MUNICIPAL CORPORATION OF GREATER MUMBAI vs MAHARASHTRA ELECTRICITY REGULATORY COMMISSION & Ors

Court: Appellate Tribunal For Electricity
Case type: APPEAL
Decided on: 11-03-2026

<div> Judgement in Appeal Nos. 279 of 2017 IN THE APPELLATE TRIBUNAL FOR ELECTRICITY (Appellate Jurisdiction) APPEAL No. 279 OF 2017 th Dated: 11 March, 2026 Present: Hon`ble Ms. Seema Gupta, Officiating Chairperson Hon`ble Mr. Virender Bhat, Judicial Member In the matter of: MUNICIPAL CORPORATION OF GREATER MUMBAI, Brihanmumbai Electricity Supply And Transport Undertaking BEST Bhawan, BEST Marg Post Box No.192, Coloba, Mumbai-400 001. … Appellant(s) VERSUS 1. MAHARASHTRA ELECTRICITY REGULATORY COMMISSION Through Secretary , World Trade Centre No.1, th 13 floor, Cuffe Parade, Colaba, Mumbai – 400 001 2. TATA POWER COMPANY LIMITED, Through Managing Director Bombay House, 24, Homi Mody Street, Mumbai – 400 001 3. ADANI ELECTRICITY MUMBAI LIMITED, Through Managing Director CTS 407/A (New) 408 (Old), Village Eksar, Devidas Lane, Off SVP Road, Borovali (West), Mumbai – 400 103. …. Respondents Counsel on record for the Appellant(s) : Ms. Padma Priya Ms. Akanksha Das Ms. Aditi Sharma Page 1 of 28 Judgement in Appeal Nos. 279 of 2017 Mr. Kshitez Kaushik Mr. Dhruv Nayar Ms. Neetica Sharma Ms. Soumya Priyadarshini Ms. Shreya Sethi for App. 1 Counsel on record for the Respondent(s) : Ms. Pratiti Rungta for Res. 1 Mr. Amit Kapur Mr.Akshat Jain for Res. 2 Mr. Hemant Singh Mr. Ambuj Dixit Mr. Shariq Ahmed Mr. Lakshyajit Singh Bagdwal Mr. Tushar Srivastava Ms. Soumya Singh Mr. Karan Govel for Res. 3 JUDGEMENT PER HON’BLE MRS. SEEMA GUPTA, OFFICIATING CHAIRPERSON 1. The captioned appeal No. 279 of 2017 has been filed by Municipal Corporation of Greater Mumbai (herein referred as “Appellant”), challenging the order dated 12.06.2017 in Case No. 182 of 2014 and Case No. 40 of 2015 ( hereinafter referred as Impugned Order” ) passed by the Maharashtra Electricity Regulatory Commission. 2. The Appellant, Municipal Corporation of Greater Mumbai (MCGM), is a municipal corporation constituted under the Mumbai Municipal Corporation Act, 1888 and is a local authority under Part IX-A of the Constitution of India. Under the said Act, MCGM has an undertaking known as the Brihanmumbai Electric Supply and Transport Undertaking (BEST), which is a statutory undertaking of Page 2 of 28 Judgement in Appeal Nos. 279 of 2017 MCGM and accordingly, BEST falls within the definition of “local authority” under Section 2(41) of the Electricity Act, 2003. 3. The Respondent No.1 i.e. Maharashtra Electricity Regulatory Commission (herein referred as “MERC/State Commission ), is the Electricity Regulator for the State of Maharashtra. 4. The Respondent No. 2 i.e. Tata Power Company Limited (hereinafter referred to known as “TPCL” ) was earlier granted four distribution license in parts of Maharashtra before enactment of Electricity Act 2003, and the area under these licenses overlapped with the area of supply of BEST. Subsequently it has been granted distribution license by MERC (in suppression of the said four licenses) in its order dated 14.08.2014. The Respondent No.3, the Adani Electricity Mumbai Limited (“AEML”) is the power distribution company for Mumbai, Factual matrix of the Case: This case has a chequered history and facts relevant to deal with present Appeal are noted below: 5. Supreme Court in its judgment dated 08.07.2008, “(2008) 10 SCC 321 (Tata Power Co. Ltd. V/s Reliance Energy Limited)” has held that TPCL under its four licenses was authorised to distribute electricity in retail directly to consumers, including those whose maximum demand is less than 1000 kVA, apart from its entitlement to supply electricity to other licensees. 6. On 20.08.2008 MERC issued Regulations, which classified TPCL as a distribution licensee under the Electricity Act, 2003, allowing it to supply electricity in its licensed area until 15.08.2014. 7. In 2009, disputes emerged between TPCL and BEST with regard to TPCL's right to supply electricity in Mumbai, leading to several case proceedings under Page 3 of 28 Judgement in Appeal Nos. 279 of 2017 the MERC. These disputes culminated in Civil Appeal No. 4223 of 2012, where the Supreme Court of India ordered the parties to maintain the status quo as of May 10, 2012, pending the appeal's resolution. 8. On 01.01.2014 MERC issued an Invitation for Expression of Interest for the distribution of electricity in Mumbai City and parts of the Mumbai Suburban Area and cited Regulations 4 and 5 of the MERC (Specific Conditions of Distribution Licence applicable to Tata Power Company Ltd.) Regulations, 2008. Regulation 4 authorizes the Distribution Licensee to supply electricity within the areas defined by various historical licenses, and Regulation 5 stipulates that the Distribution License shall remain valid until August 15, 2014, marking the continuation of Tata Power Company as a Distribution Licensee till 15.08.2014. 9. On 30.01.2014, BEST filed Case No. 37 of 2014 with MERC to prevent other licensees from distributing electricity in its supply area. On 07.04.2014, TPCL filed Case (No. 90 of 2014) for grant of distribution license under the Section 15(2) of Electricity Act, which was admitted on 06.05.2014, requiring TPCL to issue a Public Notice. 10. On 08.05.2014, the Supreme Court passed the order in Civil Appeal No. 4223 of 2012 and held that TPCL was a "deemed licensee" until 15.08.2014 and it could provide electricity to consumers in the shared supply area with its own network, without relying on BEST's infrastructure. 11. On 14.08.2014, MERC granted TPCL a distribution license for 25 years, effective 16.08.2014 in case No 90 of 2014 filed by TPCL. On 03.09.2014, BEST filed Appeal No. 216 of 2014 before this Tribunal seeking to set aside the said order pertaining to grant of distribution license to TPCL in areas already served by them. Page 4 of 28 Judgement in Appeal Nos. 279 of 2017 12. On 26.09.2014, BEST preferred another Appeal, No. 243 of 2014, before this Tribunal against MERC and others to impugn and sought setting aside the Order dated 14.08.2014 passed by MERC in Case No. 37 of 2014 filed by BEST. 13. On 10.10.2014, TPCL filed Case No. 182 of 2014 before MERC seeking approval of its revised network rollout plan, as required under the Order dated 14.08.2014 and pursuant to Distribution License No. 1 of 2014 granted to it. 14. This Tribunal vide its judgement dated 25.11.2014 in Appeal No 216 of 2014 held that Appeal 216 of 2014 was not maintainable and points raised to the merit in this appeal shall be considered in the Appeal No 243 of 2014, pending before this Tribunal 15. This Tribunal vide its Judgment dated 28.11.2014, decided the cross- appeals, being Appeal No. 246 of 2012 filed by TPCL and Appeal No. 229 of 2012 filed by R-Infra, challenging the Order dated 22.08.2012 passed by the MERC in Case No. 151 of 2011, which imposed certain restrictions on TPCL with respect to category of consumers to which TPCL could supply electricity using R-Infra network and in respect of suburban Mumbai where TPCL was required to lay down its complete distribution network to meet its universal service Obligation ( USO). It has been submitted by BEST, that it was not party in the proceedings before State Commission as well as this Tribunal and the judgement relate to area common to TPCL and R-infra and accordingly this judgement is neither applicable nor relatable to BEST or its area of supply. 16. On 12.02.2015, TPCL filed a further revised network rollout plan before the MERC in pending Case No. 182 of 2014, in compliance with the Order dated 14.08.2014 passed in Case No. 90 of 2014 and the Judgment dated 28.11.2014 passed by the APTEL in Appeal Nos. 246 and 229 of 2012. Page 5 of 28 Judgement in Appeal Nos. 279 of 2017 17. On 10.04.2015, BEST preferred Civil Appeals ( No 4074 of 2015 and 11771 of 2015 ) before the Hon’ble Supreme Court of India challenging the orders passed by the this Tribunal dated 25.11.2014 in Appeal No 216 of 2014 and 12.03.2015 vide which its review was dismissed; the said Civil Appeals were admitted on 15.05.2015. 18. On 09.11.2015, MERC passed an Interim Order in Case No. 182 of 2014, to constitute a committee to make recommendation on certain aspects in the rollout plan of TPCL, subsequent to the issue of notice on 16.07.2015 to BEST, R-Infra/AEML, TPCL and consumer representative in the case. 19. Being aggrieved by the said Interim Order dated 09.11.2015, BEST filed Appeal No. 21 of 2016 before this Tribunal to set aside the Impugned Order and dismissal of pending case 182 of 2014 filed by TPCL. Same is pending before this Tribunal for adjudication. 20. Meanwhile, in 2014, BEST had filed a Writ Petition No.2641 of 2014 (MCGM versus (i) MERC, (ii) TPCL and (iii) State of Maharashtra) before the Bombay High Court, to set aside Regulation 4.10 read with Regulations 4.1 and 4.7 of the MERC (Standards of Performance of Distribution Licensees, Period for Giving Supply and Determination of Compensation) Regulations 2014, which has been dismissed vide Bombay High Court by Judgement dated 02.03.2016. Being aggrieved by the same, BEST has filed SLP (Civil) No. 23470 of 2016 before the Supreme Court of India. Same is pending adjudication. 21. On 04.11.2016, this Tribunal dismissed the Appeal No. 243 of 2014 . Aggrieved thereby BEST has filed Civ il Appeal Nos. 3403-3404 of 2017 before the Supreme Court, which has been admitted and tagged along with Civil Appeal No. 4074 of 2015. Page 6 of 28 Judgement in Appeal Nos. 279 of 2017 22. On 12.06.2017, the MERC has passed combined Order dated in Case N o . 182 of 2014 and Case No. 40 of 2015 allowing phased development of the Distribution network by TPCL. Being aggrieved thereby, BEST has preferred present Appeal with regard to phased development of network roll out plan of TPCL for common area of supply of BEST and TPCL DISCUSSION AND ANALYSIS 23. Heard Mr. Harinder Toor, learned counsel on behalf of Appellant, Ms. Pratiti Rungta, learned counsel on behalf of State Commission and Mr. B.P Patil learned senior counsel on behalf of Respondent No 2-TPCL, pursued the written submissions filed by parties and relevant documents. Learned Counsel on behalf of BEST has raised contention with regard to approval of phased development of distribution network by TPCL over 7 years, mainly stating that it contravenes the universal service obligation under section 43 of Electricity Act, that it would result in cherry picking of customers by TPCL, non-level playing field, and about non addressing the concerns of BEST with regard to practical difficulty in migration protocol allowed by the State Commission. Per Contra, learned Counsel on behalf of MERC, at the outset, submitted that present Appeal is non maintainable and is an abuse of process of law and is barred by Principles of Res judicata as the issued involved in the present Appeal (i.e. phased development of distribution network by a parallel distribution licensee, grant of parallel license in the area where a local authority is licensed to supply electricity and switchover of consumers) has already been decided by the Hon’ble Supreme Court in its judgement dated 08.05.2014, in Civil Appeal No 4223 of 2012, and this Tribunal judgement dated 04.11.2016 in Appeal No 243 of 2014 Page 7 of 28 Judgement in Appeal Nos. 279 of 2017 and this Tribunal judgement dated 25.11.2014 in No 216 of 2014, both these judgements pending adjudication before the Hon’ble Supreme Court in the civil appeal filed by BEST but no stay is operating. In addition, learned Counsel for the MERC has elaborately argued each of the points and submitted that the Impugned Order is perfectly justified and it does not suffer from any infirmity warranting interference by this Tribunal. 24. The learned Senior Counsel appearing on behalf of TPCL, in justification of the Impugned Order has elaborately made submissions with regard to each of the contentions raised by the Appellant and also been submitted that the present Appeal has as such become infructuous due to passage of time and TPCL has complied with the Impugned Order and it is USO ready and has network to supply power to any applicant in the concerned area of supply. 25. With regard to submissions of TPCL that present Appeal has become, infructuous, this Tribunal vide its order dated 06.01.2026 has directed TPCL to furnish the progress of Network in terms of Network Layout mentioned in the Para 137.12 of the Impugned Order. In compliance thereof, TPCL vide its affidavit dated 05.02.2026 furnished the details. The information so provided is summarised hereinbelow. • TPCL has submitted its roll out plan to the State Commission in terms of para 137.12 of the Impugned Order. Further in terms of MERC’s Guidelines for in principle clearance of Capital Investment schemes 2005, TPCL is required to seek prior approval of MERC for capital expenditure above Rs. 10 Crore and accordingly, TPCL has submitted various Detailed Project Report (DPR) indicating network details and capital investment, which has been approved by MERC from time to time. Page 8 of 28 Judgement in Appeal Nos. 279 of 2017 • TPCL has fully completed Phase -I and has completed Phase II </div><table><thead><tr><th>Sr. No.</th><th>Particulars</th><th>Unit</th><th>As per Network Rollout Plan</th><th></th><th></th><th>Actuals (As of December 2025)</th><th>Status of Implementation</th></tr></thead><tbody><tr><td></td><td></td><td></td><td>Phase I</td><td>Phase II</td><td>Total</td><td></td><td></td></tr><tr><td>1</td><td>Consumer Substation</td><td>Nos.</td><td>43</td><td>52</td><td>95</td><td>122</td><td>128.42%</td></tr><tr><td>2a</td><td>HT Cable (33 KV to 11 KV)</td><td>KM</td><td>126</td><td>102</td><td>228</td><td>289</td><td>126.75%</td></tr><tr><td>2b</td><td>LT Cable</td><td>KM</td><td>102</td><td>312</td><td>414</td><td>215</td><td>51.75%</td></tr><tr><td>2</td><td>Total HT+LT</td><td>Km.</td><td>228</td><td>414</td><td>642</td><td>504</td><td>78.50%</td></tr><tr><td>3</td><td>Feeder Pillar, Sub- feeder pillar and Mini Pillars</td><td>Nos.</td><td>129</td><td>156</td><td>285</td><td>610</td><td>214.03%</td></tr><tr><td>4</td><td>Distribution Substation Nos.</td><td>Nos.</td><td>4</td><td>6</td><td>10</td><td>4*</td><td>60%</td></tr></tbody></table><div> *The figure would be 6 DSS by March 2026 • As DSS in South Mumbai is to be installed in the land allotted by developer in , its progress is affected due to non-availability of land by Developer. • Sufficient Network has been created by TPCL to power supply to the consumers and in the area overlapping with BEST and it is in position to supply power to any consumer as per stipulated timeline and MERC has not taken cognizance of any pending complaints regarding TPCL inability to effect supply. 26. It has been further submitted by TPCL, that BEST has raised objection with regard to non-laying of distribution network in accordance with Impugned Order in case no 237 of 2023, while truing up of ARR of FY 2022-23, Provisional True Page 9 of 28 Judgement in Appeal Nos. 279 of 2017 up of ARR of FY 2023-24 and Revised ARR for FY 2024-25 for TPCL, and such contentions has been dismissed by MERC in its Order dated 06.03.2024 and following observation has made “…..2.3.4 The Commission has ben approving the DPR for network roll-out to meet its obligation to supply using its own network as per principles laid down in Case No.182 of 2014. Further, TPC-D has been updating the Commission on the status of DPRs approved by the Commission. AEML-D and BEST are free to approach Commission with specific instances/cases to show selective network laying by TPC-D rather than making generic comments…” 27. From the above details furnished by TPCL, it is evident that TPCL has substantially rolled out its network and the State Commission, has taken cognigence of the same and no deficiencies in roll out plan has been pointed out by the State Commission and AEML/R-Infra and BEST were free to approach State commission with specific instances. Before this Tribunal as well, the Appellant has not pointed out any specific instances of deficiencies / contravention in the Network roll out plan but has made general comments. Considering the fact that network roll out plan of TPCL has been substantially completed, the issues concerning phased network development raised in the present appeal have lost practical significance. Ordinarily, such matters would render the appeal infructuous. However, since the questions raised also involve interpretation of statutory obligations and regulatory principles of wider significance, we consider it appropriate to examine the issues on merits. Accordingly, based on deliberations held on contentions raised by BEST, the following issues emerges for Consideration: ISSUE NO 1 : Is phased development of distribution network over a period of seven years permitted to TPC contrary to Electricity act, 2003 and other related issue Page 10 of 28 Judgement in Appeal Nos. 279 of 2017 Submissions urged on behalf of Appellant - BEST 28. It is submitted that the phased development/rollout of the distribution network over a period of seven years by the second licensee (viz. TPCL) is contrary to the Universal Service Obligation under Section 43 of the Electricity Act, 2003 (i.e. duty to supply on request), and facilitates cherry-picking or luring away of consumers. Phased and selective network development is not conducive to a level playing field or genuine competition and does not provide equal access to all categories of consumers, particularly low-end/slum consumers with consumption between 0–300 units. In addition the limited and phased nature of TPCL’s network leads to lower maintenance costs, thereby enabling TPCL to offer lower tariffs, whereas BEST, being obligated to cater to all consumer categories and to maintain a comprehensive distribution network across its entire area of supply, necessarily incurs higher cost resulting in higher tariff. Further, the Sixth Proviso to Section 14 of the Electricity Act, 2003 mandates the requirement of an “own distribution system,” which necessarily entails adequate and timely development and rollout of the distribution network. 29. Such phased development besides not ensuring compliance by TPCL with its Universal Service Obligation to serve all classes and categories of consumers in the Island City of Mumbai, it proceeds on an erroneous premise that TPCL is entitled to selectively and progressively develop or rollout its distribution network in a phased manner within its area of supply and thus MERC has adopted a facilitative approach and MERC did not also accept the recommendation of Committee appointed by it, which has specially pointed out that TPCL’s Network Plan for the BEST Area should be such that it would be against selective targeting of consumers. Page 11 of 28 Judgement in Appeal Nos. 279 of 2017 Submissions urged on behalf of State Commission 30. Without prejudice to the submissions made with regard to res-judicata, it is submitted that the State Commission in the impugned order has explained the rationale behind the directions given to TPCL for phased network development, inasmuch as the State Commission, has duly approved the principles and modalities for planning and development of TPCL network roll-out plan within the Appellant’s area and has also issued specific directions to ensure fulfilment of the Universal Service Obligation. The planned network development approach in phased manner has been considered to be the optimal approach considering its cost-effectiveness and to avoid selective bias in the coverage of areas or consumers. The contention of Appellant that that phased development of the distribution network would result in cherry-picking by TPCL, is misconceived as State Commission, in the Impugned Order, has duly examined the option of a planned, phased roll-out vis-à-vis development of the network solely on the basis of consumer demand and has categorically observed that permitting network expansion only upon demand would not be an optimal approach, as it would lead to scattered and unplanned development across various areas, thereby increasing the likelihood of selective laying of network and consequent cherry- picking. As such distribution of electricity is a licensed activity under the Electricity Act, 2003, and prior existence of a distribution network is not a precondition for the grant of a distribution licence. Section 43 of the Electricity Act prescribes timelines for supply of electricity, which itself contemplates staged development of infrastructure. Submissions urged on behalf of TPCL 31. The Contention of BEST that phased development over a period of seven years is contrary to Section 43 of the Electricity Act is misplaced in law, since such an interpretation would illogically require the entire network to be laid within Page 12 of 28 Judgement in Appeal Nos. 279 of 2017 one year of grant of licence and reflects a misconstruction of the concept of network development vis-à-vis the Universal Service Obligation (USO); in fact, the statutory duty of a distribution licensee is governed by Section 42(1) of the Electricity Act, which mandates the licensee to develop and maintain an efficient, coordinated and economical distribution system in its area of supply and to supply electricity in accordance with the provisions of the Act, and does not prohibit phased development of the distribution network. With the conjoint reading of Sections 42(1) and 43 of the Electricity Act, 2003, it is evident that the obligation to develop and lay the distribution network is a continuous process, and no outer time limit for completion of network development by a distribution licensee in its entire area of supply has been specified. While, Section 43 stipulates a timeline, on request, considering the network which ought to be laid to connect the consumers. Keeping these principles in view, and considering the peculiar topography of the Island City of Mumbai as well as space constraints and right of way issues, the State Commission directed Tata Power to lay its distribution network in two phases so as to enable compliance with its Universal Service Obligation in overlapping areas with BEST, and further directed that Phase-I should ordinarily be completed prior to commencement of Phase-II so as to ensure that the network development remains economical, in terms of Section 42 of the Act. CONSIDERATION AND OUR VIEW 32. We note that Section 14 of Electricity Act stipulates the conditions for Grant th of License, including license for Distribution of Electricity and as per 6 proviso, the State commission can grant two or more license for distribution of electricity through their own distribution system within the same area of supply, provided they comply with additional condition of capital adequacy, creditworthiness or code of conduct. Requirement of pre-owning of distribution network, has not been Page 13 of 28 Judgement in Appeal Nos. 279 of 2017 mandated in the Electricity Act to be eligible for Grant of license for distribution of electricity. In this context, it is also relevant to quote Section 42 and Section 43 of the Electricity Act, 2003. “Section 42 Duty of the Distribution licensee and Open Access : (1)It shall be the duty of a distribution licensee to develop and maintain an efficient, co-ordinated and economical distribution system in his area of supply and to supply electricity in accordance with the provisions contained in this Act…” Section 43. Duty to supply on request : (1) Save as otherwise provided in this Act, every distribution licensee, shall, on an application by the owner or occupier of any premises, give supply of electricity to such premises, within one month after receipt of the application requiring such supply: Provided that where such supply requires extension of distribution mains, or commissioning of new sub-stations, the distribution licensee shall supply the electricity to such premises immediately after such extension or commissioning or within such period as may be specified by the Appropriate Commission....” 33. As per Section 42 of the Electricity Act, a distribution licensee is mandated to develop and maintain an efficient and economical distribution system within its area of supply, which would mean progressive expansion and improvement of the distribution system. In our view, it is not a one-time activity; instead, it means the licensee must continuously plan and invest in infrastructure to meet growing demand, and ensure reliability. Thus, in terms of Electricity Act, upon grant of distribution license, the Licensee cannot be expected to develop the entire distribution network at one go, and there would be phased development of network and furthermore no time line for such a network development has been mandated in the Act. Section 43 of the Act also acknowledges that in the course of providing supply to anew customer, there would be instances, where extension of substation and/ or distribution network would be required and same can be Page 14 of 28 Judgement in Appeal Nos. 279 of 2017 provided as per time lines specified by State Commission/ or upon such extension. Thus even for meeting the Universal Service Obligation, time line has to be specified by State Commission based on the requirement of extension of network if any. Thus, in our view, the phased development of the distribution Network under Distribution license over 7 years as permitted in Impugned Order, cannot be said to be in contravention of the provisions of the Electricity Act, 2003. It is of relevance to note that Appellant - BEST has challenged the State Commission order dated 14.08.2014 in Appeal No. 216 of 2014 before this Tribunal, challenging phased development of Tata Power’s distribution network allowed by MERC, being contrary to Law and relied to this Tribunal’s Judgment dated 06.04.2011 in “ Noida Power Company Limited v. Paschimanchal Vidyut Nigam Ltd. & Anr”. This Tribunal, by Judgment dated 25.11.2014, dismissed BEST’s Appeal, holding that neither the Electricity Act nor the Noida Power judgment mandates that a distribution licensee must lay down the entire network prior to grant of licence, and that phased development of the network is permissible. BEST’s subsequent Review Petition No. 5 of 2015 against the Judgment dated 25.11.2014 was also dismissed by this Tribunal by Order dated 12.03.2015. Pursuant thereto, BEST filed Civil Appeal No. 4862 of 2015 and 4074 of 2015 before the Supreme Court against both these orders, mainly on the premise that the ratio of the Noida Power judgment purportedly prohibits phased development of a distribution network by a second licensee; same are pending adjudication, however, no interim relief has been granted in favour of BEST therein. 34. Therefore, in view of above deliberation and judicial pronouncement with no stay operating on the order, as far as broad issue of phased development of Distribution network is concerned, the principle of res-judicata shall be applicable to BEST, and same is also not in contravention of provisions of Electricity Act, 2003. However the other contentions raised about methodology of phased Page 15 of 28 Judgement in Appeal Nos. 279 of 2017 development allowed, cherry picking of customers, and issue of non-level playing fields etc. are deliberated in following paragraphs. 35. In the Impugned Order, the State Commission has analysed the three scenarios (Optimistic to pessimistic) of phased development of network in 7 years as proposed by TPCL and observed that though such a plan would cover entire license area (overlapping that of BEST in Mumbai District and with R-infra in Parts of Mumbai suburban District), no separate time line had been specified for area common to BEST has been indicated. With regard to proposed Municipal ward wise network roll out plan, the State Commission opined that this principle will have no relation with the geographical limits of Municipal ward and since a particular existing DSS /CSS may be able to cater to consumers more than one ward, and thus instead of approving addition of network ward wise basis, the State commission approved development of network in two distinct phases, and same is extracted hereunder: “137.12 Accordingly, instead of approving the addition of network elements Ward-wise, and in pursuance of its favoured approach set out above, the Commission approves the following principles and modalities for the planning and development of TPC-D's Network Roll-out in the BEST area: a. TPC-D is directed to roll out its network in the following two Phases, which should be completed within 7 years of this Order. Phase 1: Development/ augmentation/extension of existing Distribution System i. TPC-D already has some DSS (33/2211 kV sub-stations) and CSS (22/11/0.415 kV or equivalent sub-stations) in certain areas. In these areas, TPC-D shall develop its downstream distribution network elements from the existing DSS and CSS, i.e. LT Mains and LT feeder pillars/panels from the existing CSS. Where there is only a DSS at present, TPC-D should develop the further 11 kV distribution network, new CSS and LT network elements originating from the CSS. ii. Augmentation or extension of the existing network elements may also be undertaken based on the requirements. Page 16 of 28 Judgement in Appeal Nos. 279 of 2017 iii. TPC-D shall undertake these works in such a manner that it would be in a position to comply with its USO towards all consumers in the vicinity of its existing DSS and CSS upon completion of Phase I. iv. Within Phase I, TPC-D shall prioritise the works required to meet substantial existing or emergent consumer demand. Phase II: Development of new DSS along with its downstream Distribution System i. In the remaining areas where it does not have a distribution network such as DSS, CSS, HT/LT lines, feeder pillars, etc. at present, TPC-D shall establish such network in planned stages within the period remaining after completing Phase I. ii. Upon completion of this Phase, TPC-D must be in a position to comply with its USO towards all consumers in the area common to BEST's area of supply. iii. While planning (or subsequently adjusting) the stages within Phase II, TPC-D shall prioritise the works required to meet substantial existing or emergent consumer demand. b. While the maximum period envisaged for completing both Phases of this roll-out is 7 years, the possibility of reducing this time-frame should be reviewed by TPC-D from time to time, along with an evaluation of the likely impact on consumer tariffs. The Commission may also do so. c. In terms of the saving provisions of the SoP Regulations and by virtue of the present Order, the period allowed for releasing supply upon demand to applicants is relaxed till the scheduled or actual date of completing works in each Phase or stage, whichever is earlier. d. Within two months of this Order, TPC-D shall submit to the Commission details of areas or locations covered under Phase-1, along with a mapping of the components of its existing distribution network, and of the planned stage-wise execution of Phase II, with the tentative time- lines for completing network development in each of these Phases and stages. TPC-D shall also provide these details on its website for the information of consumers. These time-lines and stages may be adjusted with the prior approval of the Commission. e. TPC-D shall ordinarily release new connections only in accordance with these Phases, i.e. new connections cannot be released in areas falling in Phase II until Phase I is completed. However, if substantial demand arises from an area to be covered in Phase II although Phase I is yet to be completed, TPC-D may approach the Commission for its prior approval for taking up that area also. Page 17 of 28 Judgement in Appeal Nos. 279 of 2017 f. Based on the Phases and proposed stages of network development, TPC-D shall furnish its capital expenditure proposals for in-principle approval of the Commission, if applicable, in accordance with its Guidelines of 2005. Relevant factors such as expected loading on the network, impact on tariff, etc. should also be considered while doing so. 137.13 The Commission will review the execution of this Roll-out within 3 years to ensure that it is being implemented in an effective and optimal manner, and to address any issues that may arise. 137.14 The physical and other features and constraints acknowledged by the ATE and the Commission in the area common to TPC-D and RInfra-D also characterise the area of Mumbai common to BEST and TPC-D. However, as mentioned earlier, since it is a Local Authority, BEST is not required under the EA, 2003 to provide Open Access. The principles and modalities of the Network Roll-out Plan approved for TPC-D in the BEST area is predicated on this fact. The Commission is of the view that this would not debar BEST from entering into a commercial arrangement for the use of its network to provide electricity to TPC-D’s prospective consumers. If such an arrangement is arrived at, the Network Roll-out principles and modalities approved in this Order may require to be reconsidered to that extent.” 36. Thus, in terms of Impugned Order, first the downstream distribution network is to be developed from its existing DSS and CSS by TPCL and connections provided to consumers in vicinity of existing DSS/CSS and to comply with its USO and same were included under Phase I. In the Phase II, the rest of the network shall be developed. TPCL was further directed that new connections in Phase II to be released only after completion of Phase –I and for any deviation in this shall be subject to prior approval of State Commission. We find merit in this methodology of phase wise development allowed in the Impugned Order and are in agreement with the view of the State commission that it constitutes an optimal approach considering its cost-effectiveness and to avoid selective bias in the coverage of areas or consumers. In our considered view, adopting such an approach will enable faster coverage of the broader consumer base and foster a competitive market structure in line with the objectives of the Electricity Act. The Page 18 of 28 Judgement in Appeal Nos. 279 of 2017 same is preferable to sporadic network extensions to consumers located far from existing CSS/DSS, which typically involve longer lead times. 37. It has been also been contended on behalf of the Appellant, that State Commission has not considered the recommendation of Committee appointed by it to advise on the Network roll out plan. The Recommendation of the said Committee has been extracted below, as noted in paragraph 44.1 of the Impugned Order, are extracted hereinbelow. “44. TPC-D NETWORK ROLL-OUT IN AREA OVERLAPPING WITH BEST 44.1 The observations and recommendations of the Committee are summarized below: a. The ATE Judgment is not applicable to the Licence area common TPC-D BEST, as BEST has a special status under the EA, 2003 and is not obliged to provide Open Access under Section 42(3) by virtue of being a Local Authority Thus, network duplication by TPC-D is inevitable in the BEST area. b. Therefore, in the area common to BEST, TPC-D needs to be given some time for setting up its distribution system in a phased manner, and hence the need for a Roll-out Plan for that area. c. TPC-D's Network Roll-out Plan for the BEST area should be such as would ensure against selective targeting of consumers, as both Licensees have a USO in that area. d. The appropriate solution would be for TPC-D to first develop its distribution system at lower voltage levels in areas where the backbone distribution system in the form of DSS and/or CSS is already available, and then take up areas where it is yet to be set up. e. Study of the map of the distribution system submitted by TPC-D shows that areas such as Dharavi, Carnac, Parel, Lower Parel, Elphinstone, Mahalaxmi, Haji Ali, etc., already have DSS and/or CSS in Page 19 of 28 Judgement in Appeal Nos. 279 of 2017 place and can be targeted first so that TPC-D can supply electricity to all consumers, including LT consumers, in that area. f. TPC-D may target setting up the LT distribution system in areas where the DSS/CSS already exist in a period of, say, 2 years. 44.2 In the light of the above, the Committee has recommended that TPC-D be directed to re-submit its Network Roll-out Plan for its Licence area overlapping that of BEST based on the above considerations.” 38. On perusal of the recommendations, it is observed that Committee has also recommended phased network roll out plan, and that TPCL should first develop its distribution system at lower voltage where its DSS and CSS is already existing. In our view, the network roll out methodology approved by the State Commission has broadly considered these recommendations. Moreover, it is a settled position that a State Commission is not legally bound by the recommendations of a committee it appoints. Such committees are generally set up to investigate, study, or advice on specific issues, and their role is recommendatory, not mandatory. The State Commission retains the authority to accept, reject, or modify those recommendations. Accordingly, the said contention is rejected. 39. With regard to specific contention of cherry picking, we have been informed by learned counsel of TPCL that on 29.02.2016, BEST filed Case No. 43 of 2016 before the MERC seeking to restrain Tata Power from laying its distribution network on the allegation of cherry-picking of high-end consumers, which was dismissed by MERC vide Order dated 22.01.2018 against which BEST had preferred Appeal No. 330 of 2018 which is pending adjudication before this Tribunal. As such, in the present appeal, no specific instances of Cherry picking has been indicated on behalf of BEST and only general reference has been made that such phased development shall lead to cherry picking. Having held above that permitted methodology of phased development is an optimal approach and would avoid selective bias in coverage of area, thus, avoid cherry picking, it is Page 20 of 28 Judgement in Appeal Nos. 279 of 2017 unnecessary for us to deliberate the issue of Cherry picking in the absence of specific details. The same shall be dealt in the Appeal No. 330 of 2018, pending adjudication before this Tribunal, on its own merits, 40. Accordingly, issue No 1 is decided against the Appellant on merits, and Impugned Order is upheld. ISSUE NO 2 Is phased development of network permitted to TPCL in contravention of specific conditions of Distribution License granted to it. Submissions urged on behalf of BEST 41. It is submitted that permitted phased development of distribution network to TPCL is not in compliance with Distribution Licence No. 1 of 2014 (particularly Part II: Specific), granted by MERC on 14.08.2014 in Case No. 90 of 2014, which mandatorily required TPCL to submit a detailed Network Rollout Plan which was required to clearly demonstrate that it is cost-effective, provides equal access to all categories of consumers, creates a level playing field, and is optimal for the purpose of meeting the Universal Service Obligation in a time-bound manner; as well to be submitted for approval within six weeks from commencement of the licence. Further, MERC has gravely erred in failing to review and/or monitor the execution of the rollout of the distribution network by TPCL within the stipulated period of three years. Submissions urged on behalf of State Commission 42. It is submitted that initially the Network roll out plan was submitted for approval by TPCL on 10.10.2014, however in view of the judgement dated 28.11.2014 of this Tribunal in Appeal Nos. 229 of 2012 and 246 of 2012, TPCL has to revise the plan and accordingly submitted the revised its Network Roll-out Plan to the State Commission on 12.02.2015. Further in compliance of the referred judgement of this Tribunal, an opportunity of hearing was provided to Page 21 of 28 Judgement in Appeal Nos. 279 of 2017 RInfra-D and the Appellant, and based on their comments, further refinements of the roll out Plan was necessitated. After inviting comments of the public and stakeholders, a public hearing was conducted on 21.06.2016 and vide Order dated 12.06.2017, the State Commission approved the Network Roll-out Plan of TPCL. Submissions urged On behalf of TPCL 43. In addition to the submissions made on behalf of State Commission, it is submitted that Distribution Licence granted to TPCL was not a conditional licence, and MERC, vide its Order dated 14.08.2014 had directed TPCL to file a revised Network Rollout Plan, which, upon approval, would form part of the specific licence conditions under Section 16 of the Electricity Act, 2003, which provision contemplates specification of conditions applicable post facto grant of licence and not as a condition precedent to grant thereof, and hence, the grant of licence to Tata Power cannot be construed as being conditional upon prior approval of the Network Rollout Plan. Further, Network Roll out plan has been submitted in compliance with MERC’s directions and there is neither any wilful nor prolonged default on the part of Tata Power in discharge of its statutory obligations under the Electricity Act and the rules and regulations framed thereunder. CONSIDERATION AND OUR VIEW 44. To deliberate this issue, it is of relevance to reproduce specific conditions of License: "Part II: Specific 1. The Distribution Licensee shall submit a detailed Network Rollout Plan in accordance with the observations and directions of the Commission Page 22 of 28 Judgement in Appeal Nos. 279 of 2017 in its Order dated 14 August,2014 in Case No. 90 of 2014 and the relevant provisions of the Electricity Act, 2003, Rules and Regulations. 2. The plan should clearly bring out that it is cost effective; provides equal access to all categories of consumers,· creates a level playing field; and is optimal for the purpose of meeting the Universal Service Obligations in a time bound manner. 3. The plan shall be submitted to the Commission for approval within a period of 6 weeks from the date of commencement of this Distribution Licence." 45. In terms of specific conditions of Distribution license granted to TPCL vide State Commission Order dated 14.08.2014, the Distribution licensee was to submit a detailed Network Roll out plan, which should be cost effective, creates a level playing field and optimal; for meeting Universal Service Obligation in a time bound manner. In this regard we note from the submissions made on behalf of State Commission that initially the plan was submitted by TPCL on 10.10.2014, which necessitated modifications in view of the Judgement of this Tribunal dated 28.11.2014 and in accordance with the directions in this judgement, both R-infra and the Appellant were provided opportunity to make their submissions and after conducting public hearing, the network roll out plan was approved by the Impugned Order. As already noted in preceding paragraphs, there has been multiple litigation with regard to grant of license to TPCL, development of network in the area common to R-Infra and the Appellant and few of such litigations are still pending adjudication in this Tribunal or at Supreme Court, and some directions have been passed from time to time in particular cases. In this present issue, the roll out plan submitted by TPCL needed to be modified in compliance with the direction of this Tribunal in the above referred judgement. It has been already held in the preceding paragraph that that suggested methodology is optimal from cost consideration and would lead to covering a larger area in short time. We are therefore of the view that permitted phased development of Page 23 of 28 Judgement in Appeal Nos. 279 of 2017 distribution network is not in contravention of License condition of TPCL. Accordingly, the issue is decided against the Appellant on merits. ISSUE No 3: Non consideration of practical issues in approved Migration plan Submissions urged on behalf of BEST 46. It is submitted that, in providing for the process of switchover and/or migration, MERC failed to take into account critical practical difficulties and specific operational requirements, including that BEST has an elaborate distribution network across Mumbai City to meet its Universal Service Obligation and, upon switchover, infrastructure developed to meet the load of migrating consumers would become redundant and/or stranded, thereby causing financial loss to BEST. Further, the protocol envisaging a three-day timeline for scrutiny of applications and for sharing of information by the existing distribution licensee relating to arrears, disputes, court cases and other consumer-related issues is wholly inadequate, impractical, and incapable of ensuring due diligence and meticulous compliance, particularly in view of unforeseen operational difficulties. In addition, MERC failed to consider that defects and/or tampering may be detected during laboratory testing after removal of meters, in which event appropriate provisions are required for raising and recovering claims arising out of such defects or tampering, which have not been adequately provided for. 47. MERC gravely erred in relaxing and/or diluting the provisions of SoP Regulations in favour of TPCL by permitting relaxation of the obligation to supply on demand to applicants until the scheduled or actual date of completion of works in each phase or stage, whichever is earlier. While MERC has specified the applicability of the SoP Regulations for the process of switchover and for release of connections to new consumers as per the prescribed protocol. It clearly Page 24 of 28 Judgement in Appeal Nos. 279 of 2017 establish that MERC has relaxed and/or diluted the mandatory provisions of the Electricity Act, 2003 and the SoP Regulations so as to facilitate TPCL to develop its network as per its own convenience and suitability. Submissions urged on behalf of State Commission 48. The issue regarding the inadequacy of the three-day period stipulated for sharing consumer details with the other distribution licensee was duly considered and addressed by the State Commission in the Impugned Order. The State Commission observed that the changeover protocol already in operation in Tata Power’s area of supply overlapping with that of RInfra-D in the suburban region of Mumbai, since 2009, prescribed the same period of three days for sharing consumer-related information, and that the said time frame has functioned effectively. The identical time period has been incorporated in the switchover protocol applicable to TPCL’s entire area of supply overlapping with that of both the Appellant and RInfra-D. The Appellant’s further contention concerning possible meter tampering and the need for provision for subsequent recovery of claims has also been specifically dealt with by the State Commission in the Impugned Order. Submissions urged on behalf of TPCL 49. Supplementing the submissions made on behalf of State Commission it is submitted, that civil appeal filed by BEST before Supreme Court seeking directions against TPCL to supply electricity either through BEST’s network or by laying its own distribution network, was dismissed with costs in “ BEST v. MERC & Ors. (2015) 2 SCC 438”. Pursuant thereto, MERC suo motu listed Case No. 30 of 2011 and connected matters for monitoring switchover/migration of consumers from BEST to Tata Power and by Order dated 06.06.2016, MERC directed that until approval of the migration protocol, TPCL and BEST shall Page 25 of 28 Judgement in Appeal Nos. 279 of 2017 coordinate and disconnect consumers to minimise disruption of supply. This order attained finality, BEST having not challenged the same. 50. It is further submitted that BEST has approached this Tribunal with unclean hands and has suppressed material facts, inasmuch as switchover of consumers has been taking place both prior to and after the grant of Distribution Licence No. 1 of 2014, even in the absence of any approved migration protocol, with BEST duly effecting permanent disconnection of its supply to such consumers. Further, during the pendency of proceedings relating to approval of the Network Rollout Plan, the MERC, by Order dated 18.05.2016, approved a DPR amounting to Rs. 218.74 Crores for laying of network in areas where both BEST and TPCL are licensed to supply electricity, and all works undertaken by Tata Power to connect consumers have been carried out strictly in accordance with such DPRs. CONSIDERATION AND OUR VIEWS 51. In the Impugned Order, the recommendations of the Committee with regard to migration protocol, as well as the concerns raised by stake holders, including that of Appellant has been deliberated in detail in Chapter 5. With regard to specific contention for period of 3 days for sharing information, the following observations have been recorded in the Impugned Order: “n. Period of 3 days (Point 13 at para. 5.1 of the Report) may be extended to 7 days 135.25 The Commission notes that the period of 3 days for sharing information regarding the consumer with the other Distribution Licensee is also stipulated in the Change-over Protocol which is being followed since 2009. Hence, the Commission does not consider a longer period to be necessary for the Switch-over Protocol.” 52. The specific contention with regard to pending disputes, outstanding dues payable on account of meter tapering, ongoing court cases etc., has been dealt Page 26 of 28 Judgement in Appeal Nos. 279 of 2017 at Para 135.22 -135.24 of the Impugned Order. The relevant extracts thereof are reproduced herein below: “m. Switch-over of consumers with pending dues/disputes should not be allowed, or the arrears of existing Licensee may be recovered by the other Distribution Licensee 135.22 As regards RInfra-D’s contention that consumers against whom the existing Licensee has pending cases or dues should not be allowed to switch- over, the Commission notes that in, the Change-over Protocol approved in Order dated 15 October, 2009 in Case No. 50 of 2009, the restriction on change-over is limited only to the payment defaults: “iv. No consumer who has been disconnected for payment default shall be allowed a Changeover without clearing dues of the Existing Distribution Licensee.” 135.23 On the analogy of the Change-over Protocol, the same provision shall apply to applications for switch-over. The Switch-over Protocol approved by the Commission in the present Order also provides for recovery by the other Licensee of any remaining net consumer dues intimated by the existing Licensee after switch-over. 135.24 However, denying switch-over to a consumer because of court cases or other pending legal disputes with the existing Distribution Licensee would not be justified since the merits or otherwise of the respective claims are yet to be decided by the concerned court or other forum. Any dues arising from the outcome of such legal disputes after switch-over may be recovered by the Licensee involved as in the case of any other such court dispensations.” 53. We are also of the view that the changeover protocol, which has been in operation since 2009 between area common to TPC and R-Infra/APEML, without any functional difficulty, is rightly made applicable in the present case. The contention of BEST that a different protocol involving its network ought to be adopted has no merit. With regard to changeover during pending litigation/ subsequent issues of meter tempering, we find no error in the Impugned Order, as the mere pendency of cases cannot justify denial of changeover, and any dues payable after switchover can be recovered in accordance with the prescribed dispensation. Page 27 of 28 Judgement in Appeal Nos. 279 of 2017 54. The plea of stranded assets, due to changeover also has no merit. The provision of Electricity Act itself mandates the presence of more than one distribution licensee in the same area of supply and laying of network by each licensee is also permitted. Moreover, the Appellant, being a local authority, is exempt under Section 42(3) of the Act from the obligation to provide open access to its network and consequently if a consumer seek electricity from other distribution licensee, they are obligated to lay the network and supply electricity. Consequently, duplication of networks in overlapping areas is an inevitable statutory outcome. In view of the foregoing, we find no merit in the contention of BEST. ORDER 55. In view of above deliberations, we do not find any error in the Impugned Order passed by the State Commission necessitating our interference and accordingly, Impugned Order dated 12.06.2017 is hereby upheld. The Captioned Appeal and pending IAs, if any, stands dismissed. th PRONOUNCED IN THE OPEN COURT ON THIS 11 DAY OF MARCH, 2026. (Virender Bhat) Judicial Member (Seema Gupta) Officiating Chairperson REPORTABLE / NON-REPORTABLE pr/dk/ag Page 28 of 28 </div>