[Cites 47, Cited by 0]
Karnataka High Court
State Of Karnataka vs Altilium Energie Private Limited on 19 December, 2025
-1-
NC: 2025:KHC:54593-DB
WA No. 529 of 2024
C/W WA No. 526 of 2024
WA No. 530 of 2024
HC-KAR AND 2 OTHERS
R
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 19TH DAY OF DECEMBER, 2025
PRESENT
THE HON'BLE MRS. JUSTICE ANU SIVARAMAN
AND
THE HON'BLE MR. JUSTICE RAJESH RAI K
WRIT APPEAL NO. 529 OF 2024 (GM-KEB)
C/W
WRIT APPEAL NO. 526 OF 2024 (GM-KEB)
WRIT APPEAL NO. 530 OF 2024 (GM-KEB)
WRIT APPEAL NO. 557 OF 2024 (GM-KEB)
WRIT APPEAL NO. 623 OF 2024 (GM-KEB)
IN WA NO.529 OF 2024
BETWEEN
STATE LOAD DISPATCH CENTER,
OPERATED BY KARNATAKA POWER
Digitally signed TRANSMISSION CORPORATION LIMITED,
by PANKAJA S A BODY ESTABLISHED UNDER
Location: HIGH SECTION 31 OF THE ELECTRICITY ACT 2003
COURT OF
KARNATAKA SLDC, RACECOURSE CROSS ROAD
ANAND RAO CIRCLE, BENGALURU-560 009
[email protected]
(REPRESENTED BY ITS CHIEF ENGINEER)
...APPELLANT
(BY SRI. S.S. NAGANAND, SENIOR COUNSEL FOR
SMT. SUMANA NAGANAND, ADVOCATE)
AND
1. NSL SUGARS LIMITED
A PUBLIC LIMITED COMPANY INCORPORATED
-2-
NC: 2025:KHC:54593-DB
WA No. 529 of 2024
C/W WA No. 526 of 2024
WA No. 530 of 2024
HC-KAR AND 2 OTHERS
AND REGISTERED UNDER COMPANIES ACT 2013
HAVING ITS REGISTERED OFFICE AT
NO.60/1, SECOND CROSS,
RESIDENCY ROAD, BENGALURU-560 025
(REPRESENTED BY ITS AUTHORISED SIGNATORY)
2. UNION OF INDIA
MINISTRY OF POWER AND NEW &
RENEWABLE ENERGY,
SHRAM SHAKTI BHAWAN,
RAFI MARG, NEW DELHI 110 0014
Secy [email protected]
(REPRESENTED BY SECRETARY POWER)
3. CENTRAL ELECTRICITY REGULATORY COMMISSION
A STATUTORY BODY FUNCTIONING UNDER
SECTION 76 OF THE ELECTRICITY ACT 2003
3rd & 4th FLOOR, CHANDERLOK BUILDING,
36, JANPATH, NEW DELHI-110 001
EMAIL. [email protected]
(REPRESENTED BY ITS CHAIRMAN)
4. SOUTHERN REGIONAL LOAD
DISPATCH CENTER, MANAGED BY
GRID CONTROLLER OF INDIA LIMITED,
A BODY ESTABLISHED UNDER SECTION 27
OF THE ELECTRICITY ACT 2003
29, RACE COURSE CROSS ROAD,
BENGALURU-560 009
[email protected]
(REPRESENTED BY ITS CHIEF ENGINEER)
5. STATE OF KARNATAKA
DEPARTMENT OF ENERGY
ROOM NO.236
2nd FLOOR, VIKASA SOUDHA,
DR. B.R AMBEDKAR STREET,
BANGALORE-560 001
prs-energy@ karnataka .gov.in
-3-
NC: 2025:KHC:54593-DB
WA No. 529 of 2024
C/W WA No. 526 of 2024
WA No. 530 of 2024
HC-KAR AND 2 OTHERS
REPRESENTED BY ITS ADDITIONAL CHIEF SECRETARY
6. PTC INDIA LIMITED
(CIN NO.L40105DL1999PLC099328)
A PUBLIC LIMITED COMPANY
INCORPORATED AND REGISTERED
UNDER THE COMPANIES ACT, 1956
2nd FLOOR, NBCC TOWER 15
BHIKAJICAMA PLACE,
NEW DELHI-110 066
E MAIL [email protected]
(REPRESENTED BY ITS MANAGING DIRECTOR)
7. INDIAN ENERGY EXCHANGE LIMITED (IEX)
(CIN NO.L74999DL2007PLC277039)
A PUBLIC LIMITED COMPANY INCORPORATED AND
REGISTERED UNDER COMPANIES ACT, 1956
FIRST FLOOR, UNIT NO.1.14(a)
AVANTA BUSINESS CENTRE, SOUTHERN PARK
D-2, DISTRICT CENTRE, SAKET,
NEW DELHI-110017
[email protected]
...RESPONDENTS
(BY SRI. SHRIDHAR PRABHU, ADVOCATE FOR C/R1,
SRI. H. SHANTHIBHUSHAN, DSGI FOR R2 & R3
SRI. SHASHIKIRAN SHETTY, AG A/W
SMT. MAMATHA SHETTY, AGA FOR R5,
VIDE ORDER DATED 03.07.2024, NOTICE TO R3, R4, R6 &
R7 ARE DISPENSED WITH)
THIS WRIT APPEAL FILED U/S 4 OF THE KARNATAKA
HIGH COURT ACT PRAYING TO SET ASIDE THE ORDER DATED
11.03.2024 PASSED BY THE LEARNED SINGLE JUDGE IN WP
No. 24998/2023 (GM-KEB) AND CONSEQUENTLY DISMISS THE
WRIT PETITION, IN THE INTEREST OF JUSTICE.
-4-
NC: 2025:KHC:54593-DB
WA No. 529 of 2024
C/W WA No. 526 of 2024
WA No. 530 of 2024
HC-KAR AND 2 OTHERS
IN WA NO.526 OF 2024
BETWEEN
STATE LOAD DISPATCH CENTER,
OPERATED BY KARNATAKA POWER
TRANSMISSION CORPORATION LIMITED,
A BODY ESTABLISHED UNDER
SECTION 31 OF THE ELECTRICITY ACT 2003
SLDC, RACECOURSE CROSS ROAD
ANAND RAO CIRCLE, BENGALURU-560 009
[email protected]
(REPRESENTED BY ITS CHIEF ENGINEER)
...APPELLANT
(BY SRI. S.S. NAGANAND, SENIOR COUNSEL FOR
SMT. SUMANA NAGANAND, ADVOCATE)
AND
1. ALTILIUM ENERGIE PRIVATE LIMITED
(CIN NO.U40200DL2020PTC363593)
A PRIVATE LIMITED COMPAY REGISTERED
UNDER COMPANIES ACT 2013
HAVING ITS REGISTERED OFFICE AT
#1303, PKT-A
THE SLEUTHS CGHS LTD
PLOT NO 6, SECTOR 19 B
DWARKA, NEW DELHI
DELHI-110 075
(REPRESENTED BY ITS DIRECTOR AMIT KUMAR)
2. UNION OF INDIA
MINISTRY OF POWER AND NEW &
RENEWABLE ENERGY,
SHRAM SHAKTI BHAWAN,
RAFI MARG, NEW DELHI 110 0014
Secy [email protected]
[REPRESENTED BY SECRETARY (POWER)]
3. CENTRAL ELECTRICITY REGULATORY COMMISSION
-5-
NC: 2025:KHC:54593-DB
WA No. 529 of 2024
C/W WA No. 526 of 2024
WA No. 530 of 2024
HC-KAR AND 2 OTHERS
A STATUTORY BODY FUNCTIONING UNDER
SECTION 76 OF THE ELECTRICITY ACT 2003
3rd & 4th FLOOR, CHANDERLOK BUILDING,
36, JANPATH, NEW DELHI-110 001
EMAIL. [email protected]
(REPRESENTED BY ITS CHAIRMAN)
4. SOUTHERN REGIONAL LOAD
DISPATCH CENTER, MANAGED BY
GRID CONTROLLER OF INDIA LIMITED,
A BODY ESTABLISHED UNDER SECTION 27
OF THE ELECTRICITY ACT 2003
29, RACE COURSE CROSS ROAD,
BENGALURU-560 009
[email protected]
(REPRESENTED BY ITS CHIEF ENGINEER)
5. STATE OF KARNATAKA
DEPARTMENT OF ENERGY
ROOM NO.236
2nd FLOOR, VIKASA SOUDHA,
DR. B.R AMBEDKAR STREET,
BANGALORE-560 001
prs-energy@ karnataka .gov.in
REPRESENTED BY ITS ADDITIONAL CHIEF SECRETARY
6. ENERGY DEVELOPMENT COMPANY LTD
(CIN NO.L85110KA1995PLCO17003)
A PUBLIC LIMITED COMPANY REGISTERED
UNDER THE COMPANIES ACT, 1956
HAVING ITS REGISTERED OFFICE AT
EDCL POWER STATION
VILL-HULUGUNDA, TALUKA
SOMAWARPET, KUSHALNAGAR-571 233
(REPRESENTED BY ITS MANAGING DIRECTOR)
...RESPONDENTS
(BY SRI. SHRIDHAR PRABHU, ADVOCATE FOR C/R1,
SRI. H. SHANTHIBHUSHAN, DSGI FOR R2 & R3
-6-
NC: 2025:KHC:54593-DB
WA No. 529 of 2024
C/W WA No. 526 of 2024
WA No. 530 of 2024
HC-KAR AND 2 OTHERS
SRI. SHASHIKIRAN SHETTY, AG A/W
SMT. MAMATHA SHETTY, AGA FOR R5,
R4 & R6 - SERVED, UNREPRESENTED)
THIS WRIT APPEAL FILED U/S 4 OF THE KARNATAKA
HIGH COURT ACT PRAYING TO SET ASIDE THE ORDER DATED
11.03.2024 PASSED BY THE LEARNED SINGLE JUDGE IN WP
No. 24239/2023 (GM-KEB) AND CONSEQUENTLY DISMISS THE
WRIT PETITION, IN THE INTEREST OF JUSTICE.
IN WA NO.530 OF 2024
BETWEEN
STATE LOAD DISPATCH CENTER,
MANAGED BY KARNATAKA POWER
TRANSMISSION CORPORATION LIMITED,
A BODY ESTABLISHED UNDER
SECTION 31 OF THE ELECTRICITY ACT 2003
SLDC, RACECOURSE CROSS ROAD
ANAND RAO CIRCLE, BENGALURU-560 009
[email protected]
(REPRESENTED BY ITS CHIEF ENGINEER)
...APPELLANT
(BY SRI. S.S. NAGANAND, SENIOR COUNSEL FOR
SMT. SUMANA NAGANAND, ADVOCATE)
AND
1. NSL SUGARS LIMITED
A PUBLIC LIMITED COMPANY INCORPORATED
AND REGISTERED UNDER COMPANIES ACT 2013
HAVING ITS REGISTERED OFFICE AT
NO.60/1, SECOND CROSS
RESIDENCY ROAD, BENGALURU-560 025
HAVING ITS UNIT AT ALAND
BHUSANOOR VILLAGE, ALAND TALUK
GULBARGA DISTRCT, KARNATAKA -585 302
(REPRESENTED BY ITS AUTHORISED SIGNATORY)
-7-
NC: 2025:KHC:54593-DB
WA No. 529 of 2024
C/W WA No. 526 of 2024
WA No. 530 of 2024
HC-KAR AND 2 OTHERS
2. NSL SUGARS (TUNGABHADRA) LIMITED
[CIN U40102KA1983PLC058128]
A PUBLIC LIMITED COMPANY INCORPORATED
AND REGISTERED UNDER COMPANIES ACT 2013
HAVING ITS REGISTERED OFFICE AT
FACTORY PREMISES,
NSL SUGARS (TUNGABHADRA) LIMITED
SIRUGUPPA TALUK, SIRUGUPPA, DASANUR
BELLARY, KARNATAKA-583140
ALOS HAVING OFFICE AT
NSL ICON, 8-2-684/2/A
ROAD MO.12, BANJARA HILLS
HYDERABAD-560 034
(REPRESENTED BY ITS AUTHORISED SIGNATORY)
3. UNION OF INDIA
MINISTRY OF POWER AND NEW &
RENEWABLE ENERGY,
SHRAM SHAKTI BHAWAN,
RAFI MARG, NEW DELHI 110 0014
Secy [email protected]
[REPRESENTED BY SECRETARY (POWER)]
4. CENTRAL ELECTRICITY REGULATORY COMMISSION
A STATUTORY BODY FUNCTIONING UNDER
SECTION 76 OF THE ELECTRICITY ACT 2003
3rd & 4th FLOOR, CHANDERLOK BUILDING,
36, JANPATH, NEW DELHI-110 001
EMAIL. [email protected]
[REPRESENTED BY ITS CHAIRMAN]
5. SOUTHERN REGIONAL LOAD
DISPATCH CENTER, MANAGED BY
GRID CONTROLLER OF INDIA LIMITED,
A BODY ESTABLISHED UNDER SECTION 27
OF THE ELECTRICITY ACT 2003
29, RACE COURSE CROSS ROAD,
BENGALURU-560 009
[email protected]
(REPRESENTED BY ITS CHIEF ENGINEER)
-8-
NC: 2025:KHC:54593-DB
WA No. 529 of 2024
C/W WA No. 526 of 2024
WA No. 530 of 2024
HC-KAR AND 2 OTHERS
6. STATE OF KARNATAKA
DEPARTMENT OF ENERGY
ROOM NO.236, 2nd FLOOR,
VIKASA SOUDHA,
DR. B.R AMBEDKAR STREET,
BANGALORE-560 001
prs-energy@ karnataka .gov.in
REPRESENTED BY ITS ADDITIONAL CHIEF SECRETARY
7. PTC INDIA LIMITED
(CIN NO.L40105DL1999PLC099328)
A PUBLIC LIMITED COMPANY
INCORPORATED AND REGISTERED
UNDER THE COMPANIES ACT, 1956
2nd FLOOR, NBCC TOWER 15
BHIKAJICAMA PLACE,
NEW DELHI-110 066
E MAIL [email protected]
[REPRESENTED BY ITS MANAGING DIRECTOR]
8. ANDHRA PRADESH CENTRAL POWER
DISTRIBUTION CORPORATED LIMITED
[CIN NO.U40108AP2019SGC113717]
A PUBLIC LIMITED COMPANY INCORPORATED
AND REGISTERED UNDER COMPANIES ACT, 2013
HAVING ITS REGISTERED OFFICE AT CORPORATE
OFFICE BESIDE GOVERNMENT
POLYTECHNIC, ITI ROAD, KRISHNA
VIJAYAWADA, ANDHRA PRADESH
INDIA-520008
[email protected]
[REPRESENT BY ITS MANAGING DIRECTOR]
...RESPONDENTS
(BY SRI. SHRIDHAR PRABHU, ADVOCATE FOR C/R1 & R2,
SRI. H. SHANTHIBHUSHAN, DSGI FOR R3)
THIS WRIT APPEAL FILED U/S 4 OF THE KARNATAKA
HIGH COURT ACT PRAYING TO SET ASIDE THE ORDER DATED
-9-
NC: 2025:KHC:54593-DB
WA No. 529 of 2024
C/W WA No. 526 of 2024
WA No. 530 of 2024
HC-KAR AND 2 OTHERS
11.03.2024 PASSED BY THE LEARNED SINGLE JUDGE IN WP
No. 26833/2023 AND CONSEQUENTLY DISMISS THE WRIT
PETITION.
IN WA NO.557 OF 2024
BETWEEN
KARNATAKA POWER TRANSMISSION
CORPORATION LIMITED (STATE LOAD
DISPATCH CENTRE)
27/1, RACE COURSE ROAD
MADHAVA NAGAR, GANDHINAGAR
BENGALURU-560 001
[REPRESENTED BY ITS CHIEF ENGINEER]
...APPELLANT
(BY SRI. S.S. NAGANAND, SENIOR COUNSEL FOR
SMT. SUMANA NAGANAND, ADVOCATE)
AND
1. SRI CHAMUNDESHWARI SUGARS LIMITED
HAVING ITS REGISTERED OFFICE AT 88/5
RICHMOND ROAD, BANGALORE-560025
KARNATAKA, INDIA
[REPRESENTED BY ITS PRESIDENT
SRI. K.R NACHIAPPAN]
2. STATE OF KARNATAKA
DEPARTMENT OF ENERGY
2ND FLOOR, VIKASASOUDHA
DR B.R AMBEDKAR STREET
BANGALORE -560 001
[email protected]
[REPRESENTED BY ITS ADDITIONAL
CHIEF SECRETARY]
...RESPONDENTS
(BY SRI. ADITHYA NARAYAN, ADVOCATE FOR C/R1
- 10 -
NC: 2025:KHC:54593-DB
WA No. 529 of 2024
C/W WA No. 526 of 2024
WA No. 530 of 2024
HC-KAR AND 2 OTHERS
SRI. SHASHIKIRAN SHETTY, AG A/W
SMT. MAMATHA SHETTY, AGA FOR R2)
THIS WRIT APPEAL FILED U/S 4 OF THE KARNATAKA
HIGH COURT ACT PRAYING TO SET ASIDE THE ORDER DATED
11.03.2024 PASSED BY THE LEARNED SINGLE JUDGE IN WP
No. 26324/2023 (GM-KEB) AND CONSEQUENTLY DISMISS THE
WRIT PETITION, IN THE INTEREST OF JUSTICE.
IN WA NO.623 OF 2024
BETWEEN
STATE OF KARNATAKA
DEPARTMENT OF ENERGY
ROOM NO.236
2nd FLOOR, VIKASA SOUDHA,
DR. B.R AMBEDKAR STREET,
BANGALORE-560 001
prs-energy@ karnataka .gov.in
[REPRESENTED BY ITS
ADDITIONAL CHIEF SECRETARY]
...APPELLANT
(BY SRI. SHASHIKIRAN SHETTY, AG A/W
SMT. MAMATHA SHETTY, AGA AND
SMT. ADOORYA BOMAKKA HARISH, ADVOCATE)
AND
1. ALTILIUM ENERGIE PRIVATE LIMITED
(CIN NO.U40200DL2020PTC363593)
A PRIVATE LIMITED COMPAY REGISTERED
UNDER COMPANIES ACT 2013
HAVING ITS REGISTERED OFFICE AT
#1303, PKT-A
THE SLEUTHS CGHS LTD
PLOT NO 6, SECTOR 19 B
DWARKA, NEW DELHI
- 11 -
NC: 2025:KHC:54593-DB
WA No. 529 of 2024
C/W WA No. 526 of 2024
WA No. 530 of 2024
HC-KAR AND 2 OTHERS
DELHI-110 075
(REPRESENTED BY ITS
DIRECTOR AMIT KUMAR)
2. UNION OF INDIA
MINISTRY OF POWER AND NEW &
RENEWABLE ENERGY,
SHRAM SHAKTI BHAWAN,
RAFI MARG, NEW DELHI 110 0014
Secy [email protected]
[REPRESENTED BY SECRETARY (POWER)]
3. CENTRAL ELECTRICITY REGULATORY COMMISSION
A STATUTORY BODY FUNCTIONING UNDER
SECTION 76 OF THE ELECTRICITY ACT 2003
3rd & 4th FLOOR, CHANDERLOK BUILDING,
36, JANPATH, NEW DELHI-110 001
EMAIL. [email protected]
(REPRESENTED BY ITS CHAIRMAN)
4. SOUTHERN REGIONAL LOAD
DISPATCH CENTER, MANAGED BY
GRID CONTROLLER OF INDIA LIMITED,
A BODY ESTABLISHED UNDER SECTION 27
OF THE ELECTRICITY ACT 2003
29, RACE COURSE CROSS ROAD,
BENGALURU-560 009
[email protected]
(REPRESENTED BY ITS CHIEF ENGINEER)
5. STATE LOAD DISPATCH CENTER,
OPERATED BY KARNATAKA POWER
TRANSMISSION CORPORATION LIMITED,
A BODY ESTABLISHED UNDER
SECTION 31 OF THE ELECTRICITY ACT 2003
SLDC, RACECOURSE CROSS ROAD
ANAND RAO CIRCLE, BENGALURU-560 009
[email protected]
(REPRESENTED BY ITS CHIEF ENGINEER)
- 12 -
NC: 2025:KHC:54593-DB
WA No. 529 of 2024
C/W WA No. 526 of 2024
WA No. 530 of 2024
HC-KAR AND 2 OTHERS
6. ENERGY DEVELOPMENT COMPANY LTD
(CIN NO.L85110KA1995PLCO17003)
A PUBLIC LIMITED COMPANY REGISTERED
UNDER THE COMPANIES ACT, 1956
HAVING ITS REGISTERED OFFICE AT
EDCL POWER STATION
VILL-HULUGUNDA, TALUKA
SOMAWARPET, KUSHALNAGAR-571 233
(REPRESENTED BY ITS MANAGING DIRECTOR)
...RESPONDENTS
(BY SRI. SHRIDHAR PRABHU, ADVOCATE FOR C/R1,
SRI. H. SHANTHIBHUSHAN, DSGI FOR R2
SMT. NIDHI GUPTA, ADVOCATE FOR R5)
THIS WRIT APPEAL FILED U/S 4 OF THE KARNATAKA
HIGH COURT ACT PRAYING TO ISSUE A WRIT OF CERTIORARY
OR ANY OTHER APPROPRIATE WRIT, ORDER OR DIRECTION
SETTING ASIDE THE IMPUGNED ORDER DATED 11/03/2024 IN
WP NO.24239/2023 ON THE FILE OF THE KARNATAKA HIGH
COURT, BENGALURU AND ETC.
THESE APPEALS HAVING BEEN RESERVED FOR
JUDGMENT ON 14.11.2025 COMING ON FOR PRONOUNCEMENT
THIS DAY, RAJESH RAI K, J., DELIVERED THE FOLLOWING:
CORAM: HON'BLE MRS. JUSTICE ANU SIVARAMAN
and
HON'BLE MR. JUSTICE RAJESH RAI K
- 13 -
NC: 2025:KHC:54593-DB
WA No. 529 of 2024
C/W WA No. 526 of 2024
WA No. 530 of 2024
HC-KAR AND 2 OTHERS
CAV JUDGMENT
(PER: HON'BLE MR. JUSTICE RAJESH RAI K)
1. Writ Appeals No.529/2024, 526/2024 and 530/2024
are by State Load Despatch Centre (SLDC), Writ Appeal
No.557/2024 is by the Karnataka Power Transmission
Corporation Limited (KPTCL) and Writ Appeal No.623/2024
is by the State of Karnataka, challenging the common
order dated 11.03.2024 passed by the learned Single
Judge in W.P.No.24998/2023, 24239/2023, 26833/2023
and 26324/2023, whereby the learned Single Judge has
allowed the said petitions as under:
"The petitions are allowed quashing the
impugned State Government's Order dated
16.10.2023 in No. ENERGY 82 PPT 2023 insofar as it
extends to those engaged in inter-state transmission
of electricity and the following consequential
withdrawal of approval / No-Objections issued by
M/s KPTCL [the State Load Dispatch Centre] to the
respective petitioners.
[A] the Communication dated 18.09.2023
[Annexure - B in WP No.24998/2023]
[B] the Communication dated 17.10.2023
[Annexure - B in WP No. 26324/2023]
[C] the Communication dated 18.10.2023
[Annexure - B in WP No. 26833/2023]
- 14 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
Consequentially, M/s KPTCL, the State Load
Dispatch Centre, is directed to reinstate the
corresponding approvals/No-objection issued to the
petitioners in W.P.No.24998/2023 and
W.P.No.23624/2023, and insofar as the petitions in
W.P.No.24239/2023 and W.P.No.26833/2023, M/s
KPTCL is directed to consider the respective requests
in the light of this order."
2. The abridged facts for disposal of these collective
Writ Appeals are as under:
Electricity generation in the State of Karnataka is
primarily dependent on renewable and hydel sources.
Owing to depleted reservoir levels in major dams, the
State Load Dispatch Centre was compelled to implement
load management measures since the August of 2023. As
the Electricity Supply Companies' effort to procure power
from exchanges at maximum cap rates proved insufficient,
the Government of Karnataka issued the Government
Order dated 16.10.2023 under Section 11(1) of the
Electricity Act, 2003 (hereinafter referred to as "the Act")
directing all generators within the State to operate and
maintain generating stations at maximum exportable
- 15 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
capacity and supply all electricity generated to the State
Grid at a provisional tariff of Rs.4.86 per unit, subject to
final determination by KERC under Section 11(2) of the
Act, which reads as under:
GOVERNMENT ORDER No. ENERGY 82 PPT 2023,
BENGALURU, Dated 16.10.2023
In the circumstances explained in the Preamble and
in exercise of the power conferred under Section.11
of Electricity Act, 2003, the State Government in
the public interest hereby issues the following
Directions, with immediate effect and until further
orders.
1. All the Generators in the State of Karnataka shall
operate and maintain their generating stations to
maximum exportable capacity and supply all the
electricity generated to State Grid subject to the
following conditions:
[a] ESCOMs shall pay at Rs.4.86/unit provisionally
subject to KERC orders thereon.
[b] The balance capacity of UPCL plant, over and
above the contracted capacity with the ESCOMs
under the PPA shall be supplied to State Grid at PPA
rates.
[c] Joint meter readings shall be the basis for
raising the monthly invoices.
[d] Rebate of 2% shall be allowed on the bill
amount if payment is made within 5 days from the
date of presentation of bill or otherwise 1% shall be
allowed if the payments are made within 30 days.
- 16 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
[e] Due date for making payment shall be 30 days
from the date of presentation of the bill.
[f] Late Payment Surcharge shall be payable at
oneyear marginal cost of lending rate (MCLR) of the
State Bank of India issued as on 1st April plus 350
basis points; per month, if the payments are made
beyond due date.
[g] The Jurisdictional Distribution Licensee shall
deduct the energy at 115% for the energy, if
imported by the Generators covered by this Section
11 order.
[h] Energy injected by Generators under Section 11
shall be allocated amongst ESCOMs as per the
quantum approved by KERC in the Tariff order
dated 12.05.2023 for the FY 24 is as follows:
BESCOM 46.51%
MESCOM 8.57%
CESC 11.14%
HESCOM 20.60%
GESCOM 13.18%
Total 100.00%
[j] The generators shall raise the bills in the above
portion to respective ESCOMs
2. The above directions shall not be applicable for
the Intra-Sate Generators who are having valid
PPA's with the Distribution Licensees in the State of
Karnataka.
3. All the State Electricity Supply Companies
(ESCOMs) shall file a petition within 15 days from
date of this order before the Karnataka Electricity
- 17 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
Regulatory Commission (KERC) for approval of tariff
specified in this order.
3. Before the learned Single Judge, the respective
generating companies i.e., respondent No.1 in all the
appeals had challenged the above Government Order and
the learned Single Judge allowed the Writ Petitions and
quashed the above Government Order dated 16.10.2023
as stated supra. Hence, these Writ Appeals.
4. Before delving into the merits of the case it is
appropriate to narrate the background of the generating
companies who have challenged the Government Order
dated 16.102023:
(i) M/s Altilium Energie Private Limited-[M/s
Altilium], holding a Category V electricity trading license
bearing No. 85/2021 dated 23.05.2021 issued by the
Central Electricity Regulatory Commission, entered into a
Power Purchase Agreement on 01.02.2022 with M/s
Energy Development Corporation to purchase up to 9 MW
of renewable energy for a period of two years. M/s Altilium
- 18 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
asserted that it trades nearly 98 MWh of power on an
everyday basis on the Indian Energy Exchange [IEX]. The
KPTCL refused interstate power-sale clearance to M/s
Energy Development Corporation on 29.09.2023, citing
that the State Government's invocation of Section 11 of
the Act, restricted inter-state transactions. Owing to this
refusal and the subsequent Government Order dated
16.10.2023, M/s Altilium is unable to trade electricity
power despite the PPA dated 01.02.2022. Following which
M/s Altilium filed W.P. No.24239/2023.
(ii) M/s NSL Sugars Limited-[M/s NSL-Koppa],
operates a sugar factory at Koppa a bagasse-based co-
generation plant with a 26-MW at 66-kv voltage. It
entered into a Power Purchase Agreement dated
01.06.2022 with M/s PTC India Ltd [M/s PTC] for three
years. Under the said PPA, M/s NSL-Koppa had conceded
to instruct on M/s PTC's online bidding software to
periodically specify the quantum and price at which it
intended to sell electricity. M/s NSL-Koppa stated that,
- 19 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
under its PPA with M/s PTC, it is obligated to supply
electricity to Military Engineering Services, Delhi ['MES,
Delhi']; this supply is routed through the Indian Energy
Exchange (IEX). However, owing to the State
Government's Order dated 16.10.2023 and KPTCL's
withdrawal of transmission clearance on 18.09.2023, M/s
NSL-Koppa is unable to meet the afore supply
commitments as stipulated in the agreement. Aggrieved
by this, M/s NSL-Koppa filed W.P.No.24998/2023,
stating M/s NSL-Koppa had agreed to supply electricity
contingent to change in law or restriction imposed by
Central/State Electricity Regulator or by Central/State
Government or by any Appellate Tribunal on any aspect of
the purchase of power and the jurisdiction of the State
Electricity Regulatory Commission.
(iii) M/s NSL Sugars Limited and M/s NSL Sugars
[Tungabhadra] Limited-[M/s NSL Aland and M/s NSL
Tungabhadra], both are Public Limited Companies
primarily engaged in sugar manufacturing and bagasse-
- 20 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
based power generation. M/s NSL Aland operates a 34-MW
plant at 110-KV level at Bhusnoor Village, Aland Taluk,
Kalaburagi District. M/s NSL Tungabhadra operates 28-MW
at 110-KV plant at Siraguppa, Desanur, Bellary. M/s NSL
Aland and M/s NSL Tungabhadra asserted that in
performing the terms of the Letter of Intent dated
08.09.2023 they are obligated to supply power to Andhra
Pradesh Central Power Distribution Corporation Limited
[M/s APCPDCL] through M/s PTC.
Further, M/s NSL Aland relies on PTC's communication
dated 26.09.2023 to contend that it is obligated to supply
17 MW each day to APCPDCL from 01.12.2023 to
29.02.2024, and 20 MW each day from 01.03.2024 to
31.03.2024 and M/s NSL Tungabhadra asserts that it is
obligated to supply 6 MW each day to APCPDCL from
01.12.2023 to 31.12.2023, and 9 MW each day from
01.01.2024 to 29.02.2024. M/s KPTCL had issued
Communication dated 18.10.2023, consequent to the
State Government's Order dated 16.10.2023, refusing
- 21 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
inter-state transmission permission to both M/s NSL, Aland
and M/s NSL, Tungabhadra. Aggrieved by this they filed
W.P.NO.26833/2023.
(iv) Sri Chamundeshwari Sugars Limited-[M/s
Chamundeshwari] established a sugar factory at KM
Doddi, Maddur Taluk, Mandya District, with a crushing
capacity of 5000 TCD and a bagasse-based co-generation
plant of 26 MW with a maximum exportable capacity of 18
MW. It entered into a Power Sale Agreement dated
29.03.2022 with M/s Tata Power Trading Company Ltd.
[M/s TPTCL] agreeing to sell 13.5 MW out of the
maximum exportable capacity of 18MW of power via the
power exchange. As stipulated in Clause 15 of the said
agreement, the onus is on M/s TPTCL to supply power for
two years, starting from 01.07.2022.
Further, M/s KPTCL issued NOC[s] and standing clearances
to M/s Chamundeshwari to enable its registration on the
National Open Access Registry and supply power interstate
- 22 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
via a power exchange. Subsequent to the State
Government's Order dated 16.10.2023, M/s KPTCL
withdrew the NOC[s] and clearances granted earlier by its
Communication dated 17.10.2023. Aggrieved by this, M/s
Chamundeshwari challenged the State Government's
Order and KPTCL's withdrawal in W.P.No.26324/2023.
5. The learned Single Judge allowed the above Writ
Petitions primarily on emphasizing the following two
grounds:
(i) The inter-state transmission of power has
to be governed by the Central Government as
appropriate government, while exercising
power available under Section 11 of the Act
when the transmission is for
establishments/installations/institutions as
stipulated under Section 2(5)(a)(ii) of the Act.
(ii) The ratio laid down in the case of
ENERGY WATCHDOG VS. CENTRAL
- 23 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
ELECTRICITY REGULATORY COMMISSION -
(2017) 14 SCC 80 is that the Central
Government would be involved when there is
interstate transmission. This remains an
established precedent should the cohesion of
the scheme of the Act demands that the
interstate transmission must be the decisive
factor even for the purpose of ascertaining
which would be the appropriate Government
for the purpose of exercising jurisdiction under
Section 11 of the Act.
6. We have heard Sri S.S.Naganand, learned Senior
Counsel appearing for SLDC and KPTCL, Sri Sridhar Prabhu
and Sri Adithya Narayan, learned counsel for
caveator/respondent-No.1, Sri H.Shanthibhushan, learned
DSGI and Sri Shashikiran Shetty, learned Advocate
General along with Smt.Mamatha Shetty and Smt.Adoorya
Bomakka Harish and perused the impugned order and the
material placed before us.
- 24 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
7. The primary contention of the learned Advocate
General Sri. Shashi Kiran Shetty for the appellant-State is
that the cardinal principal governing statutory
interpretation is that each provision shall not be read in
isolation and that it should be read in harmony bearing in
mind its context, the statute's object and purpose. Section
11 of the Act is an exclusive emergency power designed to
address extraordinary circumstances threatening the
State's security and public order arising from natural
calamities or other public interest considerations.
8. According to the learned AG, the introductory words
of Section 2 of the Act recognizes the principle by stating
'In this Act, unless the context otherwise requires' as such
the definition clause must read contingent to the opening
phrase. It is further contended that Section 11 of the Act
demands interpretation beyond the rudimentary
application of definition as stipulated under Section 2(5) of
the Act. The provision is placed in Part III of the Act
dealing with the generation of electricity, and stands as an
- 25 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
idiosyncratic exception to the general deregulation and
delicensing regime established. Albeit Section 9 of the Act
permits captive generation without license and Section 7
of the Act allows generating companies to establish
stations without license, however, Section 11 of the Act
empowers the appropriate government to override these
liberties during 'extraordinary circumstances'. By
emphasizing the Judgment passed in M/s GMR Energy
Limited v. Government of Karnataka-ILR 2010 KAR
2620, by the Coordinate Bench of this Court, he
submitted that Section 11 of the Act is in the nature of
exception to the general rule of deregulation, applicable
specifically when extraordinary circumstances justify
government intervention. A failed monsoon, reservoir
depilation, agricultural demands spikes or regional heat
waves are qualified as archetypical extraordinary
circumstances. In such events, it is unreasonable and
irrational to hold that the onus shall lie on the Central
Government alone to respond to such State[s] during
- 26 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
specific emergencies as stipulated under Section 11 of the
Act. He further contended that, the contractual
interpretation of Section 11 of the Act is reinforced by
Section 11(2) of the Act which provides that the
appropriate commission may offset the adverse financial
impact of directions on any generating companies. The
interlocking of Section 11(1) & (2) of the Act demonstrates
that 'appropriate government' and 'appropriate
commission' must be read in tandem.
9. According to the learned Advocate General, Section
11(1) of the Act empowers 'the appropriate Government'
without further qualification and Section 11(2) of the Act
empowers 'the appropriate commission' to offset adverse
financial impact. The use of singular definite article 'the'
before 'appropriate government' and 'appropriate
commission' suggests that these are to be determined
functionally based on which government and which
commission have effective jurisdiction over the generating
companies in question. According to him, undisputedly,
- 27 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
the State Government is the government having effective
jurisdiction over their physical operations, licensing and
day-to-day regulation, and the State Commission is the
commission having jurisdiction to provide financial redress
under Section 11(2) of the Act. However, the impugned
judgment's interpretation is seemingly absurd as the State
Government, despite having jurisdiction over generators
physically located in its territory is powerless to act during
state-specific extraordinary circumstances merely because
the generators sell some power inter-state, while the
Central Government, not facing any emergency is
conferred with such jurisdiction which they are ill equipped
to exercise.
10. The learned Advocate General further attempted to
persuade by delving into Section 2(5)(a)(ii) of the Act and
reiterated that, the Central Government is the appropriate
government "in relation to any inter-state generation,
transmission, trading or supply of electricity and with
respect to any mines, oil-fields, railways, national
- 28 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
highways, airports, telegraphs, broadcasting stations and
any works of defence, dockyard, nuclear power
installations". According to him, a small captive generating
plant in Karnataka selling occasional surplus power to a
neighbouring State through power exchange cannot fall
within the purview of Central Government's jurisdiction
when the State Government is specifically facing crisis of
shortage of electricity. He further contended that, Section
2(5)(a)(ii) of the Act must be interpreted strictly and
conjunctively to mean that the Central Government is the
appropriate government when inter-state generation,
transmission, trading or supply is with respect to the
specific installations mentioned in that sub-clause alone.
For all other cases including embedded generations within
a State that may sell power inter-state to ordinary
consumers or distribution companies not falling within
specified installations, the State Government is the
appropriate government under Section 2(5)(b) of the Act.
- 29 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
11. He also contended that, following the GMR Energy
Judgment, the State Government issued several Orders
under Section 11 of the Act, albeit some of such Orders
were challenged by the generating companies involving
the determination of tariff before the KERC under Section
11(2) of the Act, however, those appeals were disposed of
by remand or dismissal as withdrawn. As such, the legal
position settled in the case of GMR Energy was disturbed
by the Order of learned Single Judge, as such the same is
liable to be set aside. He finally contended that, on
analysis of the finding in Energy Watchdog, the same
does not constitute ratio decidendi binding on the
interpretation of Section 11 of the Act, however are mere
obiter dicta made in an entirely different context
concerning tariff determination under Section 63 of the Act
and the concept of composite schemes under Section 79 of
the Act. He also submitted that the respondent M/s
Altilium is a licensed electricity trader operating under a
trading license issued by the Central Electricity Regulatory
- 30 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
Commission CERC pursuant to Section 14 of the Act. It is
neither a generating company nor is it maintaining
generating station, as such there is no locus standi to
challenge the Order issued by the government. With these
submissions he prays to allow the Writ Appeal.
12. The learned Senior Counsel Sri S.S. Naganad appeared
on behalf of SLDC, KPTCL adopted the arguments
advanced by the learned AG, and additionally contended
that the learned Single Judge has erroneously applied the
decision laid down in the Energy Watchdog while
discarding the binding precedent laid by the Coordinate
Bench of this Court in GMR Energy. According to the
learned senior counsel the principal question involved in
Energy Watchdog with respect to the jurisdiction of
Central Commission Exercising Power under Section 79(b)
of the Act and adoption of tariff discovered through the
process stipulated under Section 53 of the Act. He further
contended that, as per Section 2(5)(b) of the Act, other
than the categories mentioned under Section 2(5)(a) of
- 31 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
the Act, the State Government will be the appropriate
government. As such he elucidated that whenever there is
inter-state generation or supply of electricity it is the
Central Government which is involved and when there is
an intra-state generation or supply, the State Government
or the State Commission is involved. He further contended
it is a settled position of law that whenever 'and' is used in
authoritative text and judicial decisions, it is seemingly
used in a conjunctive sense, meaning it is used to join the
words, phrases, or clauses together as per the Judgment
in the case of Commissioner Customs Central Excise
and Service Tax Patna M/s. Shapoorji Paloonji and
Company Pvt Ltd, - 2024 3 SCC 358 with these
submissions he prays to allow the appeal.
13. Refuting the above contentions, the learned counsel
Sri Sridhar Prabhu for the respondents in WA 526/2024,
529/2024, 530/2024 and 623/2024 for respondent No.1,
contended that, the M/s NSL is a Public Limited company
and it has a contractual obligation to supply electricity
- 32 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
through respondent No.6 - M/s PTC via respondent No.7-
IEX which manage transactions schedule and settlements.
The statutory framework in respect of Electricity Act which
came into force on 10.06.2003 repealing Indian Electricity
Act, 1910, under Section 2(5) of the Act, the Central
Government is the appropriate government for the
matters relating to inter-state generation, transmission,
trading or supply whereas the State Government is the
appropriate government in all other cases. Section 2(36)
of the Act defines inter-state transmission system, as the
conveyance of electricity from one state to another
including incidental conveyance. Whereas Section 2(37) of
the Act defines intra-state transmission system, further,
Section 79(1) of the Act empowers the CERC to regulate
inter-state transmission and generation involving multiple
States while Section 86(1) of the Act empowers the SERC
to regulate intra-state generation supply and transmission.
As such there appears categorical distinction between
- 33 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
intra-state and inter-state generation, transmission and
trading.
14. According to the learned counsel, the Government
Order dated 16.10.2023, further culminated with a
corrigendum issued by the State dated 20.11.2023
clarifying that, distribution licensees include distribution
licensees/consumers. Further, the corrigendum effectively
exempted intra-state generators holding PPA's to ESCom's
and consumers from the GO's direction. As such it is clear
the corrigendum acknowledges that the GO does not apply
to the inter-state transactions and the State Authority is
limited to intra-state transactions. He further contended
that, since the order passed by the State Government, the
appellant-SLDC lacks locus to challenge the said Order for
the reason that in Karnataka the State through KPTCL
operates the SLDC which cannot defend the State actions,
unless the State establishes that the same is an
autonomous entity as required under the proviso to
Section 31 of the Act. It was also contended that the
- 34 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
learned Single Judge has rightly addressed the issue 'the
appropriate government' which is intrinsically 'appropriate
commission' both issues were pertaining to the
classification of inter-state and intra-state transmission.
15. He further contended that, the respondent supplies
the power to the MES with all applicable inter-state
charges duly paid by the respondent No.1 the same
expressly clarifies that they are the subject to the
provisions of the CERC, Regulations 2008. He further
contended that, the location neither decides jurisdiction
nor transmission classification solely on the geographical
location of the generating company and power station.
Such a view nullifies the statutory definition of inter-state
transmission under the Act. The correct test for
determination of the same under section 2(36) of the Act
is the destination on nature of transmission of electricity
not the location of generation of electricity. Emphasizing
para-24 of the Energy Watchdog, he submitted that the
State Commission is the commission's jurisdiction alone
- 35 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
when the generation and supply takes place within the
State. On other hand, the moment generation and sale
takes place involving more than single State the Central
Government becomes the appropriate authority. Same
analogy has to be applied while interpreting Section 11 of
the Act. He also contended that the GMR Energy decision
is not applicable to the present case as the question of law
remain open, and by relying on the judgment of the Apex
Court in Kunhayammed v. State of Kerala - (2000) 6
SCC 359, he submitted that when a superior forum
affirms, modifies or reverses an Order, the subordinate
forum's Order merges into the superior forum's Order and
becomes binding under Article 141 of the Constitution. As
such, the judgment in GMR Energy has no binding finality
as the same was dismissed as withdrawn, without any
merits. He also contended that there is no extraordinary
circumstance established by the State Government
justifying invocation of Section 11 of the Act. Mere power
shortage, scarcity does not constitute an extraordinary
- 36 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
circumstance. The doctrine of 'Ejusdem Generis' applies to
the phrase 'such other circumstances' in explanation to
Section 11 of the Act limits to those akin to specified
examples (threat to security, natural calamity, public
order). He also contended that, Section 11 of the Act is
applicable to a specific generating company as such the
appropriate government can issue directions to a
generating company and generating station alone, thereby
requiring specificity and precluding issuance of blanket
Orders covering all generators. The Government Order
dated 16.10.2023 neither identified specific generating
companies nor stations. By relying on the communication
dated 23.10.2023 by the Central Government he
submitted that the same exemplifies the right approach by
explicitly enumerating the coal based generating stations
subject to Section 11 of the Act directions thereby
confirming to the statutory mandate.
16. Further it is contended that, the force majure clause
in the PPA has been erroneously interpreted and applied
- 37 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
by the appellant-LDC, the PPA is a private contract
exclusively between respondent No.1 and respondent
No.6-PTC. The force majure clause therein protects these
parties from liability arising out of State imposed
restrictions. However, it neither extends to the State nor
agency. He also contended that, the respondent No.3-
SRLDC regulated by the CERC is the competent authority
to issue standing clearance for inter-state transaction and
the appellant-SLDC governed by KERC lacks jurisdiction
over inter-state clearance, since the respondent No.1 is
the inter-state generator. Further, in view of the
establishment of national grid on 31.12.2013 the State
Governments are not obligated to issue direction under
Section 11 of the Act as the Central Government is
responsible for assessing and addressing the national
power. Further, he contended that there is neither
perversity nor illegality in the Order passed by learned
Single Judge and the interference by this Court in the
- 38 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
impugned judgment does not call for. Accordingly, he
prays to dismiss the Writ Appeals.
17. To fortify his arguments he relied on the following
judgments:
1. Syed Yakoob v. K.S. Radhakrishnan-1963 SCC
OnLine SC 24
2. Energy Watchdog v. CERC-(2017) 14 SCC 80
3. Gojer Bros. (P) Ltd. v. Ratan Lal Singh-(1974) 2
SC 453
4. Kunhayammed v. State of Kerala-(2000) 6 SCC
5. Narendra & Co. (P) Ltd. v. Workmen-(2016) 3
SCC 340
6. Baddula Lakshmaiah v. Sri Anjaneya Swami
Temple-(1996) 3 SCC 52
18. Having heard the learned counsel for the respective
parties and on perusal of the documents on record, the
points that arise for our consideration are:
1. Whether the observations in the judgment of the
Hon'ble Supreme Court in Energy Watchdog v.
CERC - (2017) 14 SCC 80, regarding appropriate
government constitute ratio decidendi binding on
the interpretation of Section 11 of the Act, or
- 39 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
whether they are obiter dicta made in the context
of tariff determination and the findings of the
learned Single Judge on the judgment of GMR
Energy require interference?
2. Whether Section 11 of the Act is a standalone
independent provision conferring emergency
powers that must be interpreted contextually in
light of its specific object and purpose, rather than
being instinctively governed by general definition
clause in Section 2(5) of the Act and whether
respondent-generating companies qualify as inter-
state generating companies within the meaning of
Section 2(36) of the Act, and whether as per
Section 2(5)(a)(ii) of the Act, the Central
Government is the only appropriate government
and can issue directions to them under Section 11
of the Act?
3. Whether the respondent - M/s.Altilium Enegry
Private Limited, is merely a licensed electricity
trader and not a generating company, has the
locus standi to challenge directions issued under
Section 11(1) of the Act which are expressly
addressed to generating companies alone?
- 40 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
19. Ahead of answering the above questions it is
imperative to ponder into the object of enactment of the
new Electricity Act, 2003, which reads as under:
"An Act to consolidate the laws relating to
generation, transmission, distribution, trading
and use of electricity and generally for taking
measures conducive to development of
electricity industry, promoting competition
therein, protecting interest of consumers and
supply of electricity to all areas, rationalization
of electricity tariff, ensuring transparent policies
regarding subsidies, promotion of efficient and
environmentally benign policies, constitution of
Central Electricity Authority, Regulatory
Commissions and establishment of Appellate
Tribunal and for matters connected therewith or
incidental thereto."
20. Likewise, it is vital to note that, Electricity is a
subject in the concurrent list (Entry-38 List 3 of the
Seventh Schedule of the Indian Constitution), indicating
that both the Parliament and the State Legislatures are
competent to legislate on this subject, and the
Parliamentary Legislation will prevail in the case of conflict.
This constitutional placement reflects Electricity's character
as a subject requiring both national co-ordination and
state level management. Thus, Electricity, as a subject,
- 41 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
must be interpreted in a manner that respects binary
structure.
21. Against this backdrop, when analysing the initial
challenge to the State Government Order dated
31.12.2008 (i.e. the similar notification as that of
Government Order dated 16.10.2023) in different Writ
Petitions i.e. W.P Nos.590/2009, 591/2009, 4693/2009,
and 9721/2009, culminated in the final decision rendered
by the Co-ordinate Bench of this Court in the case of GMR
Energy has categorically considered and decided the
question, whether the State Government or the Central
Government is the appropriate government under Section
11 of the Act for issuing emergency directions to
generating companies located within the State but
engaged in inter-state transmission of Electricity.
22. The decision in GMR Energy was appealed to the
Hon'ble Supreme Court, which heard submissions and
ultimately disposed of the appeals by Order dated
16.08.2023 observing that, "the matters are rendered
- 42 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
infructuous in as much as exercise of power under Section
11 of the Act as worked itself out". The Hon'ble Supreme
Court further observed that, "we would however record
that the question of law relating to interpretation of
Section 11 r/w section 2(5) of the Act are kept open".
Hence, it is gathered that the Hon'ble Supreme Court
disposed of the appeals as infructuous and not on merits.
As such the judgment in GMR Energy is neither affirmed
nor reversed. Further, keeping open a question of law by
the Hon'ble Supreme Court, having decided not to
adjudicate the question owing to the infructuous nature of
the appeals, seemingly reserves its right to examine and
pronounce upon that question when it arises in future
controversy. For the time being, the law declared by the
Division Bench remains in force, intact and binding on the
Co-ordinate Benches unless the Division Bench is
persuaded to refer the matter to a larger bench.
23. This position of law was decided by the Co-ordinate
Bench of the Gujarat High Court in the case of COLLECTOR
- 43 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
V/S. LIQUIDATOR PETROFILS CO-OPERATIVE LTD.,
MIS.CIVIL.APPLICATION (REVIEW) No. 1412/2015
observed that, "....there is neither confirmation nor dilution
of the ratio of the judgment under challenge it only means
that the Hon'ble Supreme Court has refused to bind itself
or put its seal on the ratio propounded by the High Court
in the judgment". It is equally important to note that, the
Hon'ble Supreme Court has repeatedly emphasised on the
significance of judicial precedents that the rule of 'Judicial
Discipline and Propriety' and the Doctrine of precedents
has a merit of promoting certainty and consistency in
judicial decisions providing assurance to individuals as to
the consequences of their actions. The Constitution
benches of this court have time and again reiterated the
rules emerging from Judicial Discipline. Accordingly, when
a decision of a coordinate Bench of same High court is
brought to the notice of the bench, it is to be respected
and is binding subject to right of the bench of such co-
equal quorum to take a different view and refer the
- 44 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
question to a larger bench. It is the only 2 course of action
open to a bench of co-equal strength, when faced with the
previous decision taken by a bench with same strength.
24. In the impugned Order, the learned Single Judge
while interpreting the above position primarily considered,
the decision rendered by the Hon'ble Supreme Court in the
case of Energy Watchdog as enumerated supra that the
Central Government would be involved when the inter-
state transmission of electricity would be a binding
precedent if the cohesion of the scheme of the Act
demands that the inter-state transmission must be the
decisive factor even for the purpose of ascertaining when
the Central Government and the State Government will be
the appropriate government under Section 11 of the Act.
In this context, it appropriate to delve into the facts and
law decided by the Hon'ble Supreme Court in the Energy
Watchdog supra.
25. The factual matrix in the Energy Watchdog involved
large generating companies that had established power
- 45 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
plants specifically for inter-state sale through long-term
power purchase agreements with the distribution
companies in the multiple states signed prior to
commercial operation of the projects. Though companies
are inter-state generating companies with composite
schemes across multiple States and not captive generators
or co-generation plants primarily serving their own
consumption and selling occasional surplus power alone.
Thus, the question decided in Energy Watchdog
concerning: (1) Whether Central Commission has
jurisdiction to regulate tariff under Section 79 of the Act
when there is a composite scheme for generation and sale
of electricity in more than one State? (2) Whether the
Central Commission's adoption of tariff under Section 63
of the Act after competitive bidding was subject to its
general regulatory powers under Section 79(1)(b) of the
Act ? For these questions the Hon'ble Supreme Court held
that, when there is a composite scheme defined as
generation and sale in more than one State under power
- 46 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
purchase agreements signed before Commercial
Operation, the Central Commission has jurisdiction to
regulate tariff, and that Section 63 of the Act must be read
harmoniously with Section 79(1)(b) of the Act to allow
regulatory supervision, even in case of competitive
bidding. Para-24 of the Energy Watchdog judgment reads
thus:
"24. The scheme that emerges from these
Sections is that whenever there is inter-State
generation or supply of electricity, it is the
Central Government that is involved, and
whenever there is intra-State generation or
supply of electricity, the State Government or
the State Commission is involved. This is the
precise scheme of the entire Act,
including Sections 79 and 86. It will be seen
that Section 79(1) itself in sub- sections (c), (d)
and (e) speaks of inter-State transmission and
inter- State operations. This is to be contrasted
with Section 86 which deals with functions of the
State Commission which uses the expression
"within the State" in sub-clauses (a), (b), and
(d), and "intra-state" in sub- clause (c). This
being the case, it is clear that the PPA, which
deals with generation and supply of electricity,
will either have to be governed by the State
Commission or the Central Commission. The
State Commission's jurisdiction is only where
generation and supply takes place within the
- 47 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
State. On the other hand, the moment
generation and sale takes place in more than
one State, the Central Commission becomes the
appropriate Commission under the Act. What is
important to remember is that if we were to
accept the argument on behalf of the appellant,
and we were to hold in the Adani case that there
is no composite scheme for generation and sale,
as argued by the appellant, it would be clear
that neither Commission would have jurisdiction,
something which would lead to absurdity. Since
generation and sale of electricity is in more than
one State obviously Section 86 does not get
attracted. This being the case, we are
constrained to observe that the expression
"composite scheme" does not mean anything
more than a scheme for generation and sale of
electricity in more than one State.."
26. Whereas, the Co-ordinate Bench in the GMR Energy
while dealing with Section 11 of the Act along with Section
2(5) of the Act discussed in para No.98 to 100 are quoted
verbatim as under:
"98. Section 11 of the Act empowers the
appropriate Government to issue directions. The
appropriate Government is defined under
Section 2(5) of the Act. Appropriate Government
means Central Government or State
Government. In what cases directions can be
issued by the Central Government is clearly set
out in Clause (a) sub-Section 2(5) of Section 2.
- 48 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
In any other case, it is the State Government.
Sub-Clause (i) (iii) and (iv) of Clause (a) is clear,
and no interpretation is called for. By giving the
words their plain and ordinary meaning, the
intention of the parliament could be gathered. In
respect of a generating company wholly or partly
owned by it, or in relation to any works or
electric installation belonging to it or under its
control or in respect of National Load Despatch
Centre and Regional Load Despatch Centre, the
Appropriate Government under Section 11 is the
Central Government.
99. Section 2 (5)(a)(ii) is in relation to any
interstate generation, transmission, trading or
supply of electricity and with respect to any
mines, oil fields, railways, national highways,
airports, telegraphs, broadcasting stations and
any works of defence, dockyard, nuclear power
installations, the Central Government would be
the appropriate Government
100. In the said sub-Clause the word "supply of
electricity" is used. The argument is the word
'inter state is to be prefixed to the said word.
Then it reads as 'inter state supply of
electricity'. The argument is that in respect of
inter state supply of electricity, the appropriate
Government is the Central Government and,
therefore, the State Government has no power
to issue direction under Section 11 of the Act. In
order to appreciate this contention we have to
read the sub-Clause as a whole. It states the
Central Government in relation to any inter state
generation, transmission, trading or supply of
electricity and with respect to any mines, oil
- 49 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
fields, railways, national highways, airports,
telegraphs, broadcasting stations and any works
of defence, dockyard, nuclear power
installations. The word interstate is to be
prefixed to the words generation, transmission,
trading or supply of electricity. Then only the
said provision could be read to mean inter-state
supply of electricity. After referring to
generation, transmission, trading or supply of
electricity, the legislature has used the word
'and', and thereafter they have set out the
installations exclusively belonging to the Central
Government Therefore, generation,
transmission, trading or supply of electricity is
on the one side and specific installations
belonging to the Central Government are on the
other side and they are connected by the word
'and'. Normally, the word 'and' signifies that it
has to be read conjuntively. In other words the
connecting words have to be read together. If so
read the interstate generation, transmission,
trading or supply of electricity, would fall within
the jurisdiction of the Central Government. If
only when the inter-state generation,
transmission, trading or supply of electricity, is
with respect to the installations mentioned
specifically in the sub-Clause. Then the
appropriate Government would be the Central
Government. The reason is not far to seek. All
the installations referred to in sub-Clause firstly
belong to the Central Government. They are
maintained by the Central Government for the
public of the country and they are key
installations. Where-ever the electricity is
generated, it is supplied to those installations
which may be located outside the State. To
- 50 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
ensure the proper working of those installations
in extra-ordinary circumstances the Central
Government can exercise the power under
Section 11. Therefore, inter state supply of
electricity has to be understood in the context in
which it is used in the said sub-clause, namely
inter-state supply of electricity to the
installations specifically mentioned in that sub-
clause which exclusively belongs to the Central
Government. In other words, in respect of inter-
state supply of electricity, installations other
than those mentioned in the said sub-clause, the
Central Government has no role to play. It is not
concerned. The location of the generating
company and the power stations within the
geographical jurisdiction of a State is a critical
factor because the State's jurisdiction cannot
extend beyond its boundaries. The mere
existence of de-minimus supply inter-state
would not take away the jurisdiction of the State
Government which has to deal with the extra-
ordinary circumstances existing within the State.
However, even in cases where a generating
station is situated within a State and if that
generating station is supplying electricity outside
the State to a Central Government
establishment as mentioned in sub-Clause (ii) of
Clause (a) of sub-Section (5) of Section 2 the
jurisdiction of the State Government to issue
direction under Section 11 of the Act stands
excluded. If so interpreted there is no conflict of
interest between the State Government and
State Government's power under the Act as both
the Governments can exercise this power in
public interest or under the circumstances
narrated in the explanation to Section 11(1) of
- 51 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
the Act Therefore, in the instant case, the
Appropriate Government under Section 11 of the
Act, is the State Government, as such the power
is properly exercised."
27. On a careful perusal of the findings of the Hon'ble
Supreme Court in the case of Energy Watchdog, it could
be gathered that, the observations were made specifically
in the context of explaining the tariff determination for the
composite scheme involved in multiple States by the
Central Commission and not in the context of explaining
Section 11 of the Act - emergency powers or the definition
of "appropriate government" in Section 2(5) of the Act for
purpose of Section 11 of the Act. Further, even within the
context of tariff jurisdiction, the Supreme Court's
observation must be understood as referring to the
specific situation of composite schemes involving
generation and sale to multiple States under pre-existing
Power Purchase Agreements (PPAs) as such schemes
inherently involve multi-state operations requiring uniform
regulatory supervision that cannot be effectively provided
- 52 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
by individual State Commissions with jurisdiction limited to
their territories. The observations held in Energy
Watchdog supra need not necessarily address Section
2(5)(a)(ii) of the Act in the context of Section 11 of the
Act and also it does not address the question of
emergency powers over the embedded generators.
28. Besides, the Co-ordinate Bench in GMR Energy has
interpreted Section 11 along with Section 2(5) of the Act,
it specifically and comprehensively analysed Section
2(5)(a)(ii) of the Act in the context of Section 11 of the
Act with respect to inter-state v/s intra-state transaction.
It further clarified the position involving 'exceptional
power' during 'extraordinary circumstance' under Section
11 r/w Section 2(5) of the Act by referring to the
scheme[s] of the Act, in a much diverse context rather
than confining to the findings of the Hon'ble Supreme
Court in Energy Watchdog.
29. The Hon'ble Supreme Court in the case of Carrier
Institute Educational Society v/s Om Shree Thakur Ji
- 53 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
Educational Society - (2023) SCC OnLine SC 586 , while
distinguishing 'ratio' from 'obiter' held that, the ratio
decidendi of a judgment alone i.e., ideally, the principles
of law applied to the material facts which form the basis of
the judgment constitute binding precedent under Article
141 of the Constitution. The observations made to
elucidate a judgment involving illustrations and
discussions of legal principles constitute obiter dicta, which
merely hold a persuasive disposition and therefore is not
binding on the Courts below with the force tantamount to
ratio decidendi.
30. Further, the Hon'ble Apex Court in the case of Padma
Sundara Rao v/s State of Tamilnadu -(2002) Vol-3 SCC
533, while examining each judicial utterance as ratio
decidendi, emphasized that, "...there is always peril in
treating the words of a speech or judgment as though they
have words in a legislative enactment that judicial
utterance is made in the setting of the facts of a particular
case". It is further noted that, "circumstantial flexibility,
- 54 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
one additional or different fact make a world of difference
between conclusion in two cases".
31. By applying these principles to the instant case, as
discussed supra, we are afraid we are unable to accept the
findings reached by the learned Single Judge's preposition
held in Energy Watchdog that, whenever there involves an
inter-state transmission the Central Government would be
involved and Section 11 of the Act cannot be viewed as
egressing expanse. Thus, we answer point No.1 that, the
observation in the Energy Watchdog are mere obiter dicta
and not a binding precedent; the findings of the Co-
ordinate Bench in GMR Energy ought not to have been
departed by the learned Single Judge while deciding the
issues involved in the instant Writ Petitions as the core
issue in the instant case and the GMR Energy are similar.
32. Ahead of delving into point No.2 raised above, it is
imperative to quote verbatim Section 2(5)(i) and Section
11 of the Act, as under:
- 55 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
Section 2. (Definitions): --- In this Act, unless
the context otherwise requires,--
(5) "Appropriate Government" means, -
(a) the Central Government, -
(i) in respect of a generating company wholly or
partly owned by it;
Section 11. (Directions to generating
companies): (1) Appropriate Government may
specify that a generating company shall, in
extraordinary circumstances operate and maintain
any generating station in accordance with the
directions of that Government.
Explanation. - For the purposes of this section, the
expression "extraordinary circumstances" means
circumstances arising out of threat to security of
the State, public order or a natural calamity or such
other circumstances arising in the public interest.
(2) The Appropriate Commission may offset the
adverse financial impact of the directions referred
to in sub-section (1) on any generating company in
such manner as it considers appropriate.
33. The cardinal principle governing statutory
interpretation is that, each provision of law must be read
in its true sense and in harmony with the statute's object
and purpose. As discussed supra the objective of the new
Act is the generation of electricity to be de-licensed and
captive generators to be freely permitted except in case of
- 56 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
Hydro projects. Creation of transmission, utility at the
Central as well as State, would be a government company
and they collectively have the responsibility of ensuring
that the transmission network is developed in a planned
and coordinated manner to meet the requirements of the
sector. The National Electricity Policy aims at laying
guidelines for accelerated development of the power
sector, providing supply of electricity to all areas and
protecting the interests of consumers and other stake
holders while being mindful and keeping a track of the
availability of energy resources, technology available to
exploit the resources, economic generation using different
resources and energy security issues.
34. The opening words of Section 2 of the Act reads, "In
this act, unless the context otherwise requires". The
Hon'ble Apex Court in the case of K.V Muttu v/s
Angamuttu Amal - (1997) 2 SCC 53 held that, despite
usage of conclusive words, "means" definition clause must
- 57 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
be read subject to the opening phrase "Unless the context,
otherwise requires".
35. Section 7 of the Act allows for setting up of
generating station by the generating companies without
license and Section 9 of the Act permits to maintain or
operate the captive generating plant; dedicated
transmitted lines provide the supply of electricity through
the grid shall be regulated in the similar manner as the
generating station of a generating company. Section 11 of
the Act empowers the appropriate government to override
the above liberties during "extraordinary circumstance", as
those arising from threat to security of the State, public
order, natural calamity or such other circumstance arising
in the public interest. The circumstance incorporated in
explanation to Section 11 of the Act, has to be interpreted
to mean extraordinary circumstance, the State-specific or
region-specific situations require immediate local response
by the government having jurisdiction over the affected
geographical area. The Co-ordinate Bench of this Court in
- 58 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
the case of GMR Energy in Para-59 to Para-69 while
discussing the extraordinary circumstance held as under:
"59. "Such other circumstances" is a
general word or statement, if it follows an
enumeration of circumstances of a particular or
specific meaning, such general words are not to
be construed in their widest extent, but are to be
held as applying only to circumstances of the
same kind or class as those specifically
mentioned. It is a cannon of statutory
construction that where general words follow the
enumeration of particular classes of things, the
general words will be construed as applying only
to things of the same general class as those
enumerated. In the instant case the said
expression is used in an explanation where the
word "Extra Ordinary Circumstances" is
defined, only for the purpose of Section 11(1) of
the Act. It sets out three circumstances
constituting Extra ordinary circumstances. They
are:
(a) Threat to security of the State, Public
order;
(b) A natural calamity;
(c) Such other circumstances arising in
public interest.
60. Firstly the words "such other
circumstances" are not used after the
words "Public Interest", which is the third
category constituting an extra ordinary
circumstance. It is used after the two categories.
The question is whether the first two categories
constitute the same class or kind. If the answer
is no, the principle of ejusdem generis has no
- 59 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
application in construing the words 'such other
circumstances'.
61. Let us take the first category. Threat
to security of State. It may be from outside the
country or inside the country. Similarly, there
may be threat to public order. This threat to the
security of the State, and Public order constitute
one class or kind and they are put together
because, between these two words the
word OR is conspicuously missing. Such a
circumstance is man made one. Generally it is
an act of enemy may be from out side or inside
the country. Unity and integrity of the country is
threatened. The phrase used in Section 11 of the
Act is "in extra ordinary circumstances". i.e., it is
only to meet an extra ordinary circumstance
such as threat to the security of the State or
public order, if electricity is needed and not
available at the disposal of the Government this
power could be exercised to procure electricity
from private hands. To meet such a
circumstance, if electricity is needed and it is
available in plenty, the question of Government
exercising the power under Section 11 would not
arise. Only when the electricity is not available,
it is in the hands of private persons, the
Electricity is needed to face the threat to the
security of the State or public order, this power
could be exercised. However, it does not mean
when there is a threat to the security of the
State or public order, this power could be
exercised even though there is no scarcity of
electricity. In other words threat to the security
of the State or public order is not the cause for
scarcity of electricity. After the word 'public
order' the word 'OR' is used. The word OR is
normally disjunctive. It is an indication that the
first category constitutes a class or kind by itself,
and the second category is an alternative. The
second category is a natural calamity. It is a
- 60 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
natures fury. It is an act of God. It is class by
itself, as well understood in legal terminology
as VISMAJOR. Again unless there is shortage of
electricity the question of Government exercising
this power do not arise. It is only when the
challenge posed by such natural calamity it is to
be met, electricity is required and if sufficient
electricity is not available at the disposal of the
Government, the Government could exercise this
power to procure the electricity from private
generating companies. This constitute a separate
category or genus. There is no connection
whatsoever between the first category and
second category. These two categories do not
constitute a class, or kind or genus.
62. These were the only two categories
which were found in the Section when the Bill
was moved in the parliament. The draftsmen did
not provide for any general words. It was not in
his contemplation at all. When the Bill was
moved in the parliament, the representatives of
the people in their wisdom thought that the said
provision would not adequately meet all
situation. Even in the absence of the aforesaid
two circumstances, if there is severe scarcity of
electricity and the public at large, in particular,
the farmers, people living in the villages or
hamlets, or below the poverty line or working
class and even people belonging to middle class,
who cannot afford to pay higher tariff, cannot be
denied electricity supply. The National Policy
envisages an obligation on the Government to
supply electricity to rural areas under Section 6
of the Act. India is still a Socialistic State.
Electricity is an essential requirement of all
facets of our life. It is a basic human need, as
food, clothing and shelter. Though the Act
liberalizes the market economy but is not a
lazzie faire provision, which seeks to limit the
operation of the public interest and directions
- 61 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
related thereto. Therefore a member of the
parliament proposed an amendment to cover the
interest of the common man of this country by
an addition of an independent category apart
from the existing two categories namely "such
other circumstances arising in public
interest". The amendment was allowed and it
became part of the Section. The subsequent
amendment to Section 6 of the Act makes the
intention clear. By the Electricity (Amendment)
Act, 2007 the old Section 6, is substituted by
new Section 6 which provides that the concerned
State Government and the Central Government
shall jointly endeavor of provide access to
electricity to all areas including villages and
hamlets through rural electricity infrastructure
and electrification of households.
63. Therefore the third category is "such
other circumstances affecting public interest".
Thereby meaning circumstances other than the
earlier two categories. Therefore, the word OR is
again used after the word calamity, making the
intention clear that the third category is yet
another alternative and to be read disjunctively.
The only common feature running underneath
these three categories is an extra ordinary
circumstance requiring electricity, justifying
invoking the power under Section 11 of the Act.
Therefore, that is not a general word used to
follow the specific words constituting a genus
and restricted to things ejusdem generis with
those preceding them.
64. The cardinal rule of interpretation is
to allow the general words to take their natural
wide meaning. When this general word is added
by way of amendment, the intention of the
parliament is clear, that these words are in
addition to the other two circumstances, in the
Bill before amendment, as an independent
category or genus. Any other interpretation
- 62 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
would negate the parliamentary intention and
would not conform to the parliaments intended
meaning of the enactment. The application of
the rule would produce a result contrary to the
legal meaning taking to be intended by
parliament. More over this principle of ejusdem
generis is pressed into service to resolve the
ambiguity or uncertainty and reconcile
incompatibility between specific and general
words. In the instant case there is no ambiguity.
There is no incompatibility between specific
words and general words. The general words
used itself constitutes an independent category
or genus. "Public interest" itself is a category. If
this rule is applied to define and restrict the
meaning of public interest, it would lead to
absurd result. In the absence of the specific
words constituting a genus, there is no room for
the application of the rule.
65. This Act was passed with the fond
hope to increase the production of electricity
supply. By mere passing a legislation the same
cannot be achieved. Reasonable time is required
to achieve the object of the Act. Probably a step
in the right direction is taken. Over night results
cannot be expected. Therefore, it will take some
more time to have enough supply of electricity
produced to meet the demands of the society.
Supply of electricity at reasonable rate to rural
India is essential for its overall development.
Equally important is availability of reliable and
quality power at competitive rates to Indian
industry to make it globally competitive and to
enable it to exploit the tremendous potential of
employment generation. Electricity is an
essential requirement for all facets of our life. It
has become a basic human need. It is a critical
infrastructure on which the socio-economic
development of the country depends. No
Legislature ever intends to favour one section of
- 63 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
the population against the other. Its ostensible
and proclaimed intention is always that it is
doing justice between the various sections of the
population. No rule is better established than
that where two meanings are possible, we must
take the more reasonable one. If the choice is
between the two interpretations the narrower of
which would fail to achieve the manifest purpose
of the legislation, Courts should avoid a
construction which would reduce the legislation
to futility and should rather accept the bolder
construction based on the view the Parliament
would legislate only for the purpose of bringing
about one effective result. When the Court is
called upon to give a wide or limited
interpretation to a particular expression and
when that expression is capable of both these
interpretations, it is open to the Court to
consider what was the object of the Legislature
and what was the mischief aimed at and the
Court must try and give that construction to
particular expression which will be more
consistent with the suppression of the mischief
rather man that mischief being allowed to
continue uncontrolled. When material words of a
statute are capable of two constructions, one of
which is likely to defeat or impair the policy of
the Act whilst the other construction is likely to
assist the achievement of the said policy, then
the Courts would prefer to adopt the latter
construction. It is more probable that Legislature
should have used the word in that interpretation
which least offends against 'our sense of justice'.
If it appears that one of the two constructions
will do injustice, and the other avoid injustice,
men it is the bounden duty of the Court to adopt
the second, and not adopt the first, of those
constructions. Where one constructions leads to
absurdity, and the other makes the statute
logical, the latter construction is to be preferred
- 64 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
as every effort should be made to make sense
and not nonsense of legislation.
66. It was next contended that, in Section
62 of the Act while dealing with determination of
tariff, they have provided determination of tariff
in case of shortage of supply for a period not
exceeding one year. Therefore, shortage of
electricity is not an extra-ordinary circumstance
and that is how though in Section 62 the word
'shortage of power' is used, such a word is
conspicuously missing in Section 11. Part VII of
the Act deals exclusively with tariff. Section 61
speaks of tariff regulations. It provides that, the
Appropriate Commission shall, subject to the
provisions of this Act, specify the terms and
conditions for the determination of tariff, and in
doing so, shall be guided by the criteria which
are set out in the said section from Clause (a) to
Clause (i). One of the criteria to be taken note of
is safeguarding of consumers' interest and at the
same time, recovery of the cost of electricity in a
reasonable manner. Also, it should bear in mind
the National Electricity Policy and tariff policy.
Section 63 of the Act makes it very clear the
Appropriate Commission shall adopt tariff if such
tariff has been determined through transparent
process of bidding in accordance with the
guidelines issued by the Central Government.
Then Section 62 provides for determination of
tariff. It empowers the Appropriate Commission
to determine the tariff in accordance with the
provisions of the Act for supply of electricity by a
generating company to a distribution licensee;
transmission of electricity; wheeling of electricity
and retail sale of electricity. In case of shortage
of supply of electricity, the Appropriate
Commission is empowered to fix the minimum
and maximum ceiling of tariff for sale or
purchase of electricity in pursuance of an
agreement, entered into between a generating
- 65 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
company and a licensee or between licensees,
for a period not exceeding one year to ensure
reasonable prices of electricity. Therefore, the
proviso which empowers fixation of tariff in case
of shortage of supply of electricity is only
between a generating company and a licensee
and not in other case. Therefore, Section 11(2)
provides that, when there is a direction to supply
electricity to a State grid and the price is fixed
for such supply by the Appropriate Government
results in adverse financial impact on such
generating company, the Appropriate
Commission has been conferred the power to
offset the adverse financial impact. Therefore,
the argument that the word 'shortage of supply
of electricity' is specifically used in Section 62
and the same is conspicuously absent in Section
11, the shortage of supply of electricity cannot
be a ground to exercise power under Section 11
or fix the tariff for such power to be supplied is
without any substance. Section 62 applies to a
case where there is no direction under Section
11. Once the direction is granted it is Section
11(2) which is attracted and not Section 62.
67. It was contended what the Court has
to keep in mind is not the effect but the cause
for shortage of scarcity of electricity. Only a
circumstance such as threat to the State, public
order, natural calamity should result in scarcity
of electricity. Then only the Government has the
power to invoke Section 11 of the Act. The
circumstances set out in the order viewed in that
context was in existence prior to the passing of
the enactment. It is only because of that, this
Act was passed liberalizing the production of
electricity by introducing the concepts like open
access, delicensing, etc., and, therefore, the
facts stated in the order do not constitute an
extra-ordinary circumstance in public interest
justifying the exercise of power under Section 11
- 66 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
of the Act. If there is sufficient supply of
electricity and there is a breach to the security
of the State or public order to meet such a
threat if the Government wants electricity it
could procure the same and meet such a
situation. Similarly, when there is a natural
calamity and the electricity is available in plenty,
the question of the Government invoking Section
11 would not arise. What the Section meant is
not that scarcity of electricity shall result on
account of threat to security of the State or
public order or natural calamity. It is to meet a
situation of that nature, if electricity is required
and it is not available at the disposal of the
Government and if it is in the hands of private
generators, then it becomes necessary for the
Government to compel those private generators
to supply the electricity to the Government to
face its challenge. Therefore, what is provided in
the explanation is not the cause for scarcity.
They are the circumstances which require to be
faced, by the Government for which electricity is
required. Therefore the parliament by way of
Explanation has set out three circumstances,
under which the Government can exercise its
power under Section 11 of the Act.
68. The impugned order clearly sets out
the circumstances under which the same came
to be passed. It is stated that Karnataka is
facing a severe power shortage in the year
2008-2009. There is a glaring demand--supply
gap in the State. According to the Energy Power
Survey of the Union Ministry of Power, in 2008,
while demand is expected to be 8228 MW,
supply is of the order of 5939 MW, leading to a
gap of about 2300 MW. One of the reasons for
such deficit situation is poor water inflows to the
major hydel reservoirs of Linganamakki, Supa
and Manl Dams respectively. These reservoirs
reached only 62% of their levels, as against
- 67 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
88% in the previous year. Karnataka is hydel
dependent. Daily power generation from the
major Hydros was 21 MU, compared to 32 MU
per day in the same period last year. There was
a drastic reduction in power availability from its
share of central generating stations. As against
the expected share of 1542 MW daily, on an
average only about 1000 MW was received,
resulting in a shortage of 500 MW. The Bellary
Thermal Power Station of 500 MW,
commissioned at the end of July, 2008 unit
experienced 35 trips in the period August to
October, 2008. At present the unit is operating
at part capacity, resulting in further power
shortages to the grid. Demand for power is
expected to increase in the period January 2009
to May 2009. Then a tabular column is given
showing the availability of electricity, electricity
required and the deficit for the months January
to May 2009. They have also introduced power
cuts in the State. It is in those circumstances,
special measures were required to protect the
public interest. In that context they felt it is
imperative that all power generated in the State,
including power from those who have gone on
Open Access and are exporting power outside
the State, be made available to the State Grid.
When this is facilitated, nearly 500 MW of power
will be available to the State. Therefore, as a
matter of policy, in public interest, to mitigate
the severe power crisis in the State, all
generators of the State were directed to operate,
maintain the generating stations and supply all
the electricity thus generated to the State Grid
for the consumption of all the consumers of
electricity within the State to bridge the
demand-supply gap. It is only a stop gap
arrangement. It is for a limited period. It is not a
permanent phenomenon. The supply of
electricity is sought to be regulated during crisis
in public interest.
- 68 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
69. Keeping in mind these well settled
principles of interpretation of statutes, the
purpose of the legislation, the circumstances
under which the amendment was done and for
the reasons set out in the impugned order, we
are of the view that the circumstances set out in
the impugned order constitute an 'extra-ordinary
circumstance' justifying the exercise of power
under Section 11 of the Act in public interest."
36. The Co-ordinate Bench of this Court further observed
that, Section 11 of the Act is in the nature of an exception
to the general rule of deregulation, applicable specifically
when extraordinary circumstances justify government
intervention. Albeit extraordinary circumstances have not
left discretion with the appropriate government to decide
what constitutes and qualifies to be extraordinary
circumstances, however, it has unilaterally elucidated and
defined them with reference to threats to the State
security, public order, natural calamities or public interest
i.e., matter quintessentially within the purview of the State
Government.
37. In our considered view, the observation of the
Coordinate Bench on this aspect is well reasoned and well-
- 69 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
thought-out one. Nonetheless, failed monsoon, reservoir
depletion, agricultural demand spikes or regional heat
waves, essentially creates an indigenous extraordinary
circumstance and contextual interpretation of Section 11
of the Act must recognize it. The electricity crises are the
archetypical regional or State specific phenomenon. During
a drought induced power crises in the State, the State
Government is compelled to handle the situation by
exercising emergency power stipulated under Section 11
of the Act over generators embedded in the State when
those generators occasionally sell the surplus power to
other States. Here, we find it essential and relevant to
refer the proceedings of the Government of Karnataka
dated 16.10.2023, wherein the preamble of the
notification reads as under:
PROCEEDINGS OF THE GOVERNMENT OF KARNATAKA
Preamble:
1. The State electricity demand is presently
met from KPCL Thermal & Hydel Plants, CGS,
UPCL, RE, Swapping from other States and
- 70 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
different segments of Power Exchanges. Due to
increase in demand, the State is experiencing a
major power crisis on account of failed monsoon
and increased demand from agricultural
consumers.
2. The demand and energy requirement in the
State is increasing day by day and at present the
State ESCOMs are facing severe shortage of
power to an extent of 3000 to 3500 MW. The
State is likely to reach a peak load of 18214 MW
and around 357 MU/day during the coming
months i.e., from November, 2023 to May, 2024.
3. Even though the installed capacity in the
State is around 32,000 MW, meeting the
increased demand during the coming months
would be a challenging task because, more than
50% of the installed capacity is from renewal
energy source which is infirm/uncertain in terms
of meeting the RTC demand.
4. The failure of monsoon has resulted in
drought situation, resulting in less availability of
water in the hydro reservoirs, increased demand
of loads, non-availability of required quantum of
power in the market even after making all out
efforts by ESCOMs to buy power in the market
including from the Energy exchange at the
maximum cap rate.
5. The State has recorded peak demand of
16,950 MW and energy consumption of 294 MU in
the month of August, 2023 due to deficit
monsoon, leading to distress situation forcing the
SLDC to take Load Management measures since
August' 2023. Dependence on power market to
meet the increased State demand alone, may lead
to uncertainty in availability. The monthly State
demand has increased as compared to previous
year to an extent of 32%.
- 71 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
6. Due to increase in demand, State is
expecting a daily energy shortfall to an extent of
40 -- 50 MU.
7. All the market segments are being explored
on a day ahead as well as real time basis to meet
the unprecedented rise in demand. The entire
country is also facing a high demand situation and
has recorded a demand of 240 GW in September,
2023 as notified by Grid India Ltd. The availability
of power in the market is minimal due to
continued dry spells in the absence of normal
monsoon and increased demand in all the States.
8. In the prevailing increased State demand
situation, one of the options left before the
Government is to curtail the load to an extent of
1500 to 2000 MW to maintain grid stability as
mandated by CERC & KERC Regulations and
orders. However, the curtailment of load may give
rise to other unforeseen problems.
9. Thermal units having PPA with ESCOMs are
very crucial to meet the state peak demand by
running them to their full capacity, however poor
quality of coal is leading to non- availability of
thermal units/under generation.
10. Moreover, due to sub normal rainfall in the
State, the reservoir levels are very low as
compared to the last year and over-dependency
on hydro generation runs the risk the further
depletion of major hydel reservoirs which would
affect future power availability. The present
energy available from major hydel reservoirs for
the current year is short by about 3000 MU. The
storage levels in major reservoirs and the
generation availability, as compared to previous
year is shown below:
- 72 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
Reservo % % Genera
ir Name storage storage tion
as on as on loss in
10.10.2 07.10.2 MU
Lingama 90.60% 45.40% 2060
kki
Supa 71.57% 54.37% 543
Varahi 73.79% 36.26% 365
Total 2968
11. The KERC has approved bilateral purchase of
1000MW-RTC and 250 MW- peak power from
October, 2023 to May, 2024 from the power
markets and through Deep- e- Portal, which is
being pursued.
12. State Government has also requested the
MoP, Government of India to allocate 600 MW of
unallocated power of Central Generating Stations
(CGS) to Karnataka from October, 2023 to May,
2024 considering the severe power crisis in the
State.
13. From the facts indicated in the pre-paras, it
is evident that, though all efforts are being made
to source the power from the various available
resources, the day-to-day demand is not being
met on account of wide gap in demand and
availability, owing to failed monsoon,
unforeseen/foreseen outages and under
generation of Conventional generators and
uncertainty from RE sources.
14. It has been noted that many generators
within the State are exporting power outside the
State through power exchange and short-term
- 73 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
open access. In view of similar power supply
crises in the past also, the GoK had invoked its
power under Section, 11 of Electricity Act, 2003
and the State availed the supply of power from
intra State generators who are availing Open
Access to mitigate the power crisis.
15. Hon'ble Chief Minister reviewed the power
situation in the State on 13.10.2023 and directed
to impose section, 11 of Electricity Act, 2003 with
immediate effect for all intra State generators to
inject power into the State grid.
16. Section, 11 of Electricity Act, 2003 provides
that:
"Appropriate Government may specify that a
generating company shall, in extraordinary
circumstances operate and maintain any
generating station in accordance with the
directions of that Government"
17. It is observed from IEX data, in the short-
term market of the last six months, average rate
is around Rs.4.86/unit excluding transmission and
other related cost.
18. As a matter of policy and in the public
interest and to mitigate the severe power
shortage in the State, Government of Karnataka
hereby direct that all the Generators operating in
the State of Karnataka shall run their plants to full
exportable capacity and inject all the energy
generated to the State Grid for utilization within
the State to bridge the demand supply gap. Hence
this order.
38. On rudimentary reading of the above notification, it
could be gathered that the notification was issued in an
- 74 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
extraordinary circumstance, the public order arising from
natural calamities, such as failed monsoon, reservoir
depilation, recorded peak demand 16,950 Mega Watt and
energy consumption of 294 Mega Unit in the month of
August 2023 owing to a monsoon deficit which paved way
to a dire situation. It is pivotal to note that the State
Government took the decision as a remedial and
protective one in the State's interest. As discussed supra,
Section 11(2) of the Act is a remedial mechanism ensuring
that generators are compensated for financial prejudice
arising from emergency directions. When Sections 11(1)
and 11(2) of the Act are read harmoniously it elucidates
that, "appropriate government" and "appropriate
commission" in these provision must be read in tandem
and that the government empowered to issue emergency
directions must be the same government whose
Regulatory Commission has jurisdiction over the affected
generators and can provide effective financial redressal.
- 75 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
39. In the case of GMR Energy, the Co-ordinate Bench of
this Court while discussing the operation and maintenance
of electricity, defined the terms electricity, generate,
generating station, generating company, grid, license,
consumer and supply in paras 80 to 84, the same are
quoted verbatim as under:
"80. The word "generate" means to
produce electricity from a generating station for
the purpose of giving supply to any premises or
enabling a supply to be so given. In the word
'generate' both production and supply is implicit.
The direction to operate and maintain any
generating station means a direction to produce
and supply • electricity. Though the Parliament
took pains to define the aforesaid words, they
have not defined the word 'operate' and
'maintain'. Therefore, we have to go by the
dictionary meaning of those words. The
word 'operate' according to the Oxford
Dictionary means "to work in a particular
way". The word 'maintain' means, the act of
keeping in good condition by checking or
repairing it regularly; to continue at the same
level, standard; to keep something in good
condition; to carry on or continue; to keep
unimpaired or in proper condition. The direction
is given to a generating company. Generating
company means any company or body corporate
or association or body of individuals, whether
incorporated or not, or artificial juridical person,
which owns or operates or maintains a
generating station. So, the direction is not given
only to the person who owns generating station.
- 76 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
It is also given to a person who operates or
maintains a generating station. Therefore, the
direction to operate and maintain a generating
station means direction to produce electricity
from a generating station for the purposes of
giving supply and supply the same in a
particular way and continue to supply at the
same level and keep the generating station in
good condition by checking and repairing it
regularly i.e., to keep it unimpaired or in proper
condition.
81. The word 'supply' has been defined
under Section 2(70) meaning the sale of
electricity to a licensee or consumer. The
consumer, means any person, who in turn shall
include a company or body corporate or
association or body of individuals, whether
incorporated or not, or artificial juridical person,
who is supplied with electricity for his own use
by a licence or the Government or by any other
person engaged in the business of supplying
electricity to the public under this Act or any
other law for the time being in force and
includes any person whose premises are for the
time being connected for the purpose of
receiving electricity with the works of a licencee,
the Government or such other person, as the
case may be. Similarly, the word 'licensee'
means a person who has been granted a licence
under Section 14 to transmit electricity or
distribute electricity or undertake trading
electricity. It is in this context the word 'supply'
as defined under the Act is to be understood.
Therefore, 'supply' means supply to these two
category of persons. It does not take within its
stride supply of electricity to a Government and
supply of electricity to a 'grid' which means the
high voltage backbone system of inter-
connected transmission lines, sub-station and
generating plants. Therefore, the word 'supply'
- 77 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
as defined under the Act which is used in sub-
Section (2) of Section 10 is confined only to
commercial supply of electricity. The word
'supply' has been specifically used in Section
10(2) of the Act which deals with duties of
generating companies. Sub-Section (2) of
Section 10 specifically provides that, a
generating company may supply electricity to
any licensee in accordance with this Act and the
rules and regulations made thereunder and
may, subject to the regulations made under
sub-Section (2) of Section 42, supply electricity
to any consumer.
82. When the generating company
produces electricity, the said power generated
cannot be stored by the generating company at
its generating station. The power generated is to
be supplied to the grid.
The word "supply" as defined under Section
2(70) of the Act do not refer to supply of the
electricity from the generating company to the
State Grid. In this context it is necessary to
keep in mind the opening words of Section 2 of
the Act which says in this Act, 'unless the
context otherwise requires'. Therefore, in the
context in which the word "supply" is used in the
Act, it means supply of electricity to any licencee
or a consumer only. It is used in a very narrow
sense. Therefore, when electricity is produced
by a generating company, before the electricity
produced is supplied to a licencee or a
consumer, it has to pass through the
transmission lines or the distribution systems or
operating facilities. The electricity produced by a
generating company cannot be supplied to a
customer or a licencee of their choice directly. It
has to pass through the State Grid. In other
words, the electricity produced is to be supplied
to the State Grid first and thereafter from the
- 78 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
State Grid it is supplied to the customer. The
word 'supply' defined in the Act refers to the
second stage, i.e., supply from the State Grid to
the customer.
83. The word "supply" of electricity is
conspicuously missing in Section 11. The reason
is not far to seek. If the word 'supply' found in
sub-Section (2) of Section 10 were to be
introduced in Section 11 also, it means the
electricity generated by virtue of the direction to
operate and maintain is to be supplied to the
licencee or customer of the generating company
only. It serves no purpose. For that
Government's intervention is not required.
Therefore, the legislature advisedly has not used
the word 'supply' in Section 11. It is because
when a generating station is operated and
maintained properly it results in production of
electricity. The electricity thus produced has to
be transmitted by means of transmission lines to
the grid. The extraordinary power cannot be
exercised by the State Government or the
Central Government only for the purpose of
increasing generation, only for the purpose of
operation and maintenance of a generating
station. When de-licensing, liberalisation is the
object of the Act, the private entrepreneurs who
are operating and maintaining these generating
stations do not need any direction from the
Government. It is a commercial venture. If there
is a demand in the market, they are bound to
put these generating stations to the optimum
use and scrupulously maintain the station so
that any hurdle in running of the generating
station would cause financial loss to them. If no
electricity is produced the question of supplying
the electricity as per the direction of the
Government would not arise. The condition
precedent for supply of electricity as per the
direction of the Government is electricity should
- 79 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
be produced. For its production the generating
station should be operated and maintained. In
order to supply the electricity as per the
direction, a further direction is issued to operate
and maintain because if they do not operate and
maintain a generating station properly they
would not produce electricity. The Government
has the power to issue direction to operate and
maintain the generating station. Therefore,
when the Government issues a direction to a
generating company to operate and maintain a
generating station and further states the
electricity so produced shall be supplied to the
State Grid only, it means the electricity supplied
is regulated so that the entire electricity
produced is available to the State for being
distributed in order to meet a situation
envisaged in Section 11 of the Act. In other
words, right of producer of the electricity to
supply to his customer or licencee is curtailed.
In this context, the word 'supply' used in the
impugned order is a general word and not a
word as defined under the Act. Therefore, when
the word 'supply' is conspicuously missing in
Section 11 of the Act, the direction issued to a
generating station to operate and maintain a
generating station includes a direction to supply
the electricity produced by such generation to
the State Grid. This does not mean supply in a
commercial sense as indicated in the definition
of supply in Section 2(70) as contra
distinguished by the meaning of supply in
Section 2(29). Section 11 is not meant for
supply of electricity to a licencee or a consumer.
It is only when electricity is to be supplied to a
person other than a licencee or a customer
Section 11 is invoked.
84. This meaning is implied from the
words used in sub-Section (2) of Section 11. It
provides that the Appropriate Commission may
- 80 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
offset the adverse financial impact of the
directions referred to in sub-Section (1) on any
generating company in such manner as it
considers appropriate. If the direction given by
the Government is only to be understood as
operate and maintain a generating station and
not supply of electricity, the generating
company cannot complain of any adverse
financial impact, because the electricity so
supplied is supplied to its customer or a licencee
for the market price agreed to between the
parties. Similarly, no such direction requires to
be given by any Government if it is for
commercial supply. Adverse financial impact
means the electricity generated by virtue of the
direction issued by the Government is not
fetching the generating company the price which
it would have fetched in the event of their
supplying to the licencee or a customer, i.e.,
less than the same. It has adverse financial
impact. Their interest is protected under the
said provision. It implies if the electricity so
produced is supplied to the Government at a
price lesser than the commercial price, the said
provision intends to protect the generating
company from such adverse financial impact.
The supply of electricity in pursuance of the
direction by the Government could be clearly
gathered from the aforesaid provision. What is
intended is appropriate compensation as a
consequence of non-commercial supply as
considered appropriate."
40. We unambiguously and explicitly concede with the
view expressed by the Co-ordinate Bench as above. In our
view the internal coherence of Section 11 of the Act is a
- 81 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
bulwark interpretation in circumstances when the
embedded generators operate within a State, although
trades/sells power inter-state, the State Government is
the appropriate government capable of both issuing
directions and ensuring compensation through the State
Commission. Against this backdrop, we are of the view
that, "appropriate government" as defined in Section 11 of
the Act must be interpreted contextually to mean the
State Government for embedded generators facing State
specific extraordinary circumstances, rather than rigidly
applying the definition stipulated under Section 2(5)(a)(ii)
of the Act, which defines "appropriate government" for the
purpose of the legislation. It is to be taken with a pinch of
salt that this definition is explicitly contingent to
contextual variation as could be inferred by the opening
words of Section 2 of the Act. Hence, Section 2(5) of the
Act cannot be permitted to defeat or restrict the exercise
of the emergency powers stipulated in Section 11 of the
- 82 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
Act, were the provision's object and the purpose require a
broader reading.
41. In light of the discussion supra, we collectively hold
that, ideally "extraordinary circumstances" in context of
Section 11 of the Act are archetypically regional and
confer jurisdiction on the State Government over
generators physically located within the State during state
specific crises.
42. An additional reasoning for our above conclusion to
avoid future abstrusity is that, admittedly, the respondents
are captive and cogeneration plants operated by sugar
manufacturing companies, they were primarily established
to meet their individual power requirements for sugar
production and the surplus power alone was sold
externally. These entities neither have composite schemes
for generation and sale of electricity in multiple States nor
do they operate as standalone independent power
producers with dedicated inter-state supply arrangements,
established prior to commercial operation of their plants.
- 83 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
M/s Chamundeshwari Sugars Limited operates a sugar
factory with an installed cogeneration capacity of 26 MW
with a maximum exportable capacity of 18 MW. NSL
Sugars operate similar cogeneration plants. These plants
use bagasse (sugarcane waste) as fuel which are pivotal in
the sugar manufacturing process. The primary purpose of
these plants is not generation of electricity for sale but
captive consumption for sugar production. It is upon
meeting the plants' own requirements and auxiliary
consumptions is any surplus available for trade. Even this
surplus is not sold under long-term Power Purchase
Agreements signed before commercial operation of the
plants, however, it is sold opportunistically through power
exchanges or short-term arrangements when surplus is
available and market prices are favourable. Thus, the
respondents' characterization of themselves as inter-state
generating companies engaged in inter-state generation,
transmission, trading, and supply is a legal conclusion not
supported by operational facts. The respondents obtained
- 84 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
No Objection Certificates from the State Load Dispatch
Centre for scheduling power through open access and
registered on power exchanges to sell surplus power.
However, obtaining NOCs for short-term open access and
making spot sales through exchanges does not transform
a captive generator into an inter-state generating
company under a composite scheme. Albeit the regulatory
framework permits captive generators and cogeneration
plants to sell surplus power through myriad mechanisms,
however, this flexibility does not alter their fundamental
character as embedded State generators primarily serve
captive load.
43. The concept of "composite scheme" as discussed in
Energy Watchdog and defined in the revised Tariff Policy
notified under Section 3 of the Act refers to generating
companies that establish power plants specifically for
generation and sale of electricity in more than one State,
having signed long-term or medium-term PPAs prior to
commercial operation for sale of at least 10% of capacity
- 85 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
to distribution licensees outside the State. The Respondent
companies do not meet these criteria. They are sugar
companies that happen to have cogeneration facilities, not
power companies with composite schemes. Their power
sales are incidental to their primary business and are
made on a short-term, opportunistic basis, not pursuant to
pre-existing multi-state sale commitments. Furthermore,
the operational control and regulatory supervision onus of
the respondent generating companies lie with the State
authorities. The State Load Dispatch Centre exercises
scheduling and dispatch control, conducts metering and
energy accounting, and issues the No Objection
Certificates required for their operations. The Regional
Load Despatch Centre and National Load Despatch Centre,
while involved in facilitating inter-state transactions, do
not exercise direct operational control over these
embedded generators. Schedule deviations, grid
management issues, and compliance with grid codes are
managed by the SLDC in coordination with other SLDCs
- 86 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
and RLDC, but the primary responsibility and control
remains with the SLDC. This operational reality reflects the
embedded nature of these generators within the State's
power system.
44. The distinction between true inter-state generating
companies under composite schemes and embedded
captive/cogeneration plants that occasionally sell surplus
power interstate is significant for the jurisdictional
purposes of Section 11 of the Act. The former are entities
whose entire business model and corporate purpose is
inter-state generation and supply, typically involving large
dedicated power plants, long-term PPAs with multiple state
utilities, and operation as independent power producers.
Such entities, exemplified by the generating companies in
Energy Watchdog, are appropriately subject to Central
Government and Central Commission jurisdiction because
their operations inherently span multiple States and
require uniform central supervision. The latter the
respondents in the present case are embedded within a
- 87 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
particular State's power system, primarily serve captive or
local needs, and engage in interstate transactions
marginally and opportunistically. These entities are
appropriately subject to State Government jurisdiction
under Section 11 of the Act as their operations are
cantered within the State, they depend on the State's
transmission infrastructure, and any extraordinary
circumstances justifying Section 11 of the Act intervention
are typically state-specific conditions affecting their
captive operations.
45. It is equally important to note that, the Central
Government has issued Section 11 of the Act directions
specifically to large imported coal-based power plants (ICB
plants) such as those operated by JSW Energy and Udupi
Power Corporation Limited, which are dedicated power
generation companies with significant capacities and
established inter-state supply arrangements. The Central
Government has not issued directions under Section 11 of
the Act to small captive and cogeneration plants
- 88 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
collectively across the country that may occasionally sell
power interstate.
46. On careful perusal of Section 2(28) of the Act defines
"generating company" to mean "any company or body
corporate or association or body of individuals, whether
incorporated or not, or artificial juridical person, which
owns or operates or maintains a generating station."
Section 2(29) of the Act defines "generate" to mean "to
produce electricity from a generating station for the
purpose of supplying to any premises or enabling a supply
to be so given." These definitions are broad and
encompassing, including both dedicated power companies
and industrial concerns with captive generation. However,
the statutory scheme distinguishes between different
categories of generators based on their operational
characteristics, ownership and the nature of the supply
arrangements.
47. In the case of GMR Energy, the Co-ordinate Bench of
this Court while discussing the concept of open access
- 89 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
under Section 2(47) of the Act, transmission lines under
Section 2(72) of the Act and distribution system under
Section 2(19) of the Act observed in paragraph No.104 as
under:
"104. It is to be remembered on the day
the Act came into force these transmission lines
and distribution system exclusively belonged to
the Government or statutory authorities. It is
exclusively used by the generating stations and
generating companies belong to the
Government. When once the law provided for
private participation in the generation, the
electricity generated by them had to be
simultaneously transmitted to the licencee and
consumers. If the existing transmission lines and
distribution systems are not made available to
private players they could not have established
generating stations, therefore, they have to be
assured that they would be provided the
transmission lines and distribution systems and
that there would be no discrimination between
the Governmental establishment and these
private agencies. However, such an open access
is also should be in accordance with the
regulations specified by the Appropriate
Commission. If a particular transmission line or a
distribution line is overcrowded and it cannot
take any more load it is not possible to grant
open access. However, subject to the availability
of the facility for transmission of electricity there
cannot be any discrimination between a
Governmental agency and these private players.
Therefore, open access means these private
players would be entitled to use transmission
lines or distribution systems as these facilities
- 90 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
are enjoyed by the Governmental agencies and
they are assured that there would not be any
discrimination between them. Therefore, it is a
non-discriminatory provision for the use of
transmission lines or distribution system or
associated facilities. It is nothing to do with the
liberty or the right to supply electricity to a
customer or a licencee of their choice, which is
regulated under the Act Therefore, 'open access'
does not mean unbridled right or absolute right
to supply electricity by the generating company
of their choice."
48. On careful perusal of the above observation of the
Co-ordinate Bench of this Court, we are of the considered
view that, the respondents' state embedded generators
cannot claim an absolute right of transmission/supply of
electricity to any licensee and the same is subject to
directions of the Government i.e. the State Government in
an extraordinary circumstance, arising in the public
interest. Accordingly, we answer point No.2 that, the
respondents'-generating companies do not qualify as
interstate generating companies within the meaning of
Section 2(36) of the Act and the Central Government is
not only the appropriate government to issue direction
- 91 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
under Section 11 of the Act but also the State government
has such power under Section 11 of Act under
extraordinary circumstances.
49. Coming to the next aspect of the matter that, the
respondent Altilium Energie Private Limited in W.P. No.
24239/2023 is a licensed electricity trader operating under a
trading license issued by the Central Electricity Regulatory
Commission pursuant to Section 14 of the Act. Altilium is not a
generating company and does not own, operate, or maintain
any generating station. Section 11(1) of the Act specifically and
exclusively addresses generating companies, empowering the
appropriate government to direct "a generating company" to
"operate and maintain any generating station" in accordance
with the government's directions during extraordinary
circumstances. Thus, it is clarified that as per Section 11 of the
Act power is exercisable over generating companies, not over
traders, distribution licensees, transmission licensees or
consumers. In the instant case, admittedly, the State
Government's Order dated 16.10.2023 imposed no
obligation on Altilium, conferred no right on Altilium, and
- 92 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
did not name or address Altilium. The Order was directed
exclusively to generating companies, requiring them to
operate at maximum capacity and supply power to the
State grid.
50. The generating company with which Altilium had a
Power Purchase Agreement-M/s Energy Development
Corporation-complied with the State Government's Order
under Section 11 of the Act and supplied power to the
State grid. Energy Development Corporation did not
challenge the Order and has not claimed that the Order
was unlawful or that it should be exempted from
compliance. When the direct addressee of a government
Order accepts and complies with the Order, a third party
who is commercially affected cannot maintain a Writ
Petition to challenge the Order. Altilium's position is
analogous to that of a contractor whose contract is
frustrated by government action directed at the other
contracting party; the frustration may cause economic
loss, but it does not give the contractor standing to
- 93 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
challenge the government's action in writ jurisdiction
unless the contractor's own independent legal rights are
violated.
51. The statutory scheme of the Act makes clear
distinctions between generators, transmission licensees,
distribution licensees, and traders, with separate
provisions governing each category. Traders are addressed
in Section 12 of the Act (requirement of license for
trading). Section 14 of the Act (grant of license including
for trading), and are subject to regulatory supervision by
the appropriate Commission regarding trading margins
and conditions of license. However, traders are
conspicuously absent from Section 11 of the Act, which
speaks only of generating companies and generating
stations. This deliberate limitation indicates Parliament's
intent that Section 11 of the Act powers be exercisable
directly over generators, not over the entire commercial
chain. Permitting traders to challenge Orders passed under
Section 11 of the Act would effectively give them a veto
- 94 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
over the government's exercise of emergency powers,
contrary to legislative intent and public interest.
Furthermore, Altilium's trading license, contains specific
conditions including Condition 6 which states: "The
licensee may with prior intimation to the Commission,
engage in any business for optimum utilization of assets.
Provided that the licensee shall not engage in the business
of transmission of electricity." This condition confirms that
Altilium's statutory role is limited to trading and does not
extend to generation or transmission.
52. The Co-ordinate Bench in GMR Energy specifically
addressed and rejected the locus standi of traders to
challenge Section 11 directions. Additionally, the Power
Purchase Agreement between Altilium and Energy
Development Corporation stipulates and provides for the
current situation. Clause 15(g) of the agreement expressly
enumerated that "any restriction imposed by any relevant
State Government on sale of power from Project under
this agreement" would constitute force majeure. The
- 95 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
learned Single Judge noted this provision, and although
the judgment enumerates that the petitioners cannot be
held to have waived their right to challenge the Order
based on contractual provisions, this analysis fails to
distinguish between the right to challenge an Order
affecting one's own legal rights and the lack of standing to
challenge an Order directed at others. Altilium's
contractual acknowledgment that government restrictions
on the generator would constitute force majeure confirms
that Altilium understood and accepted that its commercial
expectations under the PPA were subject to lawful
government action directed at the generator. This
contractual framework reinforces the conclusion that
Altilium has no independent legal right to challenge
directions issued to the generators under Section 11 of the
Act. Accordingly, we answer the point No.3 in the
"negative".
53. For the forgoing discussion, we are of the view that,
the interference called for in the impugned judgment
- 96 -
NC: 2025:KHC:54593-DB
HC-KAR AND 2 OTHERS
passed by the learned Single Judge. According, we pass
the following:
ORDER
i. The Writ Appeals are allowed.
ii. The impugned judgment dated 11.03.2024
passed by the learned Single Judge is hereby
set aside.
iii. State Government Order dated 16.10.2023 is
restored.
iv. Consequently, the following communications
are restored:
[A] The Communication dated 18.09.2023
in WP No.24998/2023.
[B] The Communication dated 17.10.2023
in WP No. 26324/2023.
[C] The Communication dated 18.10.2023
in WP No. 26833/2023.
SD/-
(ANU SIVARAMAN)
JUDGE
SD/-
(RAJESH RAI K)
JUDGE
PKS/List No.: 1 Sl No.: 2
