Suman Engineering And Chemicals PVT. LTD. vs. U.P.P.C.L. And 4 Others

Held

The Court held that the petitioner, who remained a prospective consumer and did not become an actual consumer, had not incurred the liability to share the burden of upgradation and strengthening of the distribution system. Therefore, the petitioner is entitled to a refund of the system loading charges amounting to Rs. 32,00,000/- along with interest at 8.5% per annum from the date of deposit until the date of refund. The Court reasoned that while system loading charges are a permissible mode of recovering expenditure for system upgradation, the liability accrues only when the prospective consumer starts consuming electricity and uses the distribution system. If the consumer does not commence supply for any reason, they cannot be fastened with the liability for system upgradation. The Court found the respondents' reliance on the Delhi International Airport Authority Ltd. judgment to be of no help as it dealt with service tax on user development fees, not the refund of system loading charges in this context. The Court found no justification for the respondents to retain the system loading charges.

Facts

The petitioner, Suman Engineering And Chemicals Pvt. Ltd., sought a refund of Rs. 42,14,181/- with interest from the respondents (U.P.P.C.L. and others) for a cancelled electricity load sanction. The petitioner had deposited Rs. 4,000/- along with applications for electricity load and later deposited Rs. 80,54,181/- based on an estimate, which included Rs. 38,40,000/- as security deposit and Rs. 32,00,000/- as system loading charges. The sanction was cancelled due to the non-issuance of a No-Objection Certificate (NOC) from the U.P. Pollution Control Board, for which the petitioner was not responsible. The security amount was refunded with interest, but other amounts, including system loading charges, were refused. A previous writ petition was allowed, but the Supreme Court remanded the matter for the respondents to prove actual expenses incurred.

Key Issues

1. Whether the petitioner, as a prospective consumer who did not commence electricity consumption, is entitled to a refund of the system loading charges (Rs. 32,00,000/-) deposited under Clause 4.21 of the U.P. Electricity Supply Code, 2005, especially when the sanction was cancelled due to reasons beyond its control. Petitioner's arguments: The petitioner contended that since it never became an actual consumer and thus did not utilize the distribution system, it should not be liable for charges related to the upgradation and strengthening of the system. The cancellation was not due to any fault of the petitioner. Respondents' arguments: The respondents argued that system loading charges are non-refundable as per Clause 4.6(c) of the Code and the cost data book, and that these charges contribute to the capital reserve of the company. They also claimed to have incurred expenses for establishing a new feeder and upgrading apparatus to facilitate the petitioner's connection, citing letters and a contract for strengthening equipment.