TATA POWER DELHI DISTRIBUTION LTD. v. MIND SHAPER TECHNOLOGIES PVT. LTD.

1. The present petition has been filed by TATA Power Delhi Distribution Limited challenging the order dated July 10, 2014 passed by the Learned Addl. District Magistrate, District-New Delhi (ADM in short) in Appeal no. ADM(ND)/Appeal/ELEC CASES/2012/9841, M/s. Mind Shaper Technology Pvt. Ltd. v. Tata Power Delhi Distribution Limited and Anr. whereby the learned ADM has quashed the provisional assessment order dated May 31, 2012 as well as the final assessment order dated August 8, 2012 on the ground that the activity being carried out by the respondent in its premises is of industrial nature.

2. Some of the relevant facts necessary for the adjudication of the writ petition are, that on April 10, 2012, an inspection was conducted by the Enforcement Team of the petitioner company of the meter bearing no.

K.NO.33200527865 which was installed at the respondent‟s premises vide a sanctioned load of 89 KW for small industrial power (SIP) purposes. It is the case of the petitioner that the representative of the respondent was present at the time of inspection and the observation made during the inspection was that the connection / meter is sanctioned for SIP purpose but it is being used for software training and distribution and office purpose which are commercial activities. It is the petitioner‟s case that one Mr. Santosh, an employee / representative of the respondent duly signed and received the inspection report bearing no. 202986 and show cause notice bearing NO. 170401 dated April 10, 2004. The respondent was given an opportunity of personal hearing on April 18, 2012. However, no reply was filed by the respondent to the show cause notice. It is averred that that on April 24, 2012 a written representation was submitted by one Mr. Deepak Kumar Tyagi, Vice President (Finance) of the respondent company in the office of the Enforcement Assessment Cell of the petitioner company. Thereafter, the matter was proceeded further and a provisional order dated May 31, 2012 under section 126 (1) of Electricity Act, 2003 (hereinafter referred to as „Act‟) was passed against the respondent and the same was sent to the consumer on June 1, 2012. It is averred that no objections were filed against the said provisional order. Even the hearing was not attended to by the respondent on June 8, 2012. The assessment amount on account of unauthorized use of electricity to the tune of `6,69,738 for the period April 10, 2011 to August 10, 2012 was calculated as per the provisions of law. It is also stated that the bill amount was further raised to `10,60,450/-. The bill remains unpaid. Accordingly, on August 30, 2012, the respondent was served with a disconnection notice. On October 9, 2012, a final assessment bill with due date on October 26, 2012 was sent to the respondent. On November 14, 2012, an appeal was preferred on behalf of the respondent before the learned ADM against the provisional assessment order dated May 31, 2012 under Section 126(1) of the Act. It is stated that for the reasons known to the respondent, the final order dated October 09, 2012 was not challenged and instead appeal was preferred against provisional assessment order dated May 31, 2012. On January 08, 2013, reply was filed to the appeal by the petitioner. On July 10, 2014, the impugned order was passed.

3. In the counter-affidavit it is stated that the respondent is a company which is in the business of providing technology aided teaching and elearning solutions to schools by developing content software and hardware, i.e., digital equipments as per needs and requirements of the school. That it had its head office at A-1, Naraina Industrial Area, Phase-I, New Delhi which it had rented from M/s. Eternal Radio Corp. for running their industry and accordingly had a small industrial power connection for the said purpose. On April 10, 2012, the petitioner served a show cause notice on the respondent and conducted a surprise inspection on the premises in the presence of an office boy namely Santosh who was not authorized or aware of the activities undertaken by the company. It is stated, a detail reply to the show cause notice and inspection report dated April 10, 2012 was submitted vide letter dated April 24, 2012 to the petitioner explaining that the averments in the show cause notice are incorrect and the respondent is only providing curriculum based software to the students / schools.

4. It is also stated that the industry is de-regulated as per the industrial policy of the Central and State Governments and do not required any form of registration with a licensing authority and can be operated from any premises other than a residential one. It is averred that the petitioner was further required to conduct an inspection of the premises again so that the concerned person can show the working of the company and satisfy the petitioner that no teaching centre is being run by the respondent. It also attached its Sales Tax and Service Tax registration documents which referred to the respondent as a company providing online information and data services and selling the digital equipments. It is also averred that its representative has been contacting the customer care of the petitioner and repeatedly meeting the representatives of the petitioner, who had assured that the matter would be resolved soon. The respondent also referred to a representation dated August 21, 2012 of the Industries Association. A reference is made to the representations made against the disconnection notice and non-consideration of the same and the filing of the appeal by the respondent. A reference in the counter-affidavit is also made to a Judgment of this court in the case of M/s. Panacea Biotech Ltd. v. DDA and Anr. W.P.(C) 9937/2005 wherein the impugned provisional order issued by the petitioner was quashed.

5. The learned counsel for the petitioner submitted that the learned ADM has failed to appreciate that no appeal against a provisional order was maintainable. According to him, admittedly the final order was not challenged and therefore, he should have dismissed the appeal as not being maintainable. He referred to a judgment of the Supreme Court in the case of Executive Engineer and Anr. v. Sri Seetaram Rice Mill MANU/SC/1334/2012 to contend that the Supreme Court has interpreted the scope of Section 126 of the Act to mean, that no appeal can be preferred against a provisional assessment order issued under Section 126 (2) of the Act. According to him, under Section 126 (3) of the Act a person on whom an order under subsection 2 has been served, shall be entitled to file objections if any against the provisional assessment order before the assessing authority, who shall after affording a reasonable opportunity of hearing to such person, pass a final order of assessment within 30 days from the date of service of such order of provisional assessment of the electricity charges payable by such person. He also relied upon Section 127 (1) of the Act to contend that an appeal can be preferred against the final assessment order issued under Section 126 that too within 30 days of the said order. The respondent has grossly violated the requirement of the said section by impugning the provisional order. Therefore, the proceedings before the learned ADM were non est and void ab initio. He also stated, under Section 127 (2) of the Act there is a pre-requisite / condition, for entertaining the appeal before the Appellate Authority on deposit of amount equal to half of the assessed amount in cash or by way of bank draft. He referred to a Judgment of the Supreme Court in the case of Shyam Kishore and Ors. v. Municipal Corporation of Delhi Manu/SC/0440/1992 that the condition of deposit of tax amount under Section 170 (b) of the DMC Act is a condition precedent for hearing or determination of the appeal and the learned District Judge has no discretion to grant stay of the disputed amount or dispensed with the requirement of predeposit of the amount. On merit, it is his submission that the Delhi Electricity Supply Code and Performance Standard Regulations 2007 clearly segregate the three kinds of electricity connection, i.e., Domestic connection, Nondomestic Connection and Industrial connection. Regulation 5 clearly defines and characterizes the establishment which shall be covered under the Nondomestic connection. The sub-regulation (j) of the said regulation reads “all other establishments, shops, chemists, tailors, washing, dying etc. which do not come under factories Act”. Moreover, it is to be read with Section 2 (m) of the Factories Act, 1948 that defines the term “Factory”. A plain reading of the definition of the term factory makes it apparent that the activity of the Respondent, i.e., „software training, distribution and office‟, can only be said to be a non-domestic activity under the purview of Regulation 5. The activity carried out by the Respondent cannot be said to be of industrial nature in any manner whatsoever. That the petitioner, being the licensee in terms of the Act, and the Respondent, being the user of the premises, where the disputed electricity connection was sanctioned are covered and bound by these Regulations. Hence, reliance placed upon the Master Plan 2021 or Industrial Disputes Act by the Respondent to contend that it would override the provisions of Electricity Act is misconceived.

6. It is the submission of the learned counsel for the petitioner that the learned ADM has erred in observing that the petitioner wrongly concluded that the respondent is running the activity of „software training, distribution and office‟ merely on the basis of the Respondent Company‟s name and the Display Board affixed outside the said premises. The Display Board and the visiting cards read, “CLASS TEACHER” with a tagline, “LEARNING SYSTEMS”, and accompanied by a description which says, “THINKING TECHNOLOGY IN YOUR SCHOOLS NOW”, It is his submission that by merely contending that it is running an activity of a „software development establishment‟ and not of a „software training, distribution and office‟ without any substantive documentary evidence or any other proof is not sufficient. That the onus and burden of proof in this matter was on the Respondent and it has failed to carry out the same.

7. Learned counsel for the petitioner also submitted that the learned ADM has erred in observing that the activities of the Respondent come within the definition of the “Industry” and thus the usage is for industrial purpose. He refers to a judgment of the Supreme Court in the case Bangalore Water Supply and Sewerage Board v. A. Rajappa and Anrs. MANU/SC/0257/1978, wherein the Supreme Court has laid down the triple test, which will enable an activity to fall under the definition of “Industry” as envisaged by Section 2 (j) of the Industrial Disputes Act, 1947. The triple test in the Bangalore case forms the quintessential part of the amended definition of “Industry” in 1982. The triple test provides that a) systematic activities b) organized by cooperation between employer and employees c) for the production of goods and services calculated to satisfy human wants and wishes would constitute industry. However, this test was subjected to exceptions, namely industry does not include spiritual or religious services; absence of profit motive or gainful objective is irrelevant (although an organization will not cease to be a trade or business because of philanthropy animating the undertaking). The main test is the nature of activity with emphasis of employer – employee relationship therefore all organized activities that satisfy the triple test will constitute industry including undertakings, callings and services adventures‟ analogous to the carrying on of trade or business. It is submitted that when Electricity Act, 2003 read with provisions of Supply Code, 2007 clearly categorizes the type of connection, definition adopted by other statute in any event cannot be read into Electricity Act, 2003 to interpret the provisions of Electricity Act, 2003. It is strongly argued by the learned counsel for the petitioner that the Respondent provides training and distribution of software for purely commercial purposes and nowhere has the Respondent been able to prove that it develops software per se.

8. Learned counsel for the petitioner would submit that the requirement to record reasons emanates from the broad doctrine of fairness in decision making and such reasons should be cogent, clear and succinct. It is well settled principle of law that the Appellate Authority is supposed to decide the appeal both on facts and law; it is also required to address all issues before concluding. A pretense of reasons is not to be equated with a valid decision – making process. The impugned order passed by the ld. ADM is non-speaking and cryptic because it fails to convince the petitioner to accept the Respondent‟s contentions about it running a so-called, „software development establishment‟.

9. It is the submission of the learned counsel for the petitioner that it is a well-settled principle of law that equity aids the vigilant and not the indolent, for vigilantibus non domientibusjur or subventiunt. He also submitted that the period of limitation for preferring an appeal before the appellate authority as provided under Section 127 (1) of the Act is 30 days of the final assessment order passed by the assessing officer under Section 126 of the Act. The Respondent filed the appeal on November 14, 2012 against the provisional assessment order dated May 31, 2012 which was duly sent to the Respondent on June 1, 2012. According to him, even the final assessment order was passed on August 8, 2012 and the disconnection notice pursuant to the final assessment order was dispatched to the Respondent on August 30, 2012. The appeal in question against the provisional assessment order dated May 31, 2012 was filed only on November 14, 2012, which evidently amounts to more than five months (i.e., clearly beyond the period of 30 days) from the date of the provisional assessment order and 3 months after the final assessment order dated August 8, 2012. The appeal filed by the Respondent was therefore hopelessly barred by limitation and ought not to have been entertained.

10. On the maintainability of the petition, it is the submission of the learned counsel for the petitioner that only those authorities or tribunals, who in law are required to defend the orders passed by them are to be made necessary parties. It is his submission that in the present case Ld. ADM, New Delhi is not a necessary party to the writ petition because the orders passed by the Ld. ADM are not required to be defended by it. Thus, the writ petition of the petitioner is maintainable. He placed reliance on the recent judgment of the Supreme Court in the case of Jogendrasinji Vijaysinghji v. State of Gujarat and Ors. MANU/SC/0719/2015, wherein it has held as under: “There are many authorities under many a statute. Therefore, the proposition that can safely be culled out is that the authorities or the tribunals, who in law are entitled to defend the orders passed by them, are necessary parties and if they are not arrayed as parties, the writ petition can be treated to be not maintainable or the court may grant liberty to implead them as parties in exercise of its discretion. There are tribunals which are not at all required to defend their own order, and in that case such tribunals need not be arrayed as parties. To give another example; in certain enactments, the District Judges function as Election Tribunals from whose orders a revision or a writ may lie depending upon the provisions in the Act. In such a situation, the superior court, that is the High Court, even if required to call for the records, the District Judge need need not be a party. Thus, in essence, when a tribunal or authority is required to defend its own order, it is to be made a party failing which the proceeding before the High Court would be regarded as not maintainable.(Relevant Paragraphs 27 to

34)

11. Without prejudice to the submissions as stated above, learned counsel for the petitioner submitted that if the court deems necessary, in exercise of its jurisdiction under Article 226 and 227, the petitioner may be granted liberty to implead the adjudicating authority as party. In the last it is his submission, that respondent is not entitled to the relief sought for in the appeal, which is misconceived, frivolous, wrong and hence the impugned order deserves to be set aside. In support of his submissions, learned counsel for the petitioner has relied Executive Engineer, Southern Electricity Supply Company of Orissa Limited (South Co.) and Anr. v. Sri Seeetaram Rice Mill reported as (2012) 2 SCC 108.

12. On the other hand, it is the submission of the learned counsel for the respondent that the writ petition is squarely covered by the Judgment of this court in the case of M/s. Panacea Biotech Ltd. (supra) wherein this court has unequivocally held that the activities of a computer hardware or software Company are industrial in nature as per the Master Plan of Delhi, 2021 and thus the respondent was correct in having an industrial connection and ought not to have been assessed on the ground of commercial connection.

13. It is the submission of the learned counsel for the respondent that the learned counsel for the petitioner is wrong to contend that the appeal was preferred only against the provisional assessment order dated May 31, 2012. According to her, the ADM had considered both the provisional assessment order dated May 31, 2012 and the final order dated August 8, 2012 and quashed the both and held “it is found that the employees of the appellant are covered under ESI and further ordered in the light of judgment of Hon‟ble High Court of Delhi in Case No. 9937 of 2005, Panacea Biotec Ltd. v. DDA and Ors. in Para 17.1, that the appeal of the appellant is allowed quashing the provisional assessment order dated May 31, 2012 and also the final order passes on the basis of the provisional order. As this is not the case of of misuse of electricity for which respondent are directed to restore the connection as per sanction.”