Electricity Theft: Restoration Amount Under Section 126

Electricity Theft: Amount for Restoring Supply Must Follow Section 126 Assessment, With Objection and Appeal, Says Supreme Court

Published: 26 October 2026 · NyayVidhan

The Supreme Court held that, until the Supply Code prescribes its own procedure, the assessed amount a consumer accused of electricity theft must deposit to have supply restored under the third proviso to Section 135(1A) of the Electricity Act, 2003 is fixed by the Section 126 procedure, with objection, hearing and an appeal under Section 127. That figure is final only for restoration and does not bind the Special Court that determines civil liability under Section 154(5) (paras 31, 36-37).

Key holdings

Until a State supply code prescribes its own procedure, the Section 126 assessment machinery governs the restoration amount in theft cases (paras 31, 37).

A consumer accused of theft must be served a provisional assessment and may object and be heard (para 31).

The Section 127 appellate order does not bind the Special Court; any excess deposit is refunded under Section 154(6) (para 37).

High Courts may refuse restoration in theft cases until the full provisional amount is deposited (para 39).

For a prima facie arbitrary provisional assessment, a High Court may, for recorded reasons, order restoration on payment of at least 50% (para 40).

Judgment digest by NyayVidhan: a summary of the court's judgment, not its text. The judgment itself is the authoritative version.

Brief Facts

On 03.01.2024 the Dakshin Gujarat distribution licensee served the first respondent, accused of theft under Section 135, a supplementary bill of Rs. 92,99,077.55 plus Rs. 23,45,845 compounding charges (para 4). A Single Judge of the Gujarat High Court ordered reconnection on deposit of 50 percent; the Division Bench let the consumer object before the Executive Engineer, with a Section 127 appeal if he ruled against it. In the second case a Single Judge ordered a 50 percent deposit against a theft bill of 01.06.2023, and the Division Bench remitted the matter for a fresh order (para 5). The licensees contended that a theft assessment attracts no objection or appeal (paras 7-8).

Court's Findings

Theft necessarily includes unauthorised use of electricity, though not every unauthorised use is theft (para 30). The Act provides no assessment other than under Section 126, neither the Act nor the Supply Code names a separate assessing officer for theft, and the Supply Code applies one Annexure IV formula to both (paras 29, 31, 34). The assessed amount under the third proviso to Section 135(1A) must therefore be fixed by the Section 126 procedure of provisional assessment, objection and hearing, which conforms to natural justice, until the Supply Code prescribes another (para 31). The proviso is an emergency provision; making the consumer await the Special Court would frustrate it (para 34). As held in Orion Metal, a Section 126 assessment and a theft complaint can proceed together, the assessment remaining subject to the Special Court's determination of civil liability (paras 32-33). An appeal under Section 127 lies, and its finality is limited to the restoration amount; it does not absolve the offender of civil liability, and any excess is refunded under Section 154(6) (paras 35-37).

Legal Principle

In theft cases, the assessed amount payable under the third proviso to Section 135(1A) of the Electricity Act to restore disconnected supply is determined by the Section 126 procedure and is appealable under Section 127. That determination is final only for restoration and remains subject to the Special Court's finding on civil liability under Section 154(5) (paras 36-37).

NyayVidhan's view · Practice note

Why It Matters

Distribution licensees can no longer treat a theft bill as a final demand for reconnection: until the supply code prescribes its own procedure, the restoration amount must come through a provisional assessment, objections, a hearing and, if pursued, a Section 127 appeal (paras 31, 37). Consumers gain a forum but no escape from liability, since the Special Court still fixes civil liability and the appellate figure governs only reconnection (paras 35, 37). In writ petitions, a 50% deposit is the minimum a High Court may order, and only where the provisional assessment is prima facie arbitrary and reasons are recorded; courts may insist on the full provisional amount where the facts warrant it (paras 39-40).

Editorial comment by the NyayVidhan Editorial Desk. It is not part of the Court's judgment and is not legal advice.

Precedents Relied Upon

West Bengal State Electricity Distribution Company Ltd. and Ors. v. M/s. Orion Metal Pvt. Ltd. & Anr. (2020) 18 SCC 588
Relied Upon Discussed at ¶ 5, 32
Theft of electricity falls within unauthorised use, so the authorities may make a provisional and final assessment under Section 126 even where a theft complaint is lodged, the assessed amount under the third proviso to Section 135(1A) relates to a Section 126 assessment, and the Special Court determines civil liability under Section 154(5) with any excess refunded; the Court relied on these holdings to treat the Section 126 assessment in theft cases as subject to the Special Court's final determination of civil liability.
Southern Electricity Supply Company of Orissa Limited (SOUTHCO) & Anr. v. Sri Seetaram Rice Mill (2012) 2 SCC 108
Referred To Discussed at ¶ 5
Noted as one of the two decisions after which the High Court Division Bench remitted the second writ application to the Single Judge for a fresh order; not separately discussed by the Court.