Electricity Theft Cases: Consumer Can Challenge Assessment and Seek Restoration on Deposit; Special Court’s Determination of Civil Liability Prevails, Holds Supreme Court

Case Name: Dakshin Gujarat Vij Company Limited & Anr. v. Vaibhav Metal Crusher, with Paschim Gujarat Vij Company Limited & Anr. v. Jamanbhai Nanajibhai Bhuva

Date of Judgment: 26 October 2026

Citation: 2026 INSC 1157

Bench: Justice Manoj Misra and Justice K.V. Viswanathan

Held: The Supreme Court held that, where electricity supply is disconnected on an allegation of theft and the applicable Supply Code prescribes no specific assessment procedure, the amount payable for restoration can be determined by following the assessment procedure under Section 126 of the Electricity Act, 2003. The consumer may object to the provisional assessment and appeal against the final assessment under Section 127. Where a criminal complaint for theft is filed, the assessment and appellate determination remain subject to the Special Court’s determination of civil liability under Section 154(5). Any excess amount deposited must be refunded under Section 154(6). The Court also held that a High Court may, where the provisional assessment is prima facie arbitrary and for recorded reasons, direct restoration on payment of an amount not less than 50% of the demand. It cautioned that courts must approach such requests circumspectly, having regard to the facts of each case.

Summary: The Supreme Court was considering two appeals by Gujarat electricity distribution companies arising from supplementary bills raised on allegations of electricity theft. In the first case, Vaibhav Metal Crusher was issued a supplementary bill of approximately ₹93 lakh towards alleged electricity theft, along with a demand for compounding charges. The Gujarat High Court permitted it to deposit 50% of the bill amount for reconnection and allowed it to raise objections to the assessment. In the second case, concerning Jamanbhai Nanajibhai Bhuva, the High Court’s Division Bench had remanded the matter to the Single Judge for a fresh decision.

The distribution companies argued that an assessment in a theft case could not be challenged under the procedure applicable to unauthorised use of electricity under Sections 126 and 127. They contended that the Special Court alone could determine civil liability and objected to restoration of supply on payment of only half the demand.

Rejecting the companies’ principal contention, the Supreme Court explained that unauthorised use of electricity may, in some circumstances, also amount to theft. Assessment proceedings under Section 126 and prosecution for theft under Section 135 can therefore operate together. In the absence of a specific procedure in the applicable Supply Code, the Section 126 procedure can be used to determine the assessed amount for restoration under Section 135(1A).

The Court clarified that the outcome of an appeal under Section 127 is final only for the limited purpose of determining the amount payable for restoration. Where a criminal complaint is filed, it does not bind the Special Court when that Court determines civil liability under Section 154(5). The judgment also recognised the serious consequences of denial of electricity, while cautioning that allegations of theft require a careful, fact-specific approach. In an appropriate case, a High Court may require payment of the entire provisionally assessed amount before restoration.

Decision: Both appeals were dismissed. In the Vaibhav Metal Crusher matter, the Supreme Court declined to interfere with the High Court’s order, subject to the clarification that the assessment would be subject to any appeal under Section 127 and, where prosecution is initiated, to the Special Court’s determination of civil liability under Section 154(5).