Case: Brihanmumbai Electric Supply &amp; Transport Undertaking Vs. Maharashtra Electricity Regulatory Commission (MERC) &amp; Others

gave due recognition to objective behind the Act viz. to promote competition and give the consumer open to choose the distribution licensee from which it seeks electricity as is clear from the following paragraphs: 102. On the other hand, in our view, the provisions of both the 1903 and 1910 Electricity Acts encourage competition in the electricity trade and the same is also incorporated in the licences issued in favour of the distribution licensees, which also include licensees generating power for supply. The element of competition has been included in the Preamble to the 2003 Act and permeates the same in its various provisions.103. As submitted by Mr Chagla, the Act is meant to be consumer-friendly and one of the objectives it sets out to achieve is to give the consumer an option to choose the distribution licensee from whom it wishes to receive supply of electrical energy. The intervention of MIDC, Marol Industries Association and the appeals filed by it, has obviously been made in that context. In MSR Leathers vs. S.Palaniappan & Anr. (2013) 1 SCC 177 it was observed: “24. That brings us to the question whether an offence punishable under Section 138 can be committed only once as held by this Court in Sadanandan case1. The holder of a cheque as seen earlier can present it before a bank any number of times within the period of six months or during the period of its validity, whichever is earlier. This right of the holder to present the cheque for encashment carries with it a corresponding obligation on the part of the drawer to ensure that the cheque drawn by him is honoured by the bank who stands in the capacity of an agent of the drawer vis-à-vis the holder of the cheque. If the holder of the cheque has a right, as indeed is in the unanimous opinion expressed in the decisions on the subject, there is no reason why the corresponding obligation of the drawer should also not continue every time the cheque is presented for encashment if it satisfies the requirements stipulated in clause (a) of the proviso to Section 138. There is nothing in that proviso to even remotely suggest that clause (a) would have no application to a cheque presented for the second time if the same has already been dishonoured once. Indeed if the legislative intent was to restrict prosecution only to cases arising out of the first dishonour of a cheque nothing prevented it from stipulating so in clause (a) itself. In the absence of any such provision a dishonour whether based on a second or any successive presentation of a cheque for encashment would be a dishonour within the meaning of Section 138 and clause (a) of the proviso thereto. We have, therefore, no manner of doubt that so long as the cheque remains unpaid it is the continuing obligation of the drawer to make good the same by either arranging the funds in the account on which the cheque is drawn or liquidating the liability otherwise. It is true that a dishonour of the cheque can be made a basis for prosecution of the offender but once, but that is far from saying that the holder of the cheque does not have the discretion to choose out of several such defaults, one default, on which to launch such a prosecution. The omission or the failure of the holder to institute prosecution does not, therefore, give any immunity to the drawer so long as the cheque is dishonoured within its validity period and the conditions precedent for prosecution in terms of the proviso to Section 138 are satisfied.” While dealing with the issue No.2 above, we have already held that TPC and BEST are parallel distribution licensee in the South Bombay Area.27. The appellant has sought to rely on the expression “Save as otherwise provided in this Act” in Section 43(1) of the Act to read into Section 43(1) the exception for local authorities provided for in Section 42(3). The TPC has successfully refuted this submission by pointing out that these words in Section 43(1) are required to be read in the context in which they appear. The said words were inserted in the section by way of an amendment to the Act in 2007. An “Explanation” to Section 43(1) was also added by the same amendment providing that “application” by a consumer in Section 43(1) means an application complete in all respects along with documents showing payment of necessary charges and other compliances, meaning thereby that the obligation of the distribution licensee to supply within the specified time period will begin only after it has received such completed application by the applicant. Further, Sections 45 and 46 provide for the distribution licensee’s powers to recover charges for electricity supplied and the expenditure incurred in providing electric line or plant for giving supply. Section 47 provides that the distribution licensee may require any person demanding electricity supply from him to give a reasonable security, failing which the distribution licensee may refuse to give supply of electricity to such consumer. We are of the opinion that it is in this context that the expression “save as otherwise provided in this Act” in Section 43 (1) is to be construed. 28. Before we part with we would like to make it clear that there is a dispute between TPC and R-infra) (respondent No.9) which is the subject matter of Civil Appeal Nos. 4667-68/2013. R Infra is a distribution licensee in suburban Bombay where TPC is also a licensee. Both supply electricity to different consumers. Dispute is between them with regard to cross subsidiary surcharge (CSS) payable by consumer taking supply from TPC or R Infra network. We make it clear, by way of abundant caution, that we have not touched upon the said dispute and obviously so as even otherwise the subject matter in the instance case is totally different. Therefore Civil Appeal Nos.4667-68/2013 shall be decided on its own merits.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]RE: Jurisdiction of the Regulatory Commission.7. This contention was raised primarily on the ground that there was an alternative remedy provided to the consumer to raise his grievances before the Consumer Grievances Redressal Forum (CGRF) established under Section 42 (5) of the Act. Therefore, the consumer should have approached the said Forum instead of filing petition before the Regulatory Commission. This contention is totally misconceived and rightly rejected by the authorities below. As noted above, petition was filed by the consumer seeking direction against TPC to supply electricity to him. Thus, he approached the Regulatory Commission to enforce a distribution licensee obligation under the Act. As on that date, he was not the consumer of TPC but wanted to become its consumer. In so far as CGRF is concerned, which each distribution licensee is required to set up under Section 42 (5) of the Act, it deals with the grievances of the consumer.Thus, respondent No.3 not being a consumer could not have approached CGRF. Further, we find that in Maharashtra Electricity Regulatory v. Reliance Energy Ltd. (2007) 8 SCC 381 , this Court has held that the Regulatory Commission has the power to require a licensee to fulfill its obligations under the Act. Thus, we are of the opinion that the Regulatory Commission had the requisite jurisdiction to entertain the petition filed by the consumer. Presumably, for this reason, this contention was pressed half hearted before us and given up in the middle.RE: Whether TPC is deemed distributionThere are two facets of the submissions made by Mr. Naphade. In the first instance it is to be found that there is a stipulation of period in the manner stated in the first proviso. Second aspect is as to whether it is incumbent, in all cases, to apply for licence under the provisions of Sections 14 and 15 of the Act immediately after the expiry of one year from the date of commencement of the said Act. In so far as first aspect is concerned, the argument of the appellant loses sight of the fact that in the first proviso the period for which any person can be a deemed licensee is not only such period which is stipulated in the licence, clearance or approval granted to him under the repealed laws or such Act specified in the Schedule. It also provides that the provisions of repealed laws or such Act specified in the Schedule in respect of such a licence shall apply for a period of one year from the date of commencement of Act 2003 or such earlier period as may be specified at the request of the licensee by the Regulatory Commission. In the present case, the Regulatory Commission formulated MERC (Specific Conditions of License Applicable to TPCL) Regulation 2008 i.e. Specific Licence Conditions. These were formulated under Section 16 of the Act 2003 and it is in these conditions there is a specific stipulation regarding term of TPC licence up to 15.8.2014. We, therefore, are unable to accept the submissions of the appellant that the licence was valid for a period of one year only. It would be useful to refer to Section 16 of the Act under which aforesaid Specific Licence Conditions of TPC are formulated.Conditions of licence.- The Appropriate Commission may specify any general or specific conditions which shall apply either to a licensee or class of licensees and such conditions shall be deemed to be conditions of such licence:Provided that the Appropriate Commission shall, within one year from the appointed date, specify any general or specific conditions of licence applicable to the licensees referred to in the first, second, third, fourth and fifth provisos to section 14 after the expiry of one year from the commencement of thisto the aforesaid section very categorically enables the Regulatory Commission to specify general or specific condition of licence applicable to licensees referred to in the first to fifth proviso to Section 14 after expiry of one year after the commencement of that Act. Since as on the date of commencement of the Act, TPC became deemed licensee under the first proviso as its predecessors were holding the distribution licence under the repealed laws and thereafter specific conditions of licence are formulated by the Regulatory Commission under Section 16 mentioning the period of 15.8.2014, it becomes clear that the combined fact of that would be that YPC would be deemed licence till 15.8.2014. Tatalicense to supply electricity in the South Mumbai area is clearly established by virtue of theThe Erstwhile Licensee authorized Tata Power to supply electricity to all consumers in Mumbai, including the South Mumbai area;(b) When the new Act came into force, by virtue of the 1st Proviso to Section 14, Tata Power was deemed to be a licensee under thatis also clear from Section 172(b) of the Act. It is trite law that once the purpose of the deeming provision is ascertained, full effect must be given to the statutory fiction and the fiction is to be carried to its logical end.17. An argument was sought to be raised before us that Regulation 2008 laying down specific conditions for TPC are flouted as they were not made by the Regulatory Commission within the mandatory period of one year. However, no such argument was raised earlier and there is no challenge to the validity of the aforesaid Regulations which are made by the Regulatory Commission under its statutory powers and therefore are having statutory force. Once, we come to the conclusion that TPC can be treated as deemed distribution licensee under the first proviso to Section 14 of the Act 2003 and the area of the licence is the same which overlaps with the area covered by BEST, argument predicated on sixth proviso to Section 14 would not be available to the BEST.RE: AVAILABILLITY OF OPEN ACCESS TO TPC IN THE AREA COVERED BY BEST, WHICH IS A LOCAL AUTHORITYY OF TPC TO EXTEND ITS NETWORK IN BEST AREA OF SUPPLY WITHOUT ITS APPROVAL/CONSENT.After considering the rival contentions, we are of the opinion that the interpretation suggested by Mr. Mehta needs to prevail and therefore we do not find any fault with the view taken by the Appellate Tribunal. We have already reproduced above provisions of Section 42 (3) of the Act. As pointed out above, Section 42 of the Act deals with the duties of distribution licensee and open access. Sub-Section (1) thereof provides that it shall be the duty of a distribution licensee to develop and maintain an efficient co-ordinated and economical distribution system in his area of supply and to supply electricity in accordance with the provisions contained in the Act. Sub-section (2) casts an obligation upon the State Commission to introduce open access in phases and subject to such conditions, as may be specified, these conditions may include the cross subsidies and other operational constraints. It is thereafter in sub-section (3) of Section 42 provision is made for wheeling of electricity with respect to supply stating that duties of distribution licensee shall be of a common carrier providing non-discriminatory open access. Thus sub-section (3) provides for open access and casts a duty upon the distribution licensee in this behalf. Here, it excludes local authority, as distributor of electricity from such an obligation. However, when it comes to the duty of distribution licensee to supply the electricity under section 43, it mandates that same is to be given to the owner or occupier of any premises on his application within one month from the receipt of the said application. This duty under Section 43 imposed upon a distribution licensee does not distinguish between a local authority and other distribution licensee. It is also not a case of the appellant that in a particular area where a local authority is a distribution licensee, there cannot be any other distribution licensee at all.21. Thus, on a conjoint reading of Sections 42 and 43 of the Act along with the objectives and purpose for which Act 2003 is enacted, it becomes clear that there are two ways in which a consumer stated in a particular area can avail supply of electricity, as pointed out by the learned senior counsel for TPC and noted above. When an application is made by a consumer to a distribution licensee for supply of electricity, such a distribution licensee for supply of electricity, such a distribution licensee can request other distribution licensee in the area to provide it network to make available for wheeling electricity to such consumers and this open access is to be given as per the provisions of section 42 (3) of the Act. It is here only that local authority is exempted from such an obligation and may refuse to provide makes it network available. Second option is, under section 43 of the Act, to provide the electricity to the consumer by the distribution licensee from its own network. Therefore, if in a particular area local authority has its network and it does not permit wheeling of electricity from by making available its network, the other distribution licensee will have to provide the electricity from its own network. For this purpose, if it is not having its network, it will have to lay down its network if it requires in order to supply electricity to a consumer seeking supply.22. This interpretation of ours is in consonance of the objective and purpose of the Act. The aforesaid objective is further clarified by the Tariff Policy and the National Electricity Policy under section 3 of the Act which emphasized the need for efficiency and competition in the distribution business. On going through the statement of objects and reasons contained in the new Act, the interpretation, which we are leading to, gets further facilitated. Prior to this Act, there were three Acts, namely of 1910, 1948 and 1998 which were governing the laws relating to electricity and were operating in the field. Within few years, it was felt that the three Acts of 1910, 1948 and 1998 which were operating in the field needed to be brought in a new self contained comprehensive legislation with the policy of encouraging private sector participation in generation, transmission and distribution and also the objectives of distancing the regulatory responsibilities from the Government and giving it to the Regulatory Commissions. With these objectives in mind the Electricity Act, 2003 has been enacted. Significant addition is the provisions for newer concepts like power trading and open access. Various features of the 2003 Act which are outlined in the statement of objects and reasons to this Act. Notably, generation is being delicensed and captive generation is being freely permitted. The Act makes provision for private transmission licensees. It now provides open access in transmission from the outset. While open access in transmission implies freedom to the licensee to procure power from any source of his choice, open access in distribution, with which we are concerned here, means freedom to the consumer to get supply from any source of his choice. The provision of open access to consumers ensures right of the consumer to get supply from a person other than the distribution licensee of his area of supply by using the distribution system of such distribution licensee.23. The concept of open access under the Act enables competing generating companies and trading licensees, besides the area distribution licensees, to sell electricity to consumers when open access in distribution is introduced by the State Electricity Regulatory Commissions. Supply by way of open access is a completely different regime as is also clear from the fact that consumers who have been allowed open access under Section 42 may enter into an agreement with any person for supply of electricity on such terms and conditions, including tariff, as may be agreed upon by them under Section 49 of the Act unlike consumers who take supply under section 43 of the Act.24. Once we read the provisions in the aforesaid manner, it becomes clear that there is no exemption from universal service obligation to any distribution licensee under the Act, on account of the presence of aas a distribution licensee in the particular area of supply, which is also reinforced by Paragraph 5.4.7 of the National Electricity Policy which clearly states that the second licensee in the same area shall have the obligation to supply to all consumers in accordance with Section 43. In this context, it is relevant to reproduce the following observations in Chandu Khamaru v. Nayan Malik reported in (2011) 12 SCCprovisions in the Electricity Act, 2003 make it amply clear that a distribution licensee has a statutory duty to supply electricity to an owner of occupier of any premises located in the area of supply of the distribution licensee, if such owner or occupier of the premises applies for it, and correspondingly every owner or occupier of any premises has a statutory right to apply for and obtain such electric supply from the distribution licensee.It is, therefore, difficult to accept the extreme position taken by the appellant that if local authority is a distribution licensee in a particular area, there cannot be any other distribution licensee in that area without the permission of such a local authority. Not only such a contention would negate the effect of universal supply obligation under Section 43, it will also amount to providing an exception which is not there either in Section 43 or Section 14 of the Act namely to treat local authority in special category and by giving it the benefit even that benefit which is not specified under the Act.26. It is trite that Court should lean in favour of an interpretation which subserves the objective of the Act namely the purposive interpretation. In Tata Power Co.Ltd. v. Reliance Energy Ltd. & Ors. (2008) 10 SCC 321 , this Court gave due recognition to objective behind the Act viz. to promote competition and give the consumer open to choose the distribution licensee from which it seeks electricity as is clear from the followingOn the other hand, in our view, the provisions of both the 1903 and 1910 Electricity Acts encourage competition in the electricity trade and the same is also incorporated in the licences issued in favour of the distribution licensees, which also include licensees generating power for supply. The element of competition has been included in the Preamble to the 2003 Act and permeates the same in its various provisions.103. As submitted by Mr Chagla, the Act is meant to be consumer-friendly and one of the objectives it sets out to achieve is to give the consumer an option to choose the distribution licensee from whom it wishes to receive supply of electrical energy. The intervention of MIDC, Marol Industries Association and the appeals filed by it, has obviously been made in thatMSR Leathers vs. S.Palaniappan & Anr. (2013) 1 SCC 177  it wasThat brings us to the question whether an offence punishable under Section 138 can be committed only once as held by this Court in Sadanandan case1. The holder of a cheque as seen earlier can present it before a bank any number of times within the period of six months or during the period of its validity, whichever is earlier. This right of the holder to present the cheque for encashment carries with it a corresponding obligation on the part of the drawer to ensure that the cheque drawn by him is honoured by the bank who stands in the capacity of an agent of the drawer vis-à-vis the holder of the cheque. If the holder of the cheque has a right, as indeed is in the unanimous opinion expressed in the decisions on the subject, there is no reason why the corresponding obligation of the drawer should also not continue every time the cheque is presented for encashment if it satisfies the requirements stipulated in clause (a) of the proviso to Section 138. There is nothing in that proviso to even remotely suggest that clause (a) would have no application to a cheque presented for the second time if the same has already been dishonoured once. Indeed if the legislative intent was to restrict prosecution only to cases arising out of the first dishonour of a cheque nothing prevented it from stipulating so in clause (a) itself. In the absence of any such provision a dishonour whether based on a second or any successive presentation of a cheque for encashment would be a dishonour within the meaning of Section 138 and clause (a) of the proviso thereto. We have, therefore, no manner of doubt that so long as the cheque remains unpaid it is the continuing obligation of the drawer to make good the same by either arranging the funds in the account on which the cheque is drawn or liquidating the liability otherwise. It is true that a dishonour of the cheque can be made a basis for prosecution of the offender but once, but that is far from saying that the holder of the cheque does not have the discretion to choose out of several such defaults, one default, on which to launch such a prosecution. The omission or the failure of the holder to institute prosecution does not, therefore, give any immunity to the drawer so long as the cheque is dishonoured within its validity period and the conditions precedent for prosecution in terms of the proviso to Section 138 aredealing with the issue No.2 above, we have already held that TPC and BEST are parallel distribution licensee in the South Bombay Area.27. The appellant has sought to rely on the expressionas otherwise provided in thisin Section 43(1) of the Act to read into Section 43(1) the exception for local authorities provided for in Section 42(3). The TPC has successfully refuted this submission by pointing out that these words in Section 43(1) are required to be read in the context in which they appear. The said words were inserted in the section by way of an amendment to the Act in 2007. Anto Section 43(1) was also added by the same amendment providing thatby a consumer in Section 43(1) means an application complete in all respects along with documents showing payment of necessary charges and other compliances, meaning thereby that the obligation of the distribution licensee to supply within the specified time period will begin only after it has received such completed application by the applicant. Further, Sections 45 and 46 provide for the distributionpowers to recover charges for electricity supplied and the expenditure incurred in providing electric line or plant for giving supply. Section 47 provides that the distribution licensee may require any person demanding electricity supply from him to give a reasonable security, failing which the distribution licensee may refuse to give supply of electricity to such consumer. We are of the opinion that it is in this context that the expressions otherwise provided in thisin Section 43 (1) is to be