Captive power use by participants needs no licence, but supply to sister concerns requires statutory authorisation.

Electricity generated by a collective captive generating company may be consumed by participating industries and transferee shareholders within the extent of their shareholding without a licence, because such use is not treated as supply to outsiders. Electricity made available to sister concerns of participating industries is not captive consumption, since a sister concern is a separate legal entity, and such supply requires a licence or valid exemption. Section 43A(1)(c) of the Electricity (Supply) Act, 1948 remains operative, but the expression "any person" is confined to entities of the same class as electricity boards or bodies engaged in generation, transmission, distribution or supply.

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Issues: (i) whether electricity generated by the company and consumed by participating industries or transferee shareholders required a licence under the electricity laws; (ii) whether supply of electricity to sister concerns of participating industries fell within captive consumption or required a licence; and (iii) whether the consent provision under Section 43A(1)(c) of the Electricity (Supply) Act, 1948 remained available and what was the meaning of the expression "any person" therein.

Issue (i): whether electricity generated by the company and consumed by participating industries or transferee shareholders required a licence under the electricity laws.

Analysis: The generating company was treated as a collective captive generation venture. No licence is required for generation of electricity, and captive use by those who participate in the generation activity does not amount to supply or distribution to outsiders. The provisions governing licences under the Indian Electricity Act, 1910 and the Andhra Pradesh Electricity Reform Act, 1998 do not require a generating company to obtain a licence merely because the electricity is used by the participating industries or by transferees of their shareholding, so long as the use remains within the extent of their share participation.

Conclusion: No licence was required for consumption of self-generated electricity by the participating industries and by the transferee shareholders to the extent of their shareholding.

Issue (ii): whether supply of electricity to sister concerns of participating industries fell within captive consumption or required a licence.

Analysis: A sister concern is a separate legal and commercial entity, even if under the same group. Electricity made available to such an entity is not self-consumption by the generating group and therefore does not fall within captive consumption. Private arrangements cannot override the statutory scheme governing supply and distribution of electricity. Once electricity is supplied to a separate concern beyond the participating entity itself, the activity assumes the character of supply requiring regulatory authorization.

Conclusion: Supply of electricity to sister concerns required a licence, unless valid exemption was granted by the competent authority.

Issue (iii): whether the consent provision under Section 43A(1)(c) of the Electricity (Supply) Act, 1948 remained available and what was the meaning of the expression "any person" therein.

Analysis: Section 43A(1)(c) was held not to be displaced by Section 56(3)(vi) of the Andhra Pradesh Electricity Reform Act, 1998. However, the expression "any person" in Section 43A(1)(c) was construed in context and by applying the principle of ejusdem generis, so as not to include ordinary end-consumers or sister concerns of participating industries. The expression was limited to entities of the same class as the electricity boards or bodies engaged in generation, transmission, distribution or supply of electricity.

Conclusion: Section 43A(1)(c) remained operative, but it did not authorise supply to sister concerns as ordinary end-consumers within the meaning of "any person".

Final Conclusion: The appeal succeeded only in part. Captive consumption by participating industries and transferee shareholders was held to be outside the licensing requirement, while supply to sister concerns continued to require licence or exemption under the governing law.

Ratio Decidendi: Electricity generated by a captive or collective captive generating company may be consumed by participating shareholders without a licence, but supply to a separate non-participating entity is not captive consumption and requires statutory authorization.

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