# STATE OF GUJARAT & ORS v. UTILITY USERS' WELFARE ASSOCIATION & ORS

- **Citation:** [2018] 9 S.C.R. 106
- **Court:** Supreme Court of India
- **Decided:** 2018-04-12
- **Case number:** Civil Appeal No. 14697 of 2015
- **Bench:** J. Chelameswar, Sanjay Kishan Kaul
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/state-of-gujarat-ors-v-utility-users-welfare-association-ors-33791
- **Pages:** 58

## Headnote

Electricity Act 2003: ss. 84 and 86 - Appointment of
Chairperson of Central and State Regulatory Commissions -
Whether mandatory to have a judicial mind presiding over these
Commissions in the form of a Judge - Held: Section 84(2) is only
an enabling provision to appoint a High Court Judge as a
Chairperson of the State Commission - It is not mandatory to appoint
a High Court Judge as a Chairperson of the State Commission -
However, it is mandatory that there should be a person of law as a
Member of the Commission - Such member should be a person
holding a judicial office or is a person possessing professional
qualifications with substantial experience in the practice of law,
who has the requisite qualifications to have been appointed as a
Judge of the High Court or a District Judge - This is so because
the State Commission have adjudicatory function and has trappings
of the court - On facts, challenge to the appointment of the
Chairman and Member of the Tamil Nadu State Commission is
rejected as also the suo moto proceedings carried out by the
Commission.
ss. 84 and 86 - Qualifications for appointment of Chairperson
and Members of State Commission - Constitution of Selection
Committee to select Members of State Commission - Explained.
Interpretation of Statutes: Statutory construction - Golden
rule and literal rule of - Held: Both the golden rule and the literal
rule of statutory construction are well established that a statute
must be read as it is framed by the legislature - It is not the function
of the Court to supplant or read into the statute something which is
not provided - Courts may ascertain the real intention of the
legislature by carefully attending to the whole scope of the statute.
 106
[2018] 9 S.C.R. 106
A
B
C
D
E
F
G
H
107
Disposing of the matters, the Court
HELD: 1. Section 84(2) of the Electricity Act 2003 is only
an enabling provision to appoint a High Court Judge as a
Chairperson of the State Commission of the said Act and it is not
mandatory to do so. It is mandatory that there should be a person
of law as a Member of the Commission, which requires a person,
who is, or has been holding a judicial office or is a person
possessing professional qualifications with substantial experience
in the practice of law, who has the requisite qualifications to have
been appointed as a Judge of the High Court or a District Judge.
In any adjudicatory function of the State Commission, it is
mandatory for a member having the said legal expertise to be a
member of the Bench. The challenge to the appointment of the
Chairman and Member of the Tamil Nadu State Commission is
rejected as also the suo moto proceedings carried out by the
Commission. The judgment would apply prospectively and would
not affect the orders already passed by the Commission from
time to time. In case there is no member from law as a member
of the Commission as required, the next vacancy arising in every
State Commission would be filled in by a Member of law in the
terms stated. [Para 114] [162-D-H; 163-A]
2.1 On a plain reading of Section 84(1), it is mandated that
both the Chairperson and the Members of the State Commission
"shall" be persons of ability, integrity and standing who have
adequate knowledge of and have shown capacity in dealing with
problems relating to engineering, finance, commerce, economics,
law or management. A plain grammatical reading of this Section
shows that no distinction has been made qua the qualifications of
a Chairperson and Member. All that is required is the mandates
contained in the sub-section, which begin with the word "shall".
Thus, any person of the fields mentioned therein, having the
ability, integrity and standing can be appointed as a Member or
Chairperson. [Para 73] [147-G-H; 148-A-B]
2.2 Section 85 of the Act provides for constitution of a
Selection Committee to select the Members of the State
Commission, which in turn has to consist of the persons as set
out

## Text

_Characters 0–39,866 of 133,657. This is a partial read: ask again with offset=39866 for what follows._

A
B
C
D
E
F
G
H
106
SUPREME COURT REPORTS
[2018] 9 S.C.R.
STATE OF GUJARAT & ORS.
v.
UTILITY USERS' WELFARE ASSOCIATION & ORS.
(Civil Appeal No. 14697 of 2015)
APRIL 12, 2018
[J. CHELAMESWAR AND SANJAY KISHAN KAUL, JJ.]
Electricity Act 2003: ss. 84 and 86 - Appointment of
Chairperson of Central and State Regulatory Commissions -
Whether mandatory to have a judicial mind presiding over these
Commissions in the form of a Judge - Held: Section 84(2) is only
an enabling provision to appoint a High Court Judge as a
Chairperson of the State Commission - It is not mandatory to appoint
a High Court Judge as a Chairperson of the State Commission -
However, it is mandatory that there should be a person of law as a
Member of the Commission - Such member should be a person
holding a judicial office or is a person possessing professional
qualifications with substantial experience in the practice of law,
who has the requisite qualifications to have been appointed as a
Judge of the High Court or a District Judge - This is so because
the State Commission have adjudicatory function and has trappings
of the court - On facts, challenge to the appointment of the
Chairman and Member of the Tamil Nadu State Commission is
rejected as also the suo moto proceedings carried out by the
Commission.
ss. 84 and 86 - Qualifications for appointment of Chairperson
and Members of State Commission - Constitution of Selection
Committee to select Members of State Commission - Explained.
Interpretation of Statutes: Statutory construction - Golden
rule and literal rule of - Held: Both the golden rule and the literal
rule of statutory construction are well established that a statute
must be read as it is framed by the legislature - It is not the function
of the Court to supplant or read into the statute something which is
not provided - Courts may ascertain the real intention of the
legislature by carefully attending to the whole scope of the statute.
 106
[2018] 9 S.C.R. 106
A
B
C
D
E
F
G
H
107
Disposing of the matters, the Court
HELD: 1. Section 84(2) of the Electricity Act 2003 is only
an enabling provision to appoint a High Court Judge as a
Chairperson of the State Commission of the said Act and it is not
mandatory to do so. It is mandatory that there should be a person
of law as a Member of the Commission, which requires a person,
who is, or has been holding a judicial office or is a person
possessing professional qualifications with substantial experience
in the practice of law, who has the requisite qualifications to have
been appointed as a Judge of the High Court or a District Judge.
In any adjudicatory function of the State Commission, it is
mandatory for a member having the said legal expertise to be a
member of the Bench. The challenge to the appointment of the
Chairman and Member of the Tamil Nadu State Commission is
rejected as also the suo moto proceedings carried out by the
Commission. The judgment would apply prospectively and would
not affect the orders already passed by the Commission from
time to time. In case there is no member from law as a member
of the Commission as required, the next vacancy arising in every
State Commission would be filled in by a Member of law in the
terms stated. [Para 114] [162-D-H; 163-A]
2.1 On a plain reading of Section 84(1), it is mandated that
both the Chairperson and the Members of the State Commission
"shall" be persons of ability, integrity and standing who have
adequate knowledge of and have shown capacity in dealing with
problems relating to engineering, finance, commerce, economics,
law or management. A plain grammatical reading of this Section
shows that no distinction has been made qua the qualifications of
a Chairperson and Member. All that is required is the mandates
contained in the sub-section, which begin with the word "shall".
Thus, any person of the fields mentioned therein, having the
ability, integrity and standing can be appointed as a Member or
Chairperson. [Para 73] [147-G-H; 148-A-B]
2.2 Section 85 of the Act provides for constitution of a
Selection Committee to select the Members of the State
Commission, which in turn has to consist of the persons as set
out therein and mandatorily has to have a person, who has been
a Judge of the High Court as the Chairperson of the Selection
Committee. This provision refers to the appointment of
STATE OF GUJARAT & ORS. v. UTILITY USERS' WELFARE
ASSOCIATION & ORS.
A
B
C
D
E
F
G
H
108
SUPREME COURT REPORTS
[2018] 9 S.C.R.
'Members' of the State Commission but then that would also
include the Chairperson of the State Commission, in view of subsection 43 of Section 2 of the said Act. Thus, the reading of subsection (1) of Section 84 read with Section 85 would leave no
manner of doubt as to the fields from which a Chairperson or a
Member of the State Commission can be chosen from. However,
the controversy has emanated from the inclusion of sub-section
(2) of Section 84. This is so, as sub-section (2) begins with a
"notwithstanding" clause providing that the State Government
"may" appoint any person as Chairperson from amongst the
persons, who is, or has been, a Judge of the High Court. This is
to be read with the proviso that such an appointment would have
to be made in consultation with the Chief Justice of that High
Court. The proviso only respects and maintains the accepted
position that in appointment of persons, who have been holding
such senior judicial office, consultation with the judicial head, being
the Chief Justice, should be mandatory. Both the golden rule
and the literal rule of statutory construction are well established
that a statute must be read as it is framed by the legislature. It is
not the function of the Court to supplant or read into the statute
something which is not provided. This is not to say that there
have not been judicial views taken qua the interchangeability of
the expression "may' and "shall" in certain provisions. Thus,
the use of the word "shall" raises a presumption that a particular
provision is imperative. However, it has been construed as merely
directory in certain cases if the context or intention of the
legislature demands otherwise. The Courts may ascertain the
real intention of the legislature by carefully attending to the whole
scope of the statute. [Para 74-76] [148-B-C, E-H; 149-A-C]
Sainik Motors v. State of Rajasthan [1962] 1 SCR 517;
Chairman Canara Bank, Bangalore v. M.S. Jasra AIR
1992 SC 1100 : [1992] 2 SCR 68 - referred to.
2.3 It is well-nigh impossible to lay down a general rule for
determining whether a provision is imperative or directory. In
Section 84, the expression "shall" is used in sub-section (1) both
in the context of the requirement of ability, integrity and standing
as also in the context of adequate knowledge and capacity in
dealing with problems relating to engineering, finance, commerce,
economics, law or management. On the other hand, in
A
B
C
D
E
F
G
H
109
sub-section (2) while dealing with the possibility of appointment
of a Chairperson from the pool of sitting or retired Judges, the
expression used is "may" indicating it to be a discretionary power.
Thus, the line of reasoning that the plain reading of the section
leaves no manner of doubt that the legislature only envisaged a
possibility of appointment of a Chairperson from the pool of sitting
or retired Judges of the High Court, in which case the method of
appointment would be different from the one as envisaged u/s. 85
is accepted. [Paras 78-80] [149-H; 150-C-F]
Interpretation of Statutes by Maxwell, 12th Edn -
referred to.
2.4 The functions of the State Commission are prescribed
under Section 86 of the Act. The enumerated functions are
determination of tariff, regulation of electricity purchase and
procurement process of distribution licencees, facilitating intrastate transmission, issuing licences to persons, promoting
cogeneration and generation of electricity from renewable
sources, levy fee, specify or enforce standards, fix trading margins.
All these functions are regulatory in character rather than
adjudicatory. The real adjudicatory function is only provided in
sub-clause (f) whereupon the Commission has the option of
adjudicating the disputes between the licencees and generating
companies, or to refer such disputes to arbitration. There is also
an advisory role to be performed by the State Commission as
specified in sub-section (2). These types of functions do not
necessarily mandate a Judge to be a Chairperson. [Para 81] [150G-H; 151-A-B]
Tamil Nadu Generation and Distribution Corporation
Limited v. PPN Power Generating Company Private
Limited [2014] 4 SCR 667:2014 (11) SCC 53 - referred
to.
2.5 The composition of the appellate tribunal under Section
112 mandates that there has to be a Bench of two or more persons
of which at least one should be a judicial member. The Chairperson
as per Section 113, mandatorily has to be a present or retired
Judge of the Supreme Court or a Chief Justice of the High Court.
Thus, at the appellate stage there is necessary judicial scrutiny,
which takes place. Looked at from the perspective of the position
STATE OF GUJARAT & ORS. v. UTILITY USERS' WELFARE
ASSOCIATION & ORS.
A
B
C
D
E
F
G
H
110
SUPREME COURT REPORTS
[2018] 9 S.C.R.
prevailing prior to the said Act coming into force, the nature of
functions sought to be performed by the State Commission, were
to be so performed, not by person, who necessarily held a judicial
office. The observations, in the context of the "tribunalisation"
of judicial process and the requirement of it to be headed by a
Judge have to be read in the context of shifting of the adjudicatory
role from the Courts to the Tribunals. [Para 83] [151-E-G]
2.6 The fact that the Chairperson has a right to nominate
the Member, who would chair meetings in his absence as per
sub-section (2) of Section 92, or that the presence of a man of law
would be no substitute to the requirement of a Judge who would
bring a judicial thought process to the decision making as
Chairman, or that the regulatory body should not be unregulated,
are generalized pleas, which are difficult to accept. No doubt, the
law declared by the Supreme Court is binding on all Courts within
the territory of India, which would also include principles of law
emanating from a judgment or interpretation of the law, but then
the ratio decidendi of the judgments of the Supreme Court, makes
the principle of mandatory requirement of a Judge applicable only
to cases where the judicial function is sought to be shifted through
the process of 'tribunalisation'. [Para 86] [152-D-F]
2.7 Section 84(2) of the said Act begins with a non-obstante
clause, i.e., Notwithstanding anything contained in sub-section
(1), it does not take away what is stated in sub-section (1), which
deals with the requirements that are necessary in the appointment
of a Member or Chairperson. It would not cut down the clear
terms of the enactment being sub-section (1). The occasion to
use such a non-obstante clause really arose because the process
of appointment of a Chairperson who is, or has been a Judge, is
required to be different, and thus, the mandatory consultation
with the Chief Justice. It is nothing more or less. Further subsection (1) of Section 85 provides for a Selection Committee to
be headed by a Judge of the High Court but with the proviso that
the said provision would not apply for the appointment of a person
as a Chairperson who is, or has been, a Judge of the High Court.
This, in fact, shows that a non-Judge can be appointed as the
Chairperson by the Selection Committee constituted under
Section 85 of the said Act, which in turn is chaired by a Judge of
A
B
C
D
E
F
G
H
111
the High Court. Thus, Section 84(2) of the said Act only gives
the discretionary option to the State Government to appoint a
Judge as the Chairperson of the State Commission. The said
provision therefore, is not mandatory in nature. [Para 87] [152-FH; 153-A-B]
3.1 In terms of Section 82(4) of the said Act, the State
Commission is to consist of not more than three members
including the Chairperson. In other words, there have to be two
other members other than the Chairperson. Now if the
Chairperson is not a Judge, the question arises whether any of
the other two members has to be a person from the legal field
considering the nature of functions performed by the State
Commission. Section 84(1) of the said Act prescribes the
requirement of knowledge and shown capacity in dealing with
problems relating to six different fields, i.e., engineering, finance,
commerce, economics, law or management. If the Chairperson
is from a non-legal field, it would imply that he/she would be a
person from any of the other five fields. That would still leave the
appointment of two members from the fields specified, including
law. Thus, there can be a possibility and it is so, where State
Commissions have no members from the legal field at all. The
moot point arises whether there can be a mandatory provision
read into Section 84(1) of the Act for opining, that at least one
person from the legal field is necessary as a member, although
on a plain reading of the Section it is not so. [Para 88] [153-C-G]
3.2 The distinguishing feature between appointment of
members to the Central Commission and the State Commission
is that, with regards to the Central Commission, it is specifically
provided in Section 77, how many persons from which field are to
be appointed. There is a further proviso to sub-clause (c) of subsection (1) of Section 77 restricting it to not more than one
member from the fields specified in the said clause, viz.
economics, commerce, law or management. This is not the
position for the State Commission. [Para 89] [153-G-H; 154-A]
3.3 There is no dispute that sub-clause (f) of s. 86 is clearly
an adjudicatory function. It provides for adjudication of disputes
between the licencees and the generating companies. There is
also a power to refer the dispute to arbitration. [Para 91] [154-C-D]
STATE OF GUJARAT & ORS. v. UTILITY USERS' WELFARE
ASSOCIATION & ORS.
A
B
C
D
E
F
G
H
112
SUPREME COURT REPORTS
[2018] 9 S.C.R.
3.4 A perusal of ss. 94 to 96 would show that apart from
their definition, even otherwise, these are powers of a civil court
under the Code of Civil Procedure, 1908. Powers such as
summoning, enforcement of attendance of any person and
examination on oath, discovery and production of documents,
receiving affidavit of evidence, requisitioning of public records,
etc., all form part of Section 94. In terms of Section 95, all such
proceedings before the State Commission would be deemed to
be judicial proceedings within the meaning of Sections 193 and
228 IPC and the commission would be a civil court for purposes
of Sections 345 & 346 CrPC. Not only that, Section 96 confers
the extreme power of entry and seizure in respect of any building
and place where the Commission has reason to believe that any
document relating to the subject matter of enquiry may be found
and may be seized. The power is conferred on the Commission
under Section 129 for securing compliances of orders and under
Sections 142 & 146 for punishment for non-compliance of orders
and directions. This, thus, leaves no manner of doubt that the
State Commission, though defined as a 'Commission' has all the
'trappings of the Court'. [Para 93] [154-H; 155-A-D]
Gujarat Urja Vikas Nigam Ltd. v. Essar Power Ltd.
(GJ-I) [2008] 4 SCR 822 : 2008 (4) SCC 755; A.P.
Power Coordination Committee & Ors. v. Lanco
Kondapalli Power Ltd. & Ors. [2015] 12 SCR 447 :
 2016 (3) SCC 468; Gujarat Urja Vikas Nigam Ltd. v.
Essar Power Ltd. (GJ-I) [2008] 4 SCR 822 : 2008 (4)
SCC 755; Tamil Nadu Generation and Distribution
Corporation Limited v. PPN Power Generating
Company Private Limited [2014] 4 SCR 667 : 2014 (11)
SCC 53; Bharat Bank Ltd. v. Employees of the Bharat
Bank Ltd. 1950 AIR 188 : [1950] SCR 45; Jaswant
Sugar Mills Ltd. v. Lakshmi Chand [1963] Supp. 1 SCR
242; Engineering Mazdoor Sabha v. Hind Cycles Ltd.
1963 AIR 874 : [1963] Suppl. SCR 625; Indo-China
Steam Navigation Co. Ltd. v. Jasjit Singh [1964] 6 SCR
594; Associated Cement Companies Ltd. v. P.N. Sharma
[1965] 2 SCR 366; Sarojini Ramaswami v. Union of
India [1992] 1 Suppl. SCR 108 : 1992 (4) SCC 506;
A
B
C
D
E
F
G
H
113
State of Gujarat v. Gujarat Revenue Tribunal Bar
Association [2012] 10 SCR 816 : 2012 (10) SCC 353
- referred to.
Shell Company of Australia, Limited v. Federal
Commissioner of Taxation (1931) AC 275; R. v. London
County Council (1931) 2 KB 215; Huddart, Parker &
Co. v. Moorehead 8 CLR 330, 357; Cooper v. Wilson
(1937) 2 KB 309 - referred to.
3.5 The 'Wambaugh Test' or 'The Inversion Test' is
propounded as the means of judicial interpretation. 'The Inversion
Test' is used to identify the ratio decidendi in any judgment. In
order to test whether a particular proposition of law is to be treated
as the ratio decidendi of the case, the proposition is to be inversed,
i.e., to remove from the text of the judgment as if it did not exist.
If the conclusion of the case would still have been the same even
without examining the proposition, then it cannot be regarded as
the ratio decidendi of the case. This test has been followed to
imply that the ratio decidendi is what is absolutely necessary for
the decision of the case. "In order that an opinion may have the
weight of a precedent", "it must be an opinion, the formation of
which, is necessary for the decision of a particular case." Applying
the test to the said judgment, the proposition is reversed, i.e.,
"the Chairman need not be a judicial member", the fact remains
that it would have no impact on the decision in that case, which
was related to inter alia the interpretation of Section 86 of the
said Act. This, in fact, justifies what has been held aforesaid qua
the appointment of a Chairperson from the pool of Judges. [Para
102-104] [159-A-F]
3.7 If this Court was to take the proposition as "no member
having knowledge of law is required to be a member of the
Commission" then there is a problem at hand. This is so because
while interpreting Section 86 of the said Act, it has been expressed
that the Commission has the 'trappings of the Court', an aspect
which has been accepted. Once it has the 'trappings of the Court'
and performs judicial functions, albeit limited ones in the context
of the overall functioning of the Commission, still while performing
such judicial functions which may be of far reaching effect, the
STATE OF GUJARAT & ORS. v. UTILITY USERS' WELFARE
ASSOCIATION & ORS.
A
B
C
D
E
F
G
H
114
SUPREME COURT REPORTS
[2018] 9 S.C.R.
presence of a member having knowledge of law would become
necessary. The absence of a member having knowledge of law
would make the composition of the State Commission such as
would make it incapable of performing the functions under Section
86(1)(f) of the said Act. [Para 105] [159-G; 160-A-C]
Madras Bar Association v. Union of India & Anr.
(MJ-II) [2014] 10 SCR 1 : 2014 (10) SCC 1 - referred
to.
3.8 It is mandatory to have a person of law, as a member of
the State Commission. When it is said, it does not imply that any
person from the field of law can be picked up. It has to be a person,
who is, or has been holding a judicial office or is a person
possessing professional qualifications with substantial experience
in the practice of law, who has the requisite qualifications to have
been appointed as a Judge of the High Court or a District Judge.
[Para 107] [160-G-H]
Brahm Dutt v. Union of India 2005 (2) SCC 431 -
referred to.
3.9 It cannot be said that since there is a presence of a
Judge in the Appellate Tribunal that would obviate the need of a
man of law as a member of the State Commission. The original
proceedings cannot be cured of its defect merely by providing a
right of appeal. Thus, for all adjudicatory functions, the Bench
must necessarily have at least one member, who is or has been
holding a judicial office or is a person possessing professional
qualifications with substantial experience in the practice of law
and who has the requisite qualifications to have been appointed
as a Judge of the High Court or a District Judge. [Paras 109-110]
[161-D-E]
3.10 The challenge laid in Transfer Cases to the
appointments made to the Tamil Nadu State Commission and the
exercise of the powers suo moto by the Commission. The
fundamental plea is of financial bias of the two members as they
were working in their erstwhile avatars. The name of 'GR' was
recommended when he was still working as the Director,
TANGEDCO and he opted for voluntary retirement after his name
A
B
C
D
E
F
G
H
115
had been recommended. 'AK' retired from the post of Managing
Director of TANTRANSCO on 31.5.14 and was appointed as
Chairman of the Commission on 6.6.14. The tariff hike was
approved by a majority of 2:1 with these two members being part
of the majority view. [Para 111] [161-E-G]
3.11 The nature of financial interest was examined in the
narrower sense as well as the wider sense and in the wider sense,
it was held to include the direct or indirect interest of a person in
relation to a financial undertaking. The situation arose when the
person concerned was holding both the posts simultaneously,
which is not so in the instant case. It is also pointed out by the
counsel for the State of Tamil Nadu that the orders of appointment
have been exclusively assailed right till the Supreme Court.
Selection Committee was presided over by a retired Judge of
the High Court. Thus, no merit is found in the plea sought to be
advanced assailing either the appointment or the suo moto tariff
revision.[Para 112-113] [162-A-C]
Rajesh Awasthi v. Nand Lal Jaiswal [2012] 10 SCR 883
: 2013 (1) SCC 501; Mor Modern Cooperative
Transport Society Ltd. v. Financial Commissioner &
Secretary to Govt. of Haryana and Anr. [2002] 1 Suppl.
SCR 87 : 2002 (6) SCC 269; Kihoto Hollohan v.
Zachillhu [1992] 1 SCR 686 : 1992 (2) Suppl. SCC 651;
Pareena Swarup v. Union of India [2008] 13
SCR 1217 : 2008 (14) SCC 107; Union of India v.
Madras Bar Association (MJ-I) [2010] 6 SCR 857 :
2010 (11) SCC 1; Uttar Pradesh Power Corporation
Limited v. National Thermal Power Corporation Limited
& Ors. (2011) 12 SCC 400; Natural Resources
Allocation In re Special Reference No. 1 of 2012 [2012]
9 SCR 311 : 2012 (10) SCC 1; Bachahan Devi & Anr.
v. Nagar Nigam, Gorakhpur & Anr. [2008] 2 SCR 424 :
2008 (12) SCC 372; The Dominion of India & Anr. v.
Shrinbai A Irani & Anr. [1955] 1 SCR 206; Chairman
Canara Bank, Bangalore v. M.S. Jasra 1992 AIR
1100 : [1992] 2 SCR 68; Ajit Singh (II) v. State of Punjab
(1999) 7 SCC 209; State of U.P. v. Babu Ram [1961] 2
SCR 679 - referred to.
STATE OF GUJARAT & ORS. v. UTILITY USERS' WELFARE
ASSOCIATION & ORS.
A
B
C
D
E
F
G
H
116
SUPREME COURT REPORTS
[2018] 9 S.C.R.
The Study of Cases"by Eugene Wambaugh Boston :
Little, Brown & Co., 1892 p 17.
Case Law Reference
[2014] 4 SCR 667
referred to
 Paras 17, 25,
 29, 34, 39
[1992] 1 SCR 686
referred to
Para 17
[2008] 13 SCR 1217
referred to
Para 20
[2014] 10 SCR 1
referred to
Paras 26, 32
[2010] 6 SCR 857
referred to
 Paras 26, 29,
32, 38
[2008] 4 SCR 822
referred to
 Paras 30, 32,
44
[2016] 5 SCR 101
referred to
Para 32
(2011) 12 SCC 400
referred to
Para 33
[2012] 9 SCR 311
referred to
Para 39
2005 (2) SCC 431
referred to
Para 43
[2012] 10 SCR 883
referred to
Para 52
[2002] 1 Suppl. SCR 87
referred to
Para 52, 69
[2008] 2 SCR 424
referred to
Para 56
[2015] 12 SCR 447
referred to
Para 57
[2013] 13 SCR 96
referred to
Para 57, 60
[1955] 1 SCR 206
referred to
Para 66
(1999) 7 SCC 209
referred to
Para 67
[1962] 1 SCR 517
referred to
Para 76
[1961] 2 SCR 679
referred to
Para 76
[1992] 2 SCR 68
referred to
Para 76
A
B
C
D
E
F
G
H
117
[1950] SCR 45
referred to
Para 95
[1963] Supp. 1 SCR 242
referred to
Para 98
[1963] Suppl. SCR 625
referred to
Para 98
[1964] 6 SCR 594
referred to
Para 98
[1965] 2 SCR 366
referred to
Para 98
[1992] 1 Suppl. SCR 108
referred to
Para 98
[2012] 10 SCR 816
referred to
Para 98
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 14697
of 2015.
From the Judgment and Order dated 08.10.2015 of the High Court
of Gujarat at Ahmedabad in Writ Petition (PIL) No. 172 of 2014
WITH
C. A. No. 13451 of 2015
T. C. (C) Nos. 139, 138, 137, 140 of 2015
C. A. Nos. 3759-3760 of 2016
T. P. (C) No. 974 of 2016.
K.K. Venugopal, AG, Atmaram N.S. Nadkarni, ASG, Mr.
Subramonium Prasad, Sr. Adv. AAG, Arvind P. Dattar, Shekhar Naphade,
Jayant Bhushan, Sr. Advs., M.G. Ramachandran, R. Balasubramanian,
Ms. Aarti Sharma, Ms. Liz Mathew, P. K. Mullick, Ms. Hemantika Wahi,
Shubham Arya, Gurmeet Singh Makker, Gautam Narayan, R. A. Iyer,
Ms. Mahamaya Chatterjee, Anil Kaushik, Abhishek Mishra, Vishnu
Sharma, Mehul M. Gupta, Rajinder Singh, Vishnu Sharma, Abdul Saleem,
Vinodh Kanna B., A. Sriram, Buddy Ranganathan, Arjit Moitra, Soumik
Ghosal, Nikhil Nayyar, N. Sai Vinod, Dhananjai Baijal, Ms. Smriti Shah,
Divyanshu Rai, Ms. Sujatha Balachander, Ravjyot Ghuman, Shreyak
Gupta, Joseph Aristotle S., Poojan Kapoor, Ms. Kamini Jaiswal,
Ms. Rani Mishra, Abhimanyu Shrestha, D. L. Chidananda, Syed Jafar
Alam, Deep Rao, Sandeep Devasisha Das, Ms. Hemantika Wahi,
B. Balaji, Rahul Mehra, Ms. Neha Sangwan, Chirag Shroff, E. C.
Agrawala, Advs. for the appearing parties.
STATE OF GUJARAT & ORS. v. UTILITY USERS' WELFARE
ASSOCIATION & ORS.
A
B
C
D
E
F
G
H
118
SUPREME COURT REPORTS
[2018] 9 S.C.R.
The Judgment of the Court was delivered by
SANJAY KISHAN KAUL, J. 1. The Electricity Act, 2003
(hereinafter referred to as the 'said Act') provides for Central and State
Regulatory Commissions. Insofar as the appointment of the Chairperson
of these Commissions is concerned, the relevant provisions stipulate that
the Chairperson "may" be a Judge of a High Court for the State
Commission, a Judge of the Supreme Court or the Chief Justice of a
High Court for the Central Commission. The common question, which
arises for consideration in these appeals is whether the expression "may"
should be read as "shall", i.e., whether it is mandatory to have a judicial
mind presiding over these Commissions in the form of a Judge.
2. The Division Bench of the Madras High Court vide judgment
dated 7.2.2014 took the view in respect of the challenge laid to the selection
process of the Chairman of the Tamil Nadu State Electricity Commission
that there was no such mandatory requirement though there was an
option to appoint a Judge.
3. The Division Bench of the Gujarat High Court in a similar case
in respect of the appointment of a Chairperson of the Gujarat State
Regulatory Commission vide impugned order dated 8.10.2015 opined
that it was so mandatory.
4. The aforesaid judicial conflict being before this Court, the
challenges laid in different States were transferred to this Court through
Transfer Petitions vide order dated 3.11.2015.
5. The Union of India, as also some of the State Commissions are
arrayed on the one side to canvas for an interpretation of the provision
as it reads, while on the other side, are consumers, activists and some
affected parties, who canvassed the importance of the State Regulatory
Commissions and the nature of functions it performs, to establish that a
Judge alone should preside over these Commissions.
6. We do not see the necessity of going into individual facts nor
were the pleas advanced on that basis before us. The submissions have
been based on the provisions of the said Act and the legal pronouncements
dealing with the issue of the mandatory requirement of certain
Commissions to be headed by a judicial mind.
A
B
C
D
E
F
G
H
119
The Act:
7. The said Act came into force on 10.6.2003 on publication in the
Gazette. The Act seeks to consolidate the laws relating to generation,
transmission, distribution, trading and use of electricity. The Preamble to
the said Act states as under:
"An Act to consolidate the laws relating to generation, transmission,
distribution, trading and use of electricity and generally for taking
measures conducive to development of electricity industry,
promoting competition therein, protecting interest of consumers
and supply of electricity to all areas, rationalisation of electricity
tariff, ensuring transparent policies regarding subsidies, promotion
of efficient and environmentally benign policies, constitution of
Central Electricity Authority, Regulatory Commissions and
establishment of Appellate Tribunal and for matters connected
therewith or incidental thereto."
8. The detailed Statement of Objects & Reasons mentions that
the Electricity Supply Industry in India was governed by the Indian
Electricity Act, 1910, the Electricity (Supply) Act, 1948 and the Electricity
Regulatory Commission Act, 1998. The State Electricity Boards
constituted under the Electricity (Supply) Act, 1948 failed to perform on
account of various factors inter alia fixation of appropriate tariff and
the cross-subsidies reached unsustainable levels. The Electricity
Regulatory Commission Act of 1998 was an endeavour to distance the
Government from determination of tariffs by having independent
regulatory commissions.
9. Part X of the said Act deals with matters relating to Regulatory
Commissions - their constitution, powers and functions, etc. Sections
76 & 77 of the said Act are concerned with the constitution of the Central
Commission and the qualifications for appointment of Members of the
Central Commission. The provisions are similar to the appointment of
the Members and Chairperson of the State Commissions except to the
extent that while the relevant sub-section provides that the Central
Government "may" appoint the Chairperson from amongst persons who
is, or has been a Judge of the Supreme Court or the Chief Justice of a
High Court in the case of the Central Commission, in the case of State
Commissions, the provision states that the State Government "may"
STATE OF GUJARAT & ORS. v. UTILITY USERS' WELFARE
ASSOCIATION & ORS. [SANJAY KISHAN KAUL, J.]
A
B
C
D
E
F
G
H
120
SUPREME COURT REPORTS
[2018] 9 S.C.R.
appoint any person as the Chairperson from amongst persons who is, or
has been, a Judge of a High Court. Section 78 of the said Act deals with
the constitution of the Selection Committee to recommend Members,
while the functions of the Central Commission are specified in Section
79 of the said Act. Section 80 of the said Act provides for establishment
of a Central Advisory Committee with the Chairperson of the Central
Commission being the ex officio Chairperson of the Central Advisory
Committee. This Committee is to advise the Central Commission on
major questions of policy; quality, continuity and extent of service provided
by the licensees; compliance by the licensees with the conditions and
requirements of their licence; protection of consumer interest; electricity
supply and overall standards of performance by utilities (Section 81 of
the said Act).
10. Section 82 of the said Act is in respect of constitution of State
Commission while Section 84 prescribes the qualifications for appointment
of Chairperson and Members of State Commissions. Section 85 of the
said Act provides for constitution of Selection Committee to select
Members of State Commission and Section 86 prescribes the functions
of State Commission. Similar to the Central Advisory Committee, the
State Advisory Committee can be constituted under Section 87 of the
said Act with similarity of functions under Section 88 of the said Act.
The relevant provisions, which will have to be referred to are being
reproduced hereunder:
"Section 84. Qualifications for appointment of Chairperson
and Members of State Commission. - (1) The Chairperson
and the Members of the State Commission shall be persons of
ability, integrity and standing who have adequate knowledge of,
and have shown capacity in, dealing with problems relating to
engineering, finance, commerce, economics, law or management.
(2) Notwithstanding anything contained in sub-section (1), the State
Government may appoint any person as the Chairperson from
amongst persons who is, or has been, a Judge of a High Court:
Provided that no appointment under this sub-section shall be made
except after consultation with the Chief Justice of that High Court.
(3) The Chairperson or any other Member of the State
Commission shall not hold any other office.
A
B
C
D
E
F
G
H
121
(4) The Chairperson shall be the Chief Executive of the State
Commission.
Section 85. Constitution of Selection Committee to select
Members of State Commission. - (1) The State Government
shall, for the purposes of selecting the Members of the State
Commission, constitute a Selection Committee consisting of -
(a) a person who has been a Judge of the High Court....
Chairperson;
(b) the Chief Secretary of the concerned State ....Member;
(c) the Chairperson of the Authority or
the Chairperson of the Central Commission ....... Member:
Provided that nothing contained in this section shall apply to the
appointment of a person as the Chairperson who is or has been a
Judge of the High Court.
(2) The State Government shall, within one month from the date
of occurrence of any vacancy by reason of death, resignation or
removal of the Chairperson or a Member and six months before
the superannuation or end of tenure of the Chairperson or Member,
make a reference to the Selection Committee for filling up of the
vacancy.
(3) The Selection Committee shall finalise the selection of the
Chairperson and Members within three months from the date on
which the reference is made to it.
(4) The Selection Committee shall recommend a panel of two
names for every vacancy referred to it.
(5) Before recommending any person for appointment as the
Chairperson or other Member of the State Commission, the
Selection Committee shall satisfy itself that such person does not
have any financial or other interest which is likely to affect
prejudicially his functions as such Chairperson or Member, as the
case may be.
(6) No appointment of Chairperson or other Member shall be
invalid merely by reason of any vacancy in the Selection
Committee
STATE OF GUJARAT & ORS. v. UTILITY USERS' WELFARE
ASSOCIATION & ORS. [SANJAY KISHAN KAUL, J.]
A
B
C
D
E
F
G
H
122
SUPREME COURT REPORTS
[2018] 9 S.C.R.
86. Functions of State Commission.- (1) The State Commission
shall discharge the following functions, namely:-
(a) determine the tariff for generation, supply, transmission and
wheeling of electricity, wholesale, bulk or retail, as the case may
be, within the State:
Provided that where open access has been permitted to a category
of consumers under section 42, the State Commission shall
determine only the wheeling charges and surcharge thereon, if
any, for the said category of consumers;
(b) regulate electricity purchase and procurement process of
distribution licensees including the price at which electricity shall
be procured from the generating companies or licensees or from
other sources through agreements for purchase of power for
distribution and supply within the State;
(c) facilitate intra-State transmission and wheeling of electricity;
(d) issue licences to persons seeking to act as transmission
licensees, distribution licensees and electricity traders with respect
to their operations within the State;
(e) promote cogeneration and generation of electricity from
renewable sources of energy by providing suitable measures for
connectivity with the grid and sale of electricity to any person,
and also specify, for purchase of electricity from such sources, a
percentage of the total consumption of electricity in the area of a
distribution licensee;
(f) adjudicate upon the disputes between the licensees and
generating companies and to refer any dispute for arbitration;
(g) levy fee for the purposes of this Act;
(h) specify State Grid Code consistent with the Grid Code specified
under clause (h) of sub-section (1) of section 79;
(i) specify or enforce standards with respect to quality, continuity
and reliability of service by licensees;
(j) fix the trading margin in the intra-State trading of electricity, if
considered, necessary;
A
B
C
D
E
F
G
H
123
(k) discharge such other functions as may be assigned to it under
this Act.
(2) The State Commission shall advise the State Government on
all or any of the following matters, namely:-
(i) promotion of competition, efficiency and economy in activities
of the electricity industry;
(ii) promotion of investment in electricity industry;
(iii) reorganisation and restructuring of electricity industry in the
State;
(iv) matters concerning generation, transmission, distribution and
trading of electricity or any other matter referred to the State
Commission by that Government:
(3) The State Commission shall ensure transparency while
exercising its powers and discharging its functions.
(4) In discharge of its functions, the State Commission shall be
guided by the National Electricity Policy, National Electricity Plan
and tariff policy published under section 3."
11. We may note a distinction between the Members of the Central
Commission and the State Commissions inasmuch as Section 77 dealing
with the appointment of Members of Central Commission provides as
under:
"77. Qualifications for appointment of Members of Central
Commission.- (1) The Chairperson and the Members of the
Central Commission shall be persons having adequate knowledge
of, or experience in, or shown capacity in, dealing with, problems
relating to engineering, law, economics, commerce, finance or
management and shall be appointed in the following manner,
namely:-
(a) one person having qualifications and experience in the field of
engineering with specialisation in generation, transmission or
distribution of electricity;
(b) one person having qualifications and experience in the field of
finance;
STATE OF GUJARAT & ORS. v. UTILITY USERS' WELFARE
ASSOCIATION & ORS. [SANJAY KISHAN KAUL, J.]
A
B
C
D
E
F
G
H
124
SUPREME COURT REPORTS
[2018] 9 S.C.R.
(c) two persons having qualifications and experience in the field
of economics, commerce, law or management:
Provided that not more than one Member shall be appointed under
the same category under clause (c)."
12. However, for appointment of a Member for State Commission,
there is no such limitation on the number of Members from a particular
field though it does state that such Members should have adequate
knowledge and shown capacity in, dealing with problems relating to
engineering, law, economics, commerce, finance or management. Subsection (2) of both Sections 77 and Section 84 are similar except for the
person to be appointed. Thus, irrespective of the provisions in subsection (1) of Section 84 stipulating the fields from which the Members
will have to be appointed, sub-section (2) begins with a 'notwithstanding'
clause stating that the State Government "may" appoint any person as
the Chairperson from amongst those, who have been, or is a Judge of
the High Court. The proviso to sub-section (2) stipulates that no
appointment under sub-section (2) shall be made except after consultation
with the Chief Justice of that High Court. This, in fact, recognizes the
pre-eminence and requirement of consultation with the Chief Justice of
the High Court in case of appointment of a Judge as the Chairperson of
a State Commission. For the Central Commission, the consultation is
with the Chief Justice of India, because the appointment envisaged is of
a Judge of the Supreme Court or the Chief Justice of a High Court.
13. The Selection Committee under Section 85 of the said Act for
selecting Members of the State Commission is to be headed by a Judge
of the High Court but once again the proviso states that this would not
be applicable to the appointment of a person as the Chairperson who is
or has been a Judge of the High Court.