The Himachal Pradesh High Court has set aside a provisional electricity assessment of over ₹4.55 crore raised against an industrial unit, holding that the power utility acted beyond the limits of law. The Court found that the assessment was issued without conducting the mandatory site inspection required under the Electricity Act.
The judgment was delivered by Justice Ajay Mohan Goel on December 29, 2025, in a petition filed by M/s Kundlas Loh Udyog against the Himachal Pradesh State Electricity Board Limited (HPSEBL).
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Background of the Case
The dispute traces back to June 2015, when HPSEBL raised a demand of ₹1.52 crore against the petitioner, alleging tampering of the electricity meter for the period between August 2014 and May 2015. The industrial unit challenged the demand before various forums, including the Consumer Grievance Redressal Forum and the Divisional Commissioner.
While those proceedings were still unfolding, the electricity board withdrew the earlier demand in February 2021. However, barely weeks later, the Board issued a fresh provisional assessment notice on March 15, 2021-this time claiming ₹4.55 crore for alleged unauthorized use of electricity on the same factual grounds.
Aggrieved by what it described as repeated harassment, the company approached the High Court.
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Senior counsel for the petitioner argued that the provisional assessment was legally void from the outset. He pointed out that Section 126 of the Electricity Act clearly requires an inspection of the premises, equipment, or records maintained by the consumer before issuing any such assessment.
“No inspection was conducted, no inspection report exists, and yet a massive demand was raised,” the petitioner’s counsel submitted.
On the other hand, HPSEBL argued that the order was only provisional and that the company should first file objections before approaching the Court. The Board also claimed that scrutiny of MRI meter data available with it was sufficient to justify the assessment.
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Court’s Observations
The Court examined the statutory framework in detail and was unconvinced by the Board’s explanation. Justice Goel noted that Section 126 begins with inspection-either of the premises, equipment, or records maintained by the consumer.
“The statute does not permit a provisional assessment to be based solely on records maintained by the Electricity Board itself,” the bench observed.
During earlier hearings, the Court had specifically directed HPSEBL to produce inspection records and site reports. However, none were placed on record. The Court was also informed that no physical inspection had taken place before issuing the impugned notice.
Relying on Supreme Court precedent, the Court clarified that proceedings under Section 126 must commence with inspection, not desk-based assumptions.
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Decision
Allowing the petition, the High Court quashed the provisional assessment order dated March 15, 2021, calling it an arbitrary exercise of power and beyond the scope of the Electricity Act.
The bench held that since the illegality went to the root of the matter, the petitioner was not required to wait for a final assessment order before invoking the Court’s jurisdiction.
“The provisional assessment is per se bad in law and cannot be sustained,” the Court ruled.
With this, the ₹4.55 crore demand was set aside. No costs were imposed, and all pending applications were disposed of accordingly.
Case Title: M/s Kundlas Loh Udyog vs Himachal Pradesh State Electricity Board Ltd
Case No.: CWP No. 2239 of 2021
Case Type: Writ Petition (Civil)
Decision Date: 29 December 2025
