# 'A BRIHANMUMBAI ELECTRIC SUPPLY & TRANSPORT UNDERTAKING v. J MAHRASHTRA ELECTRICITY REGULATORY COMMISSION (MERC) & ORS

- **Citation:** [2014] 6 S.C.R. 50
- **Court:** Supreme Court of India
- **Decided:** 2014-05-08
- **Case number:** Civil Appeal No.4223 of 2012
- **Bench:** Surinder Singh Nijjar, A.K. Sikri
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/a-brihanmumbai-electric-supply-transport-undertaking-v-j-mahrashtra-electricity-30071
- **Pages:** 35

## Headnote

C
Electricity Act, 2003 - ss.2(15) and 42(5) - Supply of
electricity - Enforcement of distribution licensee obligation
under the Act -
Jurisdiction of Electricity Regulatory
Commission to entertain dispute between a consumer and a
distribution licencf!e - Petition filed by respondent no.3 before
o Electricity Regulatory Commission seeking direction against
Tata Power Company Limited (TPC) to supply electricity to
him - Challenge to, on ground that respondent no. 3 had
access to alternative remedy to raise his grievances before
the Consumer Grievances Redressal Forum (CGRF)
.E __ established uls.42 (5) - Held: Not tenable - As on the date,
respondent no.3 approached the Regulatory Commission, he
was not consumer of TPC but wanted to become its consumer
- Insofar as CGRF is concerned, which each distribution
licensee is required to set up uls.42 (5), it deals with the
F
grievances of the consumer as defined u/s. 2 (15) -
Respondent No. 3 not being a consumer could not have
approached GGRF -Regulatory Commission had requisite
jurisdiction to entertain petition filed by respondent no.3.
Electricity Act, 2003 - s.14, 15 and 172(b) - Supply of
G electricity - Deemed distribution licensee - Nine provisos u/
s. 14 stipulating various circumstances under which no specific
license required by making application u/s. 15 and if
conditions stipulated in any of these provisos. were satisfied,
H
50
BRIHANMUMBAI ELECT. SUP. & TRAN. UNDERTAKING v.
51
MAHRASHTRA ELECT. REG UL COMMN.
such person to be treated as deemed· licensee - On facts,
Tata Power Company Limited (TPC) claiming to be deemed
distribution licensee under 1st proviso while appel/antBrihanmumbai Electricity Supply and Transport Undertaking
(BEST) invoking 6th proviso to contend that TPC could not
be deemed distribution licensee in the area where BEST was
in operation - Whether TPC was not a deemed distribution
licensee for the area in question and therefore not permitted
to supply electricity to any consumer in that area - Held:
A
B
Since as on the date of commencement of the Act, TPC
became deemed licensee under the first proviso as its C
predecessors were holding the distribution licence under the
repealed laws and thereafter specific conditions of licence
were formulated by the Regulatory Commission uls.16
mentioning the period of 15. 8. 2014, TPC was deemed
licencee till 15. 8. 2014 - Once, it is held that TPC can be
0
treated as deemed distribution licensee under the first proviso
to s. 14 and the area of the licence is the same which overlaps
with the area covered by BEST, argument predicated on sixth
proviso to s.14 not available to BEST - Tata Power's license
to supply electricity clearly established.
Electricity Act, 2003 - ss.42(3), 43, 45, 46 and 47 -
Supply of electricity - Parallel distribution licensees -
-'Availability of open access to Tata Power Company Limited
(TPC) in the area covered by Brihanmumbai Electricity
Supply and Transport Undertaking (BEST) - Permissibility
of TPC to extend its network in BEST area of supply without
its approval/consent - Whether unlike other distribution
licensees, BEST being a local authority, no persons situated
E
F
in BEST's area of supply could avail electricity from any other
licensee, on account of BEST invoking a statutory exemption
G
available to a local authority u/s.42(3) and whether TPC could
not extend its network in BEST's area of supply, without
BEST's consent and agreement -
Held: There is no
exemption from universal service obligation to any
distribution licensee under the Act, on account of the
H
52
SUPREME COURT REPORTS
[2014] 6 S.C.R.
A
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
B
s.43 - The contention that if local authority is a distribution
licensee

## Text

_Characters 0–39,885 of 70,529. This is a partial read: ask again with offset=39885 for what follows._

[2014] 6 S.C.R. 50
'A
BRIHANMUMBAI ELECTRIC SUPPLY & TRANSPORT
UNDERTAKING
v.
.J
MAHRASHTRA ELECTRICITY REGULATORY
COMMISSION (MERC) & ORS.
B
(Civil Appeal No.4223 of 2012)
MAY 8, 2014
[SURINDER SINGH NIJJAR AND A.K. SIKRI, JJ.]
C
Electricity Act, 2003 - ss.2(15) and 42(5) - Supply of
electricity - Enforcement of distribution licensee obligation
under the Act -
Jurisdiction of Electricity Regulatory
Commission to entertain dispute between a consumer and a
distribution licencf!e - Petition filed by respondent no.3 before
o Electricity Regulatory Commission seeking direction against
Tata Power Company Limited (TPC) to supply electricity to
him - Challenge to, on ground that respondent no. 3 had
access to alternative remedy to raise his grievances before
the Consumer Grievances Redressal Forum (CGRF)
.E __ established uls.42 (5) - Held: Not tenable - As on the date,
respondent no.3 approached the Regulatory Commission, he
was not consumer of TPC but wanted to become its consumer
- Insofar as CGRF is concerned, which each distribution
licensee is required to set up uls.42 (5), it deals with the
F
grievances of the consumer as defined u/s. 2 (15) -
Respondent No. 3 not being a consumer could not have
approached GGRF -Regulatory Commission had requisite
jurisdiction to entertain petition filed by respondent no.3.
Electricity Act, 2003 - s.14, 15 and 172(b) - Supply of
G electricity - Deemed distribution licensee - Nine provisos u/
s. 14 stipulating various circumstances under which no specific
license required by making application u/s. 15 and if
conditions stipulated in any of these provisos. were satisfied,
H
50
BRIHANMUMBAI ELECT. SUP. & TRAN. UNDERTAKING v.
51
MAHRASHTRA ELECT. REG UL COMMN.
such person to be treated as deemed· licensee - On facts,
Tata Power Company Limited (TPC) claiming to be deemed
distribution licensee under 1st proviso while appel/antBrihanmumbai Electricity Supply and Transport Undertaking
(BEST) invoking 6th proviso to contend that TPC could not
be deemed distribution licensee in the area where BEST was
in operation - Whether TPC was not a deemed distribution
licensee for the area in question and therefore not permitted
to supply electricity to any consumer in that area - Held:
A
B
Since as on the date of commencement of the Act, TPC
became deemed licensee under the first proviso as its C
predecessors were holding the distribution licence under the
repealed laws and thereafter specific conditions of licence
were formulated by the Regulatory Commission uls.16
mentioning the period of 15. 8. 2014, TPC was deemed
licencee till 15. 8. 2014 - Once, it is held that TPC can be
0
treated as deemed distribution licensee under the first proviso
to s. 14 and the area of the licence is the same which overlaps
with the area covered by BEST, argument predicated on sixth
proviso to s.14 not available to BEST - Tata Power's license
to supply electricity clearly established.
Electricity Act, 2003 - ss.42(3), 43, 45, 46 and 47 -
Supply of electricity - Parallel distribution licensees -
-'Availability of open access to Tata Power Company Limited
(TPC) in the area covered by Brihanmumbai Electricity
Supply and Transport Undertaking (BEST) - Permissibility
of TPC to extend its network in BEST area of supply without
its approval/consent - Whether unlike other distribution
licensees, BEST being a local authority, no persons situated
E
F
in BEST's area of supply could avail electricity from any other
licensee, on account of BEST invoking a statutory exemption
G
available to a local authority u/s.42(3) and whether TPC could
not extend its network in BEST's area of supply, without
BEST's consent and agreement -
Held: There is no
exemption from universal service obligation to any
distribution licensee under the Act, on account of the
H
52
SUPREME COURT REPORTS
[2014] 6 S.C.R.
A
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
B
s.43 - The contention 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, cannot be accepted - Not only such a
contention would negate the effect of universal supply
C. obligation uls.43, it will also amount to providing an exception
which is not there either in s.43 or s.14 namely to treat local
authority in special category and by giving it the benefit even
that benefit which is not specified under the Act - The Court
should lean in favour of an interpretation which subserves the
0
objective of the Act namely the purposive interpretation - The
objective behind the Act is to promote competition and give
the consumer open to choose the distribution licensee from
which it seeks electricity - Interpretation of Statutes -
Purposive interpretation.
E
F
G
H
Respondent No.3, a consumer of electricity (LT-II
Category) whose premises were situated within the
supply area of appellant-BEST, wanted to switch-over to
respondent No.2-Tata Power Company Limited (TPC) for
his electricity requirement. TPC advised respondent no.3
to approach appellant-BEST for its permission to use its
distribution network to enable TPC to supply electricity
to respondent no.3 using that network. Respondent no.3,
accordingly, turned to BEST requesting it to give the said
permission. It was, however, denied by BEST.
After receiving this rejection, respondent no.3 filed
petition before the Mumbai Electricity Regulatory
Commission. 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
BRIHANMUMBAI ELECT SUP. & TRAN. UNDERTAKING v.
53.
MAHRASHTRA ELECT REGUL. COMMN.
TPC for their electricity requirement. The appellant-BEST
A
resisted the demand of the consumers contending: (a)
that the Regulatory Commission did not have the
jurisdiction to entertain a dispute between the consumer
and a distribution licensee; (b) that TPC was not a
deemed distribution licensee for the area in question and
B
therefore not permitted to supply electricity to any
consumer in that area; (c) that unlike other distribution
licensees, BEST being a local authority, no persons
1situated in BEST's area of supply could avail electricity
;trom any other licensee, on account of BEST invoking a c
.statutory exemption available to a local authority under
Section 42(3) of The Electricity Act, 2003 and (d) that TPC
could not extend its network in BEST's area of supply,
without BEST's consent and agreement.
The Regulatory Commission rejected the contentions
of BEST and held that TPC was bound to supply
electricity in terms of applicable Regulations i.e. (MERC
(Standards of Performance of Distribution Licensees,
Period of Giving Supply and Determination of
·Compensation) Regulations 2005; and therefore direction
was given to the TPC to supply electricity to the
consumers either through BEST wires or its own wires.
The Regulatory Commission held that Tata Power had a
duty under the Act to extend its distribution network and
supply electricity, if the consumers so required, and also
that TPC would be deemed distribution licensee for the
area in question. The directions passed by the
Regulatory Commission was affirmed by the Appellate
Tribunal and therefore the instant appeal.
Dismissing the appeal, the Court
HELD:
RE: Jurisdiction of the Regulatory
Commission.
D
E
F
G
1. The contention with regard to jurisdiction of the
H
54
SUPREME COURT REPORTS
[2014] 6 S.C.R. -
A Regulatory Commission 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 Electricity Act,
B 2003; ·and 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. Petition was filed by the consumer
c 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. Insofar as CGRF is
0 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 as defined under Section 2
(15) of the Act. Thus, respondent No.3 not being a
consumer could not have approached CGRF. The
Regulatory Commission has the power to require a
E licensee to fulfill its obligations under the Act. Thus, the
Regulatory Commission had the requisite jurisdiction to
entertain the petition filed by the consumer. [Paras 7, 8]
(66-D-G; -67-B-C]
F
Maharashtra Electricity Regulatory v. Reliance Energy
- G
H
Ltd. (2007) 8 SCC 3812007 (9) SCR 9 - relied on.
Re: Whether TPC is deemed distribution licensee
2.1. Under Section 14 of the Electricity Act, 2003, 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 d.istribule
electricity as a distribution licensee; or to undertake
BRIHANMUMBAI ELECT. SUP. & TRAN. UNDERTAKING v.
55
MAHRASHTRA ELECT. REGUL. COM MN.
trading in electricity as an electricity trader, in any area, A·
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 B
person is treated as deemed licensee. The case at hand
concerns 1st proviso under which TPC claims to be a
deemed distribution licensee as well as 6th proviso which
is invoked by appellant-BEST in contending TPC cannot
be a deemed distribution licensee in the area where BEST c
operates. [Para 12] [68-C-F]
2.2. As per the first proviso to Section 14 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 D
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 E
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
F
repealed laws or for a period of o.ne 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
Commission. Once, such a period is over, then that
person is supposed to apply for licence under Section G
14. [Para 13] [69-E-H]
2.3. Proviso six to Section 14, on the other hand,
deals with a different situation. As per this provision, the
Regulatory Commission is authorized to grant a licence H
56
SUPREME COURT REPORTS
[2014] 6 .S.C.R.
A 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,
B 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
c with open access policy. [Para 13] [70-A-C]
2.4. There are two facets-in the first instance it is to
be found that there is a stipulation of period in the manner
stated in the first proviso to Section 14. Second aspect
is as to whether it is incumbent, in all cases, to apply for
D 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
E 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 law~ or such
Act specified in the Schedule. It also provides that the
provisions of repealed laws or such Act specified in the
F 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
G formulated MERC (Specific Conditions of License
Applicable to TPCL) Regulation 2008 i.e. Specific Licence
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
H 15.8.2014. One, therefore, is unable to accept the
I
BRIHANMUMBAI ELECT SUP. & TRAN. UNDERTAKING v.
57
MAHRASHTRA ELECT REGUL. COMMN.
submissions of the appellant that the licence was valid A
for a period of one year only. [Para 16] (71-G-H; 72-A-D]
2.5. Proviso to Section 16 of the Act [under which
aforesaid Specific Licence Conditions of TPC are
formulated] very categorically enables the Regulatory 8
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 C
the distribution 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 D
deemed licencee 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
E
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
F
effect must be given to the statutory fiction and the fiction
is to be carried to its logical end. [Para 16] (72-H; 73-A-E]
2.6. Once, it is held that TPC can be treated as
deemed distribution licensee under the first proviso to G
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. TPC and BEST are
H
58
SUPREME COURT REPORTS
[2014] 6 S.C.R.
A
parallel distribution licensee in the South Bombay Area.
[Paras 17, 26] [57-G-H; 83-D-E]
Re: Availability of open access to TPC in the area
covered by BEST, which is a local authority and
8
Permissibility of TPC to extend its network in BEST area
of Supply without its approval/consent.
3.1. 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
C
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 provisions'
contained in the Act. Sub-section (2) casts an obligation
upon the State Commission to introduce open access in
D 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
E duties of distribution licensee shall be of a common carrier
providing noh-discriminatory open access. Thus subsection (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
F
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
G under Section 43 imposed upon a distribution licensee
does not distinguish between a local authority and other
distribution licertsee. It is also not a case of the appellant
that in a particular area where a local authority is a
distribution li~ensee, there cannot be any other
distribution licensee at all. [Para 20] [78-A-F]
y
BRIHANMUMBAI ELECT. SUP. & TRAN. UNDERTAKING v.
59
MAHRASHTRA ELECT. REGUL COMMN.
3.2. On a conjoint reading of Sections 42 and 4i of the A
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. When an application is made by a
consumer to a distribution licensee for supply of electricity,
B
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 c
,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 elecfricity 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 0
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 requires in order to supply electricity E
to a consumer seeking supply. [Para 21) [78-G-H; 79-A-D]
" 3.3. This interpretation i!? 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
F
emphasized the need for effici'ency and competition in the
distribution business. On going through the statement of
objects and reasons contained in the new Act, the
interpretation gets further facilitated. Prior to this Act,
there were three Acts, namely of 1910 (Indian Electricity G
Act, 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 H
60
SUPREME COURT REPORTS
[2014] 6 S.C.R.
A
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
B
the Electricity Act, 2003 has been enacted. Significant
addition is the provisions for newer concepts like power
trading and open access. Various features of the 2003 Act
are outlined in the statement of objects and reasons to
this Act. Notably, genera~ion is being delicensed and
c 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
0
source of his choice, open access in distribution, with
which this Court is 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
E supply by using the distribution system of such
distribution licensee. [Para 22) [79-D-H; 80-A-C)
3.4. The concept of open access under the Act
enables competing generating companies and trading
F
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
G fact that consumers who have been allowed open access
under Section 42 may enter into an agreement with any
person for 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 whc
H take supply under section 43 of the Act. Once thE,
BRIHANMUMBAI ELECT SUP. & TRAN. UNDERTAKING v.
61
MAHRASHTRA ELECT. REGUL. COMMN.
provisions are read in the aforesaid manner, it becomes A
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 B
National Electricity Policy which clearly states that the
second licensee in the same area shall have the
obligation to supply to all consumer€ in accordance with
Section 43. [Paras 23, 24] [80-D-H]
3.5. It is difficult to accept the extreme position taken c
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 D
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. [Para 25] [81-C-D]
E
3.6. It is trite that Court should lean in favour of an
interpretation which subserves the objective of the Act
namely the purposive interpretation. The objective behind
the Act is to promote competition and give the consumer F
open to choose the distribution licensee from which it
seeks electricity. [Para 26] [81-E-F]
3.7. The appellant 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 G
authorities provided for in Section 42(3). The TPC has
successfully refuted this submission by pointing out that
these words in Section 43(1) 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 H
62
SUPREME COURT REPORTS
[2014] 6 S.C.R.
A
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,
B 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
C 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
0
licensee may refuse to give supply of electricity to such
consumer. It is in this context that the expression "save/
as otherwise provided in this Act" in Section 43 (1) is to
be construed. [Para 27] [83-E-H; 84-A-B]
Chandu Khamaru v. Nayan Malik (2011) 12 SCC 314:
E
2011 (11) SCR 112; Tata Power Co.Ltd. v. Reliance Energy
Ltd. & Ors. (2008) 1 o sec 321: 2008 (1 O) SCR 293 and MSR
Leathers vs. S. Palaniappan & Anr. (2013) 1 SCC 177: 2012
F
G
(9) SCR 165 - relied on.
'
Case Law Reference:
2007 (9) SCR 9
2011 (11) SCR 112
2008 (10) SCR 293
2012 (9) SCR 165
relied on
relied on
relied on
relied on
Para 8
Para 24
Para 26
Para 26
CIVIL AP PELLA TE JURISDICTION : Civil Api;>eal No.4223
of 2012.
H
From the Judgment and Order dated 04.04.2012 of the
BRIHANMUMBAI ELECT. SUP. & TRAN. UNDERTAKING v.
63
MAHRASHTRA ELECT. REGUL. COMMN.
Appellate Tribunal for Electricity, New Delhi in appeal No. 149 A
of 2010.
Shekhar Naphade, Dhruv Mehta, Jayant Bhushan, Mukul
Rohatgi, J.J. Bhatt, Harender Toor, Tavinder Sidhu, Pallavi
Mohan, Sewga Agarwal, Ganesh Karnath (for M.V. Kini &
B
Associates), Sitesh Mukherjee, Prerna Priyadarshini (for Jagjit
Singh Chhabra), Kanika Chugh, Sakya Singha Chaudhuri, AV.
Rangam, Buddy A. Ranganadhan, S. Ravi Shankar, E.C.
Agrawala, Anjali Chandurkar, Hasan Murtaza (for Shiv Kumar
Suri), Siddhartha Chowdhury for the appearing parties.
C
The Judgment of the Court was delivered by
A.K.SIKRl,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 D
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
E
requirement. In response to his request, TPC advised the
consumer vide letter dated 8.7.2009 to 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 c,onsumer, accordingly, turned to BEST
F
: requesting it to give the said permission. It was, however,
denied by BEST vide letter dated 31.7.2009 and again ori
10.8.2009. After receiving this rejection, the consumer
approached Mumbai Electricity Regulatory Commission
(hereinafter referred to as the "Regulatory Commission") with G
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
H
A
B
64
SUPREME COURT REPORTS
[2014] 6 S.C.R.
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;"
C
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
made party. However, at the instance of Regulatory
D
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
E
TPC to supply electricity to the consumers either through BEST_
wires or its own wires. The operative part of that order reads
as under:
F
G
H
"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."
BRIHANMUMBAI ELECT SUP. & TRAN. UNDERTAKING v.
65
MAHRASHTRA ELECT REGUL. COMMN. [AK. SIKRI, J.]
3. We may point out here that the BEST (the appellant
A
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
B
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
C
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
0
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
E
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
F
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
TPC's position that it was willing to extend its network and
supply electricity, the MERC held that there was no requirement
G
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
H
66
SUPREME COURT REPORTS
[2014] 6 S.C.R. ·
A
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
B 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
C 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.
0
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
E 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
F the Act. As on that date, he was not the consumer of TPC but
wanted to become its corisumer. 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
G 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
H
public μnder this Acfor any other law for the time being in
BRIHANMUMBAI ELECT. SUP. & TRAN. UNDERTAKING v.
67
MAHRASHTRA ELECT. REGUL. COMMN. [A.K. SIKRI, J.]
force and includes any person whose premises are for the
A
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."
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
B
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
C
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
f
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.
D
E
F
10. The Government of Mabarashtra, 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 G
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
H
68
SUPREME COURT REPORTS
[2014] 6 S.C.R.
A 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
B 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
C 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 und~rtake trading in electricity as an electricity
D 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
E 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
F reproduce both these provisos:
G
H
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
BRIHANMUMBAI ELECT. SUP. & TRAN. UNDERTAKING v.
69
MAHRASHTRA ELECT. REGUL. COMMN. [AK SIKRI, J.)
shall apply for a period of one year from the date of A
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 the conditions that
B
the applicant for grant of licence within the same area shall,
C
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,ihall be refused grant
D
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 aswell. 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
E
F
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
G
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 Commission. Once, such a period is over, then that
person is supposed to apply for licence under Section 14.
H
70
SUPREME COURT REPORTS
[2014] 6 S.C.R. .
A
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
B 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
c not be a ground to reject an application for another applicant
for same purpose. This provision deals with open access policy.
14.