BRIHANMUMBAI ELECTRIC SUP.& TRAN.UNDERTA Vs MAHARASHTRA ELECT.REGUL.COMMISSION
Bench: SURINDER SINGH NIJJAR,A.K. SIKRI
Case number: C.A. No.-004223-004223 / 2012
Diary number: 15249 / 2012
Advocates: M. V. KINI & ASSOCIATES Vs
SAKYA SINGHA CHAUDHURI
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REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.4223 OF 2012
Brihanmumbai Electric Supply & Transport Undertaking ….Appellant
Vs.
Mahrashtra Electricity Regulatory Commission (MERC) & Ors. ….Respondents
J U D G M E N T
A.K.SIKRI,J.
1. Respondent No.3 is a consumer (hereinafter referred to as
the “consumer”) of electricity (LT-II Category) whose premises
are situated within area of supply of the appellant namely
Brihanmumbai Electricity Supply and Transport Undertaking
(BEST). In April 2009, he approached respondent No.2 i.e. Tata
Power Company Limited (TPC) with a request that he be supplied
the electricity by TPC. In nutshell, he wants to switch over from
BEST to TPC for his electricity requirement. In response to his
request, TPC advised the consumer vide letter dated 8.7.2009 to
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approach the BEST for its permission to use its distribution
network of the BEST to enable TPC to supply electricity to the
consumer using that network. The consumer, accordingly, turned
to BEST requesting it to give the said permission. It was,
however, denied by BEST vide letter dated 31.7.2009 and again
on 10.8.2009. After receiving this rejection, the consumer
approached Mumbai Electricity Regulatory Commission
(hereinafter referred to as the “Regulatory Commission”) with
petition seeking the following directions:
“(a) That this Hon’ble Commission may be pleased to direct TPC to provide electricity supply to the Petitioner and make such supply available as early as possible, either on BEST Network or by extending its own network, as may be necessary, failing which TPC’s distribution license should be cancelled by this Hon’ble Commission;
(b) that the Hon’ble Commission may be pleased to direct the respondent to pay compensation to the petitioner under Regulations 3.2 and 12 of MERC (Standards of Performance of Distribution Licensees, Period of Giving Supply and Determination of Compensation) Regulations 2005;”
2. In the meantime, respondent Nos.4 to 8 also filed similar
petitions before the Regulatory Commission with same relief as
they also wanted to switch over to TPC for their electricity
requirement. Since direction was sought for TPC, only TPC was
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made party. However, at the instance of Regulatory Commission
BEST and Reliance Industries Limited (RIL) were also
impleaded in these matters. After hearing all the parties,
Regulatory Commission passed orders dated 22.2.2010 holding
that TPC was bound to supply electricity in terms of applicable
Regulations and therefore direction was given to the TPC to
supply electricity to the consumers either through BEST wires or
its own wires. The operative part of that order reads as under:
“In view of the above there is no requirement to issue a direction in regard to the Petitioner’s claim of compensation under Regulation 3.2 and 12 of the SOP regulations. However, TPC is bound by Regulation 4.7 of MERC (Standards of Performance of Distribution Licensees, Period for Giving Supply and Determination of Compensation) Regulations, 2005 in terms of the timelines as mentioned in the said Regulation. Time has started ticking from the date of receipt of applications by TPC from the Petitioners who have requisitioned for electricity supply. TPC will have to adhere to the timelines specified in the regulations.”
3. We may point out here that the BEST (the appellant herein)
had resisted the demand of the consumers in their petitions with
the following contentions:
(a) The Regulatory Commission did not have the jurisdiction
to
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entertain a dispute between the consumer and a distribution
licensee;
(b) TPC was not a deemed distribution licensee for the area
in question and therefore was not permitted to supply the
electricity to any consumer in that area;
(c) that unlike other distribution licensees, BEST being a
local authority, no persons situated in BEST’s area of supply could
avail electricity from any other licensee, on account of BEST
invoking a statutory exemption available to a local authority
under Section 42(3) of The Electricity Act, 2003 Act (hereinafter
referred to as the Act).
(d) Since TPC had clarified that it was willing to extend its
network and supply electricity, BEST also contended that TPC
could not extend its network in BEST’s area of supply, without
BEST’s consent and agreement.
4. In its order dated 22.2.2010 while issuing the directions
extracted above, the Regulatory Commission rejected BEST’s
contentions and held that Tata Power had a duty under the Act to
extend its distribution network and supply electricity, if the
consumers so required, in the South Mumbai area. In light of
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TPC’s position that it was willing to extend its network and supply
electricity, the MERC held that there was no requirement to give
any directions to it. The Regulatory Commission also held that
TPC would be deemed distribution licensee for the area in
question.
5. BEST challenged the aforesaid order of the Regulatory
Commission by filing appeal before the Appellate Tribunal for
Electricity, New Delhi (hereinafter referred to as the “Appellate
Tribunal”). This appeal, however, has been dismissed by the
Appellate Tribunal vide orders dated 4.4.2012, thereby affirming
the findings and direction of the Regulatory Commission. Not
satisfied, BEST has filed the instant appeal statutorily provided
under Section 125 of the Electricity Act.
6. We have already stated in brief the four contentions which
were raised by BEST before the Regulatory Commission. Same
contentions were raised before the Appellate Tribunal, which are
the submissions before us as well. Therefore, we proceed to deal
with these submissions hereinafter:
RE: Jurisdiction of the Regulatory Commission.
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7. This contention was raised primarily on the ground that
there was an alternative remedy provided to the consumer to
raise his grievances before the Consumer Grievances Redressal
Forum (CGRF) established under Section 42 (5) of the Act.
Therefore, the consumer should have approached the said Forum
instead of filing petition before the Regulatory Commission. This
contention is totally misconceived and rightly rejected by the
authorities below. As noted above, petition was filed by the
consumer seeking direction against TPC to supply electricity to
him. Thus, he approached the Regulatory Commission to enforce
a distribution licensee obligation under the Act. As on that date,
he was not the consumer of TPC but wanted to become its
consumer. In so far as CGRF is concerned, which each distribution
licensee is required to set up under Section 42 (5) of the Act, it
deals with the grievances of the consumer. Consumer is defined
under Section 2 (15) of the Act and reads as under:
“any person who is supplied with electricity for his own use by a licensee or the Government or by any other person engaged in the business of supplying electricity to the public under this Act or any other law for the time being in force and includes any person whose premises are for the time being connected for the purposes of receiving electricity with the works of a licensee, the Government or such other person, as the case may be.”
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8. Thus, respondent No.3 not being a consumer could not have
approached CGRF. Further, we find that in Maharashtra
Electricity Regulatory v. Reliance Energy Ltd. (2007) 8 SCC
381, this Court has held that the Regulatory Commission has the
power to require a licensee to fulfill its obligations under the Act.
Thus, we are of the opinion that the Regulatory Commission had
the requisite jurisdiction to entertain the petition filed by the
consumer. Presumably, for this reason, this contention was
pressed half hearted before us and given up in the middle.
RE: Whether TPC is deemed distribution
licensee
9. Before we take note of the argument of the parties on this
aspect and deal with the same, some background facts need a
mention. TPC is the successor of the Bombay Hydroelectric
License, 1907, the Andhra Valley Hydro-electric License, 1919,
the Nila Mula Valley Hydro-electric License, 1921 and Trombay
Thermal Power Electric License 1953 to supply electricity to
consumers in specified areas in and around Mumbai (Erstwhile
Licenses). The Erstwhile Licenses were subsequently
amalgamated and transferred to Tata Power on 12.7.2001.
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10. The Government of Maharashtra, in exercise of powers
under the Indian Electricity Act, 1910 amended the area of supply
under the Erstwhile Licenses from time to time. This included
addition of new areas as well as handing over of certain areas to
the Government owned distribution company, earlier known as
the Maharashtra State Electricity Board.
11. TPC’s area of supply overlaps with that of Reliance
Infrastructure Limited (R Infra) another distribution licensee in the
suburban Mumbai area, and with that of the Appellant (BEST) in
South Mumbai. In 2002, R Infra filed a petition before the
Respondent No.1 (MERC) alleging that Tata Power’s license did
not authorize Tata Power to supply electricity to direct retail
consumers (with a maximum demand below 1000KVA). While the
petition was pending, the Electricity Act, 2003 came into force.
12. On the basis of aforesaid facts TPC claimed that by virtue of
first proviso to Section 14 of the Act, it was a deemed licensee for
the area of supply of BEST. Under Section 14 the Regulatory
Commission is empowered to grant a license to any person on an
application made to it under Section 15 of the Act. This license
may pertain to transmit electricity as a transmission licensee; or
distribute electricity as a distribution licensee; or to undertake
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trading in electricity as an electricity trader, in any area, as may
be specified in the license. This section has nine provisos which
stipulated various circumstances under which no specific license
is required by making an application under Section 15 and if the
conditions stipulated in any of these provisos are satisfied, such a
person is treated as deemed licensee. We are here concerned
with 1st proviso under which TPC claims to be a deemed
distribution licensee as well as 6th proviso which is invoked by
BEST in contending TPC cannot be a deemed distribution licensee
in the area where BEST operates. Therefore, we reproduce both
these provisos:
1st Proviso:“Provided that any person engaged in the business of transmission or supply of electricity under the provisions of the repealed laws or any Act specified in the Schedule on or before the appointed date shall be deemed to be a licensee under this Act for such period as may be stipulated in the licence, clearance or approval granted to him under the repealed laws or such Act specified in the Schedule, and the provisions of the repealed laws or such Act specified in the Schedule in respect of such licence shall apply for a period of one year from the date of commencement of this Act or such earlier period as may be specified, at the request of the licensee, by the Appropriate Commission and thereafter the provisions of this Act shall apply to such business. 6thProviso:Provided also that the Appropriate Commission may grant a licence to two or more persons for distribution of electricity through their own distribution system within the same area, subject to
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the conditions that the applicant for grant of licence within the same area shall, without prejudice to the other conditions or requirements under this Act, comply with the additional requirements [relating to the capital adequacy, creditworthiness, or code of conduct] as may be prescribed by the Central Government, and no such applicant, who complies with all the requirements for grant of licence, shall be refused grant of license on the ground that there already exists a licensee in the same area for the same purpose.”
13. As per the first proviso if any person was engaged in the
business of transmission or supply of electricity under the
provisions of the repealed laws etc. that person is deemed to be
a licensee under the Act, 2003 as well. The period for such
deemed licence is the one that is stipulated in the licence,
clearance or approval granted to him under the repealed laws. If
it is under any Act specified in the Schedule in respect of such
licence, then the period of licence is for one year from the date of
commencement of the Act or such period as may be specified by
the Appropriate Commission. It would mean that either the
period of deemed licence for such a person is the period which is
stipulated in the licence, clearance or approval granted to him
under the repealed laws or for a period of one year from the date
of commencement of the Act or the period which may be
specified, at the request of the licensee by the Regulatory
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Commission. Once, such a period is over, then that person is
supposed to apply for licence under Section 14.
Proviso six, on the other hand, deals with a different
situation. As per this provision, the Regulatory Commission is
authorized to grant a licence to two or more persons for
distribution of electricity through their own distribution system
within the same area. It is subject to the conditions that the
applicant for grant of licence within the same area shall apply
with the additional requirements relating to the capital adequacy,
creditworthiness, or code of conduct as may be prescribed by the
Central Government. It further provides that merely because
there exists a licensee in the same area would not be a ground to
reject an application for another applicant for same purpose. This
provision deals with open access policy.
14. As per the TPC, proviso one is applicable in their case since
its predecessor were granted licence under the Act, 1910 and
therefore it continuous to be licensee as per the aforesaid
deeming provision under the Act, 2003 as well. The case set up
by the TPC in this behalf is such a licence granted under the old
Act is valid upto 15.8.2014 which is categorical stipulated in the
Specific Licence Conditions by the Regulatory Commission.
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Therefore, it is only after 15.8.2014 that the TPC would be
required to take fresh licence by making application under
Section 15 of the Act, 2003. This is stated on the ground that the
MERC formulated the MERC (Specific Conditions of License
applicable to the Tata Power Company Limited) Regulations,
2008 (Specific License Conditions) under Section 16 of the Act.
The Specific License Conditions read with the MERC (General
Conditions of Distribution License) Regulations, 2006 set out the
terms and conditions of Tata Power’s license in supersession of
the Erstwhile Licenses, and authorize Tata Power to supply
electricity in its area of supply to the public for all purposes in
accordance with the Act. The Specific License Conditions further
stipulate that the term of Tata Power’s license is up to 15.8.2014.
15. The argument of BEST, on the other hand, is that the
Appellate Tribunal was wrong in holding TPC was a deemed
licensee under the first proviso to Section 14, as well as a parallel
licensee under the sixth proviso to Section 14 of the Act 2003.
According to Mr. Naphade, the Appellate Tribunal gravely erred
in failing to appreciate that network of TPC cannot be allowed or
extended within the area of supply of BEST in the absence of
distribution licensee which TPC failed to obtain from Regulatory
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Commission, though it is a necessary requirement under sections
14 and 15 read with Section 12 of the Act. It was argued that as
per the first proviso to Section 14, a person is treated deemed
licensee only if it is engaged in the business of supply of
electricity under the provisions of the repealed laws and it is for
such period “as may be stipulated in the licence granted to him
under the repealed laws”. It was argued that the protection was
only for that period which is stipulated in the licence and not on
the basis of licence and there is no such period specified in the
business up to 15.8.14 specified in the licence. It was, further,
argued that the provisions of the repealed laws in respect of such
licences are applicable for a period of one year within which and
thereafter licence was to be obtained under Section 14 by
moving an application under Section 15, as per the procedure
prescribed in the Act 2003. It was argued that for the deeming
fiction in the first proviso to said Section 14 to arise, (i) a person
must be engaged in the business of supply of electricity under
the repealed laws on or before 10.6.2003, and (ii) a period (being,
period of subsistence of licence) be stipulated in the licence
granted to such person under the repealed laws. It was further
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pointed out that said deeming fiction applies (i) to such a person,
and (ii) for such stipulated period.
16. There are two facets of the submissions made by Mr.
Naphade. In the first instance it is to be found that there is a
stipulation of period in the manner stated in the first proviso.
Second aspect is as to whether it is incumbent, in all cases, to
apply for licence under the provisions of Sections 14 and 15 of
the Act immediately after the expiry of one year from the date of
commencement of the said Act. In so far as first aspect is
concerned, the argument of the appellant loses sight of the fact
that in the first proviso the period for which any person can be a
deemed licensee is not only such period which is stipulated in the
licence, clearance or approval granted to him under the repealed
laws or such Act specified in the Schedule. It also provides that
the provisions of repealed laws or such Act specified in the
Schedule in respect of such a licence shall apply for a period of
one year from the date of commencement of Act 2003 or such
earlier period as may be specified at the request of the licensee
by the Regulatory Commission. In the present case, the
Regulatory Commission formulated MERC (Specific Conditions of
License Applicable to TPCL) Regulation 2008 i.e. Specific Licence
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Conditions. These were formulated under Section 16 of the Act
2003 and it is in these conditions there is a specific stipulation
regarding term of TPC licence up to 15.8.2014. We, therefore, are
unable to accept the submissions of the appellant that the licence
was valid for a period of one year only. It would be useful to refer
to Section 16 of the Act under which aforesaid Specific Licence
Conditions of TPC are formulated.
“16. Conditions of licence.- The Appropriate Commission may specify any general or specific conditions which shall apply either to a licensee or class of licensees and such conditions shall be deemed to be conditions of such licence:
Provided that the Appropriate Commission shall, within one year from the appointed date, specify any general or specific conditions of licence applicable to the licensees referred to in the first, second, third, fourth and fifth provisos to section 14 after the expiry of one year from the commencement of this Act.”
Proviso to the aforesaid section very categorically enables
the Regulatory Commission to specify general or specific
condition of licence applicable to licensees referred to in the first
to fifth proviso to Section 14 after expiry of one year after the
commencement of that Act. Since as on the date of
commencement of the Act, TPC became deemed licensee under
the first proviso as its predecessors were holding the distribution
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licence under the repealed laws and thereafter specific conditions
of licence are formulated by the Regulatory Commission under
Section 16 mentioning the period of 15.8.2014, it becomes clear
that the combined fact of that would be that YPC would be
deemed licence till 15.8.2014. Tata
Power’s license to supply electricity in the South Mumbai area is
clearly established by virtue of the following:
(a) The Erstwhile Licensee authorized Tata Power to supply
electricity to all consumers in Mumbai, including the South
Mumbai area;
(b) When the new Act came into force, by virtue of the 1st
Proviso to Section 14, Tata Power was deemed to be a licensee
under that Act.
This is also clear from Section 172(b) of the Act. It is trite
law that once the purpose of the deeming provision is
ascertained, full effect must be given to the statutory fiction and
the fiction is to be carried to its logical end.
17. An argument was sought to be raised before us that
Regulation 2008 laying down specific conditions for TPC are
flouted as they were not made by the Regulatory Commission
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within the mandatory period of one year. However, no such
argument was raised earlier and there is no challenge to the
validity of the aforesaid Regulations which are made by the
Regulatory Commission under its statutory powers and therefore
are having statutory force. Once, we come to the conclusion that
TPC can be treated as deemed distribution licensee under the
first proviso to Section 14 of the Act 2003 and the area of the
licence is the same which overlaps with the area covered by
BEST, argument predicated on sixth proviso to Section 14 would
not be available to the BEST.
RE: AVAILABILLITY OF OPEN ACCESS TO TPC IN THE AREA
COVERED BY BEST, WHICH IS A LOCAL AUTHORITY
AND
PERMISSIBILITY OF TPC TO EXTEND ITS NETWORK IN BEST
AREA OF SUPPLY WITHOUT ITS APPROVAL/CONSENT.
18. It was argued by Mr. Naphade that under the Act neither
open access can be allowed nor distribution system or network of
a purported parallel licensee (such as TPC) can be laid or
extended within area of supply of BEST. The learned senior
counsel labored on the aspect that admittedly BEST was a Public
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Sector Undertaking and such bodies are given due recognition of
and grant of exemption and/or protection to a special category of
licensee being a local authority in the business of distribution of
electricity before the appointed day. He submitted that as BEST
would be covered by the expression “ a local authority” protected
measures provided under the Act would be applicable to it as
well. According to him, a local authority was always placed on a
special footing under Act, 1910 as well as Act, 1948 and now
under Act, 2003 which was clear from the provisions of Section
42 (3) of the Act that reads as under:
“42(3) Where any person, whose premises are situated within the area of supply of a distribution licensee, (not being a local authority) engaged in the business of distribution of electricity before the appointed day) requires a supply of electricity from a generating company or any licensee other than such distribution licensee, such person may, by notice, require the distribution licensee for wheeling such electricity in accordance with regulations made by the State Commission and the duties of the distribution licensee with respect to such supply shall be of a common carrier providing non-discriminatory open access.”
This provision which deals with the duties of distribution
licensee as well as open access specifically excludes a local
authority.
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Mr. Naphade thus argued that if the Legislature, having
regard to the special status of a local authority engaged in the
business of distribution of electricity before the appointed date
(such as BEST), has duly exempted open access in its area of
supply, then it is but consequential and/or a fortiori that a
distribution system or network of a purported parallel licensee
(such as TPC) cannot be laid or extended within the area of
supply of a local authority engaged in the business of distribution
of electricity before the appointed date (such as BEST). His
submission was that the Legislature could never have and in fact,
has not intended that such special status (inclusive of exemption
from open access) be in vain or rendered
illusory/infructuous/nugatory, and more so by a mere lay out or
extension of a distribution system or network of the purported
parallel licensee. It is a fundamental principle of law that duly
made legislation can never be and should not be in vain or to no
avail. Hence, such special status (inclusive of exemption from
open access) cannot be ignored, but must necessarily be given
full effect to and enforced. According to him an irrational situation
would arise if the purported parallel licensee (such as TPC) could
not supply electricity under open access in the area of supply of a
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local authority engaged in the business of distribution of
electricity before the appointed date (such as BEST), but could
lay or extend its distribution system or network in the area of
supply of a local authority engaged in the business of distribution
of electricity before the appointed date (such as BEST). As such,
Section 42 (3) necessarily has to be interpreted to qualify or
restrict aforesaid Sixth Proviso to Section 14, Section 43(1),
Section 42(1) and/or Section 42(2), to the extent that any person,
whose premises are situated within the area of supply of a
distribution licensee, (which is a local authority engaged in the
business of distribution of electricity before the appointed
date)cannot require a supply of electricity from a generating
company or any licensee other than such distribution licensee,
through (i) open access and/or(ii)otherwise (including under
parallel license). Moreso, as the provisions of the Electricity Act,
2003, provide for protection of interest of electricity consumers,
and as such ought not and should not be interpreted to entail
unnecessary burden of said capital expenditure or electricity
consumers; a local authority engaged in the business of
distribution of electricity before the appointed date (such as
BEST) is ex-facie placed on a special pedestal vis-à-vis ordinary
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distribution licensees, under the Third Proviso to Section 51 of the
Electricity Act, 2003, which has been liberally interpreted in
favour of and to advantage of a local authority engaged, before
the commencement of the Electricity Act, 2003, in the business of
distribution of electricity (such as BEST), by the Hon’ble Supreme
Court of India in the Order dated 8.2.2011 made in Civil Appeal
No.848 of 2011 (Municipal Corporation of Greater Mumbai vs.
Maharashtra Electricity Regulatory Commission & Ors.).
19. On the other hand, Mr. Dhruv Mehta, learned senior counsel
appearing for TPC submitted that by this argument of the
appellant was mixing the otherwise two distinct concepts, namely
that of open access under Section 42 (3) of the Act and that of
Universal Service of Relations contained in Section 43 of the Act.
Highlighting the purpose of the Act which has, inter-alia, provided
emphasizing the need for efficiency and competition in the
distribution business as well as open access system and also
multiple licences system in the same area of supply, he
submitted that if the contention of the appellant is accepted it
would negate the very objective which is sought to be achieved
by the aforesaid provisions. Mr. Mehta argued that under the Act,
there are two ways in which a consumer situated in a particular
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area can avail supply of electricity: (i) from a distribution licensee
authorized to supply electricity in that area under Section 43; or
(ii) from any other supplier through the distribution network of a
distribution licensee by seeking “open access” in terms of Section
42(3). In the first option, the distribution licensee operating in a
particular area is required to lay down its network if required, in
order to supply electricity to a consumer seeking supply. The
second option, which is known as open access is provided under
Section 42 read with Section 2(47) of the 2003 Act. Under Section
42(3) of the 2003 Act, a consumer has the right to require a
distribution licensee to make its network available for wheeling
electricity to such consumer from a third party supplier (i.e. a
supplier of electricity not being a distribution licensee in the area
where the consumer is situated). He submitted that this
distinction between the two different concepts is to be born in
mind and the matter is seen in its proper perspective. Section
42(3) carries out an exception in favour of local authority only
qua open access which would mean that a consumer is
disallowed from seeking open access from a distribution licensee
which is a local authority like BEST. That would mean that a
consumer being supplied by BEST cannot demand that BEST
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allow a third party subject to supply electricity to such consumer
through the network of BEST. According to him, this exception
would extend to position contained in section 43 which casts
“Universal Service Obligation” on all distribution licensees to give
supply to any owner or occupier within its supply area. That
would only mean if there is an another distribution licensee in the
area in which a local authority like BEST also operates, a
consumer can approach that distribution licensee to supply him
the electricity. However, for that purpose, the said distribution
licensee will have to supply the electricity from its own laid in the
network without using the network of local authority.
20. After considering the rival contentions, we are of the
opinion that the interpretation suggested by Mr. Mehta needs to
prevail and therefore we do not find any fault with the view taken
by the Appellate Tribunal. We have already reproduced above
provisions of Section 42 (3) of the Act. As pointed out above,
Section 42 of the Act deals with the duties of distribution licensee
and open access. Sub-Section (1) thereof provides that it shall be
the duty of a distribution licensee to develop and maintain an
efficient co-ordinated and economical distribution system in his
area of supply and to supply electricity in accordance with the
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provisions contained in the Act. Sub-section (2) casts an
obligation upon the State Commission to introduce open access
in phases and subject to such conditions, as may be specified,
these conditions may include the cross subsidies and other
operational constraints. It is thereafter in sub-section (3) of
Section 42 provision is made for wheeling of electricity with
respect to supply stating that duties of distribution licensee shall
be of a common carrier providing non-discriminatory open
access. Thus sub-section (3) provides for open access and casts a
duty upon the distribution licensee in this behalf. Here, it
excludes local authority, as distributor of electricity from such an
obligation. However, when it comes to the duty of distribution
licensee to supply the electricity under section 43, it mandates
that same is to be given to the owner or occupier of any premises
on his application within one month from the receipt of the said
application. This duty under Section 43 imposed upon a
distribution licensee does not distinguish between a local
authority and other distribution licensee. It is also not a case of
the appellant that in a particular area where a local authority is a
distribution licensee, there cannot be any other distribution
licensee at all.
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21. Thus, on a conjoint reading of Sections 42 and 43 of the Act
along with the objectives and purpose for which Act 2003 is
enacted, it becomes clear that there are two ways in which a
consumer stated in a particular area can avail supply of
electricity, as pointed out by the learned senior counsel for TPC
and noted above. When an application is made by a consumer to
a distribution licensee for supply of electricity, such a distribution
licensee for supply of electricity, such a distribution licensee can
request other distribution licensee in the area to provide it
network to make available for wheeling electricity to such
consumers and this open access is to be given as per the
provisions of section 42 (3) of the Act. It is here only that local
authority is exempted from such an obligation and may refuse to
provide makes it network available. Second option is, under
section 43 of the Act, to provide the electricity to the consumer
by the distribution licensee from its own network. Therefore, if in
a particular area local authority has its network and it does not
permit wheeling of electricity from by making available its
network, the other distribution licensee will have to provide the
electricity from its own network. For this purpose, if it is not
having its network, it will have to lay down its network if it
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requires in order to supply electricity to a consumer seeking
supply.
22. This interpretation of ours is in consonance of the objective
and purpose of the Act. The aforesaid objective is further clarified
by the Tariff Policy and the National Electricity Policy under
section 3 of the Act which emphasized the need for efficiency and
competition in the distribution business. On going through the
statement of objects and reasons contained in the new Act, the
interpretation, which we are leading to, gets further facilitated.
Prior to this Act, there were three Acts, namely of 1910, 1948
and 1998 which were governing the laws relating to electricity
and were operating in the field. Within few years, it was felt that
the three Acts of 1910, 1948 and 1998 which were operating in
the field needed to be brought in a new self contained
comprehensive legislation with the policy of encouraging private
sector participation in generation, transmission and distribution
and also the objectives of distancing the regulatory
responsibilities from the Government and giving it to the
Regulatory Commissions. With these objectives in mind the
Electricity Act, 2003 has been enacted. Significant addition is the
provisions for newer concepts like power trading and open
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access. Various features of the 2003 Act which are outlined in the
statement of objects and reasons to this Act. Notably, generation
is being delicensed and captive generation is being freely
permitted. The Act makes provision for private transmission
licensees. It now provides open access in transmission from the
outset. While open access in transmission implies freedom to the
licensee to procure power from any source of his choice, open
access in distribution, with which we are concerned here, means
freedom to the consumer to get supply from any source of his
choice. The provision of open access to consumers ensures right
of the consumer to get supply from a person other than the
distribution licensee of his area of supply by using the distribution
system of such distribution licensee.
23. The concept of open access under the Act enables
competing generating companies and trading licensees, besides
the area distribution licensees, to sell electricity to consumers
when open access in distribution is introduced by the State
Electricity Regulatory Commissions. Supply by way of open
access is a completely different regime as is also clear from the
fact that consumers who have been allowed open access under
Section 42 may enter into an agreement with any person for
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supply of electricity on such terms and conditions, including tariff,
as may be agreed upon by them under Section 49 of the Act
unlike consumers who take supply under section 43 of the Act.
24. Once we read the provisions in the aforesaid manner, it
becomes clear that there is no exemption from universal service
obligation to any distribution licensee under the Act, on account
of the presence of a “local authority” as a distribution licensee in
the particular area of supply, which is also reinforced by
Paragraph 5.4.7 of the National Electricity Policy which clearly
states that the second licensee in the same area shall have the
obligation to supply to all consumers in accordance with Section
43. In this context, it is relevant to reproduce the following
observations in Chandu Khamaru v. Nayan Malik reported in
(2011) 12 SCC 314:
“7…These provisions in the Electricity Act, 2003 make it amply clear that a distribution licensee has a statutory duty to supply electricity to an owner of occupier of any premises located in the area of supply of the distribution licensee, if such owner or occupier of the premises applies for it, and correspondingly every owner or occupier of any premises has a statutory right to apply for and obtain such electric supply from the distribution licensee.”
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25. It is, therefore, difficult to accept the extreme position taken
by the appellant that if local authority is a distribution licensee in
a particular area, there cannot be any other distribution licensee
in that area without the permission of such a local authority. Not
only such a contention would negate the effect of universal
supply obligation under Section 43, it will also amount to
providing an exception which is not there either in Section 43 or
Section 14 of the Act namely to treat local authority in special
category and by giving it the benefit even that benefit which is
not specified under the Act.
26. It is trite that Court should lean in favour of an
interpretation which subserves the objective of the Act namely
the purposive interpretation. In Tata Power Co.Ltd. v.
Reliance Energy Ltd. & Ors. (2008) 10 SCC 321, this Court
gave due recognition to objective behind the Act viz. to promote
competition and give the consumer open to choose the
distribution licensee from which it seeks electricity as is clear
from the following paragraphs:
102. On the other hand, in our view, the provisions of both the 1903 and 1910 Electricity Acts encourage competition in the electricity trade and the same is also incorporated in the licences issued in favour of the distribution licensees, which also include
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licensees generating power for supply. The element of competition has been included in the Preamble to the 2003 Act and permeates the same in its various provisions.
103. As submitted by Mr Chagla, the Act is meant to be consumer-friendly and one of the objectives it sets out to achieve is to give the consumer an option to choose the distribution licensee from whom it wishes to receive supply of electrical energy. The intervention of MIDC, Marol Industries Association and the appeals filed by it, has obviously been made in that context.
In MSR Leathers vs. S.Palaniappan & Anr. (2013) 1 SCC
177 it was observed:
“24. That brings us to the question whether an offence punishable under Section 138 can be committed only once as held by this Court in Sadanandan case1. The holder of a cheque as seen earlier can present it before a bank any number of times within the period of six months or during the period of its validity, whichever is earlier. This right of the holder to present the cheque for encashment carries with it a corresponding obligation on the part of the drawer to ensure that the cheque drawn by him is honoured by the bank who stands in the capacity of an agent of the drawer vis-à-vis the holder of the cheque. If the holder of the cheque has a right, as indeed is in the unanimous opinion expressed in the decisions on the subject, there is no reason why the corresponding obligation of the drawer should also not continue every time the cheque is presented for encashment if it satisfies the requirements stipulated in clause (a) of the proviso to Section 138. There is nothing in that proviso to even remotely suggest that clause (a) would have no application to a cheque presented for the second time if the same has already
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been dishonoured once. Indeed if the legislative intent was to restrict prosecution only to cases arising out of the first dishonour of a cheque nothing prevented it from stipulating so in clause (a) itself. In the absence of any such provision a dishonour whether based on a second or any successive presentation of a cheque for encashment would be a dishonour within the meaning of Section 138 and clause (a) of the proviso thereto. We have, therefore, no manner of doubt that so long as the cheque remains unpaid it is the continuing obligation of the drawer to make good the same by either arranging the funds in the account on which the cheque is drawn or liquidating the liability otherwise. It is true that a dishonour of the cheque can be made a basis for prosecution of the offender but once, but that is far from saying that the holder of the cheque does not have the discretion to choose out of several such defaults, one default, on which to launch such a prosecution. The omission or the failure of the holder to institute prosecution does not, therefore, give any immunity to the drawer so long as the cheque is dishonoured within its validity period and the conditions precedent for prosecution in terms of the proviso to Section 138 are satisfied.”
While dealing with the issue No.2 above, we have already
held that TPC and BEST are parallel distribution licensee in the
South Bombay Area.
27. The appellant has sought to rely on the expression “Save
as otherwise provided in this Act” in Section 43(1) of the Act to
read into Section 43(1) the exception for local authorities
provided for in Section 42(3). The TPC has successfully refuted
this submission by pointing out that these words in Section 43(1)
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are required to be read in the context in which they appear. The
said words were inserted in the section by way of an amendment
to the Act in 2007. An “Explanation” to Section 43(1) was also
added by the same amendment providing that “application” by a
consumer in Section 43(1) means an application complete in all
respects along with documents showing payment of necessary
charges and other compliances, meaning thereby that the
obligation of the distribution licensee to supply within the
specified time period will begin only after it has received such
completed application by the applicant. Further, Sections 45 and
46 provide for the distribution licensee’s powers to recover
charges for electricity supplied and the expenditure incurred in
providing electric line or plant for giving supply. Section 47
provides that the distribution licensee may require any person
demanding electricity supply from him to give a reasonable
security, failing which the distribution licensee may refuse to give
supply of electricity to such consumer. We are of the opinion that
it is in this context that the expression “save as otherwise
provided in this Act” in Section 43 (1) is to be construed.
28. Before we part with we would like to make it clear that
there is a dispute between TPC and R-infra) (respondent No.9)
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which is the subject matter of Civil Appeal Nos. 4667-68/2013. R
Infra is a distribution licensee in suburban Bombay where TPC is
also a licensee. Both supply electricity to different consumers.
Dispute is between them with regard to cross subsidiary
surcharge (CSS) payable by consumer taking supply from TPC or
R Infra network. We make it clear, by way of abundant caution,
that we have not touched upon the said dispute and obviously so
as even otherwise the subject matter in the instance case is
totally different. Therefore Civil Appeal Nos.4667-68/2013 shall
be decided on its own merits.
29. We, thus, do not find any merit in any of the contentions of
the appellant. As a consequence, this appeal fails and is hereby
dismissed with cost thereby affirming the order of the Appellate
Tribunal.
……………………………………….J. (Surinder Singh Nijjar)
……………………………………..J. (A.K. Sikri)
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New Delhi May 8, 2014