Madras High Court dismisses Infosys’ petition against Rs 6.72 crore electricity bill under commercial tariff

  • 05:59 PM, 24 May 2024

Read Time: 05 minutes


The company requested the court to instruct TANGEDCO to bill them under the Industrial Tariff, rather than the commercial tariff

The Madras High Court on Thursday dismissed a petition filed by IT giant Infosys Limited, challenging a significant demand made by the Tamil Nadu Generation and Distribution Corporation (TANGEDCO) for arrears payment of electricity charges. The state-run discom had ordered Infosys to pay over Rs 6 crore as a shortfall amount.

The bench of Justice G K Ilanthiraiyan had reserved the judgment on April 4, 2024.

TANGEDCO had issued an order demanding a payment of Rs 6,72,95,384 from Infosys for its office located in Mahindra World City, Paranur village (Chengalpattu), citing a shortfall amount that the company allegedly owed under the commercial category for the period April 2009 to November 2011. In the company's December 2020 bill, this due amount was added. Infosys contested this order before the high court in 2021.

The company requested the court to instruct TANGEDCO to bill them under the Industrial Tariff, rather than the commercial tariff.

Infosys argued that it is only engaged in software development and it provides amenities like food courts, gymnasiums, shopping outlets, and banking facilities as welfare services for its 16,000 employees in its office premises. These facilities are not open to the public and are managed by outsourced service providers who do not pay rent, electricity, or water charges, therefore, these cannot be held to be commercial operations in the facility.

However, on perusal of the license agreement filed by TANGEDCO between Infosys and its service providers, Justice Ilanthiraiyan noted that though they did not pay any utility charges or rent, Infosys collected license fee from them. 

The judge held that these service providers run their businesses to Infosys' employees profitably under their brand names, indicating commercial operations.

Furthermore, Justice Ilanthiraiyan referred to an audit enquiry report dated May 20, 2009 which revealed that Infosys was not only engaged in activities of software development but also information technology enabled services as certified by MEPZ, Chennai.

Based on the Board circular dated 02.02.2008, all the companies engaged in the activities of Information Technology Enabled Services should be billed under the commercial tariff, he underscored. 

The judge held that therefore, it was appropriate to adopt a higher tariff which was the norm, in the case of services engaged in two types of activities, within the same premises.

He pointed out that out of the total load of 9550 KVA availed by Infosys, its service providers used electricity for commercial purposes to the extent of 386 KW.

Therefore, the judge found no infirmity or illegality in the proceeding issued by TANGEDCO and dismissed Infoysis' petition. 

Case Title: Infosys Limited v. The Superintending Engineer, TANGEDCO