Energy supply regulation under statutory scarcity powers can override contracts and survive unless its factual basis clearly disappears.

Section 22B of the Electricity Act, 1910 was construed as empowering the State to regulate supply, distribution, consumption and use of energy in scarcity conditions, including differential consumption cuts for heavy consumers with captive generation. That regulatory power could override inconsistent contractual supply obligations where the statute so allowed, and the challenge based on mala fides, colourable exercise of power and preferential treatment was not established. The Court also indicated that subordinate legislation remains effective unless the factual basis for it clearly disappears; on the material before it, the continued shortage of energy had not been shown to have ended, so the order had not become invalid or obsolete.

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Issues: (i) Whether the Uttar Pradesh Electricity (Regulation of Supply, Distribution, Consumption and Use) Order, 1977, including the proviso to clause 6(a)(i), was within the scope of section 22B of the Electricity Act, 1910 and valid despite the State Electricity Board's contractual obligations and the Company's own generation; (ii) whether the order had become invalid or obsolete because circumstances had materially changed after its making.

Issue (i): Whether the Uttar Pradesh Electricity (Regulation of Supply, Distribution, Consumption and Use) Order, 1977, including the proviso to clause 6(a)(i), was within the scope of section 22B of the Electricity Act, 1910 and valid despite the State Electricity Board's contractual obligations and the Company's own generation.

Analysis: Section 22B empowered the State Government to regulate the supply, distribution, consumption and use of energy to maintain supply and secure equitable distribution. The proviso did not amount to a total prohibition; it imposed a regulated cut on consumption in a situation of scarcity and specially dealt with a heavy consumer having its own source of generation. The Board's contractual arrangements did not curtail the State's statutory power, and the order could direct non-compliance with contracts. Energy generated through the Company's captive arrangement was also within the regulatory reach of section 22B. The challenge based on malice in law, colourable exercise of power, and alleged improper priorities was not established on the record.

Conclusion: The order, including the proviso to clause 6(a)(i), was valid and within the power conferred by section 22B of the Electricity Act, 1910.

Issue (ii): Whether the order had become invalid or obsolete because circumstances had materially changed after its making.

Analysis: The continuation of subordinate legislation may fail only in a clear case where the factual basis for its operation has disappeared. The material placed before the Court did not justify the conclusion that the shortage of energy had ceased or that the basis of the order had gone. The High Court had not sufficiently accounted for the overall position of supply and demand from all sources, and the subsequent increase in some supplies did not establish that the order had outlived its purpose.

Conclusion: The order had not become invalid or obsolete on account of changed circumstances.

Final Conclusion: The State's appeal succeeded to the extent that the proviso struck down by the High Court was held valid, but the proviso was not restored as a matter of practical relief, while the Company's appeal failed.

Ratio Decidendi: A statutory power to regulate supply and consumption of energy in conditions of scarcity may validly impose differential consumption cuts, may override contractual supply obligations where the enabling provision so permits, and will not be invalidated merely because some consumers receive preferential treatment unless mala fides, ultra vires action, or the disappearance of the factual basis for regulation is clearly established.

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