Penalty, Adjudication and Appeal Under the Energy Conservation Act

In one line

A civil penalty adjudicated by a member of the State Electricity Regulatory Commission, appealable to a tribunal the Act does not create for itself, and priced against the tonne of oil equivalent.

Section 26: the penalty, and what it attaches to

Section 26(1) makes a person liable to a penalty not exceeding ten lakh rupees for each failure, and, in the case of a continuing failure, an additional penalty which may extend to ten thousand rupees for every day the failure continues.

But only for a listed set of failures. They are clauses (c), (d), (h), (i), (k), (l), (r) and (s) of section 14, and clauses (b), (c) and (h) of section 15. That is: the conformity and closure obligation; the label; the two energy audit directions; the duty to furnish information to the designated agency; the duty to appoint an energy manager and report annually; the building code obligation on an owner or occupier who is a designated consumer; the audit of such a building; and the State's parallel directions on code compliance, building audit and information.

Section 26(1A) treats the substantive norm separately, and its penalty is unusual. Failure to comply with clause (n) of section 14, the duty of every designated consumer to comply with energy consumption norms and standards, attracts a penalty not exceeding ten lakh rupees and, on a continuing failure, an additional penalty which shall not be less than the price of every metric ton of oil equivalent of energy, prescribed under this Act, that is in excess of the prescribed norms.

Read that carefully, because it is the cleverest sentence in the statute. The additional penalty is measured by the excess energy itself, priced at the value prescribed under section 14B. It is not a flat daily fine but a quantity multiplied by a price. The penalty therefore rises with the waste, which is exactly what a resource management sanction should do; and the floor, shall not be less than, prevents it being set below the value of what was wasted.

And a limit that dates the Act. The proviso to section 26(1) says no person shall be liable to pay penalty within five years from the date of commencement of this Act. Parliament gave industry five years before any sanction, which matches the five years section 17(1) gives before inspecting officers may be appointed.

Section 26(2) makes any amount payable recoverable as if it were an arrear of land revenue.

Section 48 extends liability to companies. Where a company, defined to mean a body corporate and to include a firm or other association of individuals, defaults on the listed clauses, every person who at the time of the contravention was in charge of, and responsible to the company for the conduct of its business, as well as the company, is deemed to have acted in contravention and is liable to penalty. The defence is proof that the contravention was committed without his knowledge or that he exercised all due diligence to prevent it. And under section 48(2), where the contravention was committed with the consent or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other officer, that person is also deemed to have contravened.