# PTC INDIA LTD v. CENTRAL ELECTRICITY REGULATORY COMMISSION THROUGH SECRETARY

- **Citation:** [2010] 3 S.C.R. 609
- **Court:** Supreme Court of India
- **Decided:** 2010-03-15
- **Case number:** Civil Appeal No. 3902 of 2006
- **Bench:** K.G. Balakrishnan, S.H. Kapadia, R.V. Raveendran, B. Sudershan .Reddy, P. Sathasivam
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/ptc-india-ltd-v-central-electricity-regulatory-commission-through-secretary-26774
- **Pages:** 78

## Headnote

C
Electricity Act, 2003: ss. 111, 178, 121 and 79(1) -
Central Electricity Regulatory Commission (Fixation of
Trading Margin) Regulations, 2006 framed in exercise of
power uls. 178 - Vires of the Regulation challenged before D
Appellate Tribunal - Jurisdiction of Appellate Tribunal u/s. 111
to examine the validity of the Regulations - Power of judicial
review uls. 121 on the Appellate Tribunal - Power of CERC
to cap the trading margins ·by making Regulations - Held: A
regulation u/s. 178 is made under the authority of delegated E
legislation and its validity can be tested only in judicial review
and not by way of appeal before the Appellate Tribunal uls.
111 - Section 121 does not confer power of judicial review of
the validity of the Regulations made u/s. 178, on the Appellate
Tribunal - Applying the principle of "generality versus
F
enumeration'; CERC empowered to cap the trading margin
under the authority of delegated legislation u/s. 178 - Central
Electricity Regulatory Commission (Fixation of Trading
Margin) Regulations, 2006.
Administrative law:
Rules and Regulations vis-a-vis Law enacted by
legislative - Nature of - Similarity between.
609
G
H
610
SUPREME COURT REPORTS
[2010] 3 S.C.R.
A
Quasi judicial orders and judicial decisions - Similarity
B
between.
Order and 'Regulation' - Distinction between.
Legislation:
Substitution of a statutory provision - Effect of - Held:
Substitution of a provision is a combination of repeal and
fresh enactment.
c
Appellants challenged thP. vires of the Central
Electricity Regulatory Commission (Fixation of Trading
Margin) Regulations, 2006 as null and void before the
Appellate Tribunal for Electricity and had prayed for
quashing of the said Regulations. The Tribunal dismissed
0
the appeals holding that its jurisdiction was restricted by
the limits imposed by the parent Statute, i.e., the
Electricity Act, 2003. The Tribunal held that the
appropriate course of action for the appellants was to
proceed by way of judicial review under the Constitution
of India. Hence the present appeals.
E
The questions for consideration before the Court
were: (i) Whether the Appella~e Tribunal constituted
under the 2003 Act has jurisdiction u/s. 111 of the Act, to
examine the validity of the 2006 Regulations (ii) Whether
F
capping of trading margins could be done by the Central
Electricity Regulatory Commission (CERC) by making a
Regulation in that regard u/s. 178 of 2003 Act and (iii)
Whether Parliament has conferred power of judicial
review on the Appellate Tribunal for Electricity u/s. 121 of
G the 2003 Act.
H
Dismissing the appeals, the Court
HELD: 1.1. A regulation u/s. 178 is made under the
authority of delegated legislation and consequently its
PTC INDIA LTD. v. CENTRAL ELECTRICITY
611
REGULATORY COMM. THR. SECRY.
validity can be tested only in judicial review proceedings A
before the courts and not by way of appeal before the
Appellate Tribunal for Electricity under Section 111 of
Electricity Act, 2003. [Para 59] [684-H; 685-A]
1.2. The decision-making and regulation-making
8
functions are both assigned to CERC. Law comes into
existence not only through legislation but also by
regulation and litigation. Laws from all three sources are
binding. A statutory instrument, such as a rule or
regulation, emanates from the exercise of delegated
legislative power which is a part of administrative process C
resembling enactment of law by the legislature whereas
a quasi-judicial order comes from adjudication which is
also part of administrative process resembling a judicial
decision by a court of law. [Para 37] [664-H; 655-A-C]
Shri Sitaram Sugar Co. Ltd. v. Union of India and Ors.
(1990) 3 sec 223, referred to.
D
1.3. Price fixation exercise is actually legislative in
character, unless by the terms of a particular statute it is E
made quasi-judicial as in the case of Tariff fixation u/s. 62
made appealable u/s. 111 of the 2003 Act, though Section
61 is an enabling provision for the framing of regulations
by CE

## Text

_Characters 0–37,622 of 139,636. This is a partial read: ask again with offset=37622 for what follows._

[2010] 3 S.C.R. 609
PTC INDIA LTD.
v.
CENTRAL ELECTRICITY REGULATORY COMMISSION
THROUGH SECRETARY
A
(Civil Appeal No. 3902 of 2006 etc.)
B
MARCH 15, 2010
[K.G. BALAKRISHNAN, CJI., S.H. KAPADIA, R.V.
RAVEENDRAN, B. SUDERSHAN .REDDY AND P.
SATHASIVAM, JJ.)
C
Electricity Act, 2003: ss. 111, 178, 121 and 79(1) -
Central Electricity Regulatory Commission (Fixation of
Trading Margin) Regulations, 2006 framed in exercise of
power uls. 178 - Vires of the Regulation challenged before D
Appellate Tribunal - Jurisdiction of Appellate Tribunal u/s. 111
to examine the validity of the Regulations - Power of judicial
review uls. 121 on the Appellate Tribunal - Power of CERC
to cap the trading margins ·by making Regulations - Held: A
regulation u/s. 178 is made under the authority of delegated E
legislation and its validity can be tested only in judicial review
and not by way of appeal before the Appellate Tribunal uls.
111 - Section 121 does not confer power of judicial review of
the validity of the Regulations made u/s. 178, on the Appellate
Tribunal - Applying the principle of "generality versus
F
enumeration'; CERC empowered to cap the trading margin
under the authority of delegated legislation u/s. 178 - Central
Electricity Regulatory Commission (Fixation of Trading
Margin) Regulations, 2006.
Administrative law:
Rules and Regulations vis-a-vis Law enacted by
legislative - Nature of - Similarity between.
609
G
H
610
SUPREME COURT REPORTS
[2010] 3 S.C.R.
A
Quasi judicial orders and judicial decisions - Similarity
B
between.
Order and 'Regulation' - Distinction between.
Legislation:
Substitution of a statutory provision - Effect of - Held:
Substitution of a provision is a combination of repeal and
fresh enactment.
c
Appellants challenged thP. vires of the Central
Electricity Regulatory Commission (Fixation of Trading
Margin) Regulations, 2006 as null and void before the
Appellate Tribunal for Electricity and had prayed for
quashing of the said Regulations. The Tribunal dismissed
0
the appeals holding that its jurisdiction was restricted by
the limits imposed by the parent Statute, i.e., the
Electricity Act, 2003. The Tribunal held that the
appropriate course of action for the appellants was to
proceed by way of judicial review under the Constitution
of India. Hence the present appeals.
E
The questions for consideration before the Court
were: (i) Whether the Appella~e Tribunal constituted
under the 2003 Act has jurisdiction u/s. 111 of the Act, to
examine the validity of the 2006 Regulations (ii) Whether
F
capping of trading margins could be done by the Central
Electricity Regulatory Commission (CERC) by making a
Regulation in that regard u/s. 178 of 2003 Act and (iii)
Whether Parliament has conferred power of judicial
review on the Appellate Tribunal for Electricity u/s. 121 of
G the 2003 Act.
H
Dismissing the appeals, the Court
HELD: 1.1. A regulation u/s. 178 is made under the
authority of delegated legislation and consequently its
PTC INDIA LTD. v. CENTRAL ELECTRICITY
611
REGULATORY COMM. THR. SECRY.
validity can be tested only in judicial review proceedings A
before the courts and not by way of appeal before the
Appellate Tribunal for Electricity under Section 111 of
Electricity Act, 2003. [Para 59] [684-H; 685-A]
1.2. The decision-making and regulation-making
8
functions are both assigned to CERC. Law comes into
existence not only through legislation but also by
regulation and litigation. Laws from all three sources are
binding. A statutory instrument, such as a rule or
regulation, emanates from the exercise of delegated
legislative power which is a part of administrative process C
resembling enactment of law by the legislature whereas
a quasi-judicial order comes from adjudication which is
also part of administrative process resembling a judicial
decision by a court of law. [Para 37] [664-H; 655-A-C]
Shri Sitaram Sugar Co. Ltd. v. Union of India and Ors.
(1990) 3 sec 223, referred to.
D
1.3. Price fixation exercise is actually legislative in
character, unless by the terms of a particular statute it is E
made quasi-judicial as in the case of Tariff fixation u/s. 62
made appealable u/s. 111 of the 2003 Act, though Section
61 is an enabling provision for the framing of regulations
by CERC. If one takes "Tariff'' as a subject-matter, one
finds that under Part VII of the 2003 Act actual
determination/ fixation of tariff is done by the appropriate
F
Commission u/s. 62, whereas Section 61 is the enabling
provision for framing of regulations containing generic
propositions in accordance with which the appropriate
Commission has to fix the tariff. This basic scheme
equally applies to subject-matter "trading margin" in a G
different statlltory context. [Para 38] [665-D-F]
1.4. Section 79 delineates the functions of CERC
broadly into two categories - mandatory functions and
advisory functions. Tariff regulation, licensing (Including H
612
SUPREME COURT REPORTS
[2010) 3 S.C.R.
A
inter-State trading licensing), adjudication upon disputes
involving generating companies or transmission
licensees fall under the head "mandatory functions"
whereas advising Central Government on formulation of
National Electricity Policy and tariff policy would fall
B
under the head "advisory_ functions". In this sense, CERC
is the decision-making authority. Such decision-making
u/s. 79 (1) is not dependant upon making of regulations
u/s. 178 by CERC. Therefore, functions of CERC
enumerated in Section 79 are separate and distinct from
c function of CERC u/s. 178. The former is administrative/
adjudicatory function whereas the latter is legislative.
[Para 39) [666-H; 667-A-C)
Mis. Narinder Chand Hem Raj and Ors. v. Lt. Governor,
Administrator, Union Territory, Himachal Pradesh and Ors.
D (1971) 2 SCC 747; Indian Express Newspapers (Bombay)
Pvt. Ltd. and Ors. v. Union of India and Ors. (1985) 1 SCC
641, relied on.
1.5. On reading Sections 76(1) and 79(1) one finds
E that CERC is empowered to take measures/steps in
discharge of the functions enumerated in Section 79(1)
like to regulate the tariff of generating companies, to
regulate the inter-State transmission of electricity, to
determine tariff for inter-State transmission of electricity,
F
to issue licenses, to adjudicate upon disputes, to levy
fees, to specify the Grid Code, to fix the trading margin
in inter-State trading of electricity, if considered
necessary, etc .. These measures, which CERC is
empowered to take, have got to be in conformity with the
G regulations u/s. 178, wherever such regulations are
applicable. Measures u/s. 79(1 ), therefore, laave got to be
in conformity with the regulations u/s. 178. To regulate is
an exercise which is different from making of the
regulations. However, making of a regulation u/s. 178 is
not a pre-condition to the Central Commission taking any
H
PTC INDIA LTD. v. CENTRAL ELECTRICITY
613
REGULATORY COMM. THR. SECRY.
steps/measures u/s. 79(1 ). If there is a regulation, then the A
measure u/s. 79(1) has to be in conformity with such
regulation u/s. 178. The dichotomy between the power to
make a regulation u/s. 178 on one hand and the various
enumerated areas in Section 79(1) in which CERC is
mandated to take such measures as it deems to fulfil the B
objects of 2003 Act. [Para 40] [667-F-H; 668-A-C]
1.6. In the hierarchy of regulatory powers and
functions under the 2003 Act, Section 178, which deals
with making of regulations by the Central Commission,
under the authority of subordinate legislation, is wider C
than Section 79(1) of the 2003 Act, which enumerates the
regulatory functions of the CERC, in specified areas, to
be discharged by orders (decisions). [Para 59] [684-E-F]
1.7. In the instant case, instead of fixing a trading D
margin (including capping) on a case to case basis,
CERC thought it fit to make a regulation which has a
general application to the entire trading activity which has
been recognized, for the first time, under 2003 Act.
Making of a regulation u/s. 178 became necessary E
because a regulation made u/s. 178 has the effect of
interfering and overriding the existing contractual
relationship between the regulated entities. A regulation
u/s. 178 is in the nature of a subordinate legislation. Such
subordinate legislation can even override the existing
F
contracts including Power Purchase Agreements which
have got to be aligned with the regulations u/s. 178 and
which could not have been done across the board by an
order of the CERC u/s. 79(1)(j). [Para 40] [669-8-E]
National Hydro-electric Power Corporation Ltd. v. CIT G
2010 (1) SCALE 5; Mis Southern Technologies Ltd. v. Joint
Commissioner of Income Tax, Coimbatore 2010 (1) SCALE
329, relied on.
1.8. Applying the test of "general application", a H
614
SUPREME COURT REPORTS
[2010] 3 S.C.R.
A
regulation stands on a higher pedestal vis-ii-vis an Order
{decision) of CERC in the sense that an order has to be
in conformity with the regulations. However, that would
not mean that a regulation is a pre-condition to the order
{decision). Therefore, it cannot be said that under the
B
2003 Act, power to make regulations u/s. 178 has to be
correlated to the functions ascribed to each authority
under the 2003 Act and that CERC can enact regulations
only on topics enumerated in s. 178(2). Apart from
Section 178(1) which deals with "generality" even u/s.
c 178{2){ze), CERC could enact a regulation on any topic
which may not fall in the enumerated list provided such
power falls within the scope of the 2003 Act. Trading is
an activity recognized under the 2003 Act. While deciding
the nature of an order {decision) vis-a-vis a regulation
0
under the Act, one needs to apply the test of general
application. [Para 43) [672-E-H]
U.P. State Electricity Board, Lucknow v. City Board,
Mussoorie (1985) 2 SCC 16; Mis Jagdamba Paper Industries
(Pvt.) Ltd. and Ors. v. Haryana State Electricity Board and Ors.
E AIR 1983 SC 1296; Kera/a State Electricity Board v. S.N.
Govinda Prabhu and Bros. and Ors. (1986) 4 sec 198, relied
on.
Hindustan Zinc Ltd. etc. v. Andhra Pradesh State
F
Electricity Board and Ors. (1991) 3 SCC 299; Indian Express
Newspapers (Bombay) Pvt. Ltd. and Ors. v. Union of India and
Ors. (1985) 1 SCC 641; City Board, Mussoorie v. State
Electricity Board and Ors. AIR (58) 1971 Allahabad 21·9,
referred to.
G
1.9. On the making of the impugned Regulations
2006, even the existing Power Purchase Agreements
{"PPA") had to be modified and aligned with the said
Regulations. The impugned Regulation makes an inroad
into even the existing contracts. This itself indicates the
H width of the power conferred on CERC u/s. 178 of the .
PTC INDIA LTD. v. CENTRAL ELECTRICITY
615
REGULATORY COMM. THR. SECRY.
2003 Act. All contracts coming into existence after making A
of the impugned Regulations 2006 have also to factor in
the capping of the trading margin. This itself indicates that
the impugned Regulations are in the nature of
subordinate legislation. Such regulatory intervention into
the existing contracts across-the-board could have been B
done only by making Regulations u/s. 178 and not by
passing an Order u/s. 79(1)(j) of the 2003 Act. Therefore,
it becomes clear that the word "order' in Section 111 of
the 2003 Act cannot include the impugned Regulations
2006 made u/s. 178 of the 2003 Act. [Para 43] [672-H; 673- c
A-DJ
1.10. If a dispute arises in adjudication on
interpretation of a regulation made u/s. 178, an appeal
would certainly lie before the Appellate Tribunal under
Section 111, however, no appeal to the Appellate Tribunal D
shall lie on the validity of a regulation made under Section
178. [Para 59J [685-E]
2.1. On the question of "generality versus
enumeration" principle, the enumerated factors/topics in E
a provision do not mean that the authority cannot take
any other matter into consideration which may be
relevant. The words in the enumerated provision are not
a fetter; they are not words of limitation, but they are
words for general guidance. [Para 49] [677-C-F]
Hindustan Zinc Ltd. etc. v. Aridhra Pradesh State
Electricity Board and Ors. (1991) 3 SCC 299; Shri Sitaram
Sugar Co. Ltd. v. Union of India and Ors. (1990) 3 SCC 223,
relied on.
F
G
2.2. Applying the principle of "generality versus
enumeration", it would be open to the Central
Commission to make a regulation on any residuary item
u/s. 178(1) r/w Section 178(2)(ze). The CERC was
empowered to cap the trading margin under the authority H
616
SUPREME COURT REPORTS
[2010] 3 S.C.R.
A
of delegated legislation u/s. 178 vide the impugned
Notification dated 23.1.2006. [Para 59] (685-F-G]
3.1. Section 121 of the 2003 Act does not confer
power of judicial review on the Appellate Tribunal. The
8
words "orders", "instructions" or "directions" in Section
121 do not confer power of judicial review in the Appellate
Tribunal for Electricity. In the 2003 Act, the power of
judicial review of the validity of the Regulations made u/
s. 178 is not conferred on the Appellate Tribunal for
C Electricity. [Para 59] (685-B-D]
Mis Raman and Raman Ltd. v. State of Madras and Ors.
AIR 1959 SC 694, relied on.
3.2. It is not correct to say thats. 121 has not yet been
o brought into force. At the outset, the material brought on
record indicates that Section 121 of the original Electricity
Act, 2003, was never brought into force because some
MPs expressed the concern that the power, under that
Section, conferred upon the Chairperson of the Appellate
E Tribunal, could lead to excessive centralization of power
and interference with the day-to-day activities of the
Commission by the Chairperson of the Tribunal.
Therefore, Section 121 was amended by Electricity
(Amendment) Act, 2003 (No.57 of 2003) and which
F
amendment Act came into force from 27.1.2004. By
necessary implication of the coming into force of the
Electricity (Amendment) Act, 2003 (No.57 of 2003) all
provisions amended by it also came into force, hence
there is no requirement for a further Notification u/s. 1 (3),
particularly when Section 121 in its amended form has
G come into force w.e.f. 27.1.2004. Section 121 of the
original Act stood substituted by Amendment Act No. 57
''
of 2003. Substitution of a provision results in repeal of the
earlier provision and its replacement by the new
provision. Substitution is a combination of repeal and
H fresh enactment. (Para 58] (683-D-G]
PTC INDIA LTD. v. CENTRAL ELECTRICITY
617
REGULATORY COMM. THR. SECRY.
'Principles of Statutory lnterpretat~on' by G.P. Singh 11th
A
Edn., p. 638, referred to.
Case Law Reference:
(1990) 3 sec 223
Referred to.
Para 37
B
Relied on
Para 49
(1971) 2 sec 141
Relied on.
Para 38
(1985) 1 sec 641
Relied on.
Para 38
Referred to.
Para 48
c
2010 (1) SCALE 5
Relied on
Para 41
2010 (1) SCALE 329
Relied on.
Para 42
AIR (58) 1971
Referred to
Para 45
D
Allahabad 219
(1985) 2 sec 16
Relied on.
Para 45
AIR 1983 SC 1296
Relied on.
Para 46
(1986) 4 sec 198
Relied on.
Para 47,
E
(1991) 3 sec 299
Referred to
Para 48
Relied on.
Para 49
< 1990) 3 sec 223
Relied on.
Para 49
F
AIR 1959 SC 694
Relied on.
Para 53
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
3902 of 2006.
G
From the Judgment & Order dated 28.4.2006 of the
Appellate Tribunal for Electricity, New Delhi, in Appeal No. 45
of 2006.
WITH
'. ,"
618
SUPREME COURT REPORTS
[2010] 3 S.C.R.
A C.A. Nos. 147, 2073, 2166, 2875 of 2007 4354, 4355 of 2006,
7437, 7438 of 2005.
C.A. Nos. 2412, 2413 of 2010.
Gopal Subramanium, Sol. Genl. of India, Vikas Singh,
8 Harish N. Salve, P.S. Narasimha, Shanti Bhushan, K.V.
Viswanathan, Bhaskar Gupta, Dr. Manish Singhvi, AAG, Amit
Kapur, Mansoor Ali Shoket, Apoorva Misra, Amrita Narayana,
Shiva Lakshmi Singh, Udita Singh, Aribam Guneshwar Sharma,
Shrivenkastesh, Meenakshi Grover, K.D. Dayal, Harsh Shahu,
C Che~na N. Rai, Harsh Sahu (for Vibha Datta Makhija), Shreshta
Sharma, Anupam Varma (for Vibha Datta Makhija), Pradeep
Misra (NP), R. Chandrachud (for K.R. Sasiprabu) M.G.
Ramachandran, K.V. Mohan, K.V. Balakrishnan, Anand K.
Ganesan, Swapna Sheshadri, Ashiesh Kumar, Nikhil Nayyar,
D T.V.S. R.aghavendra Sreyas, Ambuj Agrawal, Sanjeev K.
Kapoor, Vishal Gupta, Kumar Mihir (for Khaitan & Co.),
Devenahsu Kr. Devesh (for D.K. Sinha), Amit Kumar, R.
Nedumaran, Suresh Chandra Tripathy, Shibashish Mishra (NP),
A.S. Bhasme (NP) Sharmila Upadhyay (NP), Ruchi Gaur
E Narula, Deepika Goel (NP) (for Rakesh K. Sharma), Pratik
Dhar, C.K. Rai, Sridhar Potaraju, G. Umapathy, Vibhu Tiwari
(for Rakesh K. Sharma), C.K. Rai (for Malini Poduval) for the
appearing parties.
F
The Judgment of the Court was delivered by
S.H. KAPADIA, J. 1. Delay condoned.
2. Leave granted.
3. In this batch of civil appeals, we are basically concerned
G with the doctrine and jurisprudence of delegated legislation.
QUESTIONS OF LAW:
4. The crucial points that arise for determination are: -
H
PTC INDIA LTD. v. CENTRAL ELECTRICITY
619
REGULATORY COMM. THR. SECRY. [S.H. KAPADIA, J.]
(i)
Whether the Appellate Tribunal constituted under
A
the Electricity Act, 2003 ("2003 Act") has jurisdiction
under Section 111 to examine the validity of Central
Electricity Regulatory Commission (Fixation of
Trading Margin) Regulations, 2006 framed in
exercise of power conferred under Section 178 of
B
the 2003 Act?
(ii)
Whether Parliament has conferred power of judicial
review on the Appellate Tribunal for Electricity under
Section 121 of the 2003 Act?
(iii)
FACTS:
Whether capping of trading margins could be done
by the CERC ("Central Commission'') by making a
Regulation in that regard under Section 178 of the
2003 Act?
5. In this batch of civil appeals, appellants had challenged
c
D
the vires of the Central Electricity Regulatory Commission
(Fixation of Trading Margin) Regulations, 2006 as null and void
before the Appellate Tribunal for Electricity and had prayed for
E
quashing of the said Regulations. The Tribunal, however,
dismissed the appeals holding that its jurisdiction was restricted
by the limits imposed by the parent Statute, i.e., the Electricity
Act, 2003. By the impugned judgment, the Tribunal held that the
appropriate course of action for the appellants is to proceed
F
by way of judicial review under the Constitution.
6. In view of the importance of the question, the matter was
referred by a three-Judge Bench of this Court to the Constitution
Bench. While making reference to the Constitution Bench, the
G
question formulated was - "whether the Tribunal has jurisdiction
to decide the question as to the validity of the Regulations
framed by the Central Commission?" Basically, the matters
involve interpretation of Sections 111 and 121 of the 2003 Act.
H
620
SUPREME COURT REPORTS
[2010] 3 S.C.R. I
A
7.
RELEVANT PROVISIONS OF THE 2003 ACT:
PART I
PRELIMINARY
B
Section 1. Short title, extent and commencement.-
c
D
E
(3) It shall come into force on such date as the Central
Government may, by notification, appoint:
Provided that different dates may be appointed for
different provisions of this Act and any reference in any
such provision to the commencement of this Act shall be
construed as a reference to the coming into force of that
provision.
,
Section 2 - Definitions.- In this Act, unless the context
otherwise requires,-
-
(9) "Central Commission" means the Central Electricity
Regulatory Commission referred to in sub-section (1) of
section76;
(23) "electricity" means electrical energy-
(a) generated, transmitted, supplied or traded for
any purpose; or
F
(b) used for any purpose except the transmission
of a message;
.
(26) "electricity trader'' means a person who has been
granted a licence to undertake trading in electricity under
G
section 12;
(32) "grid" means the high voltage backbone system of
inter-conr.ected transmission lines, sub-station and
generating plants;
H
(33) "Grid Code" means the Grid Code specified by the
PTC INDIA LTD. v. CENTRAL ELECTRICITY
621
REGULATORY COMM. THR. SECRY. [S.H. KAPADIA, J.]
Central Commission under clause (h) of su.b-section (1) of A
section 79;
(34) "Grid Standards" means the Grid Standards specified
under clause (d) of section 73 by the Authority;
(39) "licensee" means a person who has been granted a 8
licence under section 14;
(44) "National Electricity Plan" means the National
Electricity Plan notified under sub-section (4) of section 3;
(45) "National Load Despatch Centre" means the Centre
established under sub-section (1) of section 26;
c
(46) "notification" means notification published in the
Official Gazette and the expression "notify" shall be
construed accordingly;
D
(47) "open access" means the non-discriminatory provision
for the use of transmission lines or distribution system or
associated facilities with such lines or system by any
licensee or consumer or a person engaged in generation
E
in accordance with the regulations specified by the
Appropriate Commission;
(52) "prescribed" means prescribed by rules made by the
Appropriate Government under this Act;
(57) "regulations" means regulations made under this Act;
(59) "rules" means rules made under this Act;
F
(62) "specified" means specified by regulations made by
the Appropriate Commission or the Authority, as the case G
may be, under this Act;
(64) "State Commission" means the State Electricity
Regulatory Commission constituted under sub-section (1)
of section 82 and includes a Joint Commission constituted
H
622
SUPREME COURT REPORTS
[2010] 3 S.C.R.
A
under sub-section (1) of section 83;
B
c
D
E
F
G
H
(71) "trading" means purchase of electricity for resale
thereof and the expression "trade" shall be construed
accordingly;
(76) "wheeling" means the operation whereby the
distribution system and associated facilities of a
transmission licensee or distribution licensee, as the case
may be, are used by another person for the conveyance
of electricity on payment of charges to be determined
under section 62;
PART II
NATIONAL ELECTRICITY POLICY AND PLAN
Section 3 - National Electricity Policy and Plan
(1) The Central Government shall, from time-to-time,
prepare the National Electricity Policy and tariff policy, in
consultation with the State Governments and the Authority
for development of the power system based on optimal
utilisation of resources such as coal, natural gas, nuclear
substances or materials, hydro and renewable sources of
energy.
(4) The Authority shall prepare a National Electricity Plan
in accordance with the National Electricity Policy and notify
such plan once in five years:
P1ovided that the Authority while preparing the National
Electricity Plan shall publish the draft National Electricity
Plan and invite suggestions and objections thereon from
licensees, generating companies and the public within
such time as may be prescribed:
Provided further that the Authority shall-
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(a) notify the plan after obtaining the approval of the Central
A
Government;
(b) revise the plan incorporating therein the directions, if
any, given by the Central Government while granting
approval under clause (a).
PART Ill
GENERATION OF ELECTRICITY
8
Section 7 - Generating company and requirement for C
setting up of generating station.-Any generating company
may establish, operate and maintain a generating station
without obtaining a licence under this Act if it complies with
the technical standards relating to connectivity with the grid
referred to in clause (b) of section 73.
Section 9 - Captive generation.- (1) Notwithstanding
anything contained in this Act, a person may construct,
maintain or operate a captive generating plant and
dedicated transmission lines:
Provided that the supply of electricity from the captive
generating plant through the grid shall be regulated in the
same manner as the generating station of a generating
company.
Provided further that no licence shall be required under this
Act for supply of electricity generated from a captive
generating plant to any licensee in accordance with the
provisions of this Act and the rules and regulations made
thereunder and to any consumer subject to the regulations
made under sub-section (2) of section 42.
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(2) Every person, who has constructed a captive
generating plant and maintains and operates such plant,
shall have the right to open access for the purposes of
carrying electricity from his captive generating plant to the
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destination of his use:
Provided that such open access shall be subject to
availability of adequate transmission facility and such
availability of transmission facility shall be determined by
the Central Transmission Utility or the State Transmission
Utility, as the case may be:
Provided further that any dispute regarding the availability
of transmission facility shall be adjudicated upon by the
Appropriate Commission.
Section 11- Directions to generating companies.- (1) The
Appropriate Government may specify that a generating
company shall, in extraordinary circumstances operate and
maintain any generating station in accordance with the
directions of that Government.
Explanation:-For the purposes of this section, the
expression "extraordinary circumstances" means
circumstances arising out of threat to security of the State,
public order or a natural calamity or such other
circumstances arising in the public interest.
(2) The Appropriate Commission may offset the-adverse
financial impact of the directions referred to in sub-section
(1) on any generating company in such manner as it
considers appropriate.
PART IV
LICENSING
Section 12 -Authorised persons to transmit, supply, etc.,
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electricity- No person shall-
(a) transmit electricity; or
(b) distribute electricity; or
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{c) undertake trading in electricity,
unless he is authorised to do so by a licence issued under
section 14, or is exempt under section 13.
Section 14 - Grant of licence.-
The Appropriate Commission may, on an application
made to it under section 15, grant a licence to any
person-
( a) to transmit electricity as a transmission licensee; or
(b) to distribute electricity as a distribution licensee; or
{c) to undertake trading in electricity as an electricity trader,
in any area as may be specified in the licence:
Section 15 - Procedure for grant of licence.-
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(1) Every application under section 14 shall be made in
such form and in such manner as may be specified by the
Appropriate Commission and shall be accompanied by E
such fee as may be prescribed.
(6) Where a person makes an application under subsection (1) of section 14 to act as a licensee, the
Appropriate Commission shall, as far as practicable,
within ninety days after receipt of such application,-
F
(a) issue a licence subject to the provisions of this Act and
the rules and regulations made thereunder; or
(b) reject the application for reasons to be recorded in G
writing if such application does not conform to the
provisions of this Act or the rules and regulations made
thereunder or the provisions of any other law for the time
being in force:
Provided that no application shall be rejecte.d unless the H
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applicant has been given an opportunity of being heard.
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Section 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.
PART V
TRANSMISSION OF ELECTRICITY
Section 26 - National Load Despatch Centre
(1) The Central Government may establish a Centre at the
national level, to be known as the National Load Despatch
Centre for optimum scheduling and despatch of electricity
among the Regional Load Despatch Centres.
(2) The constitution and functions of the National Load
Despatch Centre shall be such as may be prescribed by
the Central Government:
Provided that the National Load Despatch Centre shall not
engage in the business of trading in electricity
Section 34 - Grid Standards.-
Every transmission licensee shall comply with such
technical standards, of operation and maintenance of
transmission lines, in accordance with the Grid Standards,
as may be specified by the Authority.
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Section 37 - Directions by Appropriate Government.-
A
The Appropriate Government may issue directions to the
Regional Load Despatch Centres or State Load Despatch
Centres, as the case may be, to take such measures as
may be necessary for maintaining smooth and stable
8
transmission and supply of electricity to any region or State
Section 38 - Central Transmission Utility and functions.-
(1) The Central Government may notify any Government
company as the Central Transmission Utility:
c
Provided that the Central Transmission Utility shall not
engage in the business of generating of electricity or
trading in electricity:
Provided further that the Central Government may transfer,
D
and vest any property, interest in property, rights and
liabilities connected with, and personnel involved in
transmission of electricity of such Central Transmission
Utility, to a company or companies to be incorporated
under the Companies Act, 1956 (1 of 1956) to function as
E
a transmission licensee, through a transfer scheme to be
effected in the manner specified under Part XIII and such
company or companies shall be deemed to be
transmission licensees under this Act.
F
(2) The functions of the Central Transmission Utility shall
be-
(a) to undertake transmission of electricity through interstate transmission system;
(b) to discharge all functions of planning and co-ordination
relating to inter-State transmission system with-
(i) State Transmission Utilities;
(ii) Central Government;
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(iii) State Governments;
(iv) generating companies;
(v) Regional Power Committees;
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(vi) Authority;
(vii) licensees;
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(viii) any other person notified by the Central Government
in this behalf;
(c) to ensure development of an efficient, co-ordinated and
economical system of inter-State transmission lines for
smooth flow of electricity from generating stations to the
load centres;
(d) to provide non-discriminatory open access to its
transmission system for use by-
(i) any licensee or generating company on payment of the
transmission charges; or
(ii) any consumer as and when such open access is
provided by the State Commission under sub-section (2)
of section 42, on payment of the transmission charges and
a surcharge thereon as may be specified by the Central
Commission:
Provided that such surcharge shall be utilised for the
purpose of meeting the requirement of current level crosssubsidy:
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Provided further that such surcharge and cross subsidies
shall be progressively reduced in the manner as may be
specified by the Central Commission:
Provided also that the manner of payment and utilization
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of the surcharge shall be specified by the Central
A
Commission:
Provided also that such surcharge shall not be leviable in
case open access is provided to a person who has
established a captive generating plant for carrying the
8
electricity to the destination of his own use.
PART VI
DISTRIBUTION OF ELECTRICITY
Section 42 - Duties of distribution licensees and open C
access.-
(2) The State Commission shall introduce open access in
such phases and subject to such conditions, (including the
cross subsidies, and other operational constraints) as may
0
be specified within one year of the appointed date by it
and in specifying the extent of open access in successive
phases and in determining the charges for wheeling, it shall
have due regard to all relevant factors including such cross
subsidies, and other operational constraints:
Provided that such open access shall be allowed on
payment of a surcharge in addition to the charges for
wheeling as may be determined by the State Commission:
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Provided further that such surcharge shall be utilised to
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meet the requirements of current level of cross subsidy
within the area of supply of the distribution licensee:
Provided also that such surcharge and cross subsidies shall
be progressively reduced in the manner as may be
specified by the State Commission: -
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Provided also that such surcharge shall not be leviable in
case open access is provided to a person who has
established a captive generating plant for carrying the
electricity to the destination of his own use:
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Provided also that the State Government shall, not later
than five years from the date of commencement of the
Electricity (Amendment) Act, 2003 (57 of 2003) by
regulations, provide such open access to all consumers
who require a supply of electricity where the maximum
B
power to be made available at any time exceeds one
megawatt.
Section 52 - Provisions with respect to electricity trader.-
(1 J Without prejudice to the provisions contained in clause
C
(c) of section 12, the Appropriate Commission may,
specify the technical requirement, capital adequacy
requirement and credit worthiness for being an electricity
trader.
0
(2) Every electricity trader shall discharge such duties, in
relation to supply and trading in electricity, as may be
specified by the Appropriate Commission.
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PART VII
TARIFF
Section 61 - Tariff regulations.-
The Appropriate Commission shall, subject to the
provisions of this Act, specify the terms and conditions for
the determination of tariff, and in doing so, shall be guided
by the following, namely:-
( a) the principles and methodologies specified by the
Central Commission for determination of the tariff
applicable to generating companies and transmission
licensees;
(b) the generation, transmission, distribution and supply of
electricity are conducted on commercial principles;
(c) the factors which would encourage competition,
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efficiency, economical use of the resources, good A
performance and optimum investments;
(d) safeguarding of consumers' interest and at the same
time, recovery of the cost of electricity in a reasonable
manner;
(e) the principles rewarding efficiency in performance;
(f) multi-year tariff principles;
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(g) that the tariff progressively reflects the cost of supply c
of electricity and also reduces cross-subsidies in the
manner specified by the Appropriate Commission;
(h) the promotion of co-generation and generation of ·
electricity from renewable sources of energy;
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(i) the National Electricity Policy and tariff policy:
Provided that the terms and conditions for determination
of tariff under the Electricity (SupplyrAct, 1948, the
Electricity Regulatory Commissions Act, 1998, and the
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enactments specified in the Schedule as they stood
immediately before the appointed date, shall continue to
apply for a period of one year or until the terms and
conditions for tariff are specified under this section,
whichever is earlier.
Section 62 - Determination of tariff
(1) The Appropriate Commission shall determine the tariff
in accordance with the provisions of this Act forF
(a) supply of electricity by a generating company to a G
distribution licensee:
Provided that the Appropriate Commission may, in case
of shortage of supply of electricity, fix the minimum and
maximum ceiling of tariff for sale or purchase of electricity H
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in pursuance of an agreement, entered into between a
generating company and a licensee orbetween licensees,
for a period not exceeding one year to ensure reasonable
prices of electricity;
(b) transmission of electricity;
(c) wheeling of electricity;
(d) retail sale of electricity:
Provided that in case of distribution of electricity in the
same area by two or more distribution licensees, the
Appropriate Commission may, for the promoting
competition among distribution licensees, fix only
maximum ceiling of tariff for retail sale of electricity.
(2) The Appropriate Commission may require a licensee
or a generating company to furnish separate details, as
may be specified in respect of generation, transmission
and distribution for determination of tariff.
(3) The Appropriate Commission shall not, while
determining the tariff under this Act, show undue preference
to any consumer of electricity but may differentiate
according to the consumer's load factor, power factor,
voltage, total consumption of electricity during any specified
period or the time at which the supply is required or the
geographical position of any area, the nature of supply and
the purpose for which the supply is required.
(4) No tariff or part of any tariff may ordinarily be amended,
more frequently than once in any financial year, except in
respect of any changes expressly permitted under the
terms of any fuel surcharge formula as may be specified.
(5) The Commission may require a licensee or a
generating company to comply with such procedure as may
be specified for ca,culating the expected revenues from
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