2014 (5) TMI 1187 - SC - Indian Laws

Supreme Court upholds Regulatory Commission's jurisdiction over electricity distribution, supporting competition & consumer choice.

The Supreme Court dismissed the appeal by BEST, affirming the order of the Appellate Tribunal. The Court held that the Regulatory Commission had ... Jurisdiction of the Regulatory Commission - contention was raised primarily on the ground that there was an alternative remedy provided to the consumer to raise his grievances before the Consumer Grievances Redressal Forum (CGRF) established Under Section 42(5) of the Act - HELD THAT:- On a conjoint reading of Sections 42 and 43 of the Act along with the objectives and purpose for which Act 2003 is enacted, it becomes clear that there are two ways in which a consumer stated in a particular area can avail supply of electricity, as pointed out by the learned senior Counsel for TPC and noted above. When an application is made by a consumer to a distribution licensee for supply of electricity, such a distribution licensee for supply of electricity, such a distribution licensee can request other distribution licensee in the area to provide it network to make available for wheeling electricity to such consumers and this open access is to be given as per the provisions of Section 42(3) of the Act. It is here only that local authority is exempted from such an obligation and may refuse to provide makes it network available. Second option is, Under Section 43 of the Act, to provide the electricity to the consumer by the distribution licensee from its own network. It is difficult to accept the extreme position taken by the Appellant that if local authority is a distribution licensee in a particular area, there cannot be any other distribution licensee in that area without the permission of such a local authority. Not only such a contention would negate the effect of universal supply obligation Under Section 43, it will also amount to providing an exception which is not there either in Section 43 or Section 14 of the Act namely to treat local authority in special category and by giving it the benefit even that benefit which is not specified under the Act. Appeal dismissed. Issues Involved:1. Jurisdiction of the Regulatory Commission.2. Whether TPC is a deemed distribution licensee.3. Availability of open access to TPC in the area covered by BEST, which is a local authority.4. Permissibility of TPC to extend its network in BEST area of supply without its approval/consent.Detailed Analysis:Jurisdiction of the Regulatory Commission:The contention that the Regulatory Commission did not have jurisdiction was primarily based on the argument that the consumer should have approached the Consumer Grievances Redressal Forum (CGRF) established under Section 42(5) of the Electricity Act, 2003. This was rejected as misconceived because the consumer was seeking enforcement of a distribution licensee obligation under the Act, and as he was not yet a consumer of TPC, he could not approach the CGRF. The Court referenced Maharashtra Electricity Regulatory v. Reliance Energy Ltd., which held that the Regulatory Commission has the power to require a licensee to fulfill its obligations under the Act.Whether TPC is a deemed distribution licensee:TPC argued that it was a deemed licensee under the first proviso to Section 14 of the Electricity Act, 2003, as its predecessors were granted licenses under the repealed laws. The Regulatory Commission formulated the MERC (Specific Conditions of License applicable to the Tata Power Company Limited) Regulations, 2008, which stipulated the term of TPC's license up to 15.8.2014. The Court agreed with TPC's position, stating that TPC was a deemed licensee under the first proviso to Section 14 and that this status was valid until 15.8.2014. The Court rejected the argument that TPC needed to apply for a new license immediately after the expiry of one year from the date of the Act's commencement.Availability of open access to TPC in the area covered by BEST, which is a local authority:The Court analyzed Section 42(3) of the Act, which excludes local authorities from the obligation to provide open access. However, it clarified that this exclusion applies only to open access and not to the universal service obligation under Section 43. The Court concluded that while BEST, as a local authority, is exempt from providing open access, it does not mean that no other distribution licensee can operate in its area. TPC, as a deemed licensee, could supply electricity using its own network without requiring BEST's approval.Permissibility of TPC to extend its network in BEST area of supply without its approval/consent:The Court held that the interpretation suggested by TPC, which distinguishes between open access and universal service obligations, was correct. Therefore, TPC could extend its network in the BEST area without needing BEST's consent, provided it did not use BEST's network. The Court emphasized that this interpretation aligns with the Act's objective to promote competition and consumer choice.Conclusion:The Supreme Court dismissed the appeal by BEST, affirming the order of the Appellate Tribunal. The Court held that the Regulatory Commission had jurisdiction to entertain the petition, TPC was a deemed distribution licensee, and TPC could extend its network in the BEST area without needing BEST's consent, provided it used its own network. The judgment reinforces the Act's objective to promote competition and consumer choice in the electricity distribution sector.