TaxTMI 
TaxTMI 
2014 (5) TMI 1187
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.... (BEST). In April 2009, he approached Respondent No. 2 i.e. Tata Power Company Limited (TPC) with a request that he be supplied the electricity by TPC. In nutshell, he wants to switch over from BEST to TPC for his electricity requirement. In response to his request, TPC advised the consumer vide letter dated 8.7.2009 to approach the BEST for its permission to use its distribution network of the BEST to enable TPC to supply electricity to the consumer using that network. The consumer, accordingly, turned to BEST requesting it to give the said permission. It was, however, denied by BEST vide letter dated 31.7.2009 and again on 10.8.2009. After receiving this rejection, the consumer approached Mumbai Electricity Regulatory Commission (hereinafter referred to as the "Regulatory Commission") with petition seeking the following directions: (a) That this Hon'ble Commission may be pleased to direct TPC to provide electricity supply to the Petitioner and make such supply available as early as possible, either on BEST Network or by extending its own network, as may be necessary, failing which TPC's distribution license should be cancelled by this Hon'ble Commission; ....
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....ection 42(3) of The Electricity Act, 2003 Act (hereinafter referred to as the Act). (d) Since TPC had clarified that it was willing to extend its network and supply electricity, BEST also contended that TPC could not extend its network in BEST's area of supply, without BEST's consent and agreement. 4. In its order dated 22.2.2010 while issuing the directions extracted above, the Regulatory Commission rejected BEST's contentions and held that Tata Power had a duty under the Act to extend its distribution network and supply electricity, if the consumers so required, in the South Mumbai area. In light of TPC's position that it was willing to extend its network and supply electricity, the MERC held that there was no requirement to give any directions to it. The Regulatory Commission also held that TPC would be deemed distribution licensee for the area in question. 5. BEST challenged the aforesaid order of the Regulatory Commission by filing appeal before the Appellate Tribunal for Electricity, New Delhi (hereinafter referred to as the "Appellate Tribunal"). This appeal, however, has been dismissed by the Appellate Tribunal vide orders dated 4.4.2012, ther....
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....by the consumer. Presumably, for this reason, this contention was pressed half hearted before us and given up in the middle. RE: Whether TPC is deemed distribution licensee 9. Before we take note of the argument of the parties on this aspect and deal with the same, some background facts need a mention. TPC is the successor of the Bombay Hydroelectric License, 1907, the Andhra Valley Hydro-electric License, 1919, the Nila Mula Valley Hydro-electric License, 1921 and Trombay Thermal Power Electric License 1953 to supply electricity to consumers in specified areas in and around Mumbai (Erstwhile Licenses). The Erstwhile Licenses were subsequently amalgamated and transferred to Tata Power on 12.7.2001. 10. The Government of Maharashtra, in exercise of powers under the Indian Electricity Act, 1910 amended the area of supply under the Erstwhile Licenses from time to time. This included addition of new areas as well as handing over of certain areas to the Government owned distribution company, earlier known as the Maharashtra State Electricity Board. 11. TPC's area of supply overlaps with that of Reliance Infrastructure Limited (R Infra) another distribution licensee in th....
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....ribution of electricity through their own distribution system within the same area, subject to the conditions that the applicant for grant of licence within the same area shall, without prejudice to the other conditions or requirements under this Act, comply with the additional requirements [relating to the capital adequacy, creditworthiness, or code of conduct] as may be prescribed by the Central Government, and no such applicant, who complies with all the requirements for grant of licence, shall be refused grant of license on the ground that there already exists a licensee in the same area for the same purpose. 13. As per the first proviso if any person was engaged in the business of transmission or supply of electricity under the provisions of the repealed laws etc. that person is deemed to be a licensee under the Act, 2003 as well. The period for such deemed licence is the one that is stipulated in the licence, clearance or approval granted to him under the repealed laws. If it is under any Act specified in the Schedule in respect of such licence, then the period of licence is for one year from the date of commencement of the Act or such period as may be specified by the App....
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....her stipulate that the term of Tata Power's license is up to 15.8.2014. 15. The argument of BEST, on the other hand, is that the Appellate Tribunal was wrong in holding TPC was a deemed licensee under the first proviso to Section 14, as well as a parallel licensee under the sixth proviso to Section 14 of the Act 2003. According to Mr. Naphade, the Appellate Tribunal gravely erred in failing to appreciate that network of TPC cannot be allowed or extended within the area of supply of BEST in the absence of distribution licensee which TPC failed to obtain from Regulatory Commission, though it is a necessary requirement Under Sections 14 and 15 read with Section 12 of the Act. It was argued that as per the first proviso to Section 14, a person is treated deemed licensee only if it is engaged in the business of supply of electricity under the provisions of the repealed laws and it is for such period "as may be stipulated in the licence granted to him under the repealed laws". It was argued that the protection was only for that period which is stipulated in the licence and not on the basis of licence and there is no such period specified in the business up to 15.8.14 specified in ....
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....re formulated. 16. Conditions of licence.- The Appropriate Commission may specify any general or specific conditions which shall apply either to a licensee or class of licensees and such conditions shall be deemed to be conditions of such licence: Provided that the Appropriate Commission shall, within one year from the appointed date, specify any general or specific conditions of licence applicable to the licensees referred to in the first, second, third, fourth and fifth provisos to Section 14 after the expiry of one year from the commencement of this Act. Proviso to the aforesaid section very categorically enables the Regulatory Commission to specify general or specific condition of licence applicable to licensees referred to in the first to fifth proviso to Section 14 after expiry of one year after the commencement of that Act. Since as on the date of commencement of the Act, TPC became deemed licensee under the first proviso as its predecessors were holding the distribution licence under the repealed laws and thereafter specific conditions of licence are formulated by the Regulatory Commission Under Section 16 mentioning the period of 15.8.2014, it becomes ....
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....be applicable to it as well. According to him, a local authority was always placed on a special footing under Act, 1910 as well as Act, 1948 and now under Act, 2003 which was clear from the provisions of Section 42(3) of the Act that reads as under: 42(3) Where any person, whose premises are situated within the area of supply of a distribution licensee, (not being a local authority) engaged in the business of distribution of electricity before the appointed day) requires a supply of electricity from a generating company or any licensee other than such distribution licensee, such person may, by notice, require the distribution licensee for wheeling such electricity in accordance with Regulations made by the State Commission and the duties of the distribution licensee with respect to such supply shall be of a common carrier providing non-discriminatory open access. This provision which deals with the duties of distribution licensee as well as open access specifically excludes a local authority. Mr. Naphade thus argued that if the Legislature, having regard to the special status of a local authority engaged in the business of distribution of electricity befo....
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....ppointed date (such as BEST) is ex-facie placed on a special pedestal vis-`-vis ordinary distribution licensees, under the Third Proviso to Section 51 of the Electricity Act, 2003, which has been liberally interpreted in favour of and to advantage of a local authority engaged, before the commencement of the Electricity Act, 2003, in the business of distribution of electricity (such as BEST), by the Hon'ble Supreme Court of India in the Order dated 8.2.2011 made in Civil Appeal No. 848 of 2011 (Municipal Corporation of Greater Mumbai v. Maharashtra Electricity Regulatory Commission and Ors.). 19. On the other hand, Mr. Dhruv Mehta, learned senior Counsel appearing for TPC submitted that by this argument of the Appellant was mixing the otherwise two distinct concepts, namely that of open access Under Section 42(3) of the Act and that of Universal Service of Relations contained in Section 43 of the Act. Highlighting the purpose of the Act which has, inter-alia, provided emphasizing the need for efficiency and competition in the distribution business as well as open access system and also multiple licences system in the same area of supply, he submitted that if the contention of....
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....and therefore we do not find any fault with the view taken by the Appellate Tribunal. We have already reproduced above provisions of Section 42(3) of the Act. As pointed out above, Section 42 of the Act deals with the duties of distribution licensee and open access. Sub-section (1) thereof provides that it shall be the duty of a distribution licensee to develop and maintain an efficient co-ordinated and economical distribution system in his area of supply and to supply electricity in accordance with the provisions contained in the Act. Sub-section (2) casts an obligation upon the State Commission to introduce open access in phases and subject to such conditions, as may be specified, these conditions may include the cross subsidies and other operational constraints. It is thereafter in Sub-section (3) of Section 42 provision is made for wheeling of electricity with respect to supply stating that duties of distribution licensee shall be of a common carrier providing non-discriminatory open access. Thus Sub-section (3) provides for open access and casts a duty upon the distribution licensee in this behalf. Here, it excludes local authority, as distributor of electricity from such an o....
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....on, which we are leading to, gets further facilitated. Prior to this Act, there were three Acts, namely of 1910, 1948 and 1998 which were governing the laws relating to electricity and were operating in the field. Within few years, it was felt that the three Acts of 1910, 1948 and 1998 which were operating in the field needed to be brought in a new self contained comprehensive legislation with the policy of encouraging private sector participation in generation, transmission and distribution and also the objectives of distancing the regulatory responsibilities from the Government and giving it to the Regulatory Commissions. With these objectives in mind the Electricity Act, 2003 has been enacted. Significant addition is the provisions for newer concepts like power trading and open access. Various features of the 2003 Act which are outlined in the statement of objects and reasons to this Act. Notably, generation is being delicensed and captive generation is being freely permitted. The Act makes provision for private transmission licensees. It now provides open access in transmission from the outset. While open access in transmission implies freedom to the licensee to procure power f....
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....e 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. 26. It is trite that Court should lean in favour of an interpretation which subserves the objective of the Act namely the purposive interpretation. In Tata Power Company Ltd. v. Reliance Energy Ltd. and Ors. (2008) 10 SCC 321, this Court gave due recognition to objective behind the Act viz. to promote competition and give the consumer open to choose the distribution licensee from which it seeks electricity as is clear from the following paragraphs: 102. On the other hand, in our view, the provisions of both the 1903 and 1910 Electricity Acts encourage competition in the electricity trade and the same is also incorporated in the licences issued in favour of the distribution licensees, which also include licensees generating power for supply. The element of competiti....
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....ity otherwise. It is true that a dishonour of the cheque can be made a basis for prosecution of the offender but once, but that is far from saying that the holder of the cheque does not have the discretion to choose out of several such defaults, one default, on which to launch such a prosecution. The omission or the failure of the holder to institute prosecution does not, therefore, give any immunity to the drawer so long as the cheque is dishonoured within its validity period and the conditions precedent for prosecution in terms of the proviso to Section 138 are satisfied. While dealing with the issue No. 2 above, we have already held that TPC and BEST are parallel distribution licensee in the South Bombay Area. 27. The Appellant has sought to rely on the expression "Save as otherwise provided in this Act" in Section 43(1) of the Act to read into Section 43(1) the exception for local authorities provided for in Section 42(3). The TPC has successfully refuted this submission by pointing out that these words in Section 43(1) are required to be read in the context in which they appear. The said words were inserted in the section by way of an amendment to the Act in 2007. ....