LexTATA POWER COMPANY LIMITED versus RELIANCE ENERGY LIMITED & ORS.
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I·~ ' [2008] 10 S.C.R. 293 TA,WER C~MPANY LIMITED RELi ENERGY LIMITED & ORS. (Civi Appeal. No.2898 of 2006) A JULY 8, 2008 B [ASHOK BHAN AND ALTAMAS KABIR, JJ] ELECTRICITY Licence to sell, supply and distribute electricity to other · distribution licensees and direct consumers of electricity - C Licensee supplying electricity also to consumers directly - Complaint by distribution licensee that the first licensee was not entitled to supply electricity directly to retail consumers falling within its area of supply - Held: under the terms and conditions of the licences held by the first licensee, it is en- D titled to effect supply of electrical energy in retail directly to consumers whose demand is Jess than 1000 KVA apart from· its entitlement to supply energy to other licensees for their · own purpose and in bulk within its area of supply, subject to·:- the constraints indicat!;d in sub-clause(/) of Clause 5 of the E licences - The Electricity Acts encourage competition in elec- tricity trade and the same is incorporated in the licences is- sued to distribution licensees - Electricity Act 1910, Electricity (Supply) Act, 1948 and Electricity Act, 2003 - s. 42. ~- · The predecessor-in-interest of the respondent(REL), F namely, BSES, filed a petition before the Maharashtra Elec- tricity Regulatory Commission(MERC) complaining_ of en- croachment by the appellant(TPC) within its area of sup- ply. Its case before the MERC was that supply of elec- tricity by the appellant directly to retail consumers was G contrary to the provisions of the Indian Electricity Act, 1910, the Electricity(Supply) Act, 1948, the policy con- tained in the Schedule to the 1948 Act, as also the Gov- ernment Policy. The case of the appellant was that un- 293 H 294 SUPREME COURT REPORTS [2008] 10 S.C.R. A der the licences of 1907, 1919 and 19:2(granted to the companies predecessors-in-interest •. h~ ·appellant and the 1953 licence granted to the appe ·t, it was entitled to sell, supply and distribute electricity not only to other distribution licensees, such as the respondent, but also B to direct consumers of electricity. The MERC though held that the terms and condi- tions of the licences of the appellant would give it an un- fettered right to supply electricity to all ·or any consumer in the BSES' area of supply, it directed the parties to file C the terms of ·reference to engage ·a c.onsultancy firm to study the· issues relating to ss.42 and 14·of the Electricity Act, 2003 and that the report of the said consultancy firm would be implemented as per the Commission's Regula- "tions. Both the parties filed appeals before the Appellate D •tribunal, which he.Id that the appellant was not granted licence to undertake retail distribution of electricity in the, area with.in which the respondent was distributing power in retaff to consumers directly and that the appellant could · ~undertake only bulk supplies to licensees such as the re- E spondenf. Aggrieved, the TPC and two consumers filed ·the 'instant appeals. The question for consideration before the Court was: whether TPC was entitled under the licences granted to 'it'to effect distribution of electricity directly to consum- F ers. within the area of supply indicated in the licences granted to BSES /REL. Allowing the appeals, the. Court HELD: 1.1. Under-the terms and conditions of the G licences held by TPC, it is entitled to effect supply of elec- .. J . L i r .' ;- trical energy in retail directly to co'nsumers, whose maxi- )' mum demand is less than 1000 KVA, apart from its en- titlement to supply energy to other licensees for their own purposes and in bulk, within its area of supply as stipu- H lated in its l~cences and also subject to the constraints 11 _J TATA POWER COMPANY LTD'. v. RELIANCE 295 ENERGY LTD. & ORS. indicated in sub-clause (I) of Clause 5 of the licences in rela- A tion to factories ai;id the Railways. [para 78] [331-8,C, D] 1.2 .. Clause 5 of the 1919, 1921 and 1953 Licences held by TPC indicates the purpose of supply and is di- vided into two parts - (i) for power and (ii) for lighting and general purposes, other than power. Sub-clause (I) deals 8 with supply to licensees for their own purposes and in bulk. Sub-clause (II) provides for supply of electricity for lighting and general purposes, other than power, includ- ing the supply of energy in bulk to other licensees for dis- tribution by them.
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