No Electricity Supplied, No Consent Obtained, Yet ₹57.74 Lakh Demanded After Nine Years: Supreme Court Rejects Distribution Licensee’s Stale Minimum Consumption Charges

Case Name: Dakschinanchal Vidyut Vitran Nigam Ltd. v. Vidut Lokpal, Uttar Pradesh and Others

Date of Judgment: 10 September 2026

Citation: 2026 INSC 985

Bench: Justice S.V.N. Bhatti and Justice N.V. Anjaria

Held: The Supreme Court held that a distribution licensee cannot enforce a belated demand for Minimum Consumption Guarantee Charges concerning an additional electricity load that was neither accepted by the consumer nor shown to have been released or supplied.

Under Section 56(2) of the Electricity Act, 2003, the licensee’s statutory power to disconnect electricity for non-payment is restricted to dues that became first payable within the preceding two years, unless the amount has continuously been reflected as recoverable arrears in the consumer’s bills. Although Section 56(2) does not extinguish every other permissible mode of recovering a supplementary demand, the recovery must still be legally sustainable and within the applicable limitation period.

A distribution licensee cannot keep an alleged liability dormant for almost nine years, omit it from regular monthly bills and subsequently resurrect it as an enforceable electricity demand. Such recovery was barred not only under Section 56(2) but also under the otherwise applicable statutory periods of limitation.

Summary:  The consumer had applied for an electricity connection carrying a load of 4,000 KVA. Due to limitations in power availability, Dakschinanchal Vidyut Vitran Nigam Ltd. initially sanctioned and released only 2,000 KVA pursuant to an agreement dated 24 February 1997. The licensee subsequently claimed that, after improvement in power availability, it offered the remaining 2,000 KVA through a communication dated 31 January 1998.

The offer required the consumer to communicate its consent and execute the necessary agreement before the additional load could be released. The consumer did not accept the offer and, through a letter dated 14 September 1998, expressly communicated that it was not interested in obtaining the additional supply. There was also no evidence that the additional 2,000 KVA load was ever released or made available to the consumer.

Despite these circumstances, on 13 February 2007—almost nine years later—the distribution licensee raised a demand of ₹57,74,164 as Minimum Consumption Guarantee Charges for the period from February to September 1998. Significantly, the alleged charges had never been included in the regular monthly electricity bills or continuously shown as recoverable arrears.

The consumer challenged the demand before the Consumer Grievance Redressal Forum, which delivered a split decision. It then approached the Electricity Ombudsman under the U.P. Electricity Regulatory Commission (Consumer Grievance Redressal Forum and Electricity Ombudsman) Regulations, 2007. The Ombudsman set aside the demand, finding that the consumer had not consented to the additional load, the load had not been released and the demand was barred by limitation. It also directed adjustment of the amount deposited by the consumer against its future electricity bills.

The Allahabad High Court upheld the Ombudsman’s decision. It observed that liability for the additional load could arise only after its release to the consumer and not merely because the licensee claimed that it was ready to supply electricity. The alleged charges, if payable, should have been included in the regular billing cycle in 1998. A demand raised for the first time in 2007 could not be treated as an amount that had remained continuously recoverable.

The Supreme Court affirmed this reasoning. Referring to Assistant Engineer (D1), Ajmer Vidyut Vitran Nigam Ltd. v. Rahamatullah Khan, the Court reiterated that the two-year restriction under Section 56(2) begins when electricity charges become “first due” and prevents disconnection for stale dues that were not continuously reflected as arrears. It also noted that the 2007 demand was beyond the limitation periods available under the Limitation Act, 1963 and the U.P. Government Electrical Undertaking (Dues Recovery) Act, 1958.

Decision: The Supreme Court dismissed the distribution licensee’s appeal and sustained the quashing of the ₹57,74,164 demand. The consumer remained entitled to adjustment of the amount deposited pursuant to that demand against future electricity bills.