Summary
An SEZ developer must apply under Regulation 13 for scrutiny and recognition as a deemed distribution licensee, but recognition cannot be conditioned on the additional capital requirements applicable to ordinary licence applicants. The direction requiring Sundew’s promoters to infuse Rs.26.90 crore was removed, while its recognised deemed-licensee status remained. General licence conditions did not import the separate initial-licensing requirement.
Issues
- Whether SEZ developer status dispensed with an application for regulatory recognition.
- Whether Rule 3(2) capital requirements and Regulation 12 applied to this deemed licensee.
- Whether Regulation 49 or Sesa Sterlite supported the capital condition.
Provisions considered
- Section 14(b), proviso inserted by Notification S.O.528(E), 3 March 2010, Electricity Act, 2003The SEZ developer’s deemed status derives from the notification, but an application for recognition under the applicable regulations remains required, with scrutiny limited to legally applicable requirements. (¶¶ 8, 13, 14, 20, 24, 25, 28, 37)
- Sections 4 and 49(1), Special Economic Zones Act, 2005The Central Government notification under the SEZ framework introduced the Electricity Act proviso for notified SEZ developers. (¶¶ 2, 12, 13, 14)
- Regulations 2, 12, 13 and 49, Andhra Pradesh Electricity Regulatory Commission (Distribution Licence) Regulations, 2013Ordinary applicants and deemed licensees seeking recognition are distinct categories. Regulation 13 exempts deemed licensees from Regulations 4–11; Regulation 12 does not extend to them, and Regulation 49 concerns Chapter IV general conditions. (¶¶ 10, 11, 15, 25, 29, 34, 35, 36)
- Rule 3(2), Distribution of Electricity Licence (Additional Requirements of Capital Adequacy, Creditworthiness and Code of Conduct) Rules, 2005The capital-adequacy condition for an applicant seeking a distribution licence was not a valid precondition to recognition of the appellant’s deemed status. (¶¶ 16, 26, 27, 28, 34, 35, 37)
Held
- The developer could not insist on recognition without any application or scrutiny. It had to apply under Regulation 13; the Commission could verify applicable requirements before recognising deemed status. The appellant had already fulfilled this application requirement. (¶¶ 20, 24, 25, 37)
- The deemed status arose from the special proviso to Section 14(b), rather than the sixth proviso governing additional requirements for ordinary competing distribution licences. Rule 3 of the 2005 Rules did not apply to this recognition, so the Commission could not require Rs.26.90 crore promoter equity as a condition. (¶¶ 26, 27, 28, 37)
- Regulation 12 could not be expanded to cover deemed licensees merely because Regulation 13 expressly exempted Regulations 4–11. Its text linked the additional requirement to ordinary applicants complying with those provisions; the statutory and regulatory distinction between grant and recognition had to be respected. Subordinate legislation must supplement and remain consistent with the primary enactment. (¶¶ 29, 30, 31, 32, 33, 34, 35)
- Regulation 49’s reference to general conditions meant the conditions in Chapter IV. It did not bring Regulation 12, in the separate chapter dealing with grant procedure, into application against deemed licensees. (¶ 36)
- Sesa Sterlite concerned cross-subsidy surcharge and parity in electricity-supply obligations. It did not decide that an SEZ developer must meet ordinary licensing capital criteria to qualify for deemed-status recognition. (¶¶ 21, 22, 23)
- The appeal was partly allowed. The Commission and Tribunal orders were set aside only to the extent of the additional-capital condition; recognition of Sundew as a deemed licensee remained, with that condition removed. No costs. (¶¶ 37, 38)
Result
Appeal partly allowed; Rs.26.90 crore additional-capital condition removed. Recognised deemed-distribution-licensee status preserved; no costs.