The rajasthan power sector reforms act, 1999

Rajasthan Power Sector Reforms Act, 1999 
(Act No. 23 of 1999) 
[Received the assent of the President of India on the 28th day of December 1999]. 
An 
Act 
to provide for the constitution of an Electricity Regulatory Commission, restructuring of the 
electricity industry by rationalisation of the generation, transmission, distribution and supply of 
electricity and generally for taking measures conducive to (he  development and management of 
the electricity industry in an efficient, economic and competitive manner and/or matters 
connected therewith or incidental thereto. 
 Be it enacted by the Rajasthan State Legislature in the Fiftieth Year of the Republic of 
India, as follows:- 
PART - I 
PRELIMINARY 
 1. Short title, extent and commencement.  - (1) This Act may be called the Rajasthan 
Power Sector Reforms Act, 1999. 
 (2) It shall extend to the whole of the State of Rajasthan. 
 (3) It shall come into force on such date as the State Government may, by 
notification, [appoint]. 
 2. Definitions. - In this Act, unless the context otherwise requires, - 
(a) "area of supply" means the area within which a supply licensee or any other person is for 
the time being authorized to distribute and supply energy: 
(b) "area of transmission" means the area within which a holder of a transmission licence or 
any other person is for the time being authorized to transmit energy: 
(c) "Board" means the Rajasthan State Electricity Board const ituted under section 5 of the 
Electricity (Supply) Act, 1948 (Central Act No. 54 of 1948); 
(d) "Central Act" means the Electricity Regulatory Commissions Act, 1998 (Central Act No. 
14 of 1998); 
(e) "Central Commission" means the Central Electricity Regulat ory Commission established 
under sub -section (1) of section 3 of the Electricity Regulatory Commission Act, 1998 
(Central Act No. 14 of 1998); 
(f) "Commission" means the Rajasthan Electricity Regulatory Commission constituted under 
section 3 of this Act: 
(g) "Corporation" means the Rajasthan Rajya Vidyut Prasaran Nigam Ltd. as constituted in 
terms of section 13 of this Act: 
(h) "Distribution Company" means a Company registered under the Companies Act, 1956 
(Central Act No. 1 of 1956) and which has among its  objects the distribution and supply 
of electricity: 
(i) "Generating Company" means a company registered under the Companies Act, 1956 
(Central Act No. 1 of 1956) and which has among its objects the establishment, operation 
and maintenance of generating stations: 
(j) "High Court" means the High Court of Judicature for the State of Rajasthan: 
(k) "licence" means a licence granted under section 18 of this Act: 
(l) "licensee" or "licence  holder" means a person licensed under this Act to transmit, 
distribute or supply energy: 
(m) "local authority" means a Municipal Corporation, a Municipal Council, a Municipal 
Board, a Zila Parishad and a Panchayat Samiti in the State: 
(n) "member" means the member of the Commission and shall include the Chairperson; 
(o) "regulations" means the regulations made by the Commission under this Act; 
(p) "rules" means the rules made by the State Government under this Act; 
(q) "selection committee" means the selec tion committee constituted under section 4 of this 
Act: 
(r) "supply licence" means a licence granted under clause (b) of sub -section (1) of section 18 
of this Act; 
(s) "transmission licence" means a licence granted under clause (a) of sub -section (1) of 
section 18 of this Act; 
(t) "transmit" in relation to electricity, means the transportation or transmission of electricity 
by means of a system, operated or controlled by a licensee, which consists, wholly or 
mainly, of extra high voltage and extra high tension lines and electrical plant, and which is 
used for transferring and for conveying and/or transmitting electricity from a generating 
station to a sub -station, from one generating station to another or from one sub -section to 
another or from one place to another; 
(u) "utility" means any person or entity engaged in the generation, transmission, sale, 
distribution or supply, as the case may be, of energy; 
(v) words and expressions used but not defined in this Act and defined in the Electricity 
(Supply) Act, 1948 (Central Act No. 54 of 1948) shall have the meanings respectively 
assigned to them in that Act: and 
(w) words and expressions used but not defined either in this Act or in the Electricity 
(Supply) Act, 1948 (Central Act No. 54 of 1948) and defined in the Indian Electricity Act, 
1910 (Central Act No. 9 of 1910) shall have the meanings respectively assigned to them in 
that Act. 
PART-II 
THE RAJASTHAN ELECTRICITY REGULATORY COMMISSION 
 3. Establishment and constitution of the Commission.  - (1) The State Government 
shall within three months of coming into force of this Act, establish by notification a 
Commission to be known as the Rajasthan Electricity Regulatory Commission: 
Provided that, Commission constituted by the State Government In terms of sub -section (1) of 
section 17 of the Electricity Regulatory Commissions Act, 1998 (Central Act No. 14 of 1998) 
and existing on the date of the commencement of this Act shall be the first Commission for the 
purposes of this Act. 
 (2) The Commission shall be a body corporate by the name aforesaid, having perpetual 
succession and a common seal, with power to acquire, hold and dispose of property, both 
movable and immovable, and to contract and shall, by the said name, sue or be sued. 
 (3) The Commission shall consist of three Members including the Chairperson. The State 
Government shall specifically designate one of the three Members as Chairperson. The  inter 
se seniority of the other two Members shall be such as may be indicated in the orders of 
appointment. 
 (4) The Chairperson and the Members of the Commission shall be appointed by the State 
Government on the recommendation of a selection committee referred to in section 4. 
 (5) The Chairperson shall be the Chief Executive of the Commission. 
 4. Constitution of the s election committee to select Members.  - (1) The State 
Government shall, for the purposes of selecting the Members of the Commission, constitute a 
selection committee, consisting of, - 
(i) a person who is or has been a Judge of the High Court as 
recommended by the Chief Justice of the High Court- 
Chairperson: 
(ii) Chief Secretary to the Government of Rajasthan- Member: 
(iii) Chairperson or Member of the Central Electricity 
Regulatory Commission as recommended by the 
Chairperson- 
Member: 
Provided that the selection committee constituted under section 18 of the Electricity Regulatory 
Commissions Act, 1998 (Central Act No. 14 of 1998) and existing on the date of commencement 
of this Act shall be deemed to have been constituted under this Act. 
 (2) No appointment of a Member shall be invalid merely by reason of any vacancy in the 
selection committee. 
 (3) The State Government shall, within one month from the date of occurrence of any 
vacancy by reason of death, resignation or removal and six months before the s uperannuation or 
end of tenure of the Chairperson or a Member, make a reference to the selection committee for 
filling up of the vacancy. 
 (4) The selection committee shall finalize the selection of the Members, within one 
month from the date on which the reference is made to it. 
 (5) The selection committee shall submit a panel of two suitable persons in alphabetical 
order for each vacancy referred to it. 
 (6) Before recommending any person for appointment as a Member, the selection 
committee shall satisfy itself that such person does not have any financial or other interest which 
is likely to affect prejudicially his functions as a Member. 
 5. Qualification for appointment of Chairperson and other Members of the 
Commission. - (1) The Chairperson and the Me mbers of the Commission shall be persons 
having adequate knowledge, or have shown capacity in dealing with problems relating to 
engineering, finance, commerce, economics, law or administration and shall be appointed in the 
following manner, namely: - 
(i) one person having qualification and experience in the field of engineering with 
specialization in generation, transmission or distribution of electricity: 
(ii) two persons having qualification and experience in the field of finance, economics, 
commerce, law or administration: 
Provided that not more than one Member shall be appointed under the same category under 
clause (ii): 
Provided further that persons below the age of fifty years shall not be eligible for appointment as 
Chairperson or Member, as the case may be. 
 (2) A person shall be disqualified for being appointed as a Member of the Commission if 
he is a Member of Parliament or of any State Legislature or of any local authority or holds any 
post in a political party or if he has any financial or other interest, directly or indirectly, in any 
private company or undertaking dealing with any of the business related to generation, 
transmission, distribution or supply of electricity or manufacture, sale or supply of any fuel, 
machinery, plant, equipment etc. related to these activities. 
 (3) The Chairperson or any other Member of the Commission shall not hold any other 
office. 
 6. Term of office, salaries and allowances and other conditions of service of 
Chairperson and Members. - (1) The Chairperson and any other Member shall hold office for a 
period of five years from the date he enters upon his office but shall not be eligible for re -
appointment: 
Provided that no Chairperson or no other Member shall hold office as such after he has attained, 
- 
(a) in the case of the Chairperson, the age of sixty five years, and 
(b) in the case of any other Member, the age of sixty two years: 
Provided further that a Member shall be eligible for appointment as Chairperson subject however 
that his combined tenure in the Commiss ion as Member and Chairperson shall not exceed five 
years: 
Provided also that the first three Members shall be appointed for varying periods of three years, 
four years and five years respectively so as to avoid the retirement of all the Members as the 
same time and ensure continuity in the functioning of the Commission. 
 (2) The salary and allowances payable to, and the other terms and conditions of service 
of, the Members of the Commission shall be such as may be prescribed by the State Government. 
 (3) The salary, allowances and other conditions of service of the Members, shall not be 
varied to their disadvantage after appointment. 
 (4) The Chairperson and every other Member shall before entering upon his office, make 
and subscribe to an oath of office a nd of secrecy in such form and in such manner and before 
such authority as may be prescribed. 
 (5) Notwithstanding anything contained in sub -section (1) or subsection (2), a Member 
may, - 
(a) relinquish his office by giving in writing to the State Government a notice of not less than 
three months: or 
(b) be removed from his office in accordance with the provisions of section 7. 
 (6) Any Member ceasing to hold office as such shall, - 
(a) be ineligible for further employment under the Central Government or an y State 
Government for a period of two years from the date he ceases to hold such office: 
(b) not accept any commercial employment for a period of two years from * * * ceases to 
hold such office; and 
(c) not represent any person before the Central Commissi on or any State Commission in any 
manner. 
Explanation. - For the purposes of this sub-section, - 
(i) "employment under the Central Government or under the State Government" includes 
employment under any local or other authority within the territory of Indi a under the 
control of the Central Government or a State Government, or under any corporation or 
society owned or controlled by the Government: 
(ii) "commercial employment" means employment in any capacity under, or agency of, a 
person engaged in trading, commercial, industrial or financial business in the electricity 
industry and also includes a director of a company or partner of a firm and it also Includes 
setting up practice either independently or as partner of a firm or as an advisor or a 
consultant. 
 7. Removal of Members.  - (1) Subject to the provisions of subsection (3). any Member 
of the Commission shall only be removed from his office by order of the State Government on 
the ground of proved mis -behaviour after the High Court, on reference being ma de to it by the 
State Government, has on inquiry, held in accordance with the procedure prescribed in that 
behalf by the High Court, reported that the Member, ought on such ground to be removed. 
 (2) The State Government may, in consultation with the Chief  Justice of the High Court, 
suspend any Member of the Commission in respect of whom a reference has been made to the 
High Court under sub -section (1) until the State Government has passed orders on the receipt of 
the report of the High Court on such reference. 
 (3) Notwithstanding anything contained in sub -section (1), the State Government may by 
order remove from office any Member if he,- 
(a) has been adjudged an insolvent; or 
(b) has been convicted of an Offence which, in the opinion of the State Governme nt, 
involves moral turpitude; or 
(c) has become physically or mentally incapable of acting as a Member: or 
(d) has acquired such financial or other interest as is likely to affect prejudicially his 
functions as a Member; or 
(e) has no abused his position a s to render his continuance in office prejudicial to the public 
interest. 
 (4) Notwithstanding anything contained in sub -section (3), no Member shall be removed 
from his office on the ground specified in clause (d) or clause (e) of that sub -section unless the 
High Court on a reference being made to it in this behalf by the State Government, has, on an 
inquiry held by it in accordance with such procedure as prescribed in this behalf by the High 
Court reported that the Member ought on such ground or grounds to be removed. 
 8. Officers of the Commission and other staff. - (1) The State Government may appoint 
a Secretary to exercise and perform under the control of the Chairperson such duties and powers 
as may be specified by regulations made by the Commission. 
 (2) The Commission may, in consultation with the State Government, determine the 
number, nature and categories of other officers and employees required to assist the Commission 
in the discharge of its functions. 
 (3) The salaries and allowances payable to , and other conditions of service of the 
Secretary, other officers and employees shall be such as may be determined by the Commission, 
by regulations, with the approval of the State Government. 
 (4) The method and manner of selection of the officers and ot her employees may be 
prescribed by the Commission by regulations with prior consultation with the State Government. 
 (5) The Commission may appoint consultants required to assist the Commission in the 
discharge of its functions on the terms and conditions as may be determined by regulations by 
the Commission. 
PART-III 
FUNCTIONS, PROCEEDINGS AND POWERS OF THE COMMISSION 
 9. Functions of the Commission.  - (1) Subject to the provisions of this Act, the 
Commission shall discharge the following functions, namely: - 
(a) to determine the tariff for electricity, wholesale, bulk, grid or retail, as the case may be, in 
the manner provided in section 26 of this Act: 
(b) to determine the tariff payable for the use of the transmission facilities in the manner 
provided in section 26 of this Act: 
(c) to issue licenses for transmission, bulk supply, distribution or supply of electricity and 
determine the conditions to be included in the licenses: 
(d) to regulate the working of the licensees and other persons authorised  or permitted to 
engage in the electricity industry in the State and to promote their working in an efficient, 
economical and equitable manner: 
(e) to regulate power purchase and procurement process of the transmission utilities and 
distribution utilities including the price at which the power shall be procured from the 
generating companies, generating stations or from other sources for transmission, sale, 
distribution and supply in the State: 
(f) to regulate the investment approval for transmission, distri bution and supply of electricity 
to the entities operating within the State: 
(g) to aid and advise the State Government, in matters concerning electricity generation, 
transmission, distribution and supply in the State: 
(h) to regulate the operation of the power system within the State: 
(i) to require licensees to formulate perspective plans and schemes in coordination with 
others for the promotion of generation, transmission, distribution, supply and utilization of 
electricity, quality of service and to devise proper power purchase and procurement 
process: 
(j) to set standards for the electricity industry in the State including standards relating to 
quality, continuity and reliability of service: 
(k) to promote competitiveness,  efficiency and economy and make avenues for participation 
of private sector in the electricity industry in the State, and also to ensure a fair deal to the 
customers: 
(l) to lay down and enforce safety standards: 
(m) to aid and advise the State Government in the formulation of the State power policy: 
(n) to collect and record information concerning the generation, transmission, distribution 
and utilization of electricity: 
(o) to collect and publish data and forecasts on the demand for. and use of, electric ity in the 
State and to require the licensees to collect and publish such data: 
(p) to regulate the assets, properties and interest in properties concerning or related to the 
electricity industry in the State including the conditions governing entry into, and exit 
from, the electricity industry in such manner as to safeguard the public interest: 
(q) to adjudicate upon the disputes and differences between the licensees and utilities and to 
refer the matter for arbitration; 
(r) to coordinate with environmenta l regulatory agencies and to evolve policies and 
procedures for appropriate environmental regulation of the electricity sector and utilities 
in the State: 
(s) to aid and advise the State Government on any other matter referred to the Commission 
by such Government: 
(t) to lay down a uniform system of accounts among the licensees: and 
(u) to regulate the intra-state transmission of energy. 
 (2) The Commission shall exercise its functions in conformity with the national power 
plan. 
 10. Head Quarters and proce edings of the Commission.  - (1) The headquarters of the 
Commission shall be at Jaipur. The Commission shall meet at the headquarter or any other place 
in the State at such time as the Chairperson may direct and shall observe such rules of procedure 
in regard to the transaction of business at its meetings (including the quorum at its meeting) as 
may be determined by regulations. 
 (2) The Chairperson or, if he is unable to attend a meeting of the Commission, any other 
Member nominated by the Chairperson in th is behalf and. in the absence of such nomination or 
where there is no Chairperson, any Member chosen by the Members present from among 
themselves, shall preside at the meeting. 
 (3) All questions which come up before any meeting of the Commission shall be decided 
by a majority of votes of the Members present and voting, and in the event of an equality of 
votes, the Chairperson or the person presiding shall have the right to exercise a second or casting 
vote. 
 (4) Save as otherwise provided in sub-section (3), every Member shall have one vote. 
 (5) All orders and decisions of the Commission shall be authenticated by the Secretary or 
any other officer of the Commission duly authorized by the Chairperson in this behalf. 
 11. Powers of the Commission.  - (1) The Commission shall, for the purposes of any 
inquiry or proceedings under this Act have the powers as are veste/d in a Civil Court under the 
Code of Civil Procedure, 1908 (Central Act No. 5 of 1908), in respect of following matters, 
namely: - 
(a) the summoning and enforcing the attendance of any witness and examining him on oath: 
(b) the discovery and production of any document or other material object, producible as 
evidence: 
(c) the reception of evidence on affidavits: 
(d) the requisition of any public record: 
(e) the issue of commission for examination of witnesses: 
(f) review of its decisions, directions and orders: and 
(g) any other matter which may be prescribed. 
 (2) The Commission shall have the powers to pass such interi m order in any proceeding, 
hearing or matter before the Commission, as the Commission may consider appropriate. 
PART-IV 
POWERS OF THE STATE GOVERNMENT 
 12. General powers of the State Government.  - (1) In the discharge of its function, the 
Commission shall be guided by such directions in the matter of policy involving public interest 
as the State Government may give to it in writing. 
 (2) If any question arises as to whether any such direction relates to a matter of policy 
involving public interest, it shal l be referred to the Central Commission whose decision thereon 
shall be final and binding. 
 (3) The State Government shall consult the Commission in relation to any proposed 
legislation or rules concerning any policy direction and shall duly take into account the 
recommendation, if any, made by the Commission on all such matters. 
PART-V 
RE-ORGANISATION OF ELECTRICITY INDUSTRY 
 13. Constitution and functions of the Corporation.  - (1) Within sixty days of the 
coming into force of this Act, the State Gover nment shall establish Rajasthan Rajya Vidyut 
Prasaran Nigam Ltd. under the provisions of the Companies Act, 1956 (Central Act No. 1 of 
1956), with the principal objects of engaging in the business of procurement, transmission, 
distribution and supply of electric energy. 
 (2) The Corporation established by the State Government in terms of sub-section (1) shall 
be the principal company to undertake all planning and coordination in regard to transmission, 
undertaking the works connected with transmission, dete rmining the electricity requirements in 
the state in coordination with the Generating Companies, State Government, the Commission, 
the Regional Electricity Boards, and the Central Electricity Authority, the operation of the power 
system. 
 (3) The Corporation shall undertake the functions specified in this section and such other 
functions as may be assigned to it by the licence to be granted to it by the Commission under this 
Act. 
 (4) Upon the grant of licence to the Corporation under sub - section (4) of se ction 17 or 
sub-section (1) of section 18 of this Act, it shall exercise such powers and perform such duties 
and functions of the Board including those under the Indian Electricity Act, 1910 (Central Act 
No. 9 of 1910) and the Electricity (Supply) Act, 194 8 (Central Act No. 54 of 1948) or the rules 
framed thereunder as the Commission may specify in the licence and it shall be the statutory 
obligation of the Corporation to undertake and duly discharge the powers, duties and functions 
so assigned. 
 (5) Subject to the provisions of sub-sections (1) and (2) and to the overall supervision and 
control of the Corporation a number of subsidiary or associated transmission companies may be 
established in the State and the Commission may grant licenses under the terms of this Act to 
such transmission companies, in consultation with the Corporation. 
 14. Re-organisation of Rajasthan State Electricity Board.  - (1) With effect from the 
date on which a transfer scheme prepared by the State Government to give effect to the objects 
and purposes of this Act is published or such further date as may be specified by the State 
Government (hereinafter in this part referred to as the effective date), any property, interest in 
property, rights and liabilities which immediately before the effective date belonged to the Board 
shall vest in the State Government on such terms as may be agreed between the State 
Government and the Board. 
 (2) Any property, interest in property, rights and liabilities vesting in the State 
Government under sub-section (1) shall be revested by the State Government in the Corporation 
and generating company or companies, or distribution company or companies, in accordance 
with the transfer scheme so published alongwith such other property, interest in property, r ights 
and liabilities of State Government as may be specified in such scheme, on such terms and 
conditions as may be agreed between the State Government and the Corporation or generating 
company or companies, or distribution company or companies, as the case may be. 
 Explanation. - For the purposes of this part generating company or companies, shall 
mean the generating company or companies to be incorporated to implement the re -organisation 
of the Electricity Industry in the State and distribution company o r companies, shall mean the 
distribution company or companies to be incorporated to implement the re -organisation of the 
Electricity industry in the State. 
 (3) Such of the rights and powers exercisable by the Board under the Electricity (Supply) 
Act, 1998 (Central Act No. 54 of 1948) as the State Government may, by notification specify, 
shall be exercisable by the Corporation or generating company or companies, or distribution 
company or companies, as the case may be, for the purpose of discharging the fun ctions and 
duties with which it is charged. 
 (4) Notwithstanding anything in this section, where, - 
(a) the transfer scheme involves the transfer of any property or rights to any person or 
undertaking not wholly owned by the State Government, the scheme sh all give effect to 
the transfer only for fair value to be paid by the transferee to the State Government: 
(b) a transaction of any description is effected in pursuance of a transfer scheme, it shall be 
binding on all persons including third parties and even if such persons or third parties have 
not consented to it. 
 (5) The State Government may, after consulting th e Corporation (the "transferor 
licensee") or generating company or companies, or distribution company or companies, as the 
case may be, require them to draw up a transfer scheme to vest in a further licensee (the 
"transferee licensee") or any generating co mpanies, or distribution company or companies, any 
of the functions including distribution and supply function, property, interest in property, rights 
and liabilities which have been vested in the transferor licensee or generating companies, or 
distribution company or companies, as the case may be, under this section and publish the same 
as Statutory Transfer Scheme under this Act. The Transfer Scheme to be notified under this sub -
section shall have the same effect as the Transfer Scheme under sub-section (2). 
 (6) A transfer scheme may, - 
(a) provide for the formation of subsidiaries, joint venture companies or other schemes of 
division, amalgamation, merger, reconstruction or arrangements. 
(b) define the property, interest in property, rights and liabilities to be allocated, - 
(i) by specifying or describing the property, rights and liabilities in question; 
(ii) by referring to all the property, interest in property, rights and liabilities comprised 
in a specified part of the transferor’s undertaking: or 
(iii) partly in one way and partly in the other; 
(c) provide that any rights or liabilities specified or described in the scheme shall be 
enforceable by or against the transferor or the transferee; 
(d) impose on the licensee an obligation to enter into such written agreements with or 
execute such other instruments in favour of, any other subsequent licensee as may be 
specified in the scheme; 
(e) make such supplement, incidental and consequential provisions as the transferor licensee 
considers appropriate incl uding provision specifying the order in which any transfer or 
transaction is to be regarded as taking effect; and 
(f) provide that the transfer shall be provisional for a specified period. 
 (7) All debts and obligations incurred, all contracts entered into and all matters and things 
engaged to be done by the Board, with the Board or for the Board, or the Corporation or 
generating company or companies, or distribution company or companies, before a transfer 
scheme becomes effective shall, to the extent speci fied in the relevant transfer scheme, be 
deemed to have been incurred, entered into or done by the Board, with the Board or for the State 
Government or the transferee and all suits or other legal proceedings instituted by or against the 
Board or transferor , as the case may be, may be continued or instituted by or against the State 
Government or concerned transferee, as the case may be. 
 (8) In the event that a licensee is required to vest any part of its undertaking in another 
licensee pursuant to sub -section (5), the Commission shall amend the transferor’s licence in 
accordance with section 22 or revoke its licence in accordance with section 21. 
 (9) The Board shall cease to be charged with and shall not perform, the functions and 
duties specified in sub-section (3) with regard to transfers made on and after the effective date. 
 (10) The exercise by a licensee of any of the rights of the Board and powers may be made 
on such conditions as may be specified in the transfer scheme including a condition that they  
shall be exercised by the licensee only with the approval of the Commission. 
 15. Provisions relating to Personnel.  - (1) The State Government may by a transfer 
scheme provide for the transfer of the personnel to Corporation, generating company or 
companies, distribution or other companies, hereinafter referred to as the transferee company or 
companies, on the vesting of properties rights and liabilities in such transferee companies as 
provided under section 14. 
 (2) Upon such transfer under a transfer scheme, the personnel shall hold officer or service 
under the transferee company on such terms and conditions as may be determined in accordance 
with the transfer scheme: 
Provided that such terms and conditions on the transfer shall not in any way be less fav ourable 
than those which would have been applicable to them if there had been no such vesting: 
Provided further that the transfer can be provisional for a specified period. 
 Explanation. - For the purposes of this section as well as the transfer scheme the  term 
"personnel" shall mean all persons who on the effective date are the employees of the Board. 
 16. Payment of compensation or damages on transfer.  - Notwithstanding anything 
contained in the Industrial Disputes Act, 1947 (Central Act No. 14 of 1947) o r any other law for 
the time being in force and except for the provisions made in this Act, the transfer of the 
employment of the personnel referred to in sub -section (1) of section 15 shall not entitle such 
personnel to any compensation or damages under t his Act, or any other Central or State law or 
under the general law, save as provided in the transfer scheme. 
PART-VI 
LICENSING OF TRANSMISSION, DISTRIBUTION AND SUPPLY 
 17. Licensing.  - (1) No person, other than those authorised to do so by licence  or by 
virtue of exemption under this Act or authorised to or exempted by any other authority under the 
Electricity (Supply) Act, 1948 (Central Act No. 54 of 1948), shall engage in the State in the 
business of,- 
(a) transmitting electricity; or 
(b) distributing and supplying electricity. 
 (2) Where any question arises as to whether any person is engaged or about to engage in 
the business of transmitting, distributing or supplying electricity as specified in sub -section (1), 
the matter shall be referred to the Commission and the decision of the Commission shall be final. 
 (3) The Commission shall order any unlicensed person to discontinue transmission, 
distribution or supply, as the case may be, of electricity. 
 (4) Notwithstanding anything contained in any other provisions of this Act and until the 
establishment of the Commission in terms of section 3 the State Government shall have power to 
grant provisional licenses under this section having a duration not exceeding twelve months to 
any person or persons t o engage in the State in the business of transmission, distribution and 
supply of electricity on such terms and conditions as the State Government may determine 
consistent with the provisions of this Act, subject to the following conditions, namely: - 
(a) upon the establishment of the Commission, each of the provisional licenses granted by 
the State Government shall be placed before the commission and shall be deemed to 
constitute an application for grant of a licence by the Commission under the provisions of 
this Act, and 
(b) each provisional licence granted under this section shall cease to be valid from the date 
notified by the Commission. 
 (5) The State Government shall be empowered to confer on the provisional licensees to 
whom licenses have been grante d under subsection (4) such powers, rights and authorisation as 
the Commission is entitled to grant to the licensees under this Act. 
 (6) The Commission shall exercise all powers and functions under the Act in regard to 
any provisional licence granted unde r sub- section (4) in the same manner as in the case of a 
licence under Section 18 of this Act. 
 18. Grant of licenses by the Commission.  - (1) The Commission may, on application 
made in the prescribed form and on payment of the prescribed fee, grant a lic ence to any person 
to, - 
(a) transmit electricity in a specified areas of transmission: or 
(b) distribute and supply electricity in a specified area of supply including bulk supply to 
licensees or any person. 
 (2) In respect of every such licence and the g rant thereof the following provisions shall 
have effect, namely: - 
(a) any person applying for a licence under this Part shall publish a notice of his application 
in the prescribed manner and with the prescribed particulars, and the licence shall not be 
granted, - 
(i) until all objections received by the Commission with reference thereto have been 
considered by it: 
Provided that no objection shall be so considered unless it is received before the 
expiration of one month from the date of the first publication of such notice as 
aforesaid: and 
(ii) until, in the case of an application for a licence for an area including the whole or 
any part of any cantonment, aerodrome, fortress, arsenal, or camp or of any building 
or place in the occupation of the C entral Government for defense purposes, the 
Commission has ascertained that there is no objection to the grant of the licence on 
the part of the Central Government: 
(b) where an objection is received from any local authority concerned, the Commission shall , 
if in its opinion the objection is insufficient, record in writing and communicate to such 
local authority its reasons for such opinion: 
(c) no application for a licence under this Part shall be made by any local authority except in 
pursuance of a resolu tion passed at a meeting of such authority held after notice of the 
same and of the purpose thereof has been given in the manner in which notices of 
meetings of such local authority are usually given: 
(d) a licence under this Part, - 
(i) may prescribe such  terms as to the limits within which, and the conditions under 
which, the supply of energy is to be compulsory or permissible, and generally as to 
such matters as the Commission may think fit: and 
(ii) save in cases in which under section 10, clause (b) of  Indian Electricity Act, 1910 
(Central Act No. 9 of 1910), the provisions of section 5 and 6, or either of them, 
have been declared not to apply, every such licence shall declare whether any 
generating station to be used in connection with the undertaking shall or shall not 
form part of the undertaking for the purpose of purchase under section 5 or 6 of 
Indian Electricity Act, 1910 (Central Act No. 9 of 1910); 
(e) the grant of a licence under this part for any purpose shall not in any way hinder or 
restrict the grant of a licence to another person within the same area for a like purpose; 
(f) the provisions contained in the Schedule to the Indian Electricity Act. 1910 (Central Act 
No. 9 of 1910) shall be deemed to be incorporated with, and to form part of, ev ery licence 
granted under this Part, save in so far as they are expressly added to, varied or excepted by 
the licence, and shall, subject to any such additions, variations or exceptions which the 
State Government is hereby empowered to make, apply to the u ndertaking authorised by 
the licence: 
Provided that where a licence is granted in accordance with the provisions of Clause IX of the 
Schedule for the supply of energy to other licensees for distribution by them, then so for as such 
licence relates to such supply, the provisions of clause IV, V, VI, VII, VIII and XII of the 
Schedule shall not be deemed to be incorporated with the licence. 
 19. Exemptions from the requirement to have a licence. - (1) The Commission may by 
order grant exemption from the requir ement to have a supply licence, but subject to compliance 
with such conditions if any, as may be specified in the order: 
Provided that the Commission shall not, by such order, grant any exemption except with the 
consent,- 
(i) of the local authority, if any, constituted in the area where energy is to be supplied: 
(ii) in any case where energy is to be supplied in any area forming part of any cantonment, 
aerodrome, fortress, arsenal, or camp or any building or place in the occupation of the 
Central Government for defense purposes, of the Central Government: 
(iii) in any area falling within the area of supply of licensee, of that licensee: 
Provided further that, except in a case falling under clause (ii), no such consent shall be 
necessary if the Commission is satisfied that such consent has been unreasonable withheld. 
 (2) An exception may be granted, - 
(a) to persons of a particular category; or 
(b) to a particular person, or 
(c) for a particular period: 
and an exception to persons of a particular category or to a particular person shall be published in 
such manner as the Commission considers appropriate for bringing it to the attention of that 
person or persons of that category and of the public in general. 
 (3) The exemption granted may be revoked by the Commission at any time for reasons to 
be recorded in writing. 
 (4) An exemption, unless previously revoked, shall continue in force for such period as 
may be specified in or determined by or under the exception. 
 (5) Every exemption granted by the Commission under this section shall be published in 
the Official Gazette. 
 20. General duties and powers of the licenses.  - (1) It shall be the duty of the holder of 
a supply licence or a transmission licence in res pect of a particular area to develop, maintain and 
provide to the consumers or the licensees as the case may be or any other person an efficient, co -
ordinated and economical system of electricity supply, distribution or transmission in the area of 
transmission or area of supply, as the case may be. 
 (2) Each licensee and generating company in discharge of its duties shall comply with the 
provisions of the regulations framed from time to time governing the terms and conditions for 
the operation and maintenance of power system and electric supply lines. 
 (3) Subject to sub -section (4), sections 12 to 19 of the Indian Electricity Act, 1910 
(Central Act No. 9 of 1910) (which relate to the carrying out of works) shall have effect in 
relation to a person authorised by a licence under this Act to transmit or supply electricity as if he 
is a licensee under that Act. 
 (4) Where any of the sections mentioned in sub -section (3) is applied to a licence holder 
by his licence, it shall have effect subject to such restrictions, exceptions and conditions as may 
be included in the licence. 
 21. Revocation of licences.  - (1) The Commission may, if in its opinion the public 
interest so requires, revoke a licence in any of the following cases, namely: - , 
(a) where the l icensee, in the opinion of the Commission makes willful and unreasonably 
prolonged default in doing anything required of him by or under this Act or under any 
regulation or orders of the Commission: 
(b) where the licensee breaks any of the terms or conditi ons of his licence the breach of 
which is expressly declared by such licence to render it liable to revocation; 
(c) where the licensee fails, within the period fixed in this behalf by his licence or any longer 
period which the Commission may substitute therefor by order, - 
(i) to show, to the satisfaction of the Commission, that he is in a position fully and 
efficiently to discharge the duties and obligations imposed on him by his licence, or 
(ii) to make the deposit or furnish the security required by his licence: 
(d) where in the opinion of the Commission the financial position of the licensee is such that 
he is unable to fully and efficiently discharge the duties and obligations imposed on him 
by his licence; 
(e) where a licensee, in the opinion of the Co mmission, has made default in complying with 
any direction issued under Section 22-A of Indian Electricity Act, 1910 (Central Act No. 9 
of 1910). 
 (2) Where in its opinion the public interest so permits, the Commission may, on the 
application or with the consent of the licensee, and after consulting the State Electricity Board or 
Corporation as the case may be, and the Central Government where that Government is 
interested, and if the licensee is not a local authority, after consulting also the local author ity, if 
any concerned, revoke a licence as to the whole or any part of the area of supply upon such terms 
and conditions as it thinks fit. 
 (3) No licence shall be revoked under sub-section (1) unless the Commission has given to 
the licensee not less than three months notice, in writing, stating the grounds on which it is 
proposed to revoke the licence and has considered any cause shown by the licensee within the 
period of that notice, against the proposed revocation. 
 (4) Where the Commission might under sub-section (1) revoke a licence it may instead of 
revoking the licence permit it to remain in force subject to such further terms and conditions as it 
thinks fit to impose and any further terms or conditions so imposed shall be binding upon, and be 
observed by the licensee, and shall be of like force and effect as if they were contained in the 
licence. 
 22. Amendment of licences. - (1) Where in its opinion the public interest so permits, the 
Commission, on the application of the licensee or otherwise and, a fter consulting the local 
authority, if any, and if the licensee is a local authority, on the application of the local authority 
concerned, may make such alterations and amendments in the terms and conditions of a license, 
including the provisions specified in clause (f) of sub- section (2) of section 18, as it thinks fit: 
Provided that no such alterations or amendments shall be made except with the consent of the 
licensee unless such consent has, in the opinion of the Commission, been unreasonably withheld. 
 (2) Where the licensee has made an application, under sub -section (1) seeking any 
alterations or amendments in his licence, the following, provisions shall have effect, namely:- 
(a) the licensee shall publish a notice of the application in the prescribed manner and with the 
prescribed particulars: 
(b) the Commission shall not make any alterations or amendments until all objections 
received by it with reference to the application within o ne month from the date of the first 
publication of the notice have been considered: 
(c) in the case of an application seeking alterations or amendments in the area of supply 
comprising the whole or any part of any cantonment, aerodrome, fortress, arsenal o r camp 
or of any building or place in the occupation of the Central Government for defense 
purposes, the Commission shall not make any alterations or amendments except with the 
consent of the Central Government. 
 (3) Before making any alterations or amendm ents in a license otherwise than on the 
application of the licensee, the Commission shall publish the proposed alterations or 
amendments in the prescribed manner and with the prescribed particulars and consider all 
objections received by it with reference to the proposed alterations or amendmen

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