Calcutta High Court Strikes Down Provision Allowing Consumers To Be Penalised For Excess Electricity Usage

The Calcutta High Court has struck down a state law which allowed electricity companies to penalise consumers who consumed more electricity than the limit prescribed by the companies.

The impugned rule was under Regulation 4.4 of the West Bengal Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2011 (for short, “the 2011 Tariff Regulations”), framed by the West Bengal Electricity Regulatory Commission (WBERC). 

In declaring the said rule unconstitutional, Justice Sabyasachi Bhattacharya held:

Regulation 4.4 confers unbridled power on the licensee to violate such contract demand clause and, at its own whims, to arbitrarily restrict drawal even below the contract demand limit, since there is nothing in Regulation 4.4 to restrict the imposition of restricted drawal limits up to the contract load and above...This creates an opportunity of unjust enrichment of the licensee and also makes the licensee the judge of its own cause...Thus, we are not merely looking at a situation where the provision is otherwise rational and within legislative domain but there can be potential abuse of the said provision, which, by itself, would not render a statutory provision invalid, but at a scenario which leaves it open, by its very nature, for the provision to be abused at every instance of its exercise.

Regulation 4.4, by its very fabric, is implicitly abusive of the Constitutional principle of equality and nondiscrimination by the very arbitrariness involved therein, since there is nothing in the provision to prevent the licensee from imposing such drawal limits whimsically and at the drop of a hat, even without any justification or reason whatsoever, in the absence of any guideline or framework for working the same. Hence, Regulation 4.4, in the absence of guidelines, is implicitly arbitrary and violative of Article 14 of the Constitution of India as well as all principles of natural justice, he added.

Although the West Bengal Electricity Regulatory Commission argued that these penalities were in order to ensure that overconsumption does not become chronic, in order to reduce pressure on the grid, the Court was of the opinion that according to the impugned law, in the event that the consumers were wiling to pay penalty charges, the pressure on the grid would effectively be waived.

"...A consumer is entitled to overdraw electricity to an infinite extent, thereby jeopardizing the power grid or bringing it down altogether, but be purged of such guilt by merely paying additional charges. In the process, if the grid stability is affected and even if the entire grid supply collapses, affecting the entire range of consumers being supplied through it, there is nothing in Regulation 4.4 to prevent the consumer from doing so...,” it observed.

This order was passed in a plea filed by an exports company challenging the impugned regulation, and subsequent levy imposed on them by the Damodar Valley Coporation for overdrawing electricity, above the restricted limit issued by DVC.

It had been argued that the licensees of the WBERC under the law are given unrestricted powers to set and alter the limits of drawal and that this was being done according to the companies' whims, leading to the end consumer suffering. 

Upon striking down the law, the court directed the WBERC to frame new regulations to curb excess drawing of power which may affect the grid. It also clarified that any limits or restrictions on power drawal must be communicated to the consumer with a notice period before imposing such restrictions. 

Case: Metsil Exports Private Limited and Another Vs. West Bengal Electricity Regulatory Commission and Others 

Case No: W.P.A. No.4669 of 2023

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