Indian Railways vs West Bengal State Electricity Distribution Company Limited & Ors.

Electricity Act, 2003 – Railways Act, 1989 – s.11(g) and (h) – Whether the activities provided u/s.11(g) and (h) of the Railways Act pass muster of “distribution” of electricity, and whether such activities are a necessary pre-requisite to qualify as a DDL under the Act – In other words, whether the activities of the Appellant-Indian Railways fall within the purview of a distribution licensee (or a deemed distribution licensee): Held: The omission of the words “distribution” or “supply” of electricity in s.11(g) and (h) is deliberate and intentional – The legislature while framing these provisions certainly intended to empower the appellant solely to erect and operate a distribution infrastructure necessary for railway operations – The language clearly confines the purpose of these installations to the operational use of Railways and does not extend any authority to the Appellant to undertake a commercial distribution or supply of electricity, beyond the railway’s internal domain – The submission of the Appellant that it is a deemed distribution licensee, lacks any substantial basis – The statutory regime under the Electricity Act regulates the commercial supply of electricity to consumer through a licensed distribution network – The Appellant, operates a closed and self-contained electricity network which is for the purposes of meeting the operational requirements of the railway system, including traction, signalling, stations – It is only when electricity is sold or provided to consumers outside the operational domain of the railway, that the activities undertaken by the Appellant could intersect with the obligation of a distribution licensee – In the present case, the Railways is procuring electricity from the Respondent DISCOMs in various states for its own use and for consumption to its constituents. [Paras 28, 30, 31, 32]

Electricity Act, 2003 – ss.2(5), 14 – Railways Act, 1989 – Constitution of India – Art.12 – Whether the Appellant-Indian Railways, being an entity of the Central Government, falls within the ambit of “Appropriate Government” u/s. 14 of the Electricity Act, 2003:

Held: A plain reading of s.2(5)(a)(ii) makes it evident that the subject of the definition is the Central Government, and the term “railways” appears only as a relative reference, and a subjectmatter that triggers the application of the Central Government – Insofar as the provision does not extend that the Railways itself is the Appropriate Government, it only expands the scope of the term to include the Central Government in matters relating to railways – It is also a well-settled principle of law that the mere classification of an instrumentality or agency as “State” u/Art.12 of the Constitution of India does not automatically render it as an “Appropriate Government” – Appellant operates as a functionary of the Central Government – It is evident that the nominal, pervasive, administrative as well as fiscal control of the Appellant lies in the clutches of the Central Government – The scheme of the Electricity Act makes it clear that a distribution licensee is under the statutory obligation to supply electricity to its consumers within its area of supply – Notably, the Appellant’s electrical infrastructure including traction sub-stations, overhead catenary systems, and 25kV alternating current systems, exists entirely for captive selfconsumption for traction purposes and not for supply to third party consumers – Therefore, the deemed status as attached to the Military Engineering Services (MES) is not by virtue of it being a government entity, but it is a governmental entity that actually performs the function of distribution within the meaning and scope of the Electricity Act – It is apparent on the face of record that the Appellant has no such analogous relationship with any consumer, and its claim to the deemed distribution licensee status fails at the very threshold – For the limited purpose of this analysis, the Appellant is regarded as falling within the ambit of “Appropriate Government” u/s. 2(5)(a) of the Act, but the observation carries no determinative consequence for the relief sought by the Appellant – Nominal virtue, however firmly established, cannot substitute for the substantive functions that the statute demands. [Paras 40, 43, 45-48, 50]

Electricity Act, 2003 – s.42 – Railways Act, 1989 – Whether the Indian Railways, even if held to be a deemed distribution licensee under the Act, is exempt from the obligation to pay Cross-Subsidy Surcharge or additional surcharge for the grant of non-discriminatory open access as per s.42 of the Act: Held: The Appellant is a consumer within the meaning and scope of s.2(15) of the Electricity Act – It purchases electricity exclusively for its own use and supplies it to no one but its own constituents – Thus, like any other consumer, Cross-Subsidy Surcharge and Additional Surcharge are applicable to the Appellant – In arguendo, even if the Railways is treated as a deemed distribution licensee (DDL), its procurement of electricity through open access exclusively for its own consumption renders it a consumer for that purpose – An entity, like the Railways in the present case, would be liable to pay Cross-Subsidy Surcharge and Additional Surcharge if it procures electricity through open access. [Paras 57, 58] Electricity Act, 2003 – Electricity (Amendment) Bill, 2014 – Draft Electricity (Amendment) Bill, 2025 – Railways Act, 1989 – Whether a proposed legislation may be relied upon as an aid to statutory interpretation for addressing gaps in the existing framework, and to give effect to the parliamentary intent to remedy defects thereunder.

Held: In the present case, the legislative history of the Electricity Act reflects that previous proposals in 2014 and 2018 had sought to confer the statutory status of a licensee in favour of the Appellant, seeking to save it from the binding statutory obligations of paying Cross-Subsidy Surcharge and additional surcharge – The language used in the Draft Electricity (Amendment) Bill, 2025 is clear and simple, to address the existing burden of Cross-Subsidy Surcharge payable by the Appellant by exempting them from payment of cross-subsidy and surcharges, within the next five years – In the present case, the very fact that such legislative actions to exempt the Appellant from payment of Cross-Subsidy Surcharges have been proposed to be taken, indicate a coherent, consistent, and current legislative intent about the absence of such exemption under the prevailing statute – This absence further implies that even by adopting a purposive construction to the prevailing statute, such an exemption cannot be read into the statute – It is a settled canon of statutory interpretation that a legislative casus omissus cannot be supplied by a judicial interpretative process – Be that as it may, the proposed legislative framework in the present case explicates that the legislative intent of the Parliament under the Electricity Act was not to exempt the Appellant from the obligations under the Electricity Act – More so, it puts the controversy to rest as the Appellant, procuring electricity for its own use and consumption, is an industrial consumer and for availing open access, it is liable to pay Cross-Subsidy Surcharge and additional surcharge, like any other consumer. [Paras 61, 67, 69]