Electricity Act, 2003 – s. 14(b) proviso – Distribution of Electricity Licence (Additional Requirements of Capital Adequacy, Creditworthiness and Code of Conduct) Rules, 2005 – r. 3(2) – Andhra Pradesh Electricity Regulatory Commission (Distribution Licence) Regulations, 2013 – Regns 12, 13 – Application for grant of Distribution Licence in the area of supply of an existing Distribution Licensee – Procedure to get identified as deemed distribution licensee – On facts, designation of an entity-appellant as a Special Economic Zone-SEZ developer by the Ministry – Appellant, if ipso facto qualifies the entity to be a deemed distribution licensee, obviating the need for an application u/s. 14 – Regn 12 of the 2013 Regulations and by implication r. 3(2) of the 2005 Rules, if applicable to a SEZ developer recognised as a deemed distribution licensee under the proviso to s. 14(b) read with Regn 13 of the 2013 Regulations – Condition imposed by the State Electricity Regulatory Commission to infuse additional capital as per r. 3(2) of the 2005 Rules read with Regn 12 of the 2013 Regulations, if justifiable or extraneous: Held: Being a SEZ developer in terms of the 2010 Notification does not ipso facto confer upon the appellant the status of a deemed licensee without any scrutiny and without being under any requirement to apply – It is required to make an application in accordance with the 2013 Regulations – This condition has been fulfilled as the status of the appellant as a deemed licensee was upheld pursuant to the application made in accordance with r. 13 of the 2013 Regulations – As regards the applicability of Regn 12 of the 2013 Regulations and r. 3(2) of the 2005 Rules, none of the nine provisos to s. 14, apply to the appellant – Sixth proviso to s.
14 does not pertain to deemed licensees and, thus, the 2005 Rules not applicable to the appellant – Furthermore, it cannot be said that Regn 12 applies implicitly to a deemed licensee as well – Regn
12 pertains solely to regular distribution licensees not to deemed licensees – ‘Reading up’ Regn 12 so as to expand its ambit to include within it deemed licensees, especially when the Electricity Act does not stipulate any such inclusion, runs counter to proviso to clause
(b) of s. 14 of the Electricity Act, which is impermissible and cannot be approved – Thus, the recognition of the status of a deemed distribution licensee cannot hinge on compliance with r. 3(2) of the 2005 Rules read with Regn 12 of the 2013 Regulations – Having been statutorily exempted from complying with Regns 4 to 11, the appellant, being a deemed licensee, would also be exempt from the concomitant obligation of complying with Regn 12 – Condition imposed on appellant to infuse an additional capital, not justified and contrary to the statutory scheme – Judgments and orders of the State Electricity Regulatory Commission and the Appellate Tribunal for Electricity set aside to this extent – Order of the State Electricity Regulatory Commission granting the status of a deemed licensee to the appellant, subject to the condition that its promoters infuse additional capital modified to the extent of excluding such condition. [Paras 25, 37, 28, 29, 34, 35, 37]
Interpretation of statutes – Principles of statutory interpretation – Reading down and reading up:
Held: Reading down and reading up are two principles in the realm of statutory interpretation – Reading down refers to the practice of interpreting a statute narrowly, limiting its scope or application to specific situations or individuals – This approach is commonly employed when the language of a statute is ambiguous or when there is a need to avoid potential conflicts with other laws or constitutional provisions – If a law is unclear about whether it applies to certain types of businesses, a court may choose to read down the statute to only include those businesses explicitly mentioned in the text – Reading up involves interpreting a statute broadly, extending its scope or application beyond what is expressly stated in the text – Reading up is a concept that is invoked with great caution within the legal framework because it can lead to judicial activism or judicial overreach – Practice of reading up a provision can only be justified when it aligns with legislative intent, maintains the fundamental character of the law, and ensures that the resulting interpretation remains consistent with the original context to which the law applies – This holds especially true for subordinate legislation, which require greater scrutiny – Reading up a provision of subordinate legislation in a manner that it militates against the primary legislation not permissible. [Paras 30, 32]
Legislation – Enabling/primary legislation and subordinate legislation – Harmonization between – Requirement: Held: Authority to enact subordinate legislation is derived from the enabling/primary legislation and it is imperative that such legislation harmonizes with the provisions outlined in the primary legislation – Electricity Act has conferred power on the Central Government to make Rules and on the Central Electricity Authority and the Central Commission to make Regulations – All such rules/regulations are to be made consistent with the Electricity Act – Rules/Regulations are enacted to supplement the main provision, not to supplant it – They serve the crucial role of bridging potential gaps within the primary legislation, yet, their function is not to create webs and voids merely to clog and hamper their implementation – Any gaps addressed by Rules/Regulations must be discernible within the framework of primary legislation. [Para 33]
As published in the Supreme Court Reports, Supreme Court of India. Headnotes prepared by: Nidhi Jain. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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