M/S SESA STERLITE LTD. versus ORISSA ELECTRICITY REGULATORY COMM. & ORS.

Citation: [2014] 13 S.C.R. 426 · Decided: 25-04-2014 · Supreme Court of India · Bench: S.S. NIJJAR · Disposal: Dismissed
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Judgment (excerpt)

[2014] 13 S.C.R. 426 
A 
M/S SESASTERLITE LTD. 
v. 
ORI SSA ELECTRICITY REGULATORY COMM. & ORS. 
B 
(Civil Appeal No. 5479 of 2013) 
APRIL 25, 2014 
[SURINDER SINGH NIJJARANDA. K. SIKRI, JJ.] 
c 
Electricity Act, 2003 - Enactment of - Object- Payment • 
of Cross Subsidy Surcharge (CSS) to Distribution company 
- Rationale - Discussed- Held: CSS is the charge payable 
by a consumer who opts to avail power supply through open 
access from someone other than Distribution licensee in 
D whose area it is situated - Such surcharge is meant to 
compensate such Distribution licensee from the loss of cross 
subsidy that such Distribution licensee would suffer by 
reason of the consumer taking supply from someone other 
than such Distribution licensee. 
E 
Eh~ctricity Act, 2003- s. 14 -Appellant, a Developer in 
the SEZ area having its unit in the SEZ, not drawing or utilizing 
any electricity from the Distribution Licensee viz. WESCO 
for its unit- State Electricity Regulatory Commission rejected 
F the Power Purchase Agreement (PPA) entered into by the 
appellant with Mis. Sterlite Energy and directed the appellant 
to pay Cross Subsidy Surcharge (CSS) to WESCO holding 
the appellant to be a 'consumer' -
Validity -
Whether 
developer of a notified SEZ, who has been deemed by law to 
G be a licensee for distribution of electricity, is required to, once 
again, apply to the Electricity Regulatory Commission for 
grant of a licence or the deeming fiction carved out in s. 14 of 
the Electricity Act automatically dispenses with this 
requirement and ipso facto makes such SEZ developer a 
H 
426 
M/S SESA STERLITE LTD. v. ORI SSA ELECTRICITY 
427 
REGULATORY COMM. 
distribution licensee - Held: No doubt by virtue of the status A 
of a developer in the SEZ area, the appellant was also treated 
as deemed Distribution Licensee- However with this, it only 
got exemption from specifically applying for licence uls.14 
of the Electricity Act- In order to avail further benefits under 
the Act, the appellant was also required to show that it was in 
B 
fact having distribution system and had number of consumers 
to whom it was supplying the electricity - That was not the 
case here- Notification dated 03.03.2010 issued u/s.49(1) 
of the SEZ Act providing for the "Developer" of SEZ being 
deemed as a "Distribution Licensee" was issued keeping in C 
view the concept of Multi Unit SEZs and did not apply to a 
Developer like appellant who had established the SEZ only 
for itself-Appellant to make payment of CSS to WESCO -
Special Economic Zone Act, 2005- s. 2(g)lj)(za)(zr:), ss. 3, 4, 
11; 12, 13, 15and49. 
D 
Dismissing the appeal, the Court 
HELD:1. In the present case, no doubt by virtue of 
the status of a developer in the SEZ area, the Appellant E 
is also treated as deemed Distribution Licensee. 
However with this, it only gets exemption from 
specifically applying for licence under Section 14 of the· 
Electricity Act, 2003. In order to avail further benefits 
under the Act, the Appellant is also required to show that F 
it is in fact having distribution system and has number 
of consumers to whom it is supplying the electricity. That 
is not the case here. For its own plant only, it is getting 
the electricity from Sterlite Ltd. for which it has entered · 
into PPA. The object and scheme of SEZ Act envisages G 
several units being set up in a SEZ area. This is evident 
from a collective reading of the various provisions of the 
Special Economic Zone Act, 2005 (SEZ Act) viz. Section 
2(g)U)(za)(zc), Section 3, 4, 11, 12, 13 and 15. The 
H 
428 
SUPREME COURT REPORTS 
[2014] 13 S.C.R. 
A Notification dated 03.03.2010 issued under Section 49(1) 
of the SEZ Act providing for the "Developer" of SEZ 
being deemed as a "Distribution Licensee" ~as issued 
keeping in view the concept of Multi Unit SEZs and will 
apply only to such cases in which the Developer is 
B supplying the power to multiple Units in the SEZ. The 
said Notification will not apply to a Developer like the 
Appellant who has established the SEZ only for itself. 
Having regard to the factual and legal aspects and 
keeping in mind the purpose for which CSS is payable, 
C on the facts of this case it is not possible for the Appellant 
to avoid payment of CSS to WESCO. [Paras 43, 44] 
[458-F-H; 459-A-E] 
CIVIL APPELLATE JURISDICTION: Civil Appeal 
D .No.5479of2013. 
From the Judgment and Order dated 03.05.2013 of the 
Appellate Tribunal for Electricity in Appeal No. 206 of 2012.
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