one location to another without fresh approval. Industrial registrations are limited to the premises inspected and cannot be used as a blanket authorisation for activities at other locations. Regulatory conditions, safety requirements and permissible activity vary from premises to premises. Applying these principles to this case, the SSI Certificate by respondent-2 relates to his original gala. It does not several other additional galas from which he was conducting commercial laboratory operations. He did not obtain separate registration for the inspected premises. This omission is significant. It shows that his activity in the new galas was carried out without knowledge or approval of the competent authority.

 

It also shows that he expanded his operations behind the back of the statutory regulators.SSI registration, therefore, cannot validate the activity found during inspection. It cannot override the fact that the connection in question was sanctioned only for industrial use and that the actual activity being carried out was commercial in nature. The Appellate Authority’s approach contradicts the law laid down in the cited cases and misreads the regulatory practice governing the small-scale industries. For these reasons, the activity of the respondent-2 in the inspected premises was undisclosed and unauthorized.

 

The Parliament intended section 126 to act as a deterrent. If a person uses electricity for unauthorised purpose, he must not pay the same rate as an honest consumer. Otherwise there would be no difference between authorised and unauthorised use. Higher rate is therefore, not a punishment in the criminal sense. The assessment must follow the formula prescribed in the Act and nothing more. In result, High court has set aside the impugned order passed by the Appellate Authority on August 1, 2011. The Court has restored the final assessment issued by the petitioner on March 26, 2010 under section 126 of the Act.