Summary
The Supreme Court held that Section 63 of the Electricity Act, 2003 does not confine applications for adoption of a bid-discovered tariff to distribution licensees or generating companies. Read literally and in harmony with Section 86(1)(b), it allowed the Municipal Corporation of Delhi, setting up a waste-to-energy plant under its duty in the Solid Waste Management Rules, 2016, to seek tariff adoption from the Delhi Electricity Regulatory Commission. APTEL's contrary ruling was set aside and DERC's orders restored.
Issues
- Whether a local authority such as the Municipal Corporation of Delhi, which is neither a distribution licensee nor a generating company, could apply to the State Commission under Section 63 of the Electricity Act, 2003 for adoption of a tariff discovered through competitive bidding.
- Whether Section 63 must be read in harmony with the State Commission's regulatory functions under Section 86(1)(b) and (e) and with the municipal duty to set up waste-to-energy facilities under Rule 15 of the Solid Waste Management Rules, 2016.
- Whether APTEL was right to set aside DERC's orders rejecting the challenge to MCD's tender and approving the bid tariff of Rs. 7.38/kWh.
Provisions considered
- Section 63, Electricity Act, 2003Read literally, the section obliges the Appropriate Commission to adopt a tariff determined through a transparent bidding process in accordance with Central Government guidelines, and says nothing to confine its invocation to distribution licensees or generating companies; APTEL's reading added words to it. (¶¶ 12, 26, 27, 28, 29, 31, 32, 33, 35, 36, 54)
- Section 86(1)(b), Electricity Act, 2003Held to confer wide power on the State Commission to regulate the electricity purchase and procurement process of distribution licensees, including the price; Section 63 must be read in harmony with it, and the Commission must satisfy itself on transparency and on balancing consumer and generator or Discom interests. (¶¶ 34, 37, 38, 39, 40, 41, 42, 44)
- Section 86(1)(e), Electricity Act, 2003Read with Rule 6.4 of the Tariff Policy as requiring the State Commission to promote generation from renewable sources, supporting adoption of the tariff for the waste-to-energy project. (¶¶ 51, 52)
- Sections 174 and 175, Electricity Act, 2003Section 175 makes the Act additional to, and not in derogation of, other laws; there being no inconsistency between Section 63 and Rule 15 of the SWM Rules, the Act must be read in addition to the municipal duty under those Rules. (¶¶ 45, 46, 47, 48, 49)
- Rule 15(q) and (v), and Rule 9, Solid Waste Management Rules, 2016 (under the Environment (Protection) Act, 1986)Rule 15(v) requires local authorities to facilitate construction and operation of solid waste processing facilities, including waste-to-energy processes; MCD's project was undertaken in discharge of this statutory duty. Rule 9 casts on the Ministry of Power a duty regarding tariff and compulsory purchase of such power. (¶¶ 13, 14, 18, 19, 20, 48)
- Clause 6.4, Tariff Policy, 2016 (notified under the Electricity Act, 2003)Requires distribution licensees to compulsorily procure all power from waste-to-energy plants in the State and the Appropriate Commission to encourage emerging renewable technologies; relied on as supporting DERC's approval. (¶¶ 15, 16, 17, 50, 52)
Held
- The first rule of interpretation is literal construction; where a plain reading gives the provision the meaning the legislature intended and produces no absurdity, courts may not add, alter or delete words. (¶¶ 30, 36)
- Section 63 empowers the Appropriate Commission, notwithstanding Section 62, to adopt a tariff determined through a transparent bidding process in accordance with Central Government guidelines; nothing in its text restricts its invocation to distribution licensees or generating companies, and reading in such a restriction impermissibly adds words to the statute. (¶¶ 28, 29, 31, 32, 33, 35, 36)
- Section 63 must be read harmoniously with Section 86(1)(b), which gives the State Commission wide power to regulate the purchase and procurement of electricity by distribution licensees, including price. The Commission is not a mere post office: while adopting a bid tariff it must be satisfied that the process was transparent and that the interests of generators and Discoms are balanced with those of consumers. Confining Section 63 to Discoms or generators would unduly curtail those powers. (¶¶ 37, 38, 39, 40, 41, 42, 43, 44)
- There is no inconsistency between Section 63 and Rule 15 of the SWM Rules, 2016; by Section 175 the Electricity Act operates in addition to the municipal duty to undertake waste-to-energy projects, which is reinforced by Section 86(1)(e) and clause 6.4 of the Tariff Policy. (¶¶ 45, 47, 48, 49, 50, 51, 52)
- MCD was not a stranger to the process: it set up the project, on a design, build, finance and operate basis to be transferred back to it after 25 years, in performance of its statutory obligations, with the Discoms' authorisation. APTEL erred in treating it otherwise and in upsetting, on a hyper-technical ground, DERC's approval based on the SWM Rules mandate, the bid evaluation report, the certificate of transparent bidding and the Tariff Policy, while ignoring the public interest in waste disposal. (¶¶ 20, 21, 22, 53, 54, 55, 56)
- Having allowed the appeals on these grounds, the Court did not decide the appellant's objection to the locus of the first respondent to appeal before APTEL. (¶ 57)
Result
Appeals allowed; APTEL's common judgment dated 31.08.2023 in DFR Nos. 245 and 247 of 2023 set aside, and DERC's orders dated 06.03.2023 in Petition No. 65 of 2022 and 07.03.2023 in Petition No. 72 of 2022 affirmed.