GLOBAL ENERGY LTD. & ANR. versus CENTRAL ELECTRICITY REGULATORY COMMISSION

Citation: [2009] 9 S.C.R. 22 · Decided: 11-05-2009 · Supreme Court of India · Bench: S.B. SINHA · Disposal: Appeal(s) allowed
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Judgment (excerpt)

'A 
B 
[2009] 9 S.C.R. 22 
GLOBAL ENERGY LTD. & ANR. 
v. 
CENTRAL ELECTRICITY REGULATORY COMMISSION 
(Civil Appeal Nos.3457-58 of 2009) 
' 
MAY 11, 2009 
[S.B. SINHA AND CYRIAC JOSEPH, JJ.] 
Electricity Act, 2003 - ss. 52 and 178 - Central Electricity 
Regulatory Commission (Procedure, Terms and Conditions 
C for Grant of Trading License and other related matters) 
Regulations, 2004 -
Central Electricity Regulatory 
Commission (Procedure, Terms and Conditions for Grant of 
Trading License and other related matters) (Amendment) 
Regulations, 2006 - Regulation 6A - Clauses (b) and (f) -
o Validity of - Challenge to - H.eld: Clauses (b) and (f) of 
Regulation 6A are ultra vires the Constitution as also the Act 
- The provisions inherently perpetuated injustice in award of 
licenses for inter-state trade of electrical energy and brought 
uncertainty and arbitrariness - Delegated /Subordinate 
E legislation - Constitution of India, 1950-Articles 19(1)(g) and 
245. 
/ 
Judicial Review - Parameters for - Held: Availability of 
judicial review, by itself cannot be a ground to declare a 
subordinate legislation valid which otherwise it is not -
F Constitution of India, 1950 -
Articles 32 and 226 -
Administrative Law. 
Doctrines - Doctrine of Legitimate Expectation -
Applicability of - In context of grant of inter-state trading 
G license. 
H 
In exercise of its jurisdiction conferred by s.178 of the 
Electricity Act, 2003, the Central Electricity Regulatory 
Commission (CERC) framed 
Central Electricity 
22 
GLOBAL ENERGY LTD. v. CENTRAL ELECTRICITY 
23 
REGULATORY COMMISSION 
Regulatory Commission (Procedure, Terms and 
A 
Conditions for Grant of Trading License and other related 
matters) Regulations, 2004. In terms of the Act and the 
Regulations, license was required to be taken by a 
person desirous of dealing in inter-state trade of electrical 
energy. 
B 
. Appellant no.1-company applied for inter-state 
trading license and during pendency of consideration of 
such application, applied for interim issuance of licence, 
which was granted. Meanwhile, in 2006, the Regulations C 
were amended vide the Central Electricity Regulatory 
Commission (Procedure, Terms and Conditions for Grant 
of Trading License and other related matters) 
(Amendment) Regulations, 2006 whereby Regulation 6A 
was brought into force, which 
provided for 
disqualifications for grant of licence for inter-state 
D 
trading. The CERC applied Regulation 6A with 
retrospective effect and rejected the application of 
appellant no.1 for inter-state trading license. An appeal 
preferred thereagainst is pending before the Appellate 
Tribunal for Electricity. Appellants filed Writ Petitions 
E 
questioning the validity of the said Regulation which 
were dismissed by the High Court. 
In appeals to this Court, the constitutional validity of 
clauses (b) and (f) of Regulation 6A was in question. 
F 
Allowing the appeals, the Court 
HELD: 1. Section 178 of the Electricity Act, 2003 
provides for regulation making power. Sub-Section (1) 
thereof empowers the Commission to make regulations 
G 
consistent with the Act and the rules generally to carry 
out the provisions of the Act. The rule making power "for 
carrying out the purpose of the Act" is a general 
delegation. Such a general delegation may not be held 
to be laying down any guidelines. Thus, by reason of H 
24 
SUPREME COURT REPORTS 
[2009] 9 S.C.R. 
A such a provision alone, the regulation making power 
cannot be exercised so as to bring into existence 
substantive rights or obligations or disabilities which are 
not contemplated in terms of the provisions of the said 
Act. The power of the regulation making authority, thus, 
B must be interpreted keeping in view the provisions of the 
Act. [Paras 13, 18 and 19] [38-C-D; 41-D] 
Kunj Behari Lal Butail & Ors. vs. State of H.P. & Ors. 
(2000) 3 SCC 40; State of Kera/a & Ors. vs. Unni & Anr. 
(2007) 2 SCC 365 and A .P. Electricity Regulatory 
C Commission vs. Mis R. V.K. Energy Pvt. Ltd. & Anr. (2008) 9 
SCALE 529, relied on. 
D 
The Rampur Distillery Co. Ltd. v. The Company Law 
Board & Anr. (1969) 2 SCC 774, referred to. 
2.1. Section 52 of the Electricity Act, 2003 lays ttown 
the provisions with respect to eligibility of electricity 
trader for grant of licence. The said section provides that 
the Commission may specify the technical requirement, 
E capital adequacy requirement and creditworthiness for 
being an electricity trader. [Para 13] [37-F] 
2.2.
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