The Telangana High Court has quashed a provisional assessment order that had slapped the company with a bill of Rs 81,18,300 for allegedly misusing electricity at its paper manufacturing unit in Khammam district. Justice Nagesh Bheemapaka, hearing Writ Petition No. 32607 of 2011, ruled that power generated from ITC's own captive plant and used for building a new production unit did not amount to "unauthorised use" under the Electricity Act, 2003.
Background of the Case
ITC runs a paper and paperboard factory at Sarapaka, where it operates several captive cogeneration plants along with backup diesel generators. The company was expanding its facility by adding a new paper machine and a 25 MW cogeneration unit. For the construction work, it engaged M/s Shapoorji Pallonji & Co. Ltd. as contractor and supplied electricity from its captive plants free of cost for the project.
Following an inspection at the factory in November 2011, the Northern Power Distribution Company of Andhra Pradesh (Northern Power Discom) issued a provisional assessment under Section 126 of the Act, alleging that ITC had extended power to the contractor without permission, calling it unauthorised use amounting to theft of energy. The Discom argued that since Shapoorji Pallonji was a separate legal entity, the arrangement counted as "supply" requiring compliance with open access rules and additional charges.
ITC contested this, saying the electricity never came from the grid or the licensee, and was used purely for constructing its own plant.
Court's Observations
The Court noted that respondents had not disputed the existence of ITC's captive plants or that the power was self-generated. It observed,
"The jurisdiction under Section 126 cannot be assumed merely because electricity is used in a manner which, according to the Distribution Licensee, violates certain regulatory provisions."
The judge also pointed out an inconsistency: the notice spoke of "theft of energy," yet no case was filed under Section 135, which deals specifically with theft. "Respondents themselves have chosen not to initiate proceedings under Section 135," the order noted, adding this weakened the case for invoking Section 126 instead.
Decision
Holding that the Discom failed to establish the jurisdictional basis needed to invoke Section 126, the Court allowed the writ petition and set aside the assessment order dated 29.11.2011, with no order as to costs.
Case Details
Case Title: ITC Limited v. Northern Power Distribution Company of Andhra Pradesh Ltd. & Others
Case Number: Writ Petition No. 32607 of 2011
Judge: Hon’ble Sri Justice Nagesh Bheemapaka
Decision Date: August 5, 2026
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