Electricity Act, 2003: s.14 – Distribution licence/minimum area of supply u/s.14 of the 2003 Act granted to appellant-JSPL by the Chattisgarh State Electricity Regulatory Commission (Commission) – Cancellation of, by the Tribunal – Challenge against – Held: s.14 of the 2003 Act states that appropriate Commission may grant a license to any person (a) to transmit electricity as a transmission licensee; or (b) to distribute electricity as a distribution licensee; or
(c) to undertake trading in electricity as an electricity trader, in any area as may be specified in the license – The sixth proviso to s.14 states that the appropriate Commission may grant a license to two or more persons for distribution of electricity through their own distribution system within the same area, subject to the applicant complying with additional requirements – Explanation to r.3 of 2005 rules prescribes the area falling within a Municipal Council or a Municipal Corporation as defined under Art.243 (Q) of the Constitution of India or Revenue District – The area of supply authorised by the Appropriate Commission shall be the ‘minimum area of supply’ – Thus, the expression ‘within the same area’ cannot refer to the entire Municipal Council or a Municipal Corporation or a Revenue District but ‘the area falling within’ a Municipal Council or a Municipal Corporation or a Revenue District in respect of which a distribution licensee is authorised – Hence the authorized ‘area of supply’ shall be the ‘minimum area of supply’ – Therefore, the contention of respondent no. 2 that the ‘minimum area of supply’ must comprise of the ‘entire’ Municipal Council or a Municipal Corporation or a Revenue District is unsustainable – Thus, the area in respect of which the license was granted to appellant is the minimum area of supply and appellant is bound to supply electricity in the said area of supply – Judgment of tribunal set aside – Electricity Rules, 2005 – r.3, explanation.
Allowing the appeals, the Court
HELD: 1. The 2003 Act, came into force on 10.06.2003 insofar as Sections 1 to 120 and Sections 122 to 185 are concerned. The Preamble of the 2003 Act states that it has been enacted to consolidate the laws relating to generation, transmission, distribution, trading and use of electricity and generally for taking measures conducive to development of electricity industry, promoting competition therein, protecting interest of consumers and supply of electricity to all areas, rationalization of electricity tariff, ensuring transparent policies regarding subsidies, promotion of efficient and environmentally benign policies, constitution of Central Electricity Authority, Regulatory Commissions and establishment of Appellate Tribunal and for matters connected therewith or incidental thereto. [Para 27][407-B-D]
2. On a reading of Section 14 of the 2003 Act, it is clear that the appropriate Commission may, on an application made to it under Section 15 grant a licence to any person (a) to transmit electricity as a transmission licensee; or (b) to distribute electricity as a distribution licensee; or (c) to undertake trading in electricity as an electricity trader, in any area as may be specified in the licence. The sixth proviso which is under consideration states 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 requirement under the 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 licence on the ground that there already exists a licensee in the same area for the same purpose. [Paras 32 and 33][412-AE]
3. Within the same area, there could be two or more persons for distribution of electricity. As to what is the area within which there could be grant of licence to two or more persons is concerned under the sixth proviso to Section 14, the Explanation to Rule 3 prescribes the area falling within a Municipal Council or a Municipal Corporation as defined under Article 243 (Q) of the Constitution of India or Revenue District. The area of supply authorised by the Appropriate Commission shall be the minimum area of supply. Thus, the ‘minimum area of supply” would fall ‘within the area’ which is comprising of a Municipal Council or a Municipal Corporation or a Revenue District but it does not imply that the licence to supply electricity for an area or an ‘area of supply which is the ‘minimum area of supply’ must extend to the ‘entire area falling within’ a Municipal Council or a Municipal Corporation or a Revenue District. Thus, the expression ‘within the same area’ cannot refer to the entire Municipal Council or a Municipal Corporation or a Revenue District but ‘the area falling within’ a Municipal Council or a Municipal Corporation or a Revenue District in respect of which a distribution licensee is authorised by its licence to supply electricity. Therefore, by the aforesaid interpretation, the authorised ‘area of supply’ shall be ‘the minimum area of supply’. [Paras 37, 40, 42][414-A-B, G-H; 415-A, E-G]
4. On the other hand, on a reading of the licence granted to the appellant, it is clear that respondent No.1 was conscious of the fact that it was granting licence to the appellant JSPL having regard to the fact that the said appellant had established an industrial park for which it had the responsibility for distribution of electricity and in addition, two more villages were added to the area comprised in the industrial park for the purpose of distribution of electricity. The area in respect of which the licence was granted and thereby authorisation provided to supply electricity is the minimum area of supply. The ‘area of supply’ is ‘an area falling within’ a Municipal Council or a Municipal Corporation or a Revenue District and in the instant case, it is a Revenue District. Since, the ‘area of supply’ authorised in the licence granted to the appellant JSPL in the instant case is the ‘minimum area of supply’, the said appellant is bound to supply electricity in the said area of supply. The licensee cannot resile from the condition of supplying electricity as per the authorisation of the area of supply indicated in the license. This would also mean that the licensee cannot supply electricity in an area beyond the area of supply authorised under the license. This is because in respect of an area falling within a Municipal Council or a Municipal Corporation or a Revenue District, there could be two or more persons who could be granted licence and authorisation to distribute electricity in terms of the respective area of supply specified. [Para 44][416-A-E]
S. Sundaram Pillai v. V.R. Pattabiraman (1985) 1 SCC
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663 : [2003] 6 Suppl. SCR 1212; Union of India and Ors. v. Indian Charge Chrome and Anr. (1999) 7 SCC 314; M/s. Hiralal Rattanlal Etc. Etc. v. State of U.P. and Anr. Etc. Etc. (1973) 1 SCC 216 : [1973] 2 SCR 502; Dattatraya Govind Mahajan v. State of
Maharashtra (1977) 2 SCC 548 : [1977] 2 SCR 790 – referred to.
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