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Monday, May 19, 2014

Se.14,15 and sec.42, 43 of Electricity Act - Application for Switch over from BEST to TPC FOR ELECTRICITY -BEST rejected permission on the ground that TPC can not supply Electricity in his area - application to Regulatory Commission - allowed - BEST filed appeals - dismissed - Apex court held that It is, therefore, 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.= Brihanmumbai Electric Supply & Transport Undertaking ….Appellant Vs. Mahrashtra Electricity Regulatory Commission (MERC) & Ors. ….Respondents = 2014(May.Part) http://judis.nic.in/supremecourt/filename=41519

Se.14,15 and sec.42, 43 of Electricity Act - Application for Switch over from BEST to TPC FOR ELECTRICITY -BEST rejected permission on the ground that TPC can not supply Electricity in his area  - application to Regulatory Commission - allowed - BEST filed appeals - dismissed - Apex court held that It is, therefore, 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.=

  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;

                 (b) that the Hon’ble Commission may be pleased  to  direct
           the respondent to  pay  compensation  to  the  petitioner  under
           Regulations 3.2 and 12 of  MERC  (Standards  of  Performance  of
           Distribution   Licensees,   Period   of   Giving   Supply    and
           Determination of Compensation) Regulations 2005;” =




  RE: Jurisdiction of the Regulatory Commission.

      7.    This 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. Therefore,  the  consumer
      should have approached the  said  Forum  instead  of  filing  petition
      before  the  Regulatory  Commission.  This   contention   is   totally
      misconceived and rightly rejected by the authorities below.
As on that date, he was not the consumer of  TPC  but  wanted  to become its consumer

      RE:  Whether TPC is deemed distribution licensee

 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.

TPC’s  area  of  supply  overlaps   with   that   of   Reliance
      Infrastructure Limited (R Infra) another distribution licensee in  the
      suburban Mumbai area, and with that of the Appellant (BEST)  in  South
      Mumbai. 
the Electricity
      Act, 2003 came into force.

On the basis of aforesaid facts TPC claimed that  by  virtue  of
      first proviso to Section 14 of the Act, it was a deemed  licensee  for
      the area of supply of BEST. 
Under Section 14 the Regulatory Commission
      is empowered to grant a license to any person on an  application  made
      to it under Section 15  of  the  Act.  This  license  may  pertain  to
      transmit  electricity  as  a  transmission  licensee;  or   distribute
      electricity as a distribution licensee; or  to  undertake  trading  in
      electricity as an electricity trader, in any area, as may be specified
      in the license.  This  section  has  nine  provisos  which  stipulated
      various circumstances under which no specific license is  required  by
      making  an  application  under  Section  15  and  if  the   conditions
      stipulated in any of these provisos are satisfied, such  a  person  is
      treated as deemed licensee.
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 clear that the combined fact of  that  would  be
      that    YPC    would    be    deemed    licence    till     15.8.2014.
 Once, we come to the conclusion  that  TPC
      can be treated as deemed distribution licensee under the first proviso
      to Section 14 of the Act 2003 and the area of the licence is the  same
      which overlaps with the area covered by BEST, argument  predicated  on
      sixth proviso to Section 14 would not be available to the BEST.

RE: AVAILABILLITY OF OPEN ACCESS TO TPC IN THE AREA COVERED BY BEST,
      WHICH IS A LOCAL AUTHORITY

                                   AND

      PERMISSIBILITY OF TPC TO EXTEND ITS NETWORK IN  BEST  AREA  OF  SUPPLY
      WITHOUT ITS APPROVAL/CONSENT.
Thus, 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.
 Once we read the provisions in the aforesaid manner, it  becomes
      clear that there is no exemption from universal service obligation  to
      any distribution licensee under the Act, on account of the presence of
      a “local authority” as a distribution licensee in the particular  area
      of supply, which is also reinforced by Paragraph 5.4.7 of the National
      Electricity Policy which clearly states that the  second  licensee  in
      the same area shall have the obligation to supply to all consumers  in
      accordance with Section  43.  In  this  context,  it  is  relevant  to
      reproduce the following observations in Chandu Khamaru v. Nayan  Malik
      reported in (2011)  12 SCC 314:

                 “7…These provisions in the Electricity Act, 2003  make  it
           amply clear that a distribution licensee has a statutory duty to
           supply electricity to an  owner  of  occupier  of  any  premises
           located in the area of supply of the distribution  licensee,  if
           such owner or occupier of  the  premises  applies  for  it,  and
           correspondingly every owner or occupier of any  premises  has  a
           statutory right to apply for and  obtain  such  electric  supply
           from the distribution licensee.”




      25.   It is, therefore, 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.
 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. 
 We, thus, do not find any merit in any of the contentions of the
      appellant. As a consequence, this appeal fails and is hereby dismissed
      with cost thereby affirming the order of the Appellate Tribunal.

2014(May.Part) http://judis.nic.in/supremecourt/filename=41519
SURINDER SINGH NIJJAR, A.K. SIKRI

                                                             REPORTABLE

                        IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION

                        CIVIL APPEAL NO.4223 OF 2012




      Brihanmumbai Electric Supply &
      Transport Undertaking
      ….Appellant
                             Vs.




      Mahrashtra Electricity Regulatory
      Commission (MERC) & Ors.
      ….Respondents




                               J U D G M E N T




      A.K.SIKRI,J.

      1.    Respondent No.3 is a consumer (hereinafter referred  to  as  the
      “consumer”)  of  electricity  (LT-II  Category)  whose  premises   are
      situated within area of supply of the  appellant  namely  Brihanmumbai
      Electricity Supply and Transport Undertaking (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;

                 (b) that the Hon’ble Commission may be pleased  to  direct
           the respondent to  pay  compensation  to  the  petitioner  under
           Regulations 3.2 and 12 of  MERC  (Standards  of  Performance  of
           Distribution   Licensees,   Period   of   Giving   Supply    and
           Determination of Compensation) Regulations 2005;”




      2.    In the meantime,  respondent  Nos.4  to  8  also  filed  similar
      petitions before the Regulatory Commission with same  relief  as  they
      also wanted to switch over to TPC for their  electricity  requirement.
      Since direction was sought for TPC, only TPC was made party.  However,
      at the instance of Regulatory Commission BEST and Reliance  Industries
      Limited (RIL) were also impleaded in these matters. After hearing  all
      the parties,  Regulatory  Commission  passed  orders  dated  22.2.2010
      holding  that  TPC  was  bound  to  supply  electricity  in  terms  of
      applicable Regulations and therefore direction was given to the TPC to
      supply electricity to the consumers either through BEST wires  or  its
      own wires. The operative part of that order reads as under:

                 “In view of the above there is no requirement to  issue  a
           direction in regard to the Petitioner’s  claim  of  compensation
           under Regulation 3.2 and 12 of the SOP regulations. However, TPC
           is bound by Regulation 4.7 of MERC (Standards of Performance  of
           Distribution   Licensees,   Period   for   Giving   Supply   and
           Determination of Compensation) Regulations, 2005 in terms of the
           timelines as mentioned in the said Regulation. Time has  started
           ticking from the date of receipt of applications by TPC from the
           Petitioners who have requisitioned for electricity  supply.  TPC
           will  have  to  adhere  to  the  timelines  specified   in   the
           regulations.”




      3.    We may point out here that the BEST (the appellant  herein)  had
      resisted the demand of the  consumers  in  their  petitions  with  the
      following contentions:

      (a) The  Regulatory  Commission  did  not  have  the  jurisdiction to

      entertain a dispute between the consumer and a distribution licensee;

            (b) TPC was not a deemed distribution licensee for the  area  in
      question and therefore was not permitted to supply the electricity  to
      any consumer in that area;

            (c) that unlike other distribution licensees, BEST being a local
      authority, no persons situated in BEST’s area of  supply  could  avail
      electricity from any other licensee, on account  of  BEST  invoking  a
      statutory exemption available to  a   local  authority  under  Section
      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, thereby affirming the findings and direction of
      the Regulatory Commission. Not satisfied, BEST has filed  the  instant
      appeal statutorily provided under Section 125 of the Electricity  Act.



      6.    We have already stated in brief the four contentions which  were
      raised by BEST before the Regulatory Commission. Same contentions were
      raised before the Appellate Tribunal, which are the submissions before
      us as well. Therefore, we  proceed  to  deal  with  these  submissions
      hereinafter:

                  RE: Jurisdiction of the Regulatory Commission.

      7.    This 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. Therefore,  the  consumer
      should have approached the  said  Forum  instead  of  filing  petition
      before  the  Regulatory  Commission.  This   contention   is   totally
      misconceived and rightly rejected by the authorities below.  As  noted
      above, petition was filed by the consumer  seeking  direction  against
      TPC to supply electricity to him. Thus, he approached  the  Regulatory
      Commission to enforce a distribution  licensee  obligation  under  the
      Act. As on that date, he was not the consumer of  TPC  but  wanted  to
      become its consumer. In so  far  as  CGRF  is  concerned,  which  each
      distribution licensee is required to set up under Section  42  (5)  of
      the Act, it deals with the grievances of  the  consumer.  Consumer  is
      defined under Section 2 (15) of the Act and reads as under:

            “any person who is supplied with electricity for his own use  by
           a licensee or the Government or by any other person  engaged  in
           the business of supplying electricity to the public  under  this
           Act or any other law for the time being in  force  and  includes
           any person whose premises are for the time being  connected  for
           the purposes of  receiving  electricity  with  the  works  of  a
           licensee, the Government or such other person, as the  case  may
           be.”




      8.    Thus, respondent No.3  not  being  a  consumer  could  not  have
      approached CGRF. Further, we  find  that  in  Maharashtra  Electricity
      Regulatory v. Reliance Energy Ltd. (2007) 8 SCC 381,  this  Court  has
      held that the  Regulatory  Commission  has  the  power  to  require  a
      licensee to fulfill its obligations under the Act. Thus, we are of the
      opinion that the Regulatory Commission had the requisite  jurisdiction
      to entertain the petition filed 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  the
      suburban Mumbai area, and with that of the Appellant (BEST)  in  South
      Mumbai. In 2002, R Infra filed a petition before the  Respondent  No.1
      (MERC) alleging that Tata Power’s license did not authorize Tata Power
      to supply electricity to  direct  retail  consumers  (with  a  maximum
      demand below 1000KVA). While the petition was pending, the Electricity
      Act, 2003 came into force.

      12.   On the basis of aforesaid facts TPC claimed that  by  virtue  of
      first proviso to Section 14 of the Act, it was a deemed  licensee  for
      the area of supply of BEST. Under Section 14 the Regulatory Commission
      is empowered to grant a license to any person on an  application  made
      to it under Section 15  of  the  Act.  This  license  may  pertain  to
      transmit  electricity  as  a  transmission  licensee;  or   distribute
      electricity as a distribution licensee; or  to  undertake  trading  in
      electricity as an electricity trader, in any area, as may be specified
      in the license.  This  section  has  nine  provisos  which  stipulated
      various circumstances under which no specific license is  required  by
      making  an  application  under  Section  15  and  if  the   conditions
      stipulated in any of these provisos are satisfied, such  a  person  is
      treated as deemed licensee. We are here  concerned  with  1st  proviso
      under which TPC claims to be a deemed distribution licensee as well as
      6th proviso which is invoked by BEST in contending  TPC  cannot  be  a
      deemed  distribution  licensee  in  the  area  where   BEST  operates.
      Therefore, we reproduce both these provisos:

           1st Proviso:“Provided that any person engaged in the business of
           transmission or supply of electricity under  the  provisions  of
           the repealed laws or any Act specified in  the  Schedule  on  or
           before the appointed date shall be deemed to be a licensee under
           this Act for such period as may be stipulated  in  the  licence,
           clearance or approval granted to him under the repealed laws  or
           such Act specified in the Schedule, and the  provisions  of  the
           repealed laws or such Act specified in the Schedule  in  respect
           of such licence shall apply for a period of one  year  from  the
           date of commencement of this Act or such earlier period  as  may
           be specified, at the request of the licensee, by the Appropriate
           Commission and thereafter the provisions of this Act shall apply
           to such business.

           6thProviso:Provided also that  the  Appropriate  Commission  may
           grant a licence to two  or  more  persons  for  distribution  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 Appropriate Commission.  It  would  mean  that
      either the period of deemed licence for such a person  is  the  period
      which is stipulated in the licence, clearance or approval  granted  to
      him under the repealed laws or for a period of one year from the  date
      of commencement of the Act or the period which may  be  specified,  at
      the request of the licensee by the Regulatory Commission. Once, such a
      period is over, then that person is  supposed  to  apply  for  licence
      under Section 14.

             Proviso  six,  on  the  other  hand,  deals  with  a  different
      situation.  As  per  this  provision,  the  Regulatory  Commission  is
      authorized to grant a licence to two or more persons for  distribution
      of electricity through their own distribution system within  the  same
      area. It is subject to the conditions that the applicant for grant  of
      licence  within  the  same  area  shall  apply  with  the   additional
      requirements relating to the capital  adequacy,  creditworthiness,  or
      code of conduct as may be prescribed by  the  Central  Government.  It
      further provides that merely because there exists a  licensee  in  the
      same area would not be a ground to reject an application  for  another
      applicant for same purpose. This  provision  deals  with  open  access
      policy.

      14.   As per the TPC, proviso one is applicable  in their  case  since
      its predecessor were granted licence under the Act, 1910 and therefore
      it continuous to be licensee as per the  aforesaid  deeming  provision
      under the Act, 2003 as well. The case set up by the TPC in this behalf
      is such a licence granted under the old Act is  valid  upto  15.8.2014
      which is categorical stipulated in the Specific Licence Conditions  by
      the Regulatory Commission. Therefore,  it is only after 15.8.2014 that
      the TPC would be required to take fresh licence by making  application
      under Section 15 of the Act, 2003. This is stated on the  ground  that
      the  MERC  formulated  the  MERC  (Specific  Conditions   of   License
      applicable to  the  Tata  Power  Company  Limited)  Regulations,  2008
      (Specific License  Conditions)  under  Section  16  of  the  Act.  The
      Specific License Conditions read with the MERC (General Conditions  of
      Distribution  License)  Regulations,  2006  set  out  the  terms   and
      conditions of Tata Power’s license in supersession  of  the  Erstwhile
      Licenses, and authorize Tata Power to supply electricity in  its  area
      of supply to the public for all purposes in accordance with  the  Act.
      The Specific License Conditions further 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 the licence. It was, further,  argued  that
      the provisions of the repealed laws in respect of  such  licences  are
      applicable for a period  of  one  year  within  which  and  thereafter
      licence was to be obtained under Section 14 by moving  an  application
      under Section 15, as per the procedure prescribed in the Act 2003.  It
      was argued that for the deeming fiction in the first proviso  to  said
      Section 14 to arise, (i) a person must be engaged in the  business  of
      supply of electricity under the repealed laws on or before  10.6.2003,
      and (ii) a  period  (being,  period  of  subsistence  of  licence)  be
      stipulated in the licence granted to such person  under  the  repealed
      laws. It was further pointed out that said deeming fiction applies (i)
      to such a person, and (ii) for such stipulated period.

      16.   There are two facets of the submissions made by Mr. Naphade.  In
      the first instance it is to be found that there is  a  stipulation  of
      period in the manner stated in the first proviso. Second aspect is  as
      to whether it is incumbent, in all cases, to apply for  licence  under
      the provisions of Sections 14 and 15 of the Act immediately after  the
      expiry of one year from the date of commencement of the said  Act.  In
      so far as first aspect is concerned, the  argument  of  the  appellant
      loses sight of the fact that in the first proviso the period for which
      any person can be a deemed licensee is not only such period  which  is
      stipulated in the licence, clearance or approval granted to him  under
      the repealed laws or such Act  specified  in  the  Schedule.  It  also
      provides that the provisions of repealed laws or such Act specified in
      the Schedule in respect of such a licence shall apply for a period  of
      one year from the date of commencement of Act  2003  or  such  earlier
      period as may be specified at the  request  of  the  licensee  by  the
      Regulatory Commission. In the present case, the Regulatory  Commission
      formulated MERC (Specific Conditions of License  Applicable  to  TPCL)
      Regulation  2008  i.e.  Specific  Licence   Conditions.   These   were
      formulated under Section 16 of  the  Act  2003  and  it  is  in  these
      conditions there is a  specific  stipulation  regarding  term  of  TPC
      licence up to 15.8.2014. We,  therefore,  are  unable  to  accept  the
      submissions of the appellant that the licence was valid for  a  period
      of one year only. It would be useful to refer to Section 16 of the Act
      under  which  aforesaid  Specific  Licence  Conditions  of   TPC   are
      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 clear that the combined fact of  that  would  be
      that    YPC    would    be    deemed    licence    till     15.8.2014.
      Tata Power’s license to supply electricity in the South Mumbai area is
      clearly established by virtue of the following:

            (a) The Erstwhile  Licensee  authorized  Tata  Power  to  supply
      electricity to all consumers in Mumbai,  including  the  South  Mumbai
      area;

            (b) When the new Act came into  force,  by  virtue  of  the  1st
      Proviso to Section 14, Tata Power was deemed to be  a  licensee  under
      that Act.

            This is also clear from Section 172(b) of the Act. It  is  trite
      law that once the purpose of the  deeming  provision  is  ascertained,
      full effect must be given to the statutory fiction and the fiction  is
      to be carried to its logical end.

      17.   An argument was sought to be raised before  us  that  Regulation
      2008 laying down specific conditions for TPC are flouted as they  were
      not made by the Regulatory Commission within the mandatory  period  of
      one year. However, no such argument was raised earlier and there is no
      challenge to the validity of the aforesaid Regulations which are  made
      by the Regulatory Commission under  its statutory powers and therefore
      are having statutory force. Once, we come to the conclusion  that  TPC
      can be treated as deemed distribution licensee under the first proviso
      to Section 14 of the Act 2003 and the area of the licence is the  same
      which overlaps with the area covered by BEST, argument  predicated  on
      sixth proviso to Section 14 would not be available to the BEST.

        RE: AVAILABILLITY OF OPEN ACCESS TO TPC IN THE AREA COVERED BY BEST,
      WHICH IS A LOCAL AUTHORITY

                                   AND

      PERMISSIBILITY OF TPC TO EXTEND ITS NETWORK IN  BEST  AREA  OF  SUPPLY
      WITHOUT ITS APPROVAL/CONSENT.

      18.   It was argued by Mr. Naphade that under  the  Act  neither  open
      access can  be  allowed  nor  distribution  system  or  network  of  a
      purported parallel licensee (such as TPC)  can  be  laid  or  extended
      within area of supply of BEST. The learned senior counsel  labored  on
      the aspect that admittedly BEST was a Public  Sector  Undertaking  and
      such bodies are given due recognition of and grant of exemption and/or
      protection to a special category of licensee being a  local  authority
      in the business of distribution of electricity before  the   appointed
      day. He submitted that as BEST would be covered by the expression “  a
      local authority” protected measures provided under the  Act  would  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 before the appointed date (such as  BEST),
      has duly exempted open access in its area of supply, then  it  is  but
      consequential and/or a fortiori that a distribution system or  network
      of a purported parallel licensee (such  as  TPC)  cannot  be  laid  or
      extended within the area of supply of a local authority engaged in the
      business of distribution of  electricity  before  the  appointed  date
      (such as BEST).  His submission was that the Legislature  could  never
      have and in fact, has not intended that such special status (inclusive
      of  exemption   from   open   access)   be   in   vain   or   rendered
      illusory/infructuous/nugatory, and more  so  by  a  mere  lay  out  or
      extension of  a  distribution  system  or  network  of  the  purported
      parallel licensee. It is a fundamental principle of law that duly made
      legislation can never be and should not be in vain  or  to  no  avail.
      Hence, such special status (inclusive of exemption from  open  access)
      cannot be ignored, but must necessarily be given full  effect  to  and
      enforced. According to him an irrational situation would arise if  the
      purported parallel licensee (such as TPC) could not supply electricity
      under open access in the area of supply of a local  authority  engaged
      in the business of distribution of electricity  before  the  appointed
      date (such as BEST), but could lay or extend its  distribution  system
      or network in the area of supply of a local authority engaged  in  the
      business of distribution of  electricity  before  the  appointed  date
      (such as BEST).  As  such,  Section  42  (3)  necessarily  has  to  be
      interpreted to qualify or restrict aforesaid Sixth Proviso to  Section
      14, Section 43(1), Section 42(1) and/or Section 42(2), to  the  extent
      that any person, whose premises are situated within the area of supply
      of a distribution licensee, (which is a local authority engaged in the
      business  of  distribution  of  electricity   before   the   appointed
      date)cannot require a supply of electricity from a generating  company
      or any licensee other than such  distribution  licensee,  through  (i)
      open access and/or(ii)otherwise (including  under  parallel  license).
      Moreso, as the provisions of the Electricity Act,  2003,  provide  for
      protection of interest of electricity consumers, and as such ought not
      and should not be interpreted to entail  unnecessary  burden  of  said
      capital  expenditure  or  electricity  consumers;  a  local  authority
      engaged in the business of  distribution  of  electricity  before  the
      appointed date (such as BEST) is ex-facie placed on a special pedestal
      vis-à-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  vs.
      Maharashtra Electricity Regulatory Commission & 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  the  appellant  is
      accepted it would negate the very objective  which  is  sought  to  be
      achieved by the aforesaid provisions. Mr. Mehta argued that under  the
      Act, there are two ways in which a consumer situated in  a  particular
      area can avail supply of electricity: (i) from a distribution licensee
      authorized to supply electricity in that area  under  Section  43;  or
      (ii) from any other supplier through the  distribution  network  of  a
      distribution licensee by seeking “open access”  in  terms  of  Section
      42(3). In the first option, the distribution licensee operating  in  a
      particular area is required to lay down its network  if  required,  in
      order to supply electricity to a consumer seeking supply.  The  second
      option, which is known as open access is  provided  under  Section  42
      read with Section 2(47) of the 2003 Act. Under Section  42(3)  of  the
      2003 Act, a consumer has the right to require a distribution  licensee
      to make  its  network  available  for  wheeling  electricity  to  such
      consumer from a third party supplier (i.e. a supplier  of  electricity
      not being a distribution licensee in the area where  the  consumer  is
      situated).  He  submitted  that  this  distinction  between  the   two
      different concepts is to be born in mind and the matter is seen in its
      proper perspective. Section 42(3) carries out an exception  in  favour
      of local authority only qua  open  access  which  would  mean  that  a
      consumer is disallowed from seeking open access  from  a  distribution
      licensee which is a local authority like BEST. That would mean that  a
      consumer being supplied by BEST cannot demand that BEST allow a  third
      party subject to supply  electricity  to  such  consumer  through  the
      network of BEST. According to him,  this  exception  would  extend  to
      position contained  in  section  43  which  casts  “Universal  Service
      Obligation” on all distribution licensees to give supply to any  owner
      or occupier within its supply area. That would only mean if  there  is
      an another  distribution  licensee  in  the  area  in  which  a  local
      authority like BEST  also  operates,  a  consumer  can  approach  that
      distribution licensee to supply him the electricity. However, for that
      purpose, the said  distribution  licensee  will  have  to  supply  the
      electricity from its own laid in the network without using the network
      of local authority.

      20.   After considering the rival contentions, we are of  the  opinion
      that the interpretation suggested by Mr. Mehta needs  to  prevail  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  obligation.
      However, when it comes to the duty of distribution licensee to  supply
      the electricity under section 43, it mandates that same is to be given
      to the owner or occupier of any premises on his application within one
      month from the receipt  of  the  said  application.  This  duty  under
      Section 43 imposed upon a distribution licensee does  not  distinguish
      between a local authority and other distribution licensee. It is  also
      not a case of the appellant that in a particular area  where  a  local
      authority is a  distribution  licensee,  there  cannot  be  any  other
      distribution licensee at all.

      21.   Thus, 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. Therefore, if in a particular area local  authority  has  its
      network and it does not permit wheeling of electricity from by  making
      available its network, the other distribution licensee  will  have  to
      provide the electricity from its own network. For this purpose, if  it
      is not having its network, it will have to lay down its network if  it
      requires in order to supply electricity to a consumer seeking supply.

      22.   This interpretation of ours is in consonance  of  the  objective
      and purpose of the Act. The aforesaid objective is  further  clarified
      by the Tariff Policy and the National Electricity Policy under section
      3 of the Act which emphasized the need for efficiency and  competition
      in the distribution business.   On  going  through  the  statement  of
      objects and reasons contained in  the  new  Act,  the  interpretation,
      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 from  any  source  of
      his choice, open access in distribution, with which we  are  concerned
      here, means freedom to the consumer to get supply from any  source  of
      his choice. The provision of open access to consumers ensures right of
      the consumer to get supply from a person other than  the  distribution
      licensee of his area of supply by using  the  distribution  system  of
      such distribution licensee.

      23.   The concept of open  access  under  the  Act  enables  competing
      generating  companies  and  trading  licensees,   besides   the   area
      distribution licensees, to sell electricity  to  consumers  when  open
      access  in  distribution  is  introduced  by  the  State   Electricity
      Regulatory Commissions. Supply by way of open access is  a  completely
      different regime as is also clear from the  fact  that  consumers  who
      have been allowed open access under  Section  42  may  enter  into  an
      agreement with any person for supply of electricity on such terms  and
      conditions, including tariff, as may be  agreed  upon  by  them  under
      Section 49 of the Act unlike consumers who take supply  under  section
      43 of the Act.

      24.   Once we read the provisions in the aforesaid manner, it  becomes
      clear that there is no exemption from universal service obligation  to
      any distribution licensee under the Act, on account of the presence of
      a “local authority” as a distribution licensee in the particular  area
      of supply, which is also reinforced by Paragraph 5.4.7 of the National
      Electricity Policy which clearly states that the  second  licensee  in
      the same area shall have the obligation to supply to all consumers  in
      accordance with Section  43.  In  this  context,  it  is  relevant  to
      reproduce the following observations in Chandu Khamaru v. Nayan  Malik
      reported in (2011)  12 SCC 314:

                 “7…These provisions in the Electricity Act, 2003  make  it
           amply clear that a distribution licensee has a statutory duty to
           supply electricity to an  owner  of  occupier  of  any  premises
           located in the area of supply of the distribution  licensee,  if
           such owner or occupier of  the  premises  applies  for  it,  and
           correspondingly every owner or occupier of any  premises  has  a
           statutory right to apply for and  obtain  such  electric  supply
           from the distribution licensee.”




      25.   It is, therefore, 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.

      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 Co.Ltd.  v.  Reliance  Energy
      Ltd. & 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 competition has been included in the Preamble to the 2003 Act
           and permeates the same in its various provisions.
              103. As submitted by Mr  Chagla,  the  Act  is  meant  to  be
           consumer-friendly and one of  the  objectives  it  sets  out  to
           achieve is  to  give  the  consumer  an  option  to  choose  the
           distribution licensee from whom it wishes to receive  supply  of
           electrical energy. The intervention of  MIDC,  Marol  Industries
           Association and the appeals filed by it, has obviously been made
           in that context.





            In MSR Leathers vs. S.Palaniappan & Anr. (2013) 1 SCC 177 it was
      observed:

              “24. That brings  us  to  the  question  whether  an  offence
           punishable under Section 138 can be committed only once as  held
           by this Court in Sadanandan case1. The holder  of  a  cheque  as
           seen earlier can present it before a bank any  number  of  times
           within the period of six months or  during  the  period  of  its
           validity, whichever is earlier. This  right  of  the  holder  to
           present  the  cheque  for   encashment   carries   with   it   a
           corresponding obligation on the part of  the  drawer  to  ensure
           that the cheque drawn by him is honoured by the bank who  stands
           in the capacity of an agent of the drawer vis-à-vis  the  holder
           of the cheque. If the holder of  the  cheque  has  a  right,  as
           indeed is in the unanimous opinion expressed in the decisions on
           the subject, there is no reason why the corresponding obligation
           of the drawer should also not continue every time the cheque  is
           presented  for  encashment  if  it  satisfies  the  requirements
           stipulated in clause (a) of the proviso to Section 138. There is
           nothing in that proviso to even remotely suggest that clause (a)
           would have no application to a cheque presented for  the  second
           time if the same has already been dishonoured  once.  Indeed  if
           the legislative intent was to restrict prosecution only to cases
           arising out of the first dishonour of a cheque nothing prevented
           it from stipulating so in clause (a) itself. In the  absence  of
           any such provision a dishonour whether based on a second or  any
           successive presentation of a cheque for encashment  would  be  a
           dishonour within the meaning of Section 138 and  clause  (a)  of
           the proviso thereto. We have, therefore, no manner of doubt that
           so long as the  cheque  remains  unpaid  it  is  the  continuing
           obligation of the  drawer  to  make  good  the  same  by  either
           arranging the funds in the account on which the cheque is  drawn
           or liquidating the  liability  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.   An
      “Explanation” to Section 43(1) was also added by  the  same  amendment
      providing that “application” by a consumer in Section 43(1)  means  an
      application complete in all  respects  along  with  documents  showing
      payment of necessary charges and other  compliances,  meaning  thereby
      that the obligation of the distribution licensee to supply within  the
      specified time period will begin  only  after  it  has  received  such
      completed application by the applicant. Further, Sections  45  and  46
      provide for the distribution licensee’s powers to recover charges  for
      electricity  supplied  and  the  expenditure  incurred  in   providing
      electric line or plant for giving supply. Section 47 provides that the
      distribution licensee may require  any  person  demanding  electricity
      supply from him to give  a  reasonable  security,  failing  which  the
      distribution licensee may refuse to give supply of electricity to such
      consumer. We are of the opinion that it is in this  context  that  the
      expression “save as otherwise provided in this Act” in Section 43  (1)
      is to be construed.

      28.   Before we part with we would like to make it clear that there is
      a dispute between TPC and R-infra)  (respondent  No.9)  which  is  the
      subject matter of  Civil  Appeal  Nos.  4667-68/2013.  R  Infra  is  a
      distribution licensee in suburban Bombay where TPC is also a licensee.
      Both supply electricity to different  consumers.  Dispute  is  between
      them with regard  to  cross  subsidiary  surcharge  (CSS)  payable  by
      consumer taking supply from TPC or R Infra network. We make it  clear,
      by way of abundant caution, that we have not  touched  upon  the  said
      dispute and obviously so as even otherwise the subject matter  in  the
      instance case is totally different. Therefore Civil  Appeal  Nos.4667-
      68/2013 shall be decided on its own merits.

      29.   We, thus, do not find any merit in any of the contentions of the
      appellant. As a consequence, this appeal fails and is hereby dismissed
      with cost thereby affirming the order of the Appellate Tribunal.




                                                          ……………………………………….J.
                                                             (Surinder Singh
                                                                     Nijjar)






                                                          ……………………………………..J.
                                                                       (A.K.
                                                                      Sikri)






      New Delhi
      May 8, 2014

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