BHUBANESWAR : In a significant judgment, the Supreme Court has ruled that state electricity regulatory commissions (SERCs) are not bound by the directions of the state or central government issued under Section 108 of the Electricity Act, 2003.
A three-member bench headed by Chief Justice of India D.Y. Chandrachud determined that the state regulatory commissions can only be guided by the directions issued by the state government under this provision, which in no way controls the functioning of the quasi-judicial body.
Section 108 of the Electricity Act stipulates that in the discharge of its functions, the state commission shall be guided by such directions in matters of policy involving public interest as the state government may provide in writing. If any question arises as to whether such a direction relates to a matter of policy involving public interest, the decision of the state government shall be final.
“This indicates that the state commission shall only be ‘guided’ by the directions issued by the state government and is not automatically bound by them,” the apex court ruled.
The court further stated, “The state government, while issuing a policy directive in the exercise of its power under Section 108, cannot impinge on the adjudicatory discretion vested in an authority under the Act. The provision, in no manner, seeks to control the exercise of quasi-judicial power by the state commissions based on directions issued by the state government.”
The Supreme Court order was the outcome of a case in which the Appellate Tribunal for Electricity (APTEL) set aside the order of the Kerala State Electricity Regulatory Commission, which had agreed to review its own order that rejected the approval of power supply agreements signed by the Kerala government with independent power generators, deviating from the standard bidding guidelines of the power ministry.
“We are in agreement with the judgment of APTEL insofar as it holds that the directive issued by the state government under Section 108 could not have displaced the adjudicatory function entrusted to KSERC,” the order stated.
State governments have the discretion to invoke Section 108 of the Electricity Act to issue a policy directive to the commission in matters involving public interest.
However, the Supreme Court has now made it clear that they cannot force the commission to accept arbitrary decisions under the guise of this provision, said a senior officer of the Odisha State Regulatory Commission.