“Regulation 4.4, even on a plain glance, permits arbitrary restriction by the licensee regarding drawal, without providing any guideline whatsoever as to the reasons or the period for imposition of such restriction”
Recently, the Calcutta High Court began scrutinizing a key provision in the WBERC Tariff Regulations, 2011, which was challenged by an industrial electricity consumer for allowing Damodar Valley Corporation (DVC) to unilaterally restrict power supply and impose punitive charges. The case raised pivotal questions about regulatory overreach, consumer rights, and the boundaries of delegated authority, issues that strike at the core of electricity governance and constitutional safeguards.
Brief facts:
The case arose against Regulation 4.4 of the WBERC (Terms and Conditions of Tariff) Regulations, 2011. They contested the regulation permitting DVC to impose restricted drawal limits and charge double rates for overdrawal, arguing it involved impermissible sub-delegation, lacked guidelines, and violated natural justice. A prior West Bengal Electricity Regulatory Commission (WBERC) order, had deemed such restrictions illegal, leading to earlier writs where the court ordered DVC to refund charges. The present writ sought constitutional scrutiny of both the regulation’s vires and the imposed charges.
Contentions of the Petitioner:
The petitioners challenged Regulation 4.4 of the WBERC (Terms and Conditions of Tariff) Regulations, 2011, on several legal grounds. They argued that it involved an impermissible sub-delegation of power to DVC, which was not authorized under Sections 181 and 61 of the Electricity Act, 2003. They further contended that the regulation granted DVC unchecked discretion to impose drawal limits, rendering it arbitrary and unconstitutional, as established in Ram Krishna Dalmia, S.M. Nawab Ariff, and Krishna Mohan (P) Ltd. Additionally, they claimed the overdrawal charges were penal in nature and imposed without giving consumers a chance to be heard, thus violating principles of natural justice. Finally, they asserted that WBERC lacked the jurisdiction to regulate tariffs for inter-state entities like DVC, which falls under the purview of the Central Electricity Regulatory Commission (CERC).
Contentions of the Respondent:
The respondents, WBERC and DVC, defended Regulation 4.4 as valid under Sections 61 and 181 of the Electricity Act, 2003. WBERC argued it was a preventive measure to maintain grid stability and ensure efficient electricity use, not punitive but a proportional deterrent to overdrawal, serving the public interest. DVC added that consumers had agreed to supply terms subject to availability and were given prior notice (10–24 hours) of restrictions due to maintenance or technical issues. They maintained the charges were regulatory, not penal, and that the policy could not be invalidated for lacking a precise definition of “restricted drawal.”
Observations of the Court:
The Court carefully examined the constitutional and legal validity of Regulation 4.4, acknowledging the WBERC’s rule-making power under Sections 61 and 181 of the Electricity Act, 2003. However, it found Regulation 4.4 to be inherently flawed and unsustainable in law.
Justice Sabyasachi Bhattacharyya noted that “Regulation 4.4, even on a plain glance, permits arbitrary restriction by the licensee regarding drawal, without providing any guideline whatsoever as to the reasons or the period for imposition of such restriction. Nothing is enumerated in the Regulation or elsewhere in the WBERC Regulations regarding the grounds and situations in which such a restriction can be imposed.”
The Court held that in the absence of any guiding principles, the provision conferred excessive and unchecked discretion on the licensee, rendering it violative of Article 14 of the Constitution and contrary to the principles of natural justice.
It further observed that this lack of clarity enabled whimsical action by the licensee, undermining the contractual obligation to maintain the agreed contract load. Additionally, the provision amounted to an impermissible sub-delegation of tariff-setting powers, effectively allowing the licensee, DVC in this case, to impose its own financial penalties, including doubling of charges, without regulatory oversight. Citing Sahni Silk Mills (P) Ltd., the Court declared such delegation unconstitutional.
The WBERC’s defense that the provision aimed to protect grid stability was rejected, with the Court emphasizing that Regulation 4.4 did not regulate excess drawal itself, but rather allowed the licensee to unilaterally set arbitrary limits and impose penalties. This, the Court said, amounted to conferring unbridled power without safeguards.
The Court also dismissed the justification of proportionality, holding that the blanket doubling of charges lacked any rational nexus with actual grid harm or quantifiable loss.
Finally, the Court underscored that such restrictions infringed upon consumers’ rights under Article 19(1)(g), especially where the regulation allowed the licensee to supply less than the contracted demand without incurring any liability. It referred to the WBERC’s own order dated December 11, 2020, which had declared similar restrictions by DVC illegal, reaffirming that the licensee was contractually bound to ensure uninterrupted supply, even if it meant procuring energy from other available grid sources.
The decision of the Court:
The High Court struck down Regulation 4.4 of the WBERC Tariff Regulations, 2011 as ultra vires the Constitution and the Electricity Act, 2003, for being arbitrary, violating natural justice, and involving impermissible sub-delegation. The Court issued the following directions:
1. Even though the ruling will apply prospectively, past billing periods will remain unaffected.
2. The existing drawable restrictions under the regulation will be rescinded, and the petitioner’s billing dispute will be decided by the Grievance Redressal Officer.
3. Regulation 4.4 will be deemed to be valid only for past periods, and the WBERC may frame fresh regulations, ensuring that there is no reduction below contracted demand, adequate prior notice to consumers, charges shall be proportionate to grid damage, and the opportunity of hearing must be provided before imposing charges.
Case Title: Metsil Exports Private Limited and Anr. Vs. West Bengal Electricity Regulatory Commission and Ors.
Case No.: W.P.A. No.4669 of 2023
Coram: Justice Sabyasachi Bhattacharyya
Counsel for Appellant: Advocates Surajit Nath Mitra, Tanoy Chakraborty, Siddharth Shroff
Counsel for Respondent: Sr. Adv. Pratik Dhar, Advocates Ritwik Pattanayak ,Abhrotosh Majumdar, Prasun Mukherjee, Deepak Agarwal
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