HINDUSTAN ZINC LIMITED vs RAJASTHAN ELECTRICITY REGULATORY COMMISSION

[2026:RJ-JD:26501-DB]
HIGH COURT OF JUDICATURE FOR RAJASTHAN AT
JODHPUR
D.B. Civil Writ Petition No. 10431/2025
Hindustan Zinc Limited, Through Ms. Shipla Nair D/o Shri
Surendra Kumar Nair, Aged About 28 Years, The Authorized
Representative Yashad Bhawan, Udaipur- 313004, Rajasthan,
India.
----Petitioner
Versus
Rajasthan Electricity Regulatory Commission, Through The
Secretary, Vidhyut Viniyamak Bhawan, Sahakar Marg, Near State
Motor Garage, Jaipur, Rajasthan 302001.
----Respondent
For Petitioner(s) : Mr. Vikas Balia, Sr. Advocate assisted
by Mr. Aditya K. Singh
Mr. Karmendra Singh
Mr. Vineet Gupta
Mr. Devendra Khatri
For Respondent(s) : Mr. Suniel Purohit
Mr. Jasraj Singh
HON'BLE DR. JUSTICE PUSHPENDRA SINGH BHATI
HON'BLE DR. JUSTICE NUPUR BHATI
Judgment
1. Date of conclusion of arguments
21.05.2026
2. Date on which judgment was reserved
21.05.2026
3. Whether the full judgment or only the
operative part is pronounced:
Full Judgment
4. Date of pronouncement
19.06.2026
Reportable
Per Dr. Pushpendra Singh Bhati, J:
1. The present writ petition has been preferred under Article
226 of the Constitution of India claiming the following reliefs:
“In view of the facts and circumstances stated hereinabove, it
is most humbly prayed that this Hon’ble Court may graciously
be pleased to:
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a) issue an appropriate writ, order or direction declaring
Regulation 32 and 92 of Rajasthan Electricity Regulatory
Commission (Terms and Conditions for Determination of
Tariff) regulations, 2025 ultra vires provisions of the
constitution of India, as arbitrary, and violative of Article
14, Article 19 (1) (g) of the Constitution of India and
ultra vires provisions of the Electricity Act, 2003, National
Tariff Policy.
b) Direct the respondent no. 1 to not impose Parallel
Operation Charges as per the RERC Tariff Regulations,
2025.
c) Pass any such further Order(s) as this Hon’ble Court
may deem fit in the facts and circumstances of the
present case.”
2. The brief facts, relevant for adjudication of the present writ
petition, are that the petitioner, a company operating Captive
Power Plants for meeting its electricity requirements, has laid
challenge to the validity of Regulation 32 (Late Payment
Surcharge) and Regulation 92 (Parallel Operation Charges) of the
Rajasthan Electricity Regulatory Commission (Terms and
Conditions for Determination of Tariff) Regulations, 2025, framed
by the respondent- Rajasthan Electricity Regulatory Commission
( hereinafter referred to as ‘respondent-RERC’ ) under the
provisions of the Electricity Act, 2003.
2.1. The Respondent–RERC, vide public notice dated 23.11.2024,
published the draft Tariff Regulations, 2025 along with an
Explanatory Memorandum and invited objections and suggestions
from stakeholders, stipulating 23.12.2024 as the last date for
submission thereof. The petitioner submitted its objections on
23.12.2024, inter alia questioning the legality of the proposed levy
of Parallel Operation Charges (POC) upon Captive Power Plants
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and the reasonableness of the prescribed Late Payment Surcharge
(LPS). Thereafter, a public hearing was conducted on 27.12.2024.
2.2. Subsequently, the respondent- RERC issued the Statement of
Objections and Reasons (SOR) on 24.01.2025, finalized the Tariff
Regulations, 2025 on 18.02.2025 and notified the same in the
Official Gazette on 06.03.2025, whereupon the Regulations
acquired statutory force.
2.3. Aggrieved by the aforesaid Regulations, the petitioner has
preferred the present writ petition challenging the validity of
Regulations 32 and 92 of the Tariff Regulations, 2025.
3. Learned Senior Counsel appearing for the petitioner
submitted that Regulations 32 (Late Payment Surcharge) and 92
(Parallel Operation Charges) of the Rajasthan Electricity
Regulatory Commission (Terms and Conditions for Determination
of Tariff) Regulations, 2025 are liable to be struck down as being
contrary to the Electricity Act, 2003, the Electricity (Procedure for
Previous Publication) Rules, 2005, the National Electricity Policy,
2005, the Tariff Policy, 2016 and Articles 14 and 19(1)(g) of the
Constitution of India.
3.1. Regarding Maintainability:
(i) Learned counsel disputed the respondent's plea of estoppel and
constructive res judicata founded upon Petition No. 2180/2023. It
was submitted that the earlier proceedings merely concerned a
request for modification under the "removal of difficulties"
jurisdiction and did not involve adjudication upon the legality,
vires or constitutional validity of Regulation 32. Consequently, the
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present challenge raises distinct issues and remains fully
maintainable.
3.2. Regarding Regulation 92 (Parallel Operation Charges):
(i) Learned counsel further submitted that Regulation 92 is ultra
vires the Electricity Act, 2003 inasmuch as the Act does not
authorize imposition of Parallel Operation Charges upon Captive
Power Plants ("CPPs"). It was contended that Section 9 of the Act
expressly promotes captive generation and grants a statutory
right to establish and operate captive generating plants, whereas
the proviso to Section 42(2) exempts captive users from payment
of surcharge while availing open access for carrying electricity to
the destination of their own use.
(ii) It was argued that neither Section 9 nor Section 42
contemplates levy of any POC or grid-support charge upon captive
generators. Therefore, by creating an independent monetary
burden on CPPs, Regulation 92 travels beyond the statutory
framework enacted by Parliament.
(iii) Learned counsel submitted that Sections 61, 86 and 181
merely confer regulatory powers upon the Commission and cannot
be construed as conferring authority to impose a fresh fiscal
burden not contemplated under the parent statute. The
Commission, being a creature of the Act, cannot exercise powers
beyond those conferred by Parliament. In support of the aforesaid
proposition, reliance was placed upon ADM Delhi v. Siri Ram ,
(2000) 5 SCC 451 , to contend that subordinate legislation
cannot travel beyond the scope of the parent enactment.
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(iv) It was further submitted that delegated legislation cannot
impose a tax or fee in the absence of express statutory authority
and that ancillary regulation-making powers cannot be invoked to
create a substantive fiscal liability. Reliance in this regard was
placed upon Ahmedabad Urban Development Authority v.
Sharadkumar Jayantikumar Pasawalla & Ors. , (1992) 3 SCC
285 .
(v) It was further submitted that the Electricity Act, 2003, the
National Electricity Policy, 2005 and the Tariff Policy, 2016
consistently seek to encourage captive generation and create an
enabling environment for CPPs. The levy of POC imposes an
additional financial burden on captive generators and defeats the
legislative objective of promoting captive generation.
(vi) Learned counsel submitted that the respondent seeks to
justify POC on the basis of an alleged study conducted by the
Electrical Research and Development Association (ERDA).
However, neither the study nor the data, assumptions,
methodology, cost-allocation principles or technical analysis
forming its basis have been disclosed to stakeholders.
(vii) It was argued that in the absence of disclosure of the
foundational material, stakeholders were deprived of any
meaningful opportunity to verify whether CPPs actually impose the
alleged grid-support costs or whether the notified charges bear
any rational nexus to such costs. Consequently, the assertion that
POC is a cost-reflective charge remains unsupported by any
verifiable material.
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(viii) Learned counsel submitted that before imposing a recurring
charge upon CPPs, the Commission was required to demonstrate
the existence of identifiable grid-support services, quantify the
actual costs attributable thereto, disclose the methodology
adopted for allocation of such costs and establish proportionality
between the costs incurred and the charges levied. According to
the petitioner, none of these requirements are reflected either in
the impugned Regulations or in the Statement of Objections and
Reasons.
(ix) Repelling the respondent's reliance upon the existence of POC
under the 2019 Regulations, learned counsel submitted that prior
existence of a similar levy does not confer legality upon the
present Regulation. Once the earlier determination was remanded
by the Appellate Tribunal, the Commission was required to
undertake a fresh, transparent and evidence-based exercise. The
legality of Regulation 92 must therefore be independently justified
on the basis of the present exercise.
(x) Learned counsel submitted that Regulation 92 is liable to be
set aside on the ground of non-compliance with the mandatory
procedure prescribed under Section 181(3) of the Electricity Act,
2003 read with Rule 3 of the Electricity (Procedure for Previous
Publication) Rules, 2005. It was contended that Rule 3(4)
specifically mandates that the Commission shall consider every
objection and suggestion received from stakeholders before
finalizing the regulations.
(xi) It was submitted that the petitioner had filed detailed
objections dated 23.12.2024 specifically opposing the proposed
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levy of Parallel Operation Charges and had also reiterated the
same during the public hearing held on 27.12.2024. However, the
Statement of Objections and Reasons dated 24.01.2025 neither
records nor deals with the petitioner's objections concerning POC
and does not disclose any reason for rejecting the same.
(xii) Learned counsel argued that inviting objections and
conducting a hearing is not sufficient compliance with the
statutory scheme. The requirement under Rule 3(4) is not merely
to receive objections but to meaningfully consider them. In
support of the said submission, reliance was placed upon
Chairman, LIC of India & Ors. v. A. Masilamani (Civil Appeal
No. 8263 of 2012, decided on 23.11.2012) , wherein it was
held that the expression "consider" implies due application of mind
and the order must reflect such consideration. Reliance was also
placed upon Delhi Airport Metro Express Private Limited v.
Delhi Metro Rail Corporation Limited , (2022) 9 SCC 286 , to
contend that every word employed by the legislature must be
given due meaning and effect and, therefore, the statutory
requirement of consideration of objections cannot be rendered
otiose.
(xiii) Learned counsel further submitted that the respondent has
neither disclosed any reason for introduction of Parallel Operation
Charges nor assigned any reason for rejecting the objections filed
by the petitioner, thereby violating the statutory mandate
governing delegated legislation.
(xiv) It was also submitted that Regulation 92 creates an
impermissible classification by singling out Captive Power Plants
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for levy of Parallel Operation Charges while Independent Power
Producers, despite having similar interaction with the grid, are not
subjected to such levy. According to learned counsel, the
classification lacks any intelligible differentia and bears no rational
nexus with the object sought to be achieved, thereby offending
Article 14 of the Constitution of India.
(xv) Learned counsel additionally submitted that the Commission
lacks authority to give retrospective effect to subordinate
legislation in the absence of express statutory sanction and that
the impugned levy has been made applicable even to pre-existing
captive generating plants. Reliance in this regard was placed upon
Vice Chancellor, M.D. University v. Jahan Singh (2007) 5
SCC 77)
(xvi) Learned counsel sought to distinguish the decision of the
Hon'ble Bombay High Court in Maharashtra State Electricity
Distribution Company Limited v. Maharashtra Electricity
Regulatory Commission (Writ Petition No. 1679 of 2011,
decided on 15.11.2011) , contending that the controversy
therein pertained to the opportunity of hearing during the
regulation-making process and did not address the issue arising in
the present case regarding non-consideration of objections or
absence of statutory competence.
(xvii) Reliance placed by the respondent upon Transmission
Corporation of Andhra Pradesh Limited v. Rain Calcining
Limited & Ors. (2021) 13 SCC 674 was also sought to be
distinguished by contending that the said judgment dealt with Grid
Support Charges under a different statutory framework and
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cannot be construed as recognising an unrestricted power under
the Electricity Act, 2003 to impose Parallel Operation Charges
through delegated legislation.
3.3. Regarding Regulation 32 (Late Payment Surcharge):
(i) Learned counsel submitted that Regulation 32 is arbitrary and
disproportionate inasmuch as it effectively subjects consumers to
a Late Payment Surcharge of 0.1% per day, which translates to
approximately 36.5% per annum.
(ii) It was contended that no study, benchmark, financial analysis
or objective criteria have been disclosed by the Commission to
justify fixation of the impugned rate. In the absence of any
discernible rationale, the levy is arbitrary and fails the
constitutional test of proportionality.
(iii) Learned counsel further submitted that the respondent's
contention that annualisation of the surcharge is illusory because
supply may be disconnected after fifteen days is misconceived.
Disconnection is neither automatic nor immediate and, in practice,
LPS continues to accrue during the recovery process. The financial
burden occasioned by the impugned levy is therefore real and
substantial.
(iv) It was argued that although the Electricity (Late Payment
Surcharge and Related Matters) Rules, 2022 may not directly
govern consumer billing, they nevertheless reflect the Central
Government's policy preference for benchmark-based, transparent
and non-punitive surcharge mechanisms. The Commission ought
to have kept these principles in view while framing Regulation 32.
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3.4. Constitutional Challenge:
(i) Lastly, learned counsel submitted that Regulation 32 imposes a
punitive and disproportionate financial burden without any
disclosed rationale, whereas Regulation 92 imposes a monetary
levy unsupported by the Electricity Act, 2003 and contrary to the
statutory policy of promoting captive generation. Both provisions
are therefore arbitrary, unreasonable and violative of Articles 14
and 19(1)(g) of the Constitution of India and deserve to be
declared unconstitutional.
4. Per contra , learned counsel appearing on behalf of the
respondent submitted that the writ petition is wholly misconceived
and liable to be dismissed. It was contended that the impugned
Regulations have been framed by the Rajasthan Electricity
Regulatory Commission ("RERC") in exercise of powers conferred
under Sections 61, 86 and 181 of the Electricity Act, 2003 and,
being a piece of subordinate legislation framed by a statutory
expert body, carry a presumption of constitutionality and validity.
The burden, therefore, lies upon the petitioner to establish that
the Regulations are ultra vires the parent statute or violative of
constitutional limitations.
4.1. Learned counsel submitted that the scope of judicial review in
matters concerning tariff determination and delegated legislation
framed by an expert regulatory body is extremely limited. It was
argued that Courts do not sit in appeal over economic or technical
policy choices made by a statutory regulator and interference is
warranted only where the regulation is shown to be manifestly
arbitrary, unconstitutional or beyond the authority conferred by
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the parent enactment. In support of the said proposition, reliance
was placed upon the judgment of this Hon'ble Court in Hindustan
Zinc Limited v. Rajasthan Electricity Regulatory
Commission & Ors. (D.B. Civil Writ Petition No. 3160/2016
and connected matters, decided on 29.08.2016) .
4.2. Regarding Maintainability:
(i) Learned counsel submitted that the challenge to Regulation 32
is itself misconceived inasmuch as the impugned rate of 0.1% per
day does not emanate from the Regulation but forms part of the
Retail Supply Tariff Orders issued by the Commission under
Section 62 of the Electricity Act, 2003.
(ii) It was further submitted that the petitioner had previously
challenged the issue of Late Payment Surcharge before the
Commission, and by order dated 19.03.2024, the Commission
rejected the request for modification and specifically held that the
issue pertains to tariff determination. The petitioner, having
accepted the said order, cannot be permitted to reagitate the
same issue in the present proceedings and is consequently barred
by the principles of estoppel and constructive res judicata.
4.3. Regarding Compliance with Statutory Procedure and
Principles of Natural Justice:
(i) Learned counsel submitted that the entire procedure
contemplated under the Electricity Act, 2003 and the Electricity
(Procedure for Previous Publication) Rules, 2005 was duly followed
before framing the Tariff Regulations, 2025. The draft Regulations
were published on 23.11.2024, objections and suggestions were
invited from all stakeholders, a public hearing was conducted on
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27.12.2024, a Statement of Objections and Reasons was issued
on 24.01.2025 and the final Regulations were thereafter notified
on 18.02.2025 and published in the Official Gazette on
06.03.2025.
(ii) It was submitted that the petitioner actively participated in the
consultative process by filing objections and appearing in the
public hearing. Merely because the petitioner's objections were not
accepted or individually discussed in the Statement of Objections
and Reasons cannot lead to an inference that they were not
considered.
(iii) Learned counsel argued that neither Section 181(3) of the
Electricity Act, 2003 nor Rule 3 of the Electricity (Procedure for
Previous Publication) Rules, 2005 requires the Commission to pass
a reasoned adjudicatory order dealing separately with every
objection received from every stakeholder. The requirement is only
that objections be invited and considered before the final
regulations are notified. Reliance in this regard was placed upon
the judgment of the Hon'ble Bombay High Court in Maharashtra
State Electricity Distribution Company Limited v.
Maharashtra Electricity Regulatory Commission ( Writ
Petition No. 1679 of 2011, decided on 15.11.2011) , to
contend that while exercising delegated legislative functions, the
Commission is not required to render individual reasoned findings
on every objection and that non-acceptance of a stakeholder's
suggestion does not ipso facto constitute violation of the principles
of natural justice.
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(iv) It was therefore submitted that there is complete compliance
with the statutory procedure governing delegated legislation and
no violation of the principles of natural justice is made out.
4.4. Regarding Regulation 92 (Parallel Operation Charges):
(i) Learned counsel submitted that Regulation 92 is fully within the
statutory competence of the Commission. Reliance was placed
upon Sections 61, 86(1)(a), (b), (e), (k) and 181 of the Electricity
Act, 2003 to contend that the Commission possesses ample
authority to frame tariff-related regulations and determine charges
incidental thereto.
(ii) It was contended that Parallel Operation Charges are not in the
nature of a tax, penalty or independent fiscal exaction but
constitute a compensatory and cost-reflective charge intended to
recover the cost of indispensable grid support availed by Captive
Power Plants operating in synchronisation with the grid. In the
absence of such recovery, the burden of maintaining grid support
infrastructure would be shifted to ordinary consumers.
(iii) It was further submitted that the Electricity Act, 2003 does
not prohibit levy of Parallel Operation Charges and the
Commission is empowered to determine tariff-related charges
necessary for ensuring cost-reflective tariffs and efficient grid
management. Consequently, the challenge founded upon Sections
9 and 42 of the Act is misconceived.
(iv) It was contended that the concept of Parallel Operation
Charges is not a new levy introduced for the first time under the
2025 Regulations. Similar provisions existed under the Tariff
Regulations, 2019 and although the determination made
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thereunder was remanded by the Appellate Tribunal for Electricity
(APTEL), the concept of POC itself was never struck down.
(v) Learned counsel submitted that pursuant to the directions
issued by the Appellate Tribunal, the matter was re-examined and
a detailed technical study was undertaken by the Electrical
Research and Development Association (ERDA) for assessing the
benefits derived by Captive Power Plants from parallel operation
with the grid and the corresponding costs attributable thereto.
After considering the said study and stakeholder comments, the
Commission determined separate rates for conventional,
renewable and hybrid captive generating plants.
(vi) It was argued that the classification adopted by the
Commission is founded upon technical considerations emerging
from the ERDA study and applies uniformly within each category.
Therefore, no violation of Article 14 of the Constitution of India is
made out.
(vii) Repelling the contention regarding non-disclosure of the
ERDA study, learned counsel submitted that the levy is based
upon a technical exercise undertaken pursuant to judicial
directions and the petitioner has failed to demonstrate that the
conclusions reached by the expert body are irrational, arbitrary or
unsupported by material.
(viii) Reliance was further placed upon the judgment of the
Hon'ble Supreme Court in Transmission Corporation of Andhra
Pradesh Limited v. Rain Calcining Limited & Ors. , (2021) 13
SCC 674 , to submit that the levy of Grid Support Charges upon
Captive Power Plants operating in parallel with the grid has been
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upheld by the Hon'ble Apex Court and that the underlying
principle recognising recovery of charges for indispensable grid
support fully supports the validity of the impugned Parallel
Operation Charges.
4.5. Regarding Regulation 32 (Late Payment Surcharge):
(i) On merits, learned counsel argued that the petitioner's
calculation treating the levy as equivalent to 36.5% per annum is
hypothetical and misleading. Under the applicable Supply Code,
supply of a defaulting consumer may be disconnected after the
prescribed period and therefore the assumption that surcharge
would continue to accumulate throughout the year is unrealistic.
(ii) It was submitted that the Late Payment Surcharge is
compensatory in nature and is intended to maintain financial
discipline and discourage consumers from treating distribution
licensees as interest-free sources of credit. The rate has been
consistently maintained keeping in view the financial health of the
distribution companies and cannot be characterized as arbitrary
merely because it imposes a financial consequence for delayed
payment.
(iii) Learned counsel further submitted that the Electricity (Late
Payment Surcharge and Related Matters) Rules, 2022 govern
delayed payments between generating companies, transmission
licensees and distribution licensees and have no application to
consumer billing. Therefore, reliance placed by the petitioner upon
the said Rules is wholly misplaced.
4.6. Lastly, learned counsel submitted that the petitioner has
failed to establish any lack of legislative competence, procedural
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illegality, violation of natural justice, manifest arbitrariness or
constitutional infirmity in the impugned Regulations. The
challenge, in essence, is directed against regulatory and tariff
policy choices made by an expert statutory body, which do not
warrant interference in exercise of jurisdiction under Article 226 of
the Constitution of India, and therefore, the writ petition deserves
to be dismissed.
5. This Court has heard learned counsel for the parties and
carefully perused the material available on record. The challenge
in the present writ petition is directed against Regulation 92
(Parallel Operation Charges) and Regulation 32 (Late Payment
Surcharge) of the Rajasthan Electricity Regulatory Commission
(Terms and Conditions for Determination of Tariff) Regulations,
2025.
5.1. This Court notes that although the respondent has questioned
the maintainability of the present writ petition on the ground of
estoppel and constructive res judicata arising out of the earlier
proceedings before the Commission, the present petition involves
a challenge to the validity of delegated legislation framed under
Section 181 of the Electricity Act, 2003. In view thereof, this Court
has proceeded to examine the challenge on merits. Consequently,
it is not considered necessary to render any conclusive finding on
the preliminary objection.
6. This Court observes that the Rajasthan Electricity Regulatory
Commission derives its authority to frame regulations from
Section 181 of the Electricity Act, 2003. Under Section 181(1), the
State Commission is empowered to make regulations consistent
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with the Act and the Rules made thereunder for carrying out the
provisions of the Act. Section 181(2), while enumerating specific
matters in respect whereof regulations may be framed, expressly
provides that such enumeration is without prejudice to the
generality of the power conferred under sub-section (1).
Simultaneously, Sections 61 and 86 of the Electricity Act, 2003
cast statutory obligations upon the Commission to determine tariff
and regulate matters concerning procurement and supply of
electricity in accordance with the principles embodied in the Act.
6.1. This Court further observes that subordinate legislation
framed by an expert statutory regulator carries a presumption of
validity. The scope of judicial review in relation to delegated
legislation is confined to examining whether the regulation suffers
from lack of legislative competence, violation of constitutional
limitations, manifest arbitrariness, or inconsistency with the
parent statute. It is equally well settled that tariff fixation and
determination of charges by the State Electricity Regulatory
Commission constitute legislative functions exercised by an expert
statutory body. Consequently, the scope of judicial review is
considerably narrower than that applicable to administrative or
quasi-judicial decisions, and this Court would not ordinarily
substitute its own opinion for that of the expert regulator on
questions involving technical assessment or economic policy
unless the decision-making process is shown to be vitiated by
patent illegality or manifest arbitrariness. This principle also finds
support from the observations of the Hon’ble Supreme Court in
Transmission Corporation of Andhra Pradesh Ltd. v. Rain
Calcining Ltd. , (2021) 13 SCC 674 . This Court also notes that
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the Hon’ble Division Bench of this Court in Hindustan Zinc
Limited v. Rajasthan Electricity Regulatory Commission &
Ors. (D.B. Civil Writ Petition No. 3160/2016 and connected
matters, decided on 29.08.2016) recognised the wide
regulation-making power of the Commission under Section 181 of
the Electricity Act, 2003 and treated such regulations as matters
of policy, not liable to interference in the absence of apparent
arbitrariness or discrimination.
6.2. The petitioner has also assailed the impugned Regulations on
the ground of non-compliance with Section 181(3) of the
Electricity Act, 2003 read with Rule 3 of the Electricity (Procedure
for Previous Publication) Rules, 2005. This Court notes that
Section 181(3) mandates previous publication before regulations
are made, while Rule 3 contemplates publication of the draft
regulations, invitation of objections and suggestions from persons
likely to be affected and consideration thereof before finalisation.
The material available on record demonstrates that draft
Regulations were published inviting objections from stakeholders,
the petitioner submitted detailed objections, participated in the
consultative process and a public hearing was conducted before
issuance of the final Regulations. The statutory scheme requires
that objections be invited and considered; it does not obligate the
Commission to render a separate adjudicatory determination upon
every objection raised by every stakeholder. Neither Section
181(3) of the Electricity Act, 2003 nor Rule 3 of the Rules of 2005
mandates that every objection received must culminate in a
separate reasoned adjudication. The statutory obligation is one of
consideration and not acceptance. Consequently, this Court is
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satisfied that the procedural requirements prescribed under
Section 181(3) of the Electricity Act, 2003 and Rule 3 of the Rules
of 2005 stand duly complied with.
6.3. The reliance placed by the petitioner upon Chairman, Life
Insurance Corporation of India & Ors. v. A. Masilamani ,
(2013) 6 SCC 530 and Delhi Airport Metro Express Private
Limited v. Delhi Metro Rail Corporation Limited , (2022) 9
SCC 286 does not advance its case. The proposition that statutory
authorities must apply their mind while considering matters placed
before them cannot be disputed. However, in the facts of the
present case, the consultative exercise undertaken by the
Commission, publication of draft Regulations, invitation of
objections, conduct of public hearing and issuance of the
Statement of Objections and Reasons collectively demonstrate
compliance with the statutory procedure governing delegated
legislation.
7. So far as Regulation 92 concerning Parallel Operation Charges is
concerned, the principal submission of the petitioner is that
Sections 9 and 42 of the Electricity Act, 2003 confer a statutory
right upon Captive Power Plants and do not contemplate levy of
Parallel Operation Charges.
7.1. Section 9 of the Electricity Act, 2003 undoubtedly recognises
the right of every person to construct, maintain and operate a
captive generating plant and dedicated transmission lines.
Likewise, the proviso to Section 42(2) exempts captive users from
payment of surcharge while availing open access for carrying
electricity to the destination of their own use. However, neither
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provision contains an express prohibition restraining the
Appropriate Commission from determining cost-reflective charges
relatable to grid support or other ancillary services where such
determination falls within the broader regulatory functions
entrusted to it under Sections 61, 86 and 181 of the Act.
7.2. The respondent has consistently maintained that Parallel
Operation Charges are compensatory in nature and are intended
to recover costs associated with maintaining grid support
infrastructure utilised by Captive Power Plants operating in
synchronisation with the grid. Whether such charges ought to be
quantified in a particular manner or whether a different
methodology would have been preferable are matters involving
technical assessment and tariff policy which ordinarily fall within
the domain of the expert regulator.
7.3. This Court further notes that the Hon'ble Supreme Court in
Transmission Corporation of Andhra Pradesh Limited v.
Rain Calcining Limited & Ors. , (2021) 13 SCC 674, while
considering the validity of Grid Support Charges and wheeling
charges levied by the Regulatory Commission, emphasised that
tariff determination and allied charges fall within the domain of an
expert statutory body and that courts ought not ordinarily to
interfere with such determinations once the relevant technical and
financial considerations have been duly examined. The relevant
portion of the judgment is reproduced hereunder:
“61. The High Court could not have interfered with the
findings on merits taken by the experts without entering into
the various aspects considered by the Commission. Thus, the
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finding on merits as to the determination of charges being
illegal and improper in any manner, cannot be said to be
sustainable. The High Court has not gone into various reasons,
and the details considered by the Commission and once the
expert body has determined specific tariffs, it is not for the
courts to interfere ordinarily in such matters. We find the
determination to be proper and do not suffer from any
infirmity or illegality. The Commission has made an elaborate
discussion for arriving at the figure mentioned above. The
recovery network charges, tariff structure, and the question of
wheeling charges in cash or kind have also been considered.
Various relevant factors have been taken into consideration.
The nature of the arrangement between APTRANCO and
DISCOMS and inter se DISCOMS has been considered while
deciding issue No.4.
6.2. The use of the system cannot be isolated from losses in
the system as they form an integral part of the system. All
persons using the system should bear the system losses,
whether technical or non-technical. Incidentally, the terms of
a licence issued by APTRANSCO and DISCOMS specifically
refer to deliver such electricity, adjust losses of electricity to a
designated point. Technical losses in the system to be taken
into account as these are also an integral part of the system.
It is an integrated system where the electricity is supplied on
displacement basis rather than direct conveyance of the
particular electricity which is generated, the technical losses
up to the voltage level at which the electricity is delivered
along cannot be measured. The technical losses of the total
system need to be taken into account as it is impossible to
determine from which source electricity is being supplied to
which particular customer. The electricity from all sources gets
combined in the system and loses its identity. As investment
in the system has also been made, it was evident that
requisite charges have to be paid.
IN RE: GRID SUPPORT CHANGES
63. With respect to Grid Support Charges, it has been
conceded by the learned counsel for the parties that the
decision in the aforesaid batch of matters as to wheeling
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charges has to govern grid support charges as we have upheld
the order of the Commission with respect to wheeling charges,
the order of the High Court has to be set aside.
64. Any Government Order or Incentive Scheme does not
govern the Grid Support Charges. Grid Code is the basis for
levy of the Grid Support Charges, which came to be approved
by the Commission on 26.5.2001. The same is also reflected
in the impugned order. Thus, in case of installation of
another CPP, that would be an additional load on the
grid, and there is no embargo for setting up additional
grid CPP in the form of expansion as grid acts as
cushioning. The Grid Support Charges can be levied, and
the order dated 8.2.2002 of the Commission is, thus on
the parity of the reasonings, has to be upheld
considering the provisions of Section 21(3) of the
Reforms Act, 1998. Under Section 11 read with Section 26
of the Reforms Act, 1998, all fixed charges under the
distribution and Grid Support Charges are leviable only at the
instance of a distribution company, and because of the
discussion above, the Commission has the powers to
determine it. In the agreements also there is a power where
the Board could have fixed the Grid Support Charge
unilaterally, but because of Reforms Act, 1998 came to be
enacted, the application was filed in the Commission. After
that, the Commission has passed the order in accordance with
the law. We find no fault in the same. Thus, the order of the
Commission concerning the Grid Support Charges has to be
upheld.”
7.4. The contention that Regulation 92 travels beyond the parent
statute also cannot be accepted. The petitioner has not
demonstrated any express provision of the Electricity Act, 2003
prohibiting determination of Parallel Operation Charges nor
established that the impugned Regulation directly conflicts with
any statutory mandate. The decisions relied upon by the petitioner
in ADM Delhi v. Siri Ram , (2000) 5 SCC 451, Ahmedabad
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Urban Development Authority v. Sharadkumar
Jayantikumar Pasawalla & Ors. , (1992) 3 SCC 285 and Vice-
Chancellor, M.D. University, Rohtak v. Jahan Singh , (2007)
5 SCC 77 undoubtedly reiterate settled principles governing
delegated legislation; however, in the facts of the present case, no
material has been placed before this Court to conclude that
Regulation 92 exceeds the regulation-making power conferred
upon the Commission under Sections 61, 86 and 181 of the
Electricity Act, 2003.
7.5. This Court further observes that the challenge founded upon
Article 14 of the Constitution of India also does not merit
acceptance. The material available on record indicates that the
Commission has classified Captive Power Plants into conventional,
renewable and hybrid categories and determined Parallel
Operation Charges separately for each class on the basis of
technical considerations. The petitioner has not demonstrated that
such classification lacks an intelligible differentia or bears no
rational nexus with the object sought to be achieved. Mere
disagreement with the methodology adopted or the quantum
determined by the expert regulator cannot, by itself, establish
hostile discrimination.
8. The challenge to Regulation 32 relating to Late Payment
Surcharge also deserves to be examined in the context of the
statutory scheme. Section 61 of the Electricity Act, 2003 requires
the Appropriate Commission to specify terms and conditions for
determination of tariff having regard to commercial principles,
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recovery of costs in a reasonable manner and safeguarding
consumer interests while ensuring viability of the electricity sector.
8.1. The petitioner has principally questioned the reasonableness
of the prescribed rate by annualising the daily surcharge. Such
computation, by itself, cannot constitute a ground for invalidating
delegated legislation unless it is shown that the prescription is
manifestly arbitrary or bears no rational nexus with the object
sought to be achieved. The respondent has explained that the
surcharge is intended to maintain payment discipline and preserve
the financial sustainability of distribution utilities. This Court does
not find the said explanation to be so irrational or arbitrary as to
warrant interference in exercise of judicial review.
8.2. The reliance placed upon the Electricity (Late Payment
Surcharge and Related Matters) Rules, 2022 also does not
materially advance the petitioner's case. Rule 1(3) thereof
expressly indicates that the said Rules operate in respect of
outstanding dues amongst generating companies, transmission
licensees, distribution licensees and electricity trading licensees
and occupy a field distinct from consumer-related tariff provisions
framed by the State Commission. Consequently, the said Rules
cannot be invoked to invalidate Regulation 32.
8.3. Upon an overall consideration of the statutory framework, the
material placed on record and the rival submissions advanced
before this Court, the petitioner has failed to establish that
Regulation 32 or Regulation 92 suffers from lack of legislative
competence, procedural impropriety, inconsistency with the
Electricity Act, 2003 or manifest arbitrariness. Equally, no material
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has been placed before this Court to demonstrate that either
provision imposes an unreasonable restriction upon the rights
guaranteed under Article 19(1)(g) of the Constitution of India or
otherwise violates Article 14 thereof.
9. Consequently, this Court finds that the present challenge
essentially invites judicial review of technical determinations and
policy choices made by an expert statutory regulator while
exercising powers expressly conferred under the Electricity Act,
2003. The petitioner has failed to establish any lack of legislative
competence, violation of mandatory statutory procedure, manifest
arbitrariness or constitutional infirmity in the impugned
Regulations. In such circumstances, this Court, while exercising
jurisdiction under Article 226 of the Constitution of India, would
not substitute its own opinion for that of the specialised regulatory
authority on matters involving tariff fixation and determination of
cost-reflective charges. No ground warranting interference is,
therefore, made out.
9.1. Accordingly, the present writ petition, being devoid of merit,
is dismissed . All pending applications, if any, stand disposed of.
(DR.NUPUR BHATI),J (DR.PUSHPENDRA SINGH BHATI),J
SKant/-
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