State Commission adjudicatory powers require legal expertise, but High Court Judge chairmanship is not mandatory under the Electricity Act.

Section 84(2) of the Electricity Act, 2003 is an enabling provision and does not make appointment of a High Court Judge as Chairperson of the State Commission mandatory. Where the Commission exercises adjudicatory powers under Section 86(1)(f), its composition must include legal expertise, and an adjudicatory Bench must have at least one legally qualified member because such functions carry judicial trappings. The challenge to the Tamil Nadu State Commission's appointments on alleged bias and to its suo motu tariff proceedings was not made out on the facts stated and was rejected. The judgment was directed to operate prospectively.

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Issues: (i) Whether the expression "may" in Section 84(2) of the Electricity Act, 2003 makes it mandatory to appoint a High Court Judge as Chairperson of the State Commission; (ii) whether, in the absence of a judicial Chairperson, the State Commission must nonetheless include a member with legal expertise for adjudicatory functions; (iii) whether the challenge to the Tamil Nadu State Commission's appointments and suo motu tariff proceedings was sustainable.

Issue (i): Whether the expression "may" in Section 84(2) of the Electricity Act, 2003 makes it mandatory to appoint a High Court Judge as Chairperson of the State Commission.

Analysis: Section 84(1) sets out the qualifications for Chairperson and Members in general terms and uses mandatory language for those qualifications, while Section 84(2) creates a separate enabling route for appointing a sitting or retired High Court Judge as Chairperson, with consultation of the Chief Justice. The use of "may" in Section 84(2), read with the structure of Section 85, shows a discretionary power and not a compulsory command. The appellate structure of the Act, where the Appellate Tribunal is headed by a judicial Chairperson and includes judicial participation, also supports the view that the legislature did not intend to make judicial chairmanship compulsory at the Commission level.

Conclusion: Section 84(2) is only enabling. Appointment of a High Court Judge as Chairperson is not mandatory.

Issue (ii): Whether, in the absence of a judicial Chairperson, the State Commission must nonetheless include a member with legal expertise for adjudicatory functions.

Analysis: The State Commission performs predominantly regulatory functions, but Section 86(1)(f) confers adjudicatory power in disputes between licensees and generating companies, and Sections 94 to 96 confer powers and incidents resembling those of a civil court. Because the Commission has the trappings of a court when it undertakes adjudicatory work, the composition of the Bench hearing such matters must include legal expertise. A mere right of appeal before the Appellate Tribunal does not cure the defect at the original adjudicatory stage.

Conclusion: It is mandatory that the State Commission include a member of law, and any adjudicatory Bench must have at least one legally qualified member meeting the stated judicial standards.

Issue (iii): Whether the challenge to the Tamil Nadu State Commission's appointments and suo motu tariff proceedings was sustainable.

Analysis: The challenge to the appointments on grounds of financial bias was not made out on the facts placed before the Court. The persons concerned had not been shown to be simultaneously holding conflicting offices in the manner required to attract the precedents relied upon. The challenge to the suo motu tariff proceedings also failed.

Conclusion: The challenge to the appointments and the suo motu tariff proceedings was rejected.

Final Conclusion: The State Commission need not be headed by a High Court Judge, but any adjudicatory functioning of the Commission must include legally qualified membership. The impugned challenge failed, while the judgment was directed to operate prospectively.

Ratio Decidendi: Where a statutory commission exercises adjudicatory powers with the trappings of a court, its composition must include legally qualified membership, but a separate enabling provision using "may" does not make judicial chairmanship mandatory unless the statute clearly so provides.

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