Case: Hindustan Zinc Ltd Vs. Rajasthan Electricity Regulatory Commission

Extraordinary on 22.1.2011. In view of the above, it is a matter of fact that the impugned Regulation does not have the effect of curtailing the power generation of the Captive Power Plant as the appellants have the right to supply surplus power to the grid. 47. The said paras from the Electricity Policy referred to supra are framed for giving effect to the objects and provisions of the Act and the same cannot be interpreted as restricting the ambit of specific provision contained in Section 86(1)(e) of the Act in any manner. The provision in the Electricity Policy cannot be read and interpreted as a statutory provision as held by this Court in the case of Secretary, Ministry of Chemicals and Fertilizer, Govt. of India v. Cipla Ltd. & Ors., (2003) 7 SCC 1. The relevant paragraph of the said case is extracted hereunder:- "4.1 It is axiomatic that the contents of a policy document cannot be read and interpreted as statutory provisions. Too much of legalism cannot be imported in understanding the scope and meaning of the clauses contained in policy formulations. At the same time, the Central Government which combines the dual role of policy-maker and the delegate of legislative power, cannot at its sweet will and pleasure give a go-bye to the policy guidelines evolved by itself in the matter of selection of drugs for price control. The Government itself stressed the need to evolve and adopt transparent criteria to be applied across the board so as to minimise the scope for subjective approach and therefore came forward with specific criteria. It is nobodys case that for any good reasons, the policy or norms have been changed or became impracticable of compliance. That being the case, the Government exercising its delegated legislative power should make a real and earnest attempt to apply the criteria laid down by itself. The delegated legislation that follows the policy formulation should be broadly and substantially in conformity with that policy; otherwise it would be vulnerable to attack on the ground of arbitrariness resulting in violation of Article 14." Therefore, the Regulations do not relate to determination of tariff, as such reliance placed by the appellants learned senior counsel upon Section 62 of the Act, which deals with the determination of tariff is mis-conceived. 48. Further, the submission of the appellants that the impugned Regulations do not fall under Clause (a) to Clause (zp) of Section 181(2) of the Act of 2003, which give power to the State Commission to frame Regulations is devoid of any merit. The said contention has been rightly rebutted by the learned counsel for the RERC that the said submission loses sight of Section 181 (1) of the Act of 2003 which provides that the State Commission may, by notification, make Regulations consistent with the Act and the Rules generally to carry out the provisions of the Act. The specific power under the various clauses of Section 181(2) of the Act of 2003 is without prejudice to the general and wider power contained in Section 181(1) of the Act of 2003. The 2007/2010 Regulations have been framed by the RERC to effectuate the provisions of Section 86(1)(e) read with Section 86(4) of the Act of 2003 and are covered by Section 181(1) of the Act. In support of the same, reliance was placed on the decision of this Court on the case of PTC India Limited (supra)that the Regulations can be made under the Act as long as two conditions are satisfied, namely, that they are consistent with the Act of 2003 and are made for carrying out for provisions of the Act.49. The purchase of nominal quantum of energy from renewable resources cannot adversely affect the cost effectiveness of the Captive Power Plant. Moreover, the object being reduction of pollution by promoting renewable source of energy, larger public interest must prevail over the interest of the industry herein which will in any case pass on the extra burden, if any, will be as part of the cost of its products and therefore, the same does not burden the appellants. The reliance placed upon the aforesaid paras of the policies is mis-conceived as the same pertains to the Captive Power Plants to be set up by group of consumers namely, small and medium industries and other consumers who are not in a position to set up a Captive Power Plant of optimal in a cost effective manner. The aforesaid para in the context of Section 2 (8) of the Act has no application to the case of the appellants which are large industries having individual Captive Power Plants. The provision of RE surcharge in the Statute is only meant for ensuring compliance with the requirement of consumption of the specified quantum of energy from renewable sources and the same is to be used in case of shortfall in compliance of RE obligation. The said provision does not amount to imposition of a pecuniary liability.50. Article 51A(g) of the Constitution of India cast a fundamental duty on the citizen to protect and improve the natural environment. Considering the global warming, mandate of Articles 21 and 51A(g) of the Constitution, provisions for the Act of 2003, the National Electricity Policy of 2005 and the Tariff Policy of 2006 is in the larger public interest, Regulations have been framed by RERC imposing obligation upon captive power plants and open access consumers to purchase electricity from renewable sources. The RE obligation imposed upon captive power plants and open consumers through impugned Regulation cannot in any manner be said to be restrictive or violative of the fundamental rights conferred on the appellants under Articles 14 and 19(1)(g) of the Constitution of India. Upon consideration of the rival submissions by the well-reasoned order, the High Court has rightly upheld the validity of the impugned Regulation and we do not find any reason to interfere with the impugned judgment. All the appeals are dismissed as the same are devoid of merit. 51. I.A.

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

Explanation:
1[ds]26. The above said legal contentions urged by the learned senior counsel on behalf of the appellants are wholly untenable in law for the reason that the Parliament with an avowed object to encourage private sectors participation in power generation, transmission and distribution of electricity to the consumers and in order to distancing itself, the regulatory responsibilities from the Government has been conferred with the Regulatory Commissions in the country. The Electricity Act of 2003 being acomprehensive legislation in the matter of generation and the transmission and supply of energy to its consumers, the provisions of Section 82 of the Act of 2003 enjoin upon every State Government to constitute a Regulatory Commission in their respective State to regulate the implementation of the provisions of the Act of 2003 by framing suitable Regulations and Rules with reference to the matters/entries enumerated in Section 181 of the Act of 2003 and accordingly the State of Rajasthan has constituted the RERC. The functions of the Regulatory Commission have been mentioned under Section 86 of the Act of 2003.Further, the submission of the appellants that the impugned Regulations do not fall under Clause (a) to Clause (zp) of Section 181(2) of the Act of 2003, which give power to the State Commission to frame Regulations is devoid of any merit. The said contention has been rightly rebutted by the learned counsel for the RERC that the said submission loses sight of Section 181 (1) of the Act of 2003 which provides that the State Commission may, by notification, make Regulations consistent with the Act and the Rules generally to carry out the provisions of the Act. The specific power under the various clauses of Section 181(2) of the Act of 2003 is without prejudice to the general and wider power contained in Section 181(1) of the Act of 2003. The 2007/2010 Regulations have been framed by the RERC to effectuate the provisions of Section 86(1)(e) read with Section 86(4) of the Act of 2003 and are covered by Section 181(1) of the Act. In support of the same, reliance was placed on the decision of this Court on the case of PTC India Limited (supra)that the Regulations can be made under the Act as long as two conditions are satisfied, namely, that they are consistent with the Act of 2003 and are made for carrying out for provisions of the Act.49. The purchase of nominal quantum of energy from renewable resources cannot adversely affect the cost effectiveness of the Captive Power Plant. Moreover, the object being reduction of pollution by promoting renewable source of energy, larger public interest must prevail over the interest of the industry herein which will in any case pass on the extra burden, if any, will be as part of the cost of its products and therefore, the same does not burden the appellants. The reliance placed upon the aforesaid paras of the policies isas the same pertains to the Captive Power Plants to be set up by group of consumers namely, small and medium industries and other consumers who are not in a position to set up a Captive Power Plant of optimal in a cost effective manner. The aforesaid para in the context of Section 2 (8) of the Act has no application to the case of the appellants which are large industries having individual Captive Power Plants. The provision of RE surcharge in the Statute is only meant for ensuring compliance with the requirement of consumption of the specified quantum of energy from renewable sources and the same is to be used in case of shortfall in compliance of RE obligation. The said provision does not amount to imposition of a pecuniary liability.50. Article51A(g) of the Constitution ofIndia cast a fundamental duty on the citizen to protect and improve the natural environment. Considering the global warming, mandate of Articles 21 and 51A(g) of the Constitution, provisions for the Act of 2003, the National Electricity Policy of 2005 and the Tariff Policy of 2006 is in the larger public interest, Regulations have been framed by RERC imposing obligation upon captive power plants and open access consumers to purchase electricity from renewable sources. The RE obligation imposed upon captive power plants and open consumers through impugned Regulation cannot in any manner be said to be restrictive or violative of the fundamental rights conferred on the appellants under Articles 14 and 19(1)(g) of the Constitution of India. Upon consideration of the rival submissions by theorder, the High Court has rightly upheld the validity of the impugned Regulation and we do not find any reason to interfere with the impugnedreference to the aforesaid rival legal contentions we are required to answer the same, considering whether the impugned Regulations imposing RE Obligation upon Captive Power Plants framed by the RERC in exercise of power under Section 86(1)(e) of the Act of 2003, which provides for promotion,cogeneration of electricity fromrenewal source of energy are ultra vires the provisions of the Act or repugnant to Article 14 and 19(1)(g) of the Constitution. Para 4.2.2 of National Action Plan on Climate Change and Preamble of the Act of 2003, emphasise upon the promotion of efficient and environmentally benign policy of the State to encourage generation and consumption of green energy tosubserve the mandate of Article 21 read with Article51A(g) of the Constitution ofIndia. Further, it is consistent with the international obligations of India ratified under Kyoto Protocol on 26.08.2002.The above contention of the learned senior counsel on behalf of some of the appellants has been rightly rebutted by the learned senior counsel on behalf of the RERC by contending that in the case of J.K. Industries Ltd. & Anr. (supra), it was held that where the validity of subordinate legislation is challenged, question to be asked is whether power given to the rule making authority has been exercised for the purpose for which it was given. The Court has to examine the nature, object and scheme of the legislation as a whole to consider what is the area over which powers are conferred upon the rule making authority. However, the Court has to start with the presumption that the Rule isand has to be read down only to save it from being declaredin case the Court finds that the above presumptions stand rebutted and the impugned regulations are relatable to the specific provision contained in Section 86(1)(e) of the Act.