S. 108 Electricity Act | State Electricity Regulatory Commission Not Bound By Directions Of State/Central Government : Supreme Court

The Supreme Court observed that the State Electricity Regulatory Commissions are not bound by the Central/State Government's directions issued under Section 108 of the Electricity Act, 2003 (“Act”).

“We are in agreement with the judgment of APTEL insofar as it holds that the directive which was issued by the State government under Section 108 could not have displaced the adjudicatory function which was entrusted to KSERC (Kerala State Electricity Regulatory Commission). The State government while issuing a policy directive in the exercise of its power under Section 108 cannot impinge on the adjudicatory discretion which is vested in an authority under the Act.”, the bench comprising Chief Justice DY Chandrachud and Justices JB Pardiwala and Manoj Misra said.

Giving literal interpretation to Section 108 of the Act, the Court observed as follows:

“That the state regulatory commissions are not 'bound' by the directions of the state government, or the Central Government is also evident from the text of Section 108. The provision reads: “In the discharge of its functions, the State Commission shall be guided by such directions in matters of policy …”. This indicates that the state commission shall only be 'guided' by the directions issued by the state government and is not automatically bound by them.”

In essence, the provision, in no manner, seeks to control the exercise of quasi-judicial power by the state commissions based on directions issued by the state government.

Background

It was the case where the Kerala Government in the exercise of the powers conferred under Section 108 of the Act directed the Kerala State Electricity Regulatory Commission (KSERC) to reconsider the application filed by the Kerala State Electricity Board Limited (KSEBL) for the approval of the Power Supply Agreements (PSAs). The State Government opined that the non-approval of the PSAs would compel the appellant to purchase power at higher rates, resulting in immense financial implications and a power crisis in the state. The liability of higher rates of power procurement would, it was opined, be passed on to the consumers, increasing the cost of power in the state.

Subsequently, KSERC allowed the KSEBLs review petition and approved the four PSAs given the public interest highlighted in the policy directions issued under Section 108 by the State government. The KSERC held that it was bound by the directions of the state government.

The KSERC decision was interfered with by the Appellate Tribunal for Electricity (“APTEL”) holding that the KSERC was not bound by the directives of the state government. The state government could not have issued a directive to compel the KSERC to exercise its quasi-judicial powers in a particular manner. Such powers are to be exercised independently by the KSERC in accordance with the Act.

Against the APTEL's decision, the KSEBL preferred an appeal before the Supreme Court.

The Court affirmed the APTEL decision noting that the state regulatory commissions are not 'bound' by the directions of the state government, or the Central Government is also evident from the text of Section 108.

The appeal was disposed of with the following direction:

“Consequently, while we do not find fault with the impugned order of APTEL insofar as it set aside the order passed by KSERC, at the same time, the appropriate course of action would be to allow for restoration of the original appeal filed against the order of KSERC dated 10 May 2023. This appeal, being Appeal No 518 of 2023, shall stand restored to the file of APTEL.”

“We, however, clarify that issues which are covered by the impugned order of APTEL shall not be re-agitated. The appeal which has been restored to the file of APTEL shall, in other words, be considered on any other grounds that were raised before APTEL prior to the withdrawal of the appeal.”

Appearances:

Mr V Giri, senior counsel for the appellant

Mr Aryama Sundaram, senior counsel for the first respondent (Jhabua Power Limited)

Dr Abhishek Manu Singhvi, senior counsel for the second respondent (Jindal India Power Thermal Limited)

Case Title: Kerala State Electricity Board Ltd Versus Jhabua Power Limited and Others, Civil Appeal Nos 10046-10047 of 2024

Citation : 2024 LiveLaw (SC) 799

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