# Torrent Power Limited v. U.P. Electricity Regulatory Commission & Ors

- **Citation:** 2025 INSC 838
- **Court:** Supreme Court of India
- **Decided:** 2025-07-14
- **Case number:** Civil Appeal No. 23514 of 2017
- **Bench:** J.B. Pardiwala, R. Mahadevan
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/torrent-power-limited-v-u-p-electricity-regulatory-commission-ors-38578
- **Pages:** 84

## Headnote

i) Whether any individual can invoke the jurisdiction of a State
Electricity Regulatory Commissions (ERC) on the plea of public
interest. In other words, whether an ERC has the jurisdiction to
consider matters in public interest; ii) Whether the Act, 2003 confers
jurisdiction on the State ERCs to consider and adjudicate the
efficacy of a distribution franchisee agreement entered between a
distribution licensee and a distribution franchisee. In other words,
whether ERCs have the jurisdiction to review the functioning of a
distribution licensee to supply the electricity through a franchisee.
Headnotes†
Electricity Act, 2003 - s.2(15), s.2(17), s.2(27), seventh proviso
to s.14, s.82, s.86, s.107, s.108, s.111, s.128, s.129, s.130, s.181,
Part VII - Whether the Electricity Regulatory Commission has
the jurisdiction to consider matters in public interest:
Held: Sections 107 and 108 respectively of the Act, 2003 mandate
the ERCs to be guided by directions in matters of policy involving
public interest as the Central/State Government may give to it
in writing - Electricity being a natural resource that vests in the
State, the provisions of the Act, 2003 keep consumers' interest at
the core of all processes that are sought to be governed under
the Act, 2003 namely, generation, transmission and distribution of
electricity - The ERCs, being creatures of a statute, derive their
jurisdiction and powers from the provisions of that statute i.e.,
the Act, 2003 - Therefore, it would not be permissible for them
to exercise powers not expressly vested in them - As a principle
of law, the ERCs are not competent to entertain a matter on the
singular ground of public interest. [Paras 37, 38, 43, 56]
* Author
694
[2025] 7 S.C.R.
Supreme Court Reports
Electricity Act, 2003 - s.128 - The respondent no.4 had preferred
a petition before the UPERC, questioning the legality, validity
and propriety of the Distribution Franchisee Agreement dated
18.05.2009 and Supplementary Agreement dated 17.03.2010
respectively (together referred to as the "DFA") entered and
executed between the appellant (distribution franchisee) and
the respondent no.3 (distribution licensee) - Respondent no.4
prayed for an investigation u/s.128 of the Act, 2003 against
the respondent nos.2 and 3 as well as the appellant - Whether
the petition filed by the respondent no.4 u/s.128 of the Act,
2003 was maintainable in law:
Held: The respondent no.4, though, has levelled serious
allegations against the respondent no.2 and the appellant, yet
has not provided any reasons or documentation in respect of
how the appellant and respondent no.2 are in violation of tariff
orders - Further, even the Expert Committee Report dated
09.01.2017 does not shed any light on how tariff orders are
being contravened by the appellant - What is discernible is
that unless some satisfactory grounds are given for initiating
an investigation, a petition or an application u/s.128 cannot be
held to be maintainable - The ERCs are required to consider
matters in public interest wherever mandated by the Act, 2003,
i.e., in matters relating to tariff determination, procurement of
power processes, and utility/licensee management which requires
safeguarding of consumer interest alongside the commercial
principles - This Court is, therefore, of the considered view that
in the present case, the petition of the respondent no.4 filed
u/s.128 does not fulfill the parameters of satisfaction required
under the said Section. [Paras 67, 68]
Electricity Act, 2003 - ss.16, 18, 19, 20, 128 - Whether the ERCs
have the jurisdiction to review the functioning of a distribution
licensee to supply electricity through a franchisee:
Held: An ERC may not directly regulate a franchisee, it exercises
regulatory oversight over the distribution licensee's functions and
duties, including the process of a distribution licensee delegating
some of its functions and activities to a franchisee - Further,
Sections 16, 18, 19 and 20 of the Act, 2003 resp

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[2025] 7 S.C.R. 693 : 2025 INSC 838
Torrent Power Limited
v.
U.P. Electricity Regulatory Commission & Ors.
(Civil Appeal No. 23514 of 2017)
14 July 2025
[J.B. Pardiwala* and R. Mahadevan, JJ.]
Issue for Consideration
i) Whether any individual can invoke the jurisdiction of a State
Electricity Regulatory Commissions (ERC) on the plea of public
interest. In other words, whether an ERC has the jurisdiction to
consider matters in public interest; ii) Whether the Act, 2003 confers
jurisdiction on the State ERCs to consider and adjudicate the
efficacy of a distribution franchisee agreement entered between a
distribution licensee and a distribution franchisee. In other words,
whether ERCs have the jurisdiction to review the functioning of a
distribution licensee to supply the electricity through a franchisee.
Headnotes†
Electricity Act, 2003 - s.2(15), s.2(17), s.2(27), seventh proviso
to s.14, s.82, s.86, s.107, s.108, s.111, s.128, s.129, s.130, s.181,
Part VII - Whether the Electricity Regulatory Commission has
the jurisdiction to consider matters in public interest:
Held: Sections 107 and 108 respectively of the Act, 2003 mandate
the ERCs to be guided by directions in matters of policy involving
public interest as the Central/State Government may give to it
in writing - Electricity being a natural resource that vests in the
State, the provisions of the Act, 2003 keep consumers' interest at
the core of all processes that are sought to be governed under
the Act, 2003 namely, generation, transmission and distribution of
electricity - The ERCs, being creatures of a statute, derive their
jurisdiction and powers from the provisions of that statute i.e.,
the Act, 2003 - Therefore, it would not be permissible for them
to exercise powers not expressly vested in them - As a principle
of law, the ERCs are not competent to entertain a matter on the
singular ground of public interest. [Paras 37, 38, 43, 56]
* Author
694
[2025] 7 S.C.R.
Supreme Court Reports
Electricity Act, 2003 - s.128 - The respondent no.4 had preferred
a petition before the UPERC, questioning the legality, validity
and propriety of the Distribution Franchisee Agreement dated
18.05.2009 and Supplementary Agreement dated 17.03.2010
respectively (together referred to as the "DFA") entered and
executed between the appellant (distribution franchisee) and
the respondent no.3 (distribution licensee) - Respondent no.4
prayed for an investigation u/s.128 of the Act, 2003 against
the respondent nos.2 and 3 as well as the appellant - Whether
the petition filed by the respondent no.4 u/s.128 of the Act,
2003 was maintainable in law:
Held: The respondent no.4, though, has levelled serious
allegations against the respondent no.2 and the appellant, yet
has not provided any reasons or documentation in respect of
how the appellant and respondent no.2 are in violation of tariff
orders - Further, even the Expert Committee Report dated
09.01.2017 does not shed any light on how tariff orders are
being contravened by the appellant - What is discernible is
that unless some satisfactory grounds are given for initiating
an investigation, a petition or an application u/s.128 cannot be
held to be maintainable - The ERCs are required to consider
matters in public interest wherever mandated by the Act, 2003,
i.e., in matters relating to tariff determination, procurement of
power processes, and utility/licensee management which requires
safeguarding of consumer interest alongside the commercial
principles - This Court is, therefore, of the considered view that
in the present case, the petition of the respondent no.4 filed
u/s.128 does not fulfill the parameters of satisfaction required
under the said Section. [Paras 67, 68]
Electricity Act, 2003 - ss.16, 18, 19, 20, 128 - Whether the ERCs
have the jurisdiction to review the functioning of a distribution
licensee to supply electricity through a franchisee:
Held: An ERC may not directly regulate a franchisee, it exercises
regulatory oversight over the distribution licensee's functions and
duties, including the process of a distribution licensee delegating
some of its functions and activities to a franchisee - Further,
Sections 16, 18, 19 and 20 of the Act, 2003 respectively, prescribe
that the ERC can stipulate/review the terms and conditions under
[2025] 7 S.C.R.
695
Torrent Power Limited v. U.P. Electricity Regulatory Commission & Ors.
which a distribution licensee may delegate its electricity distribution
responsibilities to a franchisee - Such stipulation/review occurs
as a part of ERC's regulatory functions - It is apposite to observe
that the Act, 2003 does not provide for a direct regulatory oversight
by the ERCs in respect of the distribution franchisees - Part IV
of the Act, 2003, from Sections 12 to 24 deals with licensing
which inter-alia includes the procedure for grant of licence,
conditions of licence, actions that a licensee may not undertake,
amendment of licence, revocation of licence, sale of utilities of
licensees, directions to licensees, and suspension of distribution
licence and sale of utility - All these stipulations are to regulate
the distribution licensee - There is no such stipulation provided
to control or regulate the relationship between a licensee and
franchisee - It is well settled that the relationship between the
distribution licensee and franchisee is one of agency - As a natural
corollary, the franchisee is accountable only to the distribution
licensee, who in turn is accountable to the consumers - The Act,
2003 does not envisage direct regulatory oversight as regards
distribution franchisees and by virtue of their relationship of agency,
such franchisees can only be indirectly regulated through the
distribution licensee - Therefore, even an investigation u/s.128
can only happen in respect of a distribution licensee and not its
franchisee. [Paras 71, 72, 73, 75]
Electricity Act, 2003 - s.128 - Uttar Pradesh Electricity
Regulatory Commission (Consumer Grievance Redressal
Forum & Electricity Ombudsman) Regulations, 2007 -
Reg.5 - Uttar Pradesh Electricity Regulatory Commission
(Conduct of Business) Rules, 2004 - Reg.14 - A Distribution
Franchisee Agreement dated 18.05.2009 and Supplementary
Agreement dated 17.03.2010 respectively (together referred
to as the "DFA") entered and executed between the appellant
(distribution franchisee) and the respondent no.3 (distribution
licensee) appointing the appellant herein as a franchisee for
distribution of electricity - Respondent No.4 (an individual)
preferred Petition No.816 of 2012 u/s.128 of 2003 Act before
the UPERC, questioning the legality, validity and propriety of
DFA - The UPERC held the petition was maintainable on the
grounds of public interest and further, ordered formation of
an Expert Committee to give findings - The APTEL held that
696
[2025] 7 S.C.R.
Supreme Court Reports
petition before the UPERC was maintainable and observed
that ERCs are empowered to exercise regulatory oversight
on distribution licensees - Correctness:
Held: 1. The UPERC fell in serious error in entertaining the
petition filed by the respondent no.4 and passing the order
constituting an expert committee - The APTEL also failed to
look into the error committed by the UPERC and dismissed
the appeal filed by the appellant-herein - The impugned order
passed by the APTEL is hereby set aside - As a consequence,
the report of the Expert Committee also pales into insignificance.
[Paras 78, 79]
2. The ERCs are required to consider matters in public interest
wherever mandated by the Act, 2003, i.e., in matters relating to
tariff determination, procurement of power processes, and utility/
licensee management which requires safeguarding of consumer
interest alongside the commercial principles - This Court, therefore,
of the considered view that in the present case, the petition of the
respondent no.4 filed u/s.128 does not fulfill the parameters of
satisfaction required under the said Section - The issue whether
an investigation u/s.128 could be ordered against DVVNL or
respondent no.2, the answer in the negative - It goes without
saying that the investigation to be conducted by an authority
u/s.128 is to be limited to only two eventualities: (i) if the licensee
fails to abide by the terms of its license, and (ii) if the licensee
acts in contravention to the provisions of the Act, 2003 and the
regulations thereunder - The exposition in the aforesaid clarifies
that the threshold of "satisfaction" required to order an investigation
u/s.128 was not met by the respondent no.4 and even the Expert
Committee did not present any findings as regards these two
considerations - Insofar, regulatory oversight as regards distribution
franchisees is concerned, there is no doubt that the Act, 2003 does
not envisage direct regulatory oversight as regards distribution
franchisees and by virtue of their relationship of agency, such
franchisees can only be indirectly regulated through the distribution
licensee - Therefore, even an investigation u/s.128 can only happen
in respect of a distribution licensee and not its franchisee - This
is in consonance with the principle of agency - Any action of the
franchisee is equivalent to such action having been committed
by a distribution licensee - Therefore, only the distribution
[2025] 7 S.C.R.
697
Torrent Power Limited v. U.P. Electricity Regulatory Commission & Ors.
licensee can be questioned for any action that its agent commits.
[Paras 68, 77, 75]
Electricity Act, 2003 - Input-rate model of distribution
franchisee - Explained:
Held: In this model, a franchisee buys electricity from a distribution
licensee at defined input point(s) at a pre-determined rate which is
annualized for consistency on a yearly basis - This pre-determined
rate that has to be paid by the franchisee to the distribution licensee
for purchase of electricity, is usually fixed by way of bids received
from private players interested in assuming the role of a franchisee -
The private party that quotes the highest rate is awarded the bid
subject to other terms and conditions of the bidding process - It
is for this reason that quoting of such annualized rates is required
even by the Ministry of Power's "Standard Bidding Document for
Appointment of Input based Distribution Franchisee, June 2012".
[Para 61]
Electricity Act, 2003 - Functions of Central and State Electricity
Regulations Commissions - Nature and Scope of - Discussed:
Held: Under the scheme of the Act, 2003, the Central and State
ERCs are vested with regulatory functions, tariff determination
functions, and adjudicatory functions, in particular under
Sections 79 and 86 respectively - Whilst in the exercise of
regulatory functions, the ERCs are also required to comply with
the various Regulations made by the respective Central and
State Commissions under Sections 178 and 181 respectively
of the Act, 2003 - A close reading of most of the Regulations
framed by the ERCs i.e., Regulations pertaining to Open Access,
Connectivity Regulations, Regulations on Renewable Power
Purchase Obligations etc., indicate that regulatory powers and
functions of the ERCs must be exercised in public or consumer
interest alongside commercial principles - The function of tariff
adoption or determination is also mandated to be carried by ERCs
in accordance with public interest and to safeguard consumer
needs - It is noteworthy that Section 61 of the Act, 2003 also
requires ERCs to consider commercial principles in matters of tariff
and therefore ERCs are expected to undertake a balancing act
between commercial prudence and consumer interest. [Para 48]
698
[2025] 7 S.C.R.
Supreme Court Reports
Electricity Act, 2003 - ss.79, 86 - Adjudicatory jurisdiction-
Central ERC and State ERCs - Difference - Whether consumer
disputes falls within the adjudicatory jurisdiction of UPERC:
Held: Adjudicatory jurisdiction of the Central Commission is
specified under Section 79(1)(f) and is limited to adjudication
of disputes involving generating companies or transmission
licensee, in regard to matters connected with clauses (a) to
(d) - The State ERCs have a comparatively broader jurisdiction
under Section 86, to adjudicate upon all disputes between the
licensees and generating companies, without being limited to
categories specified in (a) to (d) of Section 79 - However, even
this enlarged jurisdiction of the State ERCs, more particularly the
UPERC, does not include within its fold the power to adjudicate
disputes involving consumers and by extension their grievances,
irrespective of whether such issue is raised in furtherance of
public interest. [Paras 49, 50]
Case Law Cited
Maharashtra State Electricity Distribution Co. Ltd. v. Reliance Energy
Ltd. [2007] 9 SCR 9 : (2007) 8 SCC 381 - held inapplicable.
Paschimanchal Vidyut Vitran Nigam Ltd. v. Adarsh Textiles [2014]
14 SCR 482: (2014) 16 SCC 212; M.P. Power Management Co.
Ltd. v. Sky Power Southeast Solar India (P) Ltd. [2022] 5 SCR 1 :
(2023) 2 SCC 703; Jaipur Vidyut Vitran Nigam Ltd. v. MB Power
(M.P.) Ltd. [2024] 1 SCR 909 : (2024) 8 SCC 513; All India Power
Engineer Federation v. Sasan Power Ltd. [2016] 9 SCR 901 :
(2017) 1 SCC 487; Rajeev Hitendra Pathak v. Achyut Kashinath
Karekar [2011] 10 SCR 513 : (2011) 9 SCC 541; Chiranjilal Shrilal
Goenka v. Jasjit Singh [1993] 2 SCR 454 : (1993) 2 SCC 507;
A.R. Antulay v. R.S. Nayak [1988] Supp. 1 SCR 1 : (1988) 2
SCC 602; Gujarat Urja Vikas Nigam Ltd. v. Solar Semiconductor
Power Co. (India) (P) Ltd. [2017] 14 SCR 115 : (2017) 16 SCC
498 - relied on.
Energy Watchdog v. CERC [2017] 3 SCR 153 : (2017) 14
SCC 80 - referred to.
Amausi Industries Association v. Uttar Pradesh Electricity Regulatory
Commission, 2013 SCC OnLine APTEL 138; City Corporation
Limited v. Maharashtra Electricity Regulatory Commission and Anr.,
[2025] 7 S.C.R.
699
Torrent Power Limited v. U.P. Electricity Regulatory Commission & Ors.
2024 SCC OnLine APTEL 103; Bhadreshwar Vidyut (P) Ltd. v.
Maharashtra ERC, 2024 SCC OnLine APTEL 47 - referred to.
Global Feeds Feedback Energy Distribution Company Private
Ltd. v. Govt. of Odisha, 2019 SCC OnLine Ori 205; Citizen Forum,
Maharashtra v. State of Maharashtra, 2008 SCC OnLine Bom
165 - referred to.
List of Acts
Electricity Act, 2003; Uttar Pradesh Electricity Regulatory
Commission (Consumer Grievance Redressal Forum & Electricity
Ombudsman) Regulations, 2007; Uttar Pradesh Electricity
Regulatory Commission (Conduct of Business) Rules, 2004; Uttar
Pradesh Electricity Regulatory Commission (General Conditions of
Distribution License) Regulations, 2004; Uttar Pradesh Electricity
Reforms Act, 1999; Uttar Pradesh Transfer of Distribution
Undertaking Scheme, 2003.
List of Keywords
Distribution franchisee; Distribution licencee; Central and State
Electricity Regulations Commissions; Jurisdiction; Adjudicatory
jurisdiction; Input-rate model of distribution franchisee; Commercial
principles; Public Interest; Electricity; Agency; Consumer;
Distribution Franchisee Agreement; Jurisdiction to review the
functioning of a distribution licensee.
Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 23514
of 2017
From the Judgment and Order dated 28.07.2016 of the Appellate
Tribunal for Electricity at New Delhi in AN No. 188 of 2015
Appearances for Parties
Advs. for the Appellant:
Ms. Deepa P Chawan, Sr. Adv., Ms. Reshma Roy, Sudhir Naagar,
Arun Kumar Nagar, Manohar Naagar.
Advs. for the Respondents:
Pradeep Misra, Daleep Dhyani, Anupam Misra, Suraj Singh, Anand
K. Ganesan, Nikunj Dayal.
700
[2025] 7 S.C.R.
Supreme Court Reports
Judgment / Order of the Supreme Court
Judgment
J.B. Pardiwala, J.
For the convenience of exposition, this judgment is divided into the
following parts:
INDEX*
A.
FACTUAL MATRIX ....................................................................
2
(i)
Order passed by the UPERC .........................................
7
(ii)
Impugned Order passed by the APTEL ........................
9
(iii) Report of the Expert Committee ...................................
16
B.
SUBMISSIONS ON BEHALF OF THE APPELLANT ..............
27
C.
SUBMISSIONS ON BEHALF OF THE RESPONDENT NO.4 ...
29
D.
ANALYSIS .................................................................................
32
(i)
Relevant provisions of the Act, 2003 ............................
32
(ii)
Whether the Electricity Regulatory Commission
has the jurisdiction to consider matters in public
interest? ..........................................................................
49
(iii) Whether the petition filed by the respondent no. 4
under Section 128 of the Act, 2003 was maintainable
in law? ..............................................................................
63
(iv) Whether the ERCs have the jurisdiction to review
the functioning of a distribution licensee to supply
electricity through a franchisee? ................................
79
E.
CONCLUSION .........................................................................
87
* Ed. Note: Pagination as per the original Judgment.
[2025] 7 S.C.R.
701
Torrent Power Limited v. U.P. Electricity Regulatory Commission & Ors.
1.
This statutory appeal filed under Section 125 of the Electricity Act,
2003 arises from the judgment and order passed by the Appellate
Tribunal for Electricity, New Delhi ("APTEL") dated 28.07.2016 in
Appeal No. 188 of 2015. The appeal filed by the appellant herein,
under Section 111 of the Electricity Act, 2003 (for short, the "Act,
2003") came to be dismissed by the APTEL, thereby affirming the
order dated 16.07.2015 passed by the Uttar Pradesh Electricity
Regulatory Commission ("UPERC").
A.
FACTUAL MATRIX
2.
The facts giving rise to this appeal may be summarized as under:
i.
The respondent no. 4 had preferred Petition No. 816 of 2012
dated 25.07.2012 before the UPERC, questioning the legality,
validity and propriety of the Distribution Franchisee Agreement
dated 18.05.2009 and Supplementary Agreement dated
17.03.2010 respectively (together referred to as the "DFA")
entered and executed between the appellant (distribution
franchisee) and the respondent no. 3 (distribution licensee).
The respondent no. 4 prayed for investigation of the conduct of
respondent nos. 2 and 3 respectively in appointing the appellant
herein as a franchisee for distribution of electricity in the urban
area of Agra without purportedly seeking prior approval of the
UPERC for transfer of its utility to the appellant, which is violative
of Section 17 of the Act, 2003.
ii.
The appellant herein had filed the preliminary objections in the
said petition inter alia raising the grounds of jurisdiction and
maintainability of the petition, before the UPERC. The said
preliminary objections of the appellant were disposed of by
the UPERC vide its order dated 16.07.2015 on the grounds
of public interest.
iii.
The appellant herein preferred an appeal bearing no. 188 of
2015 under Section 111 of the Act, 2003 before the APTEL
assailing the order dated 16.07.2015 referred to above on
inter alia twin grounds that first, the Electricity Regulatory
Commissions ("ERCs") lack the jurisdiction under the Act,
2003 to consider issues in public interest as well as contractual
matters concerning the appointment of a distribution franchisee
702
[2025] 7 S.C.R.
Supreme Court Reports
and secondly, the grievance of an individual person who is not
even a consumer is not maintainable before the ERC under
the provisions of the Act, 2003.
3.
The following list of dates and events would make the picture more
clear:-
06.07.1999
The Uttar Pradesh Electricity Reforms Act, 1999 came
into force.
14.01.2000
In pursuance of a reform-restructuring exercise, the
erstwhile Uttar Pradesh State Electricity Board ("UPSEB")
was unbundled under the first reforms transfer scheme,
into three separate entities:
 •
Uttar Pradesh Power Corporation Limited ("UPPCL")
was vested with the function of Transmission and
Distribution within the State.
 •
Uttar Pradesh Rajya Vidyut Utpadan Nigam Limited
[UPRVUNL] was vested with the function of Thermal
Generation within the State.
 •
Uttar Pradesh Jal Vidyut Nigam Limited (UPJVNL)
was vested with the function of Hydro Generation
within the State.
The trifurcation of the UPSEB was accompanied by the
financial restructuring of the State's Power Sector utilities.
Four new distribution companies were created vide Uttar
Pradesh Transfer of Distribution Undertaking Scheme,
2003 to undertake distribution and supply of electricity in
the areas under their respective zones specified in the
scheme. These four distribution companies ("DISCOM")
are as follow:
 •
Dakshinanchal Vidyut Vitaran Nigam Limited [Agra
DISCOM],
 •
Madhyanchal Vidyut Vitaran Nigam Limited [Lucknow
DISCOM],
 •
Pashchimanchal Vidyut Vitaran Nigam Limited
[Meerut DISCOM) and
 •
Poorvanchal Vidyut Vitaran Nigam Limited (Varanasi
DISCOM),
10.06.2003
The Electricity Act, 2003 came into force.
[2025] 7 S.C.R.
703
Torrent Power Limited v. U.P. Electricity Regulatory Commission & Ors.
12.08.2003
The State Government notified the Uttar Pradesh
Transfer of Distribution Undertaking Scheme, 2003 for the
purpose of providing and giving effect to the provisions
for transfer of distribution undertakings of UPPCL to four
DISCOMs, one of which was the respondent no. 3 namely
Dakshinanchal Vidyut Vitran Nigam Ltd. (hereinafter
referred to as "the DVVNL").
In pursuance to the said transfer scheme. the respondent
no. 3 namely DVVNL became a Distribution Licensee
under the provisions of the Act, 2003.
18.05.2009
Distribution Franchisee Agreement was entered into
between the appellant and respondent no. 3.
The appellant was appointed as Distribution Franchisee
by the respondent nos. 2 and 3 under Section 2(27) read
with the seventh proviso to Section 14 of the Act, 2003.
17.03.2010
A Supplementary Agreement was executed between the
appellant and respondent no. 3.
From the date of execution of Distribution Franchisee
Agreement dated 18.05.2009 and Supplementary
Agreement dated 17.03.2010, the appellant has
undertaken the work of distribution of electricity in the
urban area of Agra in terms of the said Agreements.
2012
The Writ Petition No. 49774 of 2009 with the cause title
Gharelu Vidyut Upbhokta Kalyan Samiti and others v.
State of U.P. and others was filed before the Allahabad
High Court, challenging the execution of Distribution
Franchisee Agreement dated 18.05.2009.
Similarly, another Writ Petition No. 30385 of 2012 with
the cause title Agra Mandal Vyapar Sangathan v. State
of U.P. and others was filed before the Allahabad High
Court, challenging the Distribution Franchisee Agreement
dated 18.05.2009 and Supplemetary Agreement dated
17.03.2010.
Both the aforesaid writ petitions are still pending for
consideration before the Allahabad High Court.
25.07.2012
Rama Shanker Awasthi, the respondent no. 4, filed a
petition bearing no. 816 of 2012 before the UPERC
challenging the Distribution Franchisee Agreement dated
18.05.2009 and the Supplementary Agreement dated
17.03.2010.
704
[2025] 7 S.C.R.
Supreme Court Reports
03.02.2014
The UPERC heard the matter wherein the respondent
no. 3 and the appellant orally pointed out that the writ
petitions instituted before the Allahabad High Court, are
still pending. The appellant had contended therein that
because writ petitions on the same issue were pending
before the High Court, the UPERC ought not to hear
the present matter.
27.03.2014
In the meantime, the High Court passed an order in
another Writ Petition No. 2463 of 2014 with the cause
title Anoop Gupta v. Union of India and others by way
of which the said writ petition was dismissed and the
petitioner therein was permitted to intervene in the writ
petition nos. 49774 of 2009 and 30385 of 2012, already
pending before the High Court.
13.06.2014
Detailed preliminary objections were filed by the appellant
before the UPERC, raising the grounds of jurisdiction and
maintainability of the petition filed by the respondent no. 4.
30.06.2014
In the meantime, the order passed by the Lucknow Bench
of the Allahabad High Court was impugned before the
Supreme Court in Special Leave Petition No. 12556 of
2014 wherein this Court was pleased to dismiss the
Petition by permitting the appellant therein, Mr. Anoop
Gupta to withdraw the same.
16.07.2015
The UPERC passed the order for investigation of the
appellant in its role as a Distribution Franchisee under the
seventh proviso of Section 14 of the Act, 2003, holding
that the petition was maintainable.
31.08.2015
The appellant filed an appeal under Section 111 of the
Act, 2003 before the APTEL.
28.07.2016
The impugned Judgement and Order was passed by
the APTEL.
(i)
Order passed by the UPERC
4.
The UPERC vide the order dated 16.07.2015 held that the petition
was maintainable on the grounds of public interest and the ERCs
were empowered to look into the DFA to assess the benefits of such
franchisee for the DISCOMs as well as for the general public. In
furtherance of this finding, the UPERC ordered for the formation of
[2025] 7 S.C.R.
705
Torrent Power Limited v. U.P. Electricity Regulatory Commission & Ors.
an Expert Committee to give its finding on the aspects of the yearly
reduction in loss levels by the appellant as well as the improvement
in collection efficiency with information as to how such benefits have
been passed on to the consumers.
5.
Some of the observations made by the UPERC are reproduced
herein below:
"v. In view of above provisions, it is established that at the
time, of signing the Agreement, DVVNL was a deemed
licensee and they were authorized to sign such agreement
with its franchisee TPL for the urban area of Agra. The
provision of section 5 of the Act does not restrain DVVNL
from entering into franchisee agreement in urban area with
TPL as it only facilitates franchisee in rural area. It does not
bar franchisee in urban areas which has been facilitated
in section 2 (27) and seventh proviso of section 14 of the
Act. DWNL was further granted license on 21.1.2010 by
this Commission.
vi. As far as the issue of transfer of inventory by DVVNL
to the Franchisee, without approval of the Commission as
per section 17 pf the Electricity Act, 2003, is concerned it
is sufficiently evident from the above provisions that the
franchisee agreement does not fall under the purview of
section 17.
vii. The issue of lack of jurisdictional and maintainability of
this petition has been raised by DWNL and TPL. Although
the submissions made in this reference are primarily based
on certain 'v, pending PILs before the Hon'ble High Court,
Allahabad but in view of Hon'ble APTEL's specific directions
to pass the consequential orders and also as there is
no stay order from any superior Court, the Commission
concluded that the petition is maintainable and therefore,
decided to proceed with the matter. The Commission's
jurisdiction is further reinforced in a similar case by the
Hon'ble High Court Bombay order dated 12.2.2008 [2008
(110) Bom L R 598] through which the MERC was given
mandate to judge the facts and figures, discounting factor
and stipulations etc., taken in ' the agreement.
706
[2025] 7 S.C.R.
Supreme Court Reports
9. Issue of investigation of conduct: The franchisee has
been allowed under the provisions of the Act with the
primary object of facilitating reduction of Distribution losses
and improvement in Collection efficiency. There is no
doubt that the concept of franchisee has been promoted
in the Act to ensure better quality of supply and services
to the consumer. The Agreement must have been entered
into with these motives only. As now about five years
have passed, which is a substantial period to show the
improvements in efficiencies, the question would arise as
to whether the objectives have been met and whether the
trend of improvements are visible.
As the Commission has already concluded that the
petition was maintainable and well within its jurisdiction,
it becomes incumbent upon the Commission to further
assess the benefits of such franchisee for the Discoms
as also for general public. With this view, for preliminary
examination, vide order dated 12.5.2014 reply and data on
certain points were sought from DVVNL and TPL. DVVNL
has not made submissions on this stating that they do
not want to make any additional submission. UPPCL has
seconded this. Although TPL has made submissions but
insufficient. As the matter has already prolonged for more
than two years and about five years have lapsed since
the agreement has become effective, the Commission
decides to form a Committee with the specific purpose to
ascertain the answers to the following questions:
i. What has been the yearly reduction in loss levels since
2009-10 to till date?
ii. What has been improvement in the collection efficiency
from 2009-10 level?
iii. How much arrears have been recovered from the due
amount of 2009-10?
iv. Have the benefits of such improvements, if any, have
been passed on to the consumer and if yes, how?
Apart from above specific questions the Committee would
also examine the year wise technical and commercial
[2025] 7 S.C.R.
707
Torrent Power Limited v. U.P. Electricity Regulatory Commission & Ors.
performance of TPL The Committee would be at liberty
to, investigate and examine any sort of data and accounts
so as to assess the performance of TPL. The work shall
be completed within two months of this order.
10. The Committee shall consists of (1) Sri Arun, Retired
Ombudsman and Director, UPPCL
(2) Sri Sandeep Das, Chartered Accountant, Park Road,
Lucknow."
(ii) Impugned Order passed by the APTEL
6.
The APTEL took a diverging opinion on the aspect of maintainability
and held that the Act, 2003 does not have any provision for entertaining
of a public interest litigation by the ERCs. However, the APTEL
was of the view that the case on hand was not a public interest
litigation at all and concluded that the petition before the UPERC
was maintainable. It was observed that the ERCs are empowered
to exercise regulatory oversight on distribution licensees. Since
the franchisees undertake distribution of electricity on behalf of the
distribution licensee then the impact of the activities of the franchisees
can be considered by the UPERC.
7.
Some of the observations made by the Appellate Tribunal are
reproduced herein below:
"11.12) We are fully conscious of the fact that this Appellate
Tribunal does not have any power to entertain any public
interest litigation under the Electricity Act, 2003 because
there is no provision in the said Act to empower this
Appellate Tribunal to hear and decide the public interest
litigation. The matter in hand before us is, not really a
public interest litigation. The only purpose of the present
Petition before the State Commission is whether by giving
franchisee to Torrent Power Ltd. by a distribution licensee,
namely Respondent No.3, DVVNL, some benefit has
accrued to the consumers in general or not. What is to be
seen is whether as a result of franchisee given to Torrent
Power Ltd. the consumers of the area would be benefited
or not? If all the liability, responsibility of the "franchisee
still remain with the distribution licensee, then its- impact
is also to be considered by the State Commission.
708
[2025] 7 S.C.R.
Supreme Court Reports
11.13) We are unable to accept this contention of the
appellant that this Appellate Tribunal in judgment dated
28th November, 2013 in Appeal No.239 of 2012 and batch
did not remand the matter to the State Commission, hence
the Impugned Order is manifestly erroneous and illegal.
We have already cited the relevant part of the judgment
dated 28th November, 2013, in paragraph 74, thereof this
Appellate Tribunal clearly held that since any money excess
paid or recovered from Rosa Power will necessarily be a
pass through in tariff it becomes a tariff issue. It means
that the learned State Commission is bound to decide
the said issue in the light of the observations made by
this Appellate Tribunal in the said judgment as the same
issue becomes a tariff issue, the effect on the consumers
of the State, particularly within the area of Respondent
No.3, DWNL. Thus the whole impact of the franchisee and
its consequences, are to be considered to determine the
tariff in the light as observed by this Appellate Tribunal.
11.14) The Petition No.816 of 2012 (Impugned Petition)
was filed before the State Commission under Section 128
and 129 of the Electricity Act, 2003, read with Section 26
and 27 of the UP Electricity Reforms Act, 1999, praying,
inter alia, for the following reliefs:
"29 That in view of the aforesaid facts and circumstances,
it is expedient in the interest of justice that this Hon'ble
Commission may graciously be pleased to investigate the
conduct of the Respondent No.1 and 2 for acting in sheer
disregard and gross violation of the statutory mandatory^
provisions of the Act, 2003 and declare that the utility of the
Licensee has been transferred in favour of the Respondent
No.3 without prior permission of the State Commission
as mandated by Section 17 of the Act, 2003 and further
that the Respondent No.1 and 2 acted in breach of the
License, 2000 and annul the License No.3 of 2010 dated
21.01.2010 of the Respondent No.2 in respect of Urban
Area of Agra and also agreement dated 18.05.2009 and
supplementary agreement dated 17.3.2010".
11.15) The learned State Commission while passing the
Impugned Order appears to have thought, on the formation
[2025] 7 S.C.R.
709
Torrent Power Limited v. U.P. Electricity Regulatory Commission & Ors.
of Committee, which should ascertain the loss level since
2009-10 till date, to ascertain the improvement in the
collection efficiency, from 2009-10 level and to see the
improvement, if any, have been passed on to consumers
in its right perspective and correctness.
11.16) We find that the franchisee system is allowed under
the Electricity Act, 2003 with the primary objective of
facilitating reduction of distribution loss and improvement in.
collection efficiency. Further the concept of franchisee has
been permitted in the Electricity Act, 2003 .to ensure better
quality of supply and services to the consumers. Apparently,
the agreement between the appellant. Torrent Power Ltd.,
franchisee and Respondent No.3, a distribution licensee
had been entered with the said motives and purposes.
Since five years had already elapsed since the agreement
and to enable the franchisee to show the improvements
the State Commission appear to be on the right path to
ascertain whether the said objectives as provided under
the Electricity Act, 2003 have been met or accomplished
and further whether the trends of improvements are visible.
11.17) The learned State Commission vide order dated
12.05.2014, i.e. more than one year before passing of the
Impugned Order sought reply and data from Respondent
No.3, DVVNL and the appellant in that regard which they
did not give. Since the said data and information as sought
by the State Commission's order dated 12.05.2014 were
not given, the State Commission has to pass the Impugned
Order and decide to form the aforesaid Committee for the
aforesaid purposes.
11.18) On careful consideration, we are unable to accept
this contention of Mr. Pradeep Misra, learned counsel
for the Respondent, UPPCL that the petitioner Mr. Rama
Shapkar Awasthi has no locus standi to maintain the
petition because the consumers, most of the time, remain
unrepresented when such kind of decisions are taken and
only a few consumers come forward to actively participate
in such kind of proceedings. The present matter cannot
be said to be a public interest litigation by any stretch of
imagination.
710
[2025] 7 S.C.R.
Supreme Court Reports
11.19) Section 61 dealing with Tariff Regulations and
Section 62 dealing with determination of tariff, of Electricity
Act, 2003 clearly specify the Terms and Conditions for
determination of tariff with certain guidelines like the factors
which would encourage competition, efficiency, economic
use of the resources, good performance and optimum
investments and further safeguarding of consumers interest
and at the same time recovery of cost of electricity in a
reasonable manner and the principles regarding efficiency
in performance. National Electricity Policy and Tariff Policy.
A proviso to Section 62 of the. Electricity Act 2003 states
that in case of distribution of electricity in the same area
by two or more distribution licensees, the appropriate
Commission may, for promoting competition among
distribution licensees, fix only maximum ceiling of tariff
for retail sale of electricity. Sub-section 2 further provides
that 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. Sub-section
6 to Section 62 of the Act says that if any licensee or a
generating company recovers a price or charge exceeding
the tariff determination under this Section, the excess
amount shall be recoverable by the person who has paid
such price or charge along with interest equivalent to the
Bank rate without prejudice to any other liability incurred
by the licensee. From the perusal of the provisions of
the Electricity Act, 2003, it is evidently clear that the tariff
for a distribution licensee for its area of supply shall be
determined by the respective State Commissions as
per Terms and Conditions of the Act and relevant Tariff
Regulations in compliance with the National Electricity
Policy and Tariff Policy.
11.20) We have been informed during the arguments in
this matter that in the State of Uttar Pradesh, Respondent
No.2, UPPCL, procures bulk power from various sources
and then supply it to the distribution licensees namely,
Purvanchal Vidyut Vitran Nigam Ltd., Paschimanchal Vidyut
Vitran Nigam Ltd., Madhyanchal Vidyut Vitran Nigam Ltd.
[2025] 7 S.C.R.
711
Torrent Power Limited v. U.P. Electricity Regulatory Commission & Ors.
and Dakshinanchal Vidyut Vitran Nigam Ltd. which are the
Government Discoms besides a private Discom namely
Noida Power. All the PPAs or agreements are executed
between UPPCL and the relevant utility without any
active role of the distribution licensee of Uttar Pradesh.
A uniform tariff for the respective category of consumers
is fixed for the whole State of Uttar Pradesh viz. for each
of the Government Discoms. It means that the tariff shall
remain the same for the whole State for each Discom,
irrespective of the performance level of that Discom and
its collection efficiency. Thus the consumers category-wise
are charged the tariff at the same level. In other words,
we can elucidate that the performance of the Discom of
a particular area is never taken into account and all are
to be treated alike.
-xxx11.23) This Appellate Tribunal in a separate batch of
appeals, being Appeal No. 15 of 2008 & others, vide
judgment dated 09.10.2009, while dealing with the
determination of tariff for each distribution licensee, also
observed and noted as under:
"Analysis and decision
27. The determination of tariff for each distribution licensee
is based on the cost- and expenses, power availability for
the particular distribution licensee, consumer base and
consumer mix of the distribution licensee, their efficiency
of operations, distribution losses etc. etc. In order to
encourage efficient operation, it is only necessary that the
different licensees have competition amongst themselves
to carry out their operations in more efficient manner. In
view of this, this Tribunal held that the Commission may
determine differential tariff, according to the geographical
location of the, consumers, different distribution licensees
could have differential tariffs for their respective area of
operations.