Exceptional circumstances may justify third-party participation in electricity inquiries to facilitate informed regulatory decisions.

Petitioner No. 1 entered into an agreement with Jharkhand Bijli Vitran Nigam Ltd. (JBVNL) on 17 May 2012 for supplying surplus electricity from its captive power plant to Petitioner No. 2; the agreement was renewed in 2017 and 2023

Energy Watchdog complained to the State authorities that Petitioner No. 2 lacked valid captive-user status under Rule 3 of the Electricity Rules, 2005, and sought action under Section 135 of the Electricity Act, 2003

It subsequently filed a PIL seeking declarations that the electricity supply was unauthorised, investigation into the alleged violations, and recovery of losses caused to the State utility

JBVNL later issued show-cause notices alleging breach of the CPP Agreement, unauthorised supply of power, and violation of its right of first refusal, along with demands for cross-subsidy surcharge of approximately ₹176.74 crores against Petitioner No. 1 and ₹108.17 crores against Petitioner No. 2

The petitioners challenged the maintainability of the PIL. The Jharkhand High Court rejected the objection and directed that Energy Watchdog be heard in the proceedings initiated by JBVNL

The petitioners challenged that interim order under Article 136 of the Constitution

1. Whether the High Court erred in declining to reject the PIL as not maintainable when Energy Watchdog was neither privy to the CPP Agreement nor had suffered any direct legal injury

2. Whether the High Court could permit Energy Watchdog to participate in JBVNL’s proceedings concerning the petitioners’ alleged violations under the CPP Agreement and the Electricity Act

3. Whether the High Court’s interim direction was so perverse or legally impermissible as to warrant interference under Article 136 of the Constitution

The Court relied on the principle that the Electricity Act, 2003 constitutes an exhaustive statutory code governing the electricity sector, as held in PTC India Ltd. v. Central Electricity Regulatory Commission, (2010) 4 SCC 603

It further relied on Southern Power Distribution Company of Andhra Pradesh Ltd. v. Green Infra Wind Solutions Ltd., 2026 SCC OnLine SC 479, which reiterated that, following the unbundling of the electricity sector and establishment of regulatory commissions, no unallocated regulatory residue remains outside the statutory regulatory framework

Sections 79 and 86 delineate the functions of the Central and State Electricity Regulatory Commissions; Section 86(1)(f) empowers the State Commission to adjudicate disputes between licensees and generating companies; and Sections 79(3) and 86(3) require transparency in the exercise of regulatory functions

Section 94(3) permits the Appropriate Commission to authorise a person to represent consumer interests in proceedings before it

The Court also applied the limited scope of interference with an interim order under Article 136 where the order is not shown to be perverse

The Court recognised that Energy Watchdog was not a party to, or privy to, the CPP Agreement and that the Electricity Act provides a comprehensive regulatory framework for electricity-related disputes

Nevertheless, the High Court had identified circumstances suggesting that the allegations required careful examination, including the apparent delay in taking action despite longstanding complaints

In that factual setting, the High Court considered it necessary to obtain relevant information through a party other than the petitioners before JBVNL reached its decision

The Supreme Court held that this was an interim procedural measure adopted in the peculiar circumstances of the case and could not be characterised as perverse merely because Energy Watchdog was a third party to the contractual proceedings

It clarified, however, that Energy Watchdog’s participation was limited to assisting JBVNL by placing material and information before it; the hearing was not to be converted into a judicial or tribunal-like adjudication

The Court left the broader question concerning third-party intervention under the Electricity Act for determination by the High Court at the final hearing

It directed that JBVNL must independently consider the material placed by Energy Watchdog with due deliberation and caution, treating the process as an information-gathering exercise rather than a formal adjudicatory hearing

The Court expressly left all questions on the merits, including the maintainability of the PIL and the scope of third-party intervention under the Electricity Act, open for consideration by the High Court at the final hearing

The Special Leave Petition and pending applications were accordingly disposed of