Global Energy Ltd. & Anr vs Central Electricity Regulatory Com

The Parliament enacted Electricity Act, 2003 (hereinafter referred to as, "the said Act"). In exercise of its jurisdiction conferred by Section 178 of the said Act, the Central Electricity Regulatory Commission (for short, "CERC") made Central Electricity Regulatory Commission (Procedure, Terms and Conditions for Grant of Trading License and other related matters), Regulation 2004 (for short, "the Regulation") Indisputably, in terms of the provisions of the said Act as also the Regulations, inter alia, license is required to be taken by a person who is desirous of dealing in inter-state trading, which in terms of Regulation 2(g) means "transfer of electricity from the territory of one State to the territory of another State by an electricity dealer".

5. Pursuant to or in furtherance of the said Act and the Regulations, the appellant No. 1 herein filed an application for grant of inter-State Trading License under Category `A' before CERC on 23.3.2004. CERC published a 3 notice as regards the said application filed by the appellant No. 1 for grant of inter-state Trading License in all editions of `Indian Express', Financial Express' and a vernacular daily `Jansatta'. Appellant No. 1 also filed an interlocutory application seeking permission to trade in the electricity pending final disposal of its petition for grant of inter-state trading license as it had been engaged in inter-state trading of electricity prior to the commencement of the said Act. By reason of an order dated 31.3.2004, the said application was allowed. Objections filed to the appellant No.1's application for grant of license pursuant to the aforementioned notice were also rejected by an order dated 30.6.2004.

7. After the publication of notices, objections were also received as regards appellant No. 1's trading in inter-state supply of electrical energy pursuant to the aforementioned interim order. The matter was taken to High Court and interim license granted to appellant No. 1 was extended by the High Court from time to time.

8. Appellants filed Writ Petitions before the High Court questioning the validity of the said Regulation. By reason of the impugned judgment the said Writ Petitions have been dismissed.

14. Sub-Regulation (4) of Regulation 2 applies to trading carried out bilaterally between the generating company, including captive generating plant, distribution licensee and the electricity trader on the one hand and the electricity trader and the distribution licensee on the other. Supply to consumers is, thus, not a general function.

It affects the creditworthiness of the applicant. It also affects the credit effectiveness, namely, (1) financial integrity of the applicant; (2) his competence; (3) his reputation and character; and (4) his efficiency and honesty.

LOCUS STANDI OF THE APPELLANT 30

LEGITIMATE EXPECTATION

While we say so, we are not oblivious of the contours of the judicial review of legislative acts. But, we have made all endeavours to keep ourselves confined within the well-known parameters.

However, when the provision inherently perpetuates injustice in the award of licenses and brings uncertainty and arbitrariness it would be best to stop the government in the tracks. Since the vires of the regulation is under challenge, we took the opportunity to consider the propriety and constitutionality of generic decision-making process encapsulated under the impugned legislation. Amongst others, in this context, we strike down the impugned clause.

44. For the reasons aforementioned, the impugned judgment cannot be sustained. It is set aside accordingly.

Clauses (b) and (f) of Regulation 6A are declared ultra vires the Constitution of India as also the Act. The Commission is directed to consider the matter from the same stage as if the provisions had not come 36 into force, as expeditiously as possible, and preferably within a period of three months from the date of receipt of a copy of this order.

45. The appeals are allowed with costs. Counsel fee assessed at Rs.50,000/-.

May 11, 2009