TORRENT POWER LIMITED v. U.P. ELECTRICITY REGULATORY COMMISSION & ORS

Citation: 2025 INSC 838, [2025] 7 S.C.R. 693

Court: Supreme Court of India

Bench: J.B. Pardiwala and R. Mahadevan, JJ.

Judgment text

SUPREME COURT OF INDIA Torrent Power Limited v. U. P. Electricity Regulatory Commission & Ors. Civil Appeal No. 23514 of 2017 [2025] 7 S. C. R. 693 : 2025 INSC 838 Torrent Power Limited v. U. P. Electricity Regulatory Commission & Ors. (Civil Appeal No. 23514 of 2017) 14 July 2025 [J. B. Pardiwala* and R. Mahadevan, JJ. ] Issue for Consideration i) Whether any individual can invoke the jurisdiction of a State Electricity Regulatory Commissions (ERC) on the plea of public interest. In other words, whether an ERC has the jurisdiction to consider matters in public interest; ii) Whether the Act, 2003 confers jurisdiction on the State ERCs to consider and adjudicate the efficacy of a distribution franchisee agreement entered between a distribution licensee and a distribution franchisee. In other words, whether ERCs have the jurisdiction to review the functioning of a distribution licensee to supply the electricity through a franchisee. Headnotes† Electricity Act, 2003 - s. 2(15), s.

2(17), s. 2(27), seventh proviso to s. 14, s. 82, s. 86, s. 107, s. 108, s. 111, s. 128, s. 129, s. 130, s. 181, Part VII - Whether the Electricity Regulatory Commission has the jurisdiction to consider matters in public interest: Held: Sections 107 and 108 respectively of the Act, 2003 mandate the ERCs to be guided by directions in matters of policy involving public interest as the Central/State Government may give to it in writing - Electricity being a natural resource that vests in the State, the provisions of the Act, 2003 keep consumers' interest at the core of all processes that are sought to be governed under the Act, 2003 namely, generation, transmission and distribution of electricity - The ERCs, being creatures of a statute, derive their jurisdiction and powers from the provisions of that statute i. e.

, the Act, 2003 - Therefore, it would not be permissible for them to exercise powers not expressly vested in them - As a principle of law, the ERCs are not competent to entertain a matter on the singular ground of public interest. [Paras 37, 38, 43, 56] * Author 694 Electricity Act, 2003 - s. 128 - The respondent no. 4 had preferred a petition before the UPERC, questioning the legality, validity and propriety of the Distribution Franchisee Agreement dated 18. 05. 2009 and Supplementary Agreement dated 17. 03. 2010 respectively (together referred to as the "DFA") entered and executed between the appellant (distribution franchisee) and the respondent no. 3 (distribution licensee) - Respondent no. 4 prayed for an investigation u/s. 128 of the Act, 2003 against the respondent nos. 2 and 3 as well as the appellant - Whether the petition filed by the respondent no. 4 u/s. 128 of the Act, 2003 was maintainable in law: Held: The respondent no.

4, though, has levelled serious allegations against the respondent no. 2 and the appellant, yet has not provided any reasons or documentation in respect of how the appellant and respondent no. 2 are in violation of tariff orders - Further, even the Expert Committee Report dated 09. 01. 2017 does not shed any light on how tariff orders are being contravened by the appellant - What is discernible is that unless some satisfactory grounds are given for initiating an investigation, a petition or an application u/s. 128 cannot be held to be maintainable - The ERCs are required to consider matters in public interest wherever mandated by the Act, 2003, i. e. , in matters relating to tariff determination, procurement of power processes, and utility/licensee management which requires safeguarding of consumer interest alongside the commercial principles - This Court is, therefore, of the considered view that in the present case, the petition of the respondent no. 4 filed u/s.

128 does not fulfill the parameters of satisfaction required under the said Section. [Paras 67, 68] Electricity Act, 2003 - ss. 16, 18, 19, 20, 128 - Whether the ERCs have the jurisdiction to review the functioning of a distribution licensee to supply electricity through a franchisee: Held: An ERC may not directly regulate a franchisee, it exercises regulatory oversight over the distribution licensee's functions and duties, including the process of a distribution licensee delegating some of its functions and activities to a franchisee - Further, Sections 16, 18, 19 and 20 of the Act, 2003 respectively, prescribe that the ERC can stipulate/review the terms and conditions under Torrent Power Limited v. U. P. Electricity Regulatory Commission & Ors.

which a distribution licensee may delegate its electricity distribution responsibilities to a franchisee - Such stipulation/review occurs as a part of ERC's regulatory functions - It is apposite to observe that the Act, 2003 does not provide for a direct regulatory oversight by the ERCs in respect of the distribution franchisees - Part IV of the Act, 2003, from Sections 12 to 24 deals with licensing which inter-alia includes the procedure for grant of licence, conditions of licence, actions that a licensee may not undertake, amendment of licence, revocation of licence, sale of utilities of licensees, directions to licensees, and suspension of distribution licence and sale of utility - All these stipulations are to regulate the distribution licensee - There is no such stipulation provided to control or regulate the relationship between a licensee and franchisee - It is well settled that the relationship between the distribution licensee and franchisee is one of agency - As a natural corollary, the franchisee is accountable only to the distribution licensee, who in turn is accountable to the consumers - The Act, 2003 does not envisage direct regulatory oversight as regards distribution franchisees and by virtue of their relationship of agency, such franchisees can only be indirectly regulated through the distribution licensee - Therefore, even an investigation u/s.

128 can only happen in respect of a distribution licensee and not its franchisee. [Paras 71, 72, 73, 75] Electricity Act, 2003 - s. 128 - Uttar Pradesh Electricity Regulatory Commission (Consumer Grievance Redressal Forum & Electricity Ombudsman) Regulations, 2007 - Reg. 5 - Uttar Pradesh Electricity Regulatory Commission (Conduct of Business) Rules, 2004 - Reg. 14 - A Distribution Franchisee Agreement dated 18. 05. 2009 and Supplementary Agreement dated 17. 03. 2010 respectively (together referred to as the "DFA") entered and executed between the appellant (distribution franchisee) and the respondent no. 3 (distribution licensee) appointing the appellant herein as a franchisee for distribution of electricity - Respondent No. 4 (an individual) preferred Petition No. 816 of 2012 u/s.

128 of 2003 Act before the UPERC, questioning the legality, validity and propriety of DFA - The UPERC held the petition was maintainable on the grounds of public interest and further, ordered formation of an Expert Committee to give findings - The APTEL held that 696 petition before the UPERC was maintainable and observed that ERCs are empowered to exercise regulatory oversight on distribution licensees - Correctness: Held: 1. The UPERC fell in serious error in entertaining the petition filed by the respondent no. 4 and passing the order constituting an expert committee - The APTEL also failed to look into the error committed by the UPERC and dismissed the appeal filed by the appellant-herein - The impugned order passed by the APTEL is hereby set aside - As a consequence, the report of the Expert Committee also pales into insignificance. [Paras 78, 79] 2. The ERCs are required to consider matters in public interest wherever mandated by the Act, 2003, i. e.

, in matters relating to tariff determination, procurement of power processes, and utility/ licensee management which requires safeguarding of consumer interest alongside the commercial principles - This Court, therefore, of the considered view that in the present case, the petition of the respondent no. 4 filed u/s. 128 does not fulfill the parameters of satisfaction required under the said Section - The issue whether an investigation u/s. 128 could be ordered against DVVNL or respondent no. 2, the answer in the negative - It goes without saying that the investigation to be conducted by an authority u/s. 128 is to be limited to only two eventualities: (i) if the licensee fails to abide by the terms of its license, and (ii) if the licensee acts in contravention to the provisions of the Act, 2003 and the regulations thereunder - The exposition in the aforesaid clarifies that the threshold of "satisfaction" required to order an investigation u/s. 128 was not met by the respondent no.

4 and even the Expert Committee did not present any findings as regards these two considerations - Insofar, regulatory oversight as regards distribution franchisees is concerned, there is no doubt that the Act, 2003 does not envisage direct regulatory oversight as regards distribution franchisees and by virtue of their relationship of agency, such franchisees can only be indirectly regulated through the distribution licensee - Therefore, even an investigation u/s. 128 can only happen in respect of a distribution licensee and not its franchisee - This is in consonance with the principle of agency - Any action of the franchisee is equivalent to such action having been committed by a distribution licensee - Therefore, only the distribution Torrent Power Limited v. U. P. Electricity Regulatory Commission & Ors. licensee can be questioned for any action that its agent commits.

[Paras 68, 77, 75] Electricity Act, 2003 - Input-rate model of distribution franchisee - Explained: Held: In this model, a franchisee buys electricity from a distribution licensee at defined input point(s) at a pre-determined rate which is annualized for consistency on a yearly basis - This pre-determined rate that has to be paid by the franchisee to the distribution licensee for purchase of electricity, is usually fixed by way of bids received from private players interested in assuming the role of a franchisee - The private party that quotes the highest rate is awarded the bid subject to other terms and conditions of the bidding process - It is for this reason that quoting of such annualized rates is required even by the Ministry of Power's "Standard Bidding Document for Appointment of Input based Distribution Franchisee, June 2012".

[Para 61] Electricity Act, 2003 - Functions of Central and State Electricity Regulations Commissions - Nature and Scope of - Discussed: Held: Under the scheme of the Act, 2003, the Central and State ERCs are vested with regulatory functions, tariff determination functions, and adjudicatory functions, in particular under Sections 79 and 86 respectively - Whilst in the exercise of regulatory functions, the ERCs are also required to comply with the various Regulations made by the respective Central and State Commissions under Sections 178 and 181 respectively of the Act, 2003 - A close reading of most of the Regulations framed by the ERCs i. e. , Regulations pertaining to Open Access, Connectivity Regulations, Regulations on Renewable Power Purchase Obligations etc.

, indicate that regulatory powers and functions of the ERCs must be exercised in public or consumer interest alongside commercial principles - The function of tariff adoption or determination is also mandated to be carried by ERCs in accordance with public interest and to safeguard consumer needs - It is noteworthy that Section 61 of the Act, 2003 also requires ERCs to consider commercial principles in matters of tariff and therefore ERCs are expected to undertake a balancing act between commercial prudence and consumer interest. [Para 48] 698 Electricity Act, 2003 - ss.

79, 86 - Adjudicatory jurisdiction- Central ERC and State ERCs - Difference - Whether consumer disputes falls within the adjudicatory jurisdiction of UPERC: Held: Adjudicatory jurisdiction of the Central Commission is specified under Section 79(1)(f) and is limited to adjudication of disputes involving generating companies or transmission licensee, in regard to matters connected with clauses (a) to (d) - The State ERCs have a comparatively broader jurisdiction under Section 86, to adjudicate upon all disputes between the licensees and generating companies, without being limited to categories specified in (a) to (d) of Section 79 - However, even this enlarged jurisdiction of the State ERCs, more particularly the UPERC, does not include within its fold the power to adjudicate disputes involving consumers and by extension their grievances, irrespective of whether such issue is raised in furtherance of public interest.

[Paras 49, 50] Case Law Cited Maharashtra State Electricity Distribution Co. Ltd. v. Reliance Energy Ltd. [2007] 9 SCR 9 : (2007) 8 SCC 381 - held inapplicable. Paschimanchal Vidyut Vitran Nigam Ltd. v. Adarsh Textiles [2014] 14 SCR 482: (2014) 16 SCC 212; M. P. Power Management Co. Ltd. v. Sky Power Southeast Solar India (P) Ltd. [2022] 5 SCR 1 : (2023) 2 SCC 703; Jaipur Vidyut Vitran Nigam Ltd. v. MB Power (M. P. ) Ltd. [2024] 1 SCR 909 : (2024) 8 SCC 513; All India Power Engineer Federation v. Sasan Power Ltd. [2016] 9 SCR 901 : (2017) 1 SCC 487; Rajeev Hitendra Pathak v. Achyut Kashinath Karekar [2011] 10 SCR 513 : (2011) 9 SCC 541; Chiranjilal Shrilal Goenka v. Jasjit Singh[1993] 2 SCR 454 : (1993) 2 SCC 507; A. R. Antulay v. R. S. Nayak[1988] Supp. 1 SCR 1 : (1988) 2 SCC 602; Gujarat Urja Vikas Nigam Ltd. v. Solar Semiconductor Power Co. (India) (P) Ltd. [2017] 14 SCR 115 : (2017) 16 SCC 498 - relied on. Energy Watchdog v. CERC [2017] 3 SCR 153 : (2017) 14 SCC 80 - referred to.

Amausi Industries Association v. Uttar Pradesh Electricity Regulatory Commission, 2013 SCC OnLine APTEL 138; City Corporation Limited v. Maharashtra Electricity Regulatory Commission and Anr. , Torrent Power Limited v. U. P. Electricity Regulatory Commission & Ors. 2024 SCC OnLine APTEL 103; Bhadreshwar Vidyut (P) Ltd. v. Maharashtra ERC, 2024 SCC OnLine APTEL 47 - referred to. Global Feeds Feedback Energy Distribution Company Private Ltd. v. Govt. of Odisha, 2019 SCC OnLine Ori 205; Citizen Forum, Maharashtra v. State of Maharashtra, 2008 SCC OnLine Bom 165 - referred to.

List of Acts Electricity Act, 2003; Uttar Pradesh Electricity Regulatory Commission (Consumer Grievance Redressal Forum & Electricity Ombudsman) Regulations, 2007; Uttar Pradesh Electricity Regulatory Commission (Conduct of Business) Rules, 2004; Uttar Pradesh Electricity Regulatory Commission (General Conditions of Distribution License) Regulations, 2004; Uttar Pradesh Electricity Reforms Act, 1999; Uttar Pradesh Transfer of Distribution Undertaking Scheme, 2003. List of Keywords Distribution franchisee; Distribution licencee; Central and State Electricity Regulations Commissions; Jurisdiction; Adjudicatory jurisdiction; Input-rate model of distribution franchisee; Commercial principles; Public Interest; Electricity; Agency; Consumer; Distribution Franchisee Agreement; Jurisdiction to review the functioning of a distribution licensee. Case Arising From CIVIL APPELLATE JURISDICTION: Civil Appeal No. 23514 of 2017 From the Judgment and Order dated 28. 07.

2016 of the Appellate Tribunal for Electricity at New Delhi in AN No. 188 of 2015 Appearances for Parties Advs. for the Appellant: Ms. Deepa P Chawan, Sr. Adv. , Ms. Reshma Roy, Sudhir Naagar, Arun Kumar Nagar, Manohar Naagar. Advs. for the Respondents: Pradeep Misra, Daleep Dhyani, Anupam Misra, Suraj Singh, Anand K. Ganesan, Nikunj Dayal. Judgment / Order of the Supreme Court Judgment J. B. Pardiwala, J. For the convenience of exposition, this judgment is divided into the following parts: INDEX* A. FACTUAL MATRIX .................................................................... 2 (i) Order passed by the UPERC ......................................... 7 (ii) Impugned Order passed by the APTEL ........................ 9 (iii) Report of the Expert Committee ................................... 16 B. SUBMISSIONS ON BEHALF OF THE APPELLANT .............. 27 C. SUBMISSIONS ON BEHALF OF THE RESPONDENT NO. 4 ... 29 D.

ANALYSIS ................................................................................. 32 (i) Relevant provisions of the Act, 2003 ............................ 32 (ii) Whether the Electricity Regulatory Commission has the jurisdiction to consider matters in public interest? .......................................................................... 49 (iii) Whether the petition filed by the respondent no. 4 under Section 128 of the Act, 2003 was maintainable in law? .............................................................................. 63 (iv) Whether the ERCs have the jurisdiction to review the functioning of a distribution licensee to supply electricity through a franchisee? ................................ 79 E. CONCLUSION ......................................................................... 87 * Ed. Note: Pagination as per the original Judgment. Torrent Power Limited v. U. P. Electricity Regulatory Commission & Ors. 1.

This statutory appeal filed under Section 125 of the Electricity Act, 2003 arises from the judgment and order passed by the Appellate Tribunal for Electricity, New Delhi ("APTEL") dated 28. 07. 2016 in Appeal No. 188 of 2015. The appeal filed by the appellant herein, under Section 111 of the Electricity Act, 2003 (for short, the "Act, 2003") came to be dismissed by the APTEL, thereby affirming the order dated 16. 07. 2015 passed by the Uttar Pradesh Electricity Regulatory Commission ("UPERC"). A. FACTUAL MATRIX 2. The facts giving rise to this appeal may be summarized as under: i. The respondent no. 4 had preferred Petition No. 816 of 2012 dated 25. 07. 2012 before the UPERC, questioning the legality, validity and propriety of the Distribution Franchisee Agreement dated 18. 05. 2009 and Supplementary Agreement dated 17. 03. 2010 respectively (together referred to as the "DFA") entered and executed between the appellant (distribution franchisee) and the respondent no.

3 (distribution licensee). The respondent no. 4 prayed for investigation of the conduct of respondent nos. 2 and 3 respectively in appointing the appellant herein as a franchisee for distribution of electricity in the urban area of Agra without purportedly seeking prior approval of the UPERC for transfer of its utility to the appellant, which is violative of Section 17 of the Act, 2003. ii. The appellant herein had filed the preliminary objections in the said petition inter alia raising the grounds of jurisdiction and maintainability of the petition, before the UPERC. The said preliminary objections of the appellant were disposed of by the UPERC vide its order dated 16. 07. 2015 on the grounds of public interest. iii. The appellant herein preferred an appeal bearing no. 188 of 2015 under Section 111 of the Act, 2003 before the APTEL assailing the order dated 16. 07.

2015 referred to above on inter alia twin grounds that first, the Electricity Regulatory Commissions ("ERCs") lack the jurisdiction under the Act, 2003 to consider issues in public interest as well as contractual matters concerning the appointment of a distribution franchisee 702 and secondly, the grievance of an individual person who is not even a consumer is not maintainable before the ERC under the provisions of the Act, 2003. 3. The following list of dates and events would make the picture more clear:- 06. 07. 1999 The Uttar Pradesh Electricity Reforms Act, 1999 came into force. 14. 01. 2000 In pursuance of a reform-restructuring exercise, the erstwhile Uttar Pradesh State Electricity Board ("UPSEB") was unbundled under the first reforms transfer scheme, into three separate entities: • Uttar Pradesh Power Corporation Limited ("UPPCL") was vested with the function of Transmission and Distribution within the State.

• Uttar Pradesh Rajya Vidyut Utpadan Nigam Limited [UPRVUNL] was vested with the function of Thermal Generation within the State. • Uttar Pradesh Jal Vidyut Nigam Limited (UPJVNL) was vested with the function of Hydro Generation within the State. The trifurcation of the UPSEB was accompanied by the financial restructuring of the State's Power Sector utilities. Four new distribution companies were created vide Uttar Pradesh Transfer of Distribution Undertaking Scheme, 2003 to undertake distribution and supply of electricity in the areas under their respective zones specified in the scheme. These four distribution companies ("DISCOM") are as follow: • Dakshinanchal Vidyut Vitaran Nigam Limited [Agra DISCOM], • Madhyanchal Vidyut Vitaran Nigam Limited [Lucknow DISCOM], • Pashchimanchal Vidyut Vitaran Nigam Limited [Meerut DISCOM) and • Poorvanchal Vidyut Vitaran Nigam Limited (Varanasi DISCOM), 10. 06. 2003 The Electricity Act, 2003 came into force. Torrent Power Limited v. U. P.

Electricity Regulatory Commission & Ors. 12. 08. 2003 The State Government notified the Uttar Pradesh Transfer of Distribution Undertaking Scheme, 2003 for the purpose of providing and giving effect to the provisions for transfer of distribution undertakings of UPPCL to four DISCOMs, one of which was the respondent no. 3 namely Dakshinanchal Vidyut Vitran Nigam Ltd. (hereinafter referred to as "the DVVNL"). In pursuance to the said transfer scheme. the respondent no. 3 namely DVVNL became a Distribution Licensee under the provisions of the Act, 2003. 18. 05. 2009 Distribution Franchisee Agreement was entered into between the appellant and respondent no. 3. The appellant was appointed as Distribution Franchisee by the respondent nos. 2 and 3 under Section 2(27) read with the seventh proviso to Section 14 of the Act, 2003. 17. 03. 2010 A Supplementary Agreement was executed between the appellant and respondent no. 3.

From the date of execution of Distribution Franchisee Agreement dated 18. 05. 2009 and Supplementary Agreement dated 17. 03. 2010, the appellant has undertaken the work of distribution of electricity in the urban area of Agra in terms of the said Agreements. 2012 The Writ Petition No. 49774 of 2009 with the cause title Gharelu Vidyut Upbhokta Kalyan Samiti and others v. State of U. P. and others was filed before the Allahabad High Court, challenging the execution of Distribution Franchisee Agreement dated 18. 05. 2009. Similarly, another Writ Petition No. 30385 of 2012 with the cause title Agra Mandal Vyapar Sangathan v. State of U. P. and others was filed before the Allahabad High Court, challenging the Distribution Franchisee Agreement dated 18. 05. 2009 and Supplemetary Agreement dated 17. 03. 2010. Both the aforesaid writ petitions are still pending for consideration before the Allahabad High Court. 25. 07. 2012 Rama Shanker Awasthi, the respondent no.

4, filed a petition bearing no. 816 of 2012 before the UPERC challenging the Distribution Franchisee Agreement dated 18. 05. 2009 and the Supplementary Agreement dated 17. 03. 2010. 704 03. 02. 2014 The UPERC heard the matter wherein the respondent no. 3 and the appellant orally pointed out that the writ petitions instituted before the Allahabad High Court, are still pending. The appellant had contended therein that because writ petitions on the same issue were pending before the High Court, the UPERC ought not to hear the present matter. 27. 03. 2014 In the meantime, the High Court passed an order in another Writ Petition No. 2463 of 2014 with the cause title Anoop Gupta v. Union of India and others by way of which the said writ petition was dismissed and the petitioner therein was permitted to intervene in the writ petition nos. 49774 of 2009 and 30385 of 2012, already pending before the High Court. 13. 06.

2014 Detailed preliminary objections were filed by the appellant before the UPERC, raising the grounds of jurisdiction and maintainability of the petition filed by the respondent no. 4. 30. 06. 2014 In the meantime, the order passed by the Lucknow Bench of the Allahabad High Court was impugned before the Supreme Court in Special Leave Petition No. 12556 of 2014 wherein this Court was pleased to dismiss the Petition by permitting the appellant therein, Mr. Anoop Gupta to withdraw the same. 16. 07. 2015 The UPERC passed the order for investigation of the appellant in its role as a Distribution Franchisee under the seventh proviso of Section 14 of the Act, 2003, holding that the petition was maintainable. 31. 08. 2015 The appellant filed an appeal under Section 111 of the Act, 2003 before the APTEL. 28. 07. 2016 The impugned Judgement and Order was passed by the APTEL. (i) Order passed by the UPERC 4. The UPERC vide the order dated 16. 07.

2015 held that the petition was maintainable on the grounds of public interest and the ERCs were empowered to look into the DFA to assess the benefits of such franchisee for the DISCOMs as well as for the general public. In furtherance of this finding, the UPERC ordered for the formation of Torrent Power Limited v. U. P. Electricity Regulatory Commission & Ors. an Expert Committee to give its finding on the aspects of the yearly reduction in loss levels by the appellant as well as the improvement in collection efficiency with information as to how such benefits have been passed on to the consumers. 5. Some of the observations made by the UPERC are reproduced herein below: "v. In view of above provisions, it is established that at the time, of signing the Agreement, DVVNL was a deemed licensee and they were authorized to sign such agreement with its franchisee TPL for the urban area of Agra.

The provision of section 5 of the Act does not restrain DVVNL from entering into franchisee agreement in urban area with TPL as it only facilitates franchisee in rural area. It does not bar franchisee in urban areas which has been facilitated in section 2 (27) and seventh proviso of section 14 of the Act. DWNL was further granted license on 21. 1. 2010 by this Commission. vi. As far as the issue of transfer of inventory by DVVNL to the Franchisee, without approval of the Commission as per section 17 pf the Electricity Act, 2003, is concerned it is sufficiently evident from the above provisions that the franchisee agreement does not fall under the purview of section 17. vii. The issue of lack of jurisdictional and maintainability of this petition has been raised by DWNL and TPL.

Although the submissions made in this reference are primarily based on certain 'v, pending PILs before the Hon'ble High Court, Allahabad but in view of Hon'ble APTEL's specific directions to pass the consequential orders and also as there is no stay order from any superior Court, the Commission concluded that the petition is maintainable and therefore, decided to proceed with the matter. The Commission's jurisdiction is further reinforced in a similar case by the Hon'ble High Court Bombay order dated 12. 2. 2008 [2008 (110) Bom L R 598] through which the MERC was given mandate to judge the facts and figures, discounting factor and stipulations etc. , taken in ' the agreement. 9. Issue of investigation of conduct: The franchisee has been allowed under the provisions of the Act with the primary object of facilitating reduction of Distribution losses and improvement in Collection efficiency.

There is no doubt that the concept of franchisee has been promoted in the Act to ensure better quality of supply and services to the consumer. The Agreement must have been entered into with these motives only. As now about five years have passed, which is a substantial period to show the improvements in efficiencies, the question would arise as to whether the objectives have been met and whether the trend of improvements are visible. As the Commission has already concluded that the petition was maintainable and well within its jurisdiction, it becomes incumbent upon the Commission to further assess the benefits of such franchisee for the Discoms as also for general public. With this view, for preliminary examination, vide order dated 12. 5. 2014 reply and data on certain points were sought from DVVNL and TPL. DVVNL has not made submissions on this stating that they do not want to make any additional submission. UPPCL has seconded this.

Although TPL has made submissions but insufficient. As the matter has already prolonged for more than two years and about five years have lapsed since the agreement has become effective, the Commission decides to form a Committee with the specific purpose to ascertain the answers to the following questions: i. What has been the yearly reduction in loss levels since 2009-10 to till date? ii. What has been improvement in the collection efficiency from 2009-10 level? iii. How much arrears have been recovered from the due amount of 2009-10? iv. Have the benefits of such improvements, if any, have been passed on to the consumer and if yes, how? Apart from above specific questions the Committee would also examine the year wise technical and commercial Torrent Power Limited v. U. P. Electricity Regulatory Commission & Ors. performance of TPL The Committee would be at liberty to, investigate and examine any sort of data and accounts so as to assess the performance of TPL.

The work shall be completed within two months of this order. 10. The Committee shall consists of (1) Sri Arun, Retired Ombudsman and Director, UPPCL (2) Sri Sandeep Das, Chartered Accountant, Park Road, Lucknow. " (ii) Impugned Order passed by the APTEL 6. The APTEL took a diverging opinion on the aspect of maintainability and held that the Act, 2003 does not have any provision for entertaining of a public interest litigation by the ERCs. However, the APTEL was of the view that the case on hand was not a public interest litigation at all and concluded that the petition before the UPERC was maintainable. It was observed that the ERCs are empowered to exercise regulatory oversight on distribution licensees. Since the franchisees undertake distribution of electricity on behalf of the distribution licensee then the impact of the activities of the franchisees can be considered by the UPERC. 7. Some of the observations made by the Appellate Tribunal are reproduced herein below: "11.

12) We are fully conscious of the fact that this Appellate Tribunal does not have any power to entertain any public interest litigation under the Electricity Act, 2003 because there is no provision in the said Act to empower this Appellate Tribunal to hear and decide the public interest litigation. The matter in hand before us is, not really a public interest litigation. The only purpose of the present Petition before the State Commission is whether by giving franchisee to Torrent Power Ltd. by a distribution licensee, namely Respondent No. 3, DVVNL, some benefit has accrued to the consumers in general or not. What is to be seen is whether as a result of franchisee given to Torrent Power Ltd. the consumers of the area would be benefited or not? If all the liability, responsibility of the "franchisee still remain with the distribution licensee, then its- impact is also to be considered by the State Commission. 708 11.

13) We are unable to accept this contention of the appellant that this Appellate Tribunal in judgment dated 28th November, 2013 in Appeal No. 239 of 2012 and batch did not remand the matter to the State Commission, hence the Impugned Order is manifestly erroneous and illegal. We have already cited the relevant part of the judgment dated 28th November, 2013, in paragraph 74, thereof this Appellate Tribunal clearly held that since any money excess paid or recovered from Rosa Power will necessarily be a pass through in tariff it becomes a tariff issue. It means that the learned State Commission is bound to decide the said issue in the light of the observations made by this Appellate Tribunal in the said judgment as the same issue becomes a tariff issue, the effect on the consumers of the State, particularly within the area of Respondent No. 3, DWNL.

Thus the whole impact of the franchisee and its consequences, are to be considered to determine the tariff in the light as observed by this Appellate Tribunal. 11. 14) The Petition No. 816 of 2012 (Impugned Petition) was filed before the State Commission under Section 128 and 129 of the Electricity Act, 2003, read with Section 26 and 27 of the UP Electricity Reforms Act, 1999, praying, inter alia, for the following reliefs: "29 That in view of the aforesaid facts and circumstances, it is expedient in the interest of justice that this Hon'ble Commission may graciously be pleased to investigate the conduct of the Respondent No. 1 and 2 for acting in sheer disregard and gross violation of the statutory mandatory^ provisions of the Act, 2003 and declare that the utility of the Licensee has been transferred in favour of the Respondent No. 3 without prior permission of the State Commission as mandated by Section 17 of the Act, 2003 and further that the Respondent No.

1 and 2 acted in breach of the License, 2000 and annul the License No. 3 of 2010 dated 21. 01. 2010 of the Respondent No. 2 in respect of Urban Area of Agra and also agreement dated 18. 05. 2009 and supplementary agreement dated 17. 3. 2010". 11. 15) The learned State Commission while passing the Impugned Order appears to have thought, on the formation Torrent Power Limited v. U. P. Electricity Regulatory Commission & Ors. of Committee, which should ascertain the loss level since 2009-10 till date, to ascertain the improvement in the collection efficiency, from 2009-10 level and to see the improvement, if any, have been passed on to consumers in its right perspective and correctness. 11. 16) We find that the franchisee system is allowed under the Electricity Act, 2003 with the primary objective of facilitating reduction of distribution loss and improvement in. collection efficiency. Further the concept of franchisee has been permitted in the Electricity Act, 2003 .

to ensure better quality of supply and services to the consumers. Apparently, the agreement between the appellant. Torrent Power Ltd. , franchisee and Respondent No. 3, a distribution licensee had been entered with the said motives and purposes. Since five years had already elapsed since the agreement and to enable the franchisee to show the improvements the State Commission appear to be on the right path to ascertain whether the said objectives as provided under the Electricity Act, 2003 have been met or accomplished and further whether the trends of improvements are visible. 11. 17) The learned State Commission vide order dated 12. 05. 2014, i. e. more than one year before passing of the Impugned Order sought reply and data from Respondent No. 3, DVVNL and the appellant in that regard which they did not give. Since the said data and information as sought by the State Commission's order dated 12. 05.

2014 were not given, the State Commission has to pass the Impugned Order and decide to form the aforesaid Committee for the aforesaid purposes. 11. 18) On careful consideration, we are unable to accept this contention of Mr. Pradeep Misra, learned counsel for the Respondent, UPPCL that the petitioner Mr. Rama Shapkar Awasthi has no locus standi to maintain the petition because the consumers, most of the time, remain unrepresented when such kind of decisions are taken and only a few consumers come forward to actively participate in such kind of proceedings. The present matter cannot be said to be a public interest litigation by any stretch of imagination. 710 11.

19) Section 61 dealing with Tariff Regulations and Section 62 dealing with determination of tariff, of Electricity Act, 2003 clearly specify the Terms and Conditions for determination of tariff with certain guidelines like the factors which would encourage competition, efficiency, economic use of the resources, good performance and optimum investments and further safeguarding of consumers interest and at the same time recovery of cost of electricity in a reasonable manner and the principles regarding efficiency in performance. National Electricity Policy and Tariff Policy. A proviso to Section 62 of the. Electricity Act 2003 states that in case of distribution of electricity in the same area by two or more distribution licensees, the appropriate Commission may, for promoting competition among distribution licensees, fix only maximum ceiling of tariff for retail sale of electricity.

Sub-section 2 further provides that the appropriate Commission may require a licensee or a generating company to furnish separate details, as may be specified in respect of generation, transmission and distribution for determination of tariff. Sub-section 6 to Section 62 of the Act says that if any licensee or a generating company recovers a price or charge exceeding the tariff determination under this Section, the excess amount shall be recoverable by the person who has paid such price or charge along with interest equivalent to the Bank rate without prejudice to any other liability incurred by the licensee. From the perusal of the provisions of the Electricity Act, 2003, it is evidently clear that the tariff for a distribution licensee for its area of supply shall be determined by the respective State Commissions as per Terms and Conditions of the Act and relevant Tariff Regulations in compliance with the National Electricity Policy and Tariff Policy. 11.

20) We have been informed during the arguments in this matter that in the State of Uttar Pradesh, Respondent No. 2, UPPCL, procures bulk power from various sources and then supply it to the distribution licensees namely, Purvanchal Vidyut Vitran Nigam Ltd. , Paschimanchal Vidyut Vitran Nigam Ltd. , Madhyanchal Vidyut Vitran Nigam Ltd. Torrent Power Limited v. U. P. Electricity Regulatory Commission & Ors. and Dakshinanchal Vidyut Vitran Nigam Ltd. which are the Government Discoms besides a private Discom namely Noida Power. All the PPAs or agreements are executed between UPPCL and the relevant utility without any active role of the distribution licensee of Uttar Pradesh. A uniform tariff for the respective category of consumers is fixed for the whole State of Uttar Pradesh viz. for each of the Government Discoms. It means that the tariff shall remain the same for the whole State for each Discom, irrespective of the performance level of that Discom and its collection efficiency.

Thus the consumers category-wise are charged the tariff at the same level. In other words, we can elucidate that the performance of the Discom of a particular area is never taken into account and all are to be treated alike. -xxx- 11. 23) This Appellate Tribunal in a separate batch of appeals, being Appeal No. 15 of 2008 & others, vide judgment dated 09. 10. 2009, while dealing with the determination of tariff for each distribution licensee, also observed and noted as under: "Analysis and decision 27. The determination of tariff for each distribution licensee is based on the cost- and expenses, power availability for the particular distribution licensee, consumer base and consumer mix of the distribution licensee, their efficiency of operations, distribution losses etc. etc. In order to encourage efficient operation, it is only necessary that the different licensees have competition amongst themselves to carry out their operations in more efficient manner.

In view of this, this Tribunal held that the Commission may determine differential tariff, according to the geographical location of the, consumers, different distribution licensees could have differential tariffs for their respective area of operations. The letter dated September 26, 2007 from the Government of Karnataka to Secretary, KERC relied upon by the appellant ends with the following para. 712 "In this connection, i am directed to reiterate that the Government is not in favour of differential tariffs at this stage. This may be brought to the notice of the Commission" 28. We are inclined to agree with the contention of the Commission that the aforesaid letter dated September 26, 2007 relied upon by the appellant is not any policy direction in terms of Section 108 which has not even been quoted in the letter. This is only an innocuous suggestion. In this view of the matter, the appeal is not allowed and we uphold the decision of the Commission. " 11.

24) Thus this Appellate Tribunal has reiterated the view that there should be separate determination of tariff for each distribution licensee in the State. Uniform or common retail tariff for the several distribution licensees is not proper and is wrong. 12) In view of the above discussion, we find and observe that the learned State Commission is fully competent and has jurisdiction to entertain the Petition, being Petition No. 816 of 2012, because the pleadings and reliefs sought therein do not fall under the category of Public Interest Litigation. Further the grievances mentioned in the said Petition can legally be raised before a State Commission. In this view of the matter, we do not find any illegality or infirmity in the Impugned. Order and both these issues are decided against the appellant. The appeal is liable to be dismissed. ORDER The Instant Appeal, being Appeal No. 188 of 2015, is hereby dismissed and the Impugned Order is hereby affirmed.

In the facts and circumstances of the matter no cost is being imposed. The Interim Order or any other Order, passed by this Appellate Tribunal, in this instant Appeal are hereby discharged. Pronounced in the open court on this 28th day of July, 2016. " (Emphasis supplied) Torrent Power Limited v. U. P. Electricity Regulatory Commission & Ors. (iii) Report of the Expert Committee 8. The Expert Committee constituted in compliance with the order of the UPERC dated 16. 07. 2015, gave its report on 09. 01. 2017. As regards the question of how the activities of the appellant were beneficial to the consumers, the Expert Committee gave the finding that though the consumers were not happy with the appellant's services in respect of providing new connections, yet the supply of electricity and customer service of the appellant were appreciated by the consumers.

The Expert Committee, however, also pointed out that the financial benefits of appointing the appellant as the distribution franchisee could not be reaped by the retail consumers due to slow rate of reduction of distribution losses and slow growth of collection efficiency. Nevertheless, the consumers informed the Expert Committee about the satisfactory performance of the appellant in reducing the duration of power failure which has resukted in better supply of power to the consumers. 9. The findings of the Expert Committee are reproduced below: "Findings: As per provision of DFA, AT & C losses should be 15 % by the end of FY 2016-17. This seems to be not achievable on the present parameters. TPL should take more effective steps to reduce the losses. TPL should also identify the high loss level area by segregating it to 33/11 KV Substation level and further to 11 KV feeder level. These steps will help in yielding better results. As per DFA Para 5. 8.

2 "If the Distribution Franchisee fails to achieve 15% AT&C loss level based on year end ATC Losses actually achieved at the end of 7 years from the effective date then without prejudice to the other actions which DVVNL can initiate against the Distribution Franchisee under this Agreement, a penalty equivalent to lost due to non achievement of the target shall be recoverable by DWNL from the distribution franchisee". As per DFA Para 5. 8. 3 "The penalty amount shall be computed similarly at the end or each year till the overall year end ATC Loss Level of 15% is achieved by the distribution franchisee". 714 As per DFA Para 5. 8. 4 "The Distribution Franchisee shall be liable to pay the penalty amount within 30 days of the claim made by DWNL failing which the same shall be adjusted against the performance guarantee submitted by the Distribution Franchisee in terms of Article 11. " 2.

What has been improvement in the collection efficiency from 2009-10 level:- Collection Efficiency means the ratio of revenue actually realized from the consumes (including subsidy amount if any) and energy amount billed as per methodology. Collection Efficiency=Revenue Realised from Consumers (Rs) x100 Energy Billed to Consumers(R8) Revenue billed and realized from consumers as reported by M/s Torrent Power Ltd. (TPL) is as below. Year Billed Collective Collection (Rs. In Cr) (Rs. In Cr. ) Eff (%) 2010-11 519. 91 413. 47 79. 50 2011-12 535. 93 504. 10 94. 06 2012-13 634. 21 597. 62 94. 23 2013-14 855. 09 832. 01 97. 30 2014-15 916. 35 915. 78 99. 94 2015-16 1131. 95 1118. 60 98. 82 As per para 4. 5 of the annual report of F. Y. 2010-11 of Franchisee Audit of Agra Urban Area under the control of TPL conducted by M/s, KPMG, validated collection efficiency for the base year FY 2008-09 has been 75. 31%.

Thus M/s Torrent Power Ltd has shown regular improvement in the collection efficiency as shown above i. e. from 79. 50 in the FY 2010-11 to 98. 82 in FY 2015-16. There has been slight dip in the collection efficiency from 99. 94 in F. Y. 2014-15 to 98. 82 in FY 2015-16. According to the DFA signed between DVVNL & TPL there is no Torrent Power Limited v. U. P. Electricity Regulatory Commission & Ors. benchmark defined to be achieved by TPL. As such the action taken by TPL towards the improvement in collection efficiency seems proper. However, it is to be noted here that collection reported yearwise by TPL includes non - revenue items i. e. meter damage charges, fuse charges, other SLC recoveries and other miscellaneous revenue also. Thus, actual revenue realized toward energy bills must be lower than the reported collection figures. This means that the collection efficiency mentioned in the table above shall be lower to some extent.

TPL has explained that the separation of nonrevenue item realization is extremely difficult activity. It is therefore necessary that realization of non - revenue items should be kept separately in books of accounts so that Actual Collection efficiency of TPL could be worked out. Findings:- Since there has be no Benchmark Collection Efficiency figure to be achieved in DFA and TPL has regularly improved the Collection Efficiency figure and has reached 98. 82 % in FY 2015-16, the performance towards this parameter is being achieved by TPL. However, it is recommended that TPL should maintain the collection of non-revenue items separately in their books of account so that actual collection efficiency may be worked out and monitored in future reports. 3. How much arrears have been recovered from the due amount of 2009- 10: As per para 8. 4, 8. 5 and 8. 8 of DFA, M/s Torrent Power Ltd has to recover the arrear of revenue pertaining to DVVN of pre take over period. "8.

4 - Distribution Franchisee shall be liable to collect the arrears from current live consumers accrued in last month prior to effective date on account of charges for usage of electricity. These arrears shall be collected and remitted to DVVNL by Distribution Franchisee(DF). The DF shall collect and remit the amount at least equivalent 716 to the prevailing collection efficiency taking into account the collection efficiency in the corresponding month of last year including the amount already recovered. " "8. 5 - Distribution Franchisee shall make best endeavor to collect arrears other than those specified in 8. 4 from current live consumers. " "8. 8 - Distribution Franchisee shall make best endeavor to collect arrears accrued prior to effective date from PD consumers. " As per DFA signed between DVVNL & TPL revenue of pretakeover period is to be realized by TPL and remitted to DVVNL. As per report submitted by TPL on dt 19. 10. 2016, the position is as below.

DVVNL Arrears Recovery: Rs. Cr Period Recovery of DVVNL Arrears Recovery Total of pro rata payment Live PD Total Consumers Consumers 2010-11 5. 89 0. 81 6. 71 9. 23 15. 93 2011-12 5. 61 0. 50 6. 11 - 6. 11 2012-13 3. 27 0. 30 3. 57 - 3. 57 2013-14 1. 55 0. 14 1. 69 4. 14 5. 83 2014-2015 1. 25 0. 10 1. 34 1. 50 2. 84 2015-2016 1. 94 0. 03 197 0. 45 2. 42 2016-17 0. 77 0. 05 0. 82 - 0. 82 (upto Aug 2016) Total 20. 28 1. 92 22. 21 15. 32 37. 52 The statement submitted by TPL does not mention the actual arrear opening balance as on 01. 04. 2010 and actual arrear of closing 31. 03. 2016. TPL has only mentioned the Torrent Power Limited v. U. P. Electricity Regulatory Commission & Ors. recovery position of DVVNL arrears. This does not fulfill the requirement of review for recovery of DVVNL arrears. During site visit on dt 01. 12. 2016 by Expert Committee, the statement regarding arrears were put up by M/s Torrent Power Ltd (TPL) and is as below.

Opening (Uploaded Data) August 2010: Rs in Crores Service Consumers Principal LPSC Total Status Live 188666 927. 74 439. 62 1367. 37 PD 18501 236. 28 86. 12 322. 40 TD 187 1. 84 0. 40 2. 24 Total 207354 1165. 85 526. 15 1692. 00 Balance as on 31. 10. 2016 Service Consumers Principal LPSC Total Status Live 57818 237. 09 362. 43 599. 52 PD 67670 780. 32 656. 54 1436. 86 TD 7804 48. 79 88. 71 137. 51 Total 133292 1066. 21 1107. 68 2178. 88 According to the statement submitted by TPL total DVVNL arrear pending for realization in Aug. 2010 is Rs. 1692. 00 Cr. This arrear has increased to 2173. 88 eras on 31. 10. 2016. TPL has explained that increase in arrears is dye to levy of late payment surcharge on the outstanding amount of arrears. Thus the recovery of DVVNL arrears can be split into following. i. What is the actual opening balance of recovery of DVVNL arrears as on 01,04. 2010. ii. What efforts have been made for the recovery of DVVNL arrears. iii.

How much arrears have been recovered & remitted to DWNL from F. Y. 2010-11 to 2015-16. Actual opening balance of DVVNL arrears as on 01. 04. 2010. M/s Torrent Power Ltd. has intimated that DVVNL has not given the opening balance as on 01. 04. 2010. DVVNL has intimated in August 2010 the arrears to be recovered as below: Service Consumers Principal LPSC Total Status Live 188666 927. 73 439. 62 1367. 37 PD 18501 236. 28 86. 12 322. 40 TD 187 1. 84 0. 40 2. 24 Total 207354 1165. 85 526. 15 1692 Thus according to TPL, they have received the details of Rs. 1692. 00 Cr. As DVVNL arrears in August 2010. Infrastructure Advisory Report of CRISIL for the month of September 2016 has been provided by UPPCL. According to this report Para 1. 2 (v) reads as below. 1. 2(V) Arrears : The opening status of the arrears in the Agra city was Rs. 1845. 0 Crores, which has now increased to Rs. 2160. 99 crores permanently disconnected consumers) in the month of August 2016.

With respect to the above quantum of arrears in the region, TPL has been able to remit only 37. 39 Cr. of arrears to DVVNL till August 2016. There has been reduction in total principal amount on the account of corrections and collective efforts both from TPL & DVVNL. " However Annual Audit report submitted by M/s KPMG for the F. Y. 2010-11, para 4. 7 speaks as below. "We have noticed In our endeavor to review the opening level of arrear that the "opening level of arrear has not Torrent Power Limited v. U. P. Electricity Regulatory Commission & Ors. been frozen till date and a final data Is not available for audit. " Again Annual Audit report for the F. Y. 2014-15 by KPMG regarding opening level of arrears mentions as below: We have noticed in our endeavor to review the opening level of arrear that the "opening level of arrear has not been frozen till date and a final data is not available for audit.

" From the above it is dear that TPL, CRISIL and KPMG have different views & figures regarding actual arrears opening balance as on 01. 04. 2010 to be recovered & remitted to DVVNL. The position is alarming arid it is to be finalisedS final figures is to be worked out and needs to be audited and accounted for. (ii) What efforts has been made for recovery of DVVNL arrears: From the report putup by TPL on dL 01. 12. 2016 as mentioned above in the table it is reported that opening (uploaded data) in August 2010 DVVNL arrears to be recovered by TPL is Rs. 1165. 85 Crores (Prindpal amount). This principal amount of arrears has come down to Rs. 1066. 21 crores. This means that in more than 06 years of operations, TPL has only recovered (Rs. 1165. 85 - Rs. 1066. 21) Rs. 99. 64 Crores i. e. less than 10% of opening arrears. This figure does not include late payment surcharge. This reflects that TPL is not interested in recovering DVVNL arrears.

It has treen observed that module for payment of bill of M/s. Torrent Power Ltd has the following provisions. (i) Any payment made by consumer shall first go to arrears outstanding towards TPL. (ii) Balance payment shall go to current bill of the consumer. (iii) Any extra payment done by consumer if any shall go to DVVNL arrears. Due to this reason TPL is recovering ail its arrears & its current bills and almost no. payment is done by the consumer against DWNL arrears. This matter has been examined in details and found that DVVNL 720 arrears are increasing as TPL is recovering all its current bills & arrears. Ten sample bills of consumers have been examined & found as below (Annexure 9): S. S. C. Amt. of October 210 October 2016 No. No. current Bill Amt. Amt. of Current TPL DVVNL of TPL DVVNL arrears arrears 1. 57016 1118. 63 1061. 27 293711. 97 1119. 01 0. 38 493522. 57 2. 37122 924. 44 1061. 82 268488. 07 925. 24 0. 80 461116. 05 3. 5915 109. 51 1018. 37 241256. 68 275. 73 165.

18 413813. 64 4. 91925 783. 9 3171. 65 135811. 13 784. 38 0. 48 216931. 80 5. 12431 297. 29 946. 09 109335. 07 10149. 01 9753. 22 192531. 56 6. 91935 655. 22 996. 86 87371. 07 1420. 86 761. 23 136142. 84 7. 37136 2415. 75 1018. 37 72975. 26 39751. 04 37256. 67 128691. 44 8. 55883 477. 13 0. 52 22838. 42 477. 37 0. 24 40580. 72 9. 17857 1459. 41 0. 43 11897. 95 1931. 89 459. 43 24386. 62 10. 76340 6605. 07 3413. 93 709. 15 6606. 02 0. 95 2012. 30 Further from the above table it Is clear that no effort is being made to recover DVVNL arrears by TPL. (iii) How much arrears has been recovered and remitted to DVVNL from F. Y. 2010-11 to F. Y. 2015-16. M/s Torrent Power Ltd. (TPL) has submitted on dt. 1. 12. 2016 that principal amount of DWNL arrears in August 2010 was 1165. 85 Cr. This has been reduced to Rs. 1066. 21 Cr. as on 31. 10. 2016. Thus a reduction of Rs. 99. 64 Cr. has been done. Against this reduction Rs. 22. 21 Cr.

has been shown as received by TPL as per annexure Point 3 of report submitted by TPL on dt. 19. 10. 2016. Difference of Rs. 99. 64 and 22. 21 Cr. has not been explained by TPL in this report. These figures need verification by the competent authorities. Torrent Power Limited v. U. P. Electricity Regulatory Commission & Ors. Finding: (a) Opening amount of DWNL arrears as on 01. 04. 2010 is required to be finalised immediately and audited by competent auditors. (b)Neither the opening balance of DVVNL arrears are finalised nor any effort is being made to recover these arrear by M/s. TPL. (c) TFL should make more effort to recover DVVNL arrears by disconnecting live consumers and other possible means of recovery against PD consumers in consultation with DVVNL so that arrears be liquidated by the end of F. Y. 2016-17. (d) Recovery made by TPL towards DWNL arrears should be verified and remitted to DVVNL account.

Any adjustment done in the arrears be properly verified so that balance of arrears & payment made to DVVNL must match the figures of outstanding arrears. 4. Have the benefits of such improvements, if any, been passed on to the Consumers. M/s Torrent Power Ltd, (TPL) has putup the details of benefits passed onto consumers on dt. 19. 10. 2016 which are annexed with the report. Pointwise comments are as below: Para-1. It was reported that higher input rates were quoted by TPL which has led to reduction in ARR and resulting into lower tariff to retail consumer. Since retail tariff rate are same all over U. P. as such it could not be said that TPL has contributed to reduction in retail tariff/rate. Para-2. Reduction in distribution losses has reduced power requirement of the city resulting into saving cost of purchasing costly power. This point is also not correct as the power purchase by TPL is being made from DVVNL and on the fixed rate as provided in DFA.

Higher rate could only-be applied if the input energy level is exceeded beyond the provisions made in DFA. As seen from the record of input energy as put up by TPL(Annexure 4) and UPPCL 722 (Annexure 8) it is almost fixed every year where as 3% increase every year has been provided in DFA. Input energy year wise is as below: S. No. F. Y. Input Energy (MUs) 1. 2010-11 2114. 03 2. 2011-12 2207. 57 3. 2012-13 2207. 94 4. 2013-14 2206. 42 5. 2014-15 2148. 47 6. 2015-16 2143. 86 7. H1- 2016-17 1277. 88 Para-3. Old network has been replaced by TPL as reported by them. This has been seen on site and found that improvement has been done by TPL. Following is the Capex year wise as reported. S. No. F. Y. Amount (Rs. In Cr. ) 1. 2010-11 94. 46 2. 2011-12 125. 58 3. 2012-13 203. 86 4. 2013-14 122. 42 5. 2014-15 72. 52 6. 2015-16 76. 45 TOTAL 695. 29 Para-4 to 14: These points are for the betterment of services to the consumer.

Work can not be verified by the Expert Committee and a separate agency is needed to verify the claims of TPL. However, the final outcome can be verified by the Expert Committee. For this reason DVVNL was requested to fix a public meeting of consumers. On our request DWNL has arranged meeting Torrent Power Limited v. U. P. Electricity Regulatory Commission & Ors. on dt. 02. 12. 2016 In the meeting hall of DVVNL at 12:30 p. m. Copy of press cutting is being annexed with the report as Annexure 10. Twenty two consumers attended the meeting. Officers from DVVNL and TPL were also present. Consumer put up their views before the Expert Committee (Annexure 11). Some of them have put up their comments in writing about their satisfaction level regarding the services rendered by TPL. The list of comments are attached as annexure.

Feedback received by the consumers are pointing towards a satisfactory performance of TPL, As regards the improvement in the system upgradation is concerned, TPL has provided following services. 1. Round the Clock Call Centre. 2. Customer Care Centre. 3. Distribution Transformer failure rate has been reduced. 4. SCADA implementation for network management. On account of the above, duration of power failure has reduced resulting into better supply to consumers. Findings: From the above it is evident that the consumers have appreciated the working of TPL; so far as the Supply and Customer Service is concerned. On the front of Assessment of Capital Cost in new Connections, consumers are not happy with the services of TPL. Also in cases where the consumers ask for correction of old arrears of DVVNL, the same takes a long time to settle. These areas need to be handled in a more effective manner. " (Emphasis supplied) B. SUBMISSIONS ON BEHALF OF THE APPELLANT 10.

The learned counsel appearing on behalf of the appellant vehemently submitted that all that the APTEL did was to mechanically accept the erroneous findings recorded by the UPERC. According to the 724 learned counsel, there was no application of any mind at the end of the APTEL. 11. The APTEL failed to appreciate that the DFA entered into between the appellant and the respondent no. 3, was a contract under Section 2(27) of the Act, 2003 read with the seventh proviso to Section 14 and that the respondent no. 3 as the Distribution Licensee was the only regulated entity. 12. The APTEL failed to appreciate that the Act, 2003 ushered in a novel feature of appointment of franchisees under Section 2(27).

The seventh proviso to Section 14 read with Section 2(27) and Section 13 confers power on a Distribution Licensee to appoint another person to undertake distribution of electricity for a specified area within his area of supply (Agra in the present case) and that the Distribution Licensee continues to remain responsible for the distribution of electricity in such specified area of supply. Therefore, Section 2(27) of the Act, 2003 read with the seventh proviso to Section 14 permits a Distribution Licensee to appoint an agent for a specified area. The agent, therefore, would not fall within the jurisdiction of the UPERC in its capacity as a regulatory authority. 13. The APTEL erred in coming to the conclusion that the respondent no. 4 has the locus to approach the UPERC for fulfillment of the social obligations of the respondent no. 4 as stated in the original Petition No. 816 of 2012. 14.

The APTEL erred in ignoring the settled law propounded by this Court relating to individual consumers approaching the State ERC, in the case of Maharashtra State Electricity Distribution Co. Ltd. v. Reliance Energy Ltd. reported in (2007) 8 SCC 381. In the said, case this Court categorically held that Section 86(1)(f) of the Act, 2003 which prescribes the adjudicatory functions of the State Commission does not encompass within its domain, complaints of individual consumers and that it only provides that the Commission can adjudicate upon the disputes between the licensees and generating companies and to refer any such dispute to arbitration. This Court affirmed that Section 86(1)(f) does not include in it a grievance of an individual consumer. 15. The APTEL failed to appreciate the true purport and object of the DFA entered into between the appellant and the respondent no. 3 as Torrent Power Limited v. U. P. Electricity Regulatory Commission & Ors.

well as the express provisions of the Act, 2003 namely Section 2(27) read with the seventh proviso to Section 14. 16. In such circumstances referred to above, the learned counsel prayed that there being merit in her appeal, the same may be allowed and the impugned judgment and order passed by the APTEL be set aside. C. SUBMISSIONS ON BEHALF OF THE RESPONDENT NO. 4 17. The respondent no. 4 has filed submissions in writing. The same reads as under: 1. The issues raised by the Appellant are: a) Jurisdiction of the State Commission to pass directions against the Appellant, who is only a franchisee and not the licensee itself; and (b) The locus standi of the Respondent No. 4 to invoke the jurisdiction of the State Commission under the Electricity Act, as the Respondent No. 4 is not a consumer in Agra. 2. It is submitted that the above issues are erroneous and are liable to be rejected. 3.

The proceedings before the State Commission were under Sections 128 and 129 of the Electricity Act, in regard to violation of the provisions of Section 17, 43, 62 and the terms and conditions of the license issued to the distribution licensee. 4. One of the primary issues raised was the supply of power by the Respondent Nos. 2 and 3 - distribution licensees to the Appellant at a tariff, not approved by the State Commission, and which was much lower than the cost of supply to the Respondent Nos. 2 and 3. 5. The entire annual revenue requirements/total costs and expenses of the Respondent Nos. 2 and 3 are recovered from the tariff of the consumers in Uttar Pradesh. Therefore, if there is a subsidized supply by the Respondent Nos. 2 and 3 to the Appellant, it affects the tariff for the consumers of the licensee. 6. The tariff for such supply by Respondent Nos. 2 and 3 to the Appellant is mutually decided, without the approval 726 of the State Commission.

This, affecting the tariff of the consumers, is contrary to the Electricity Act. 7. The specific allegation of the Respondent No. 4 before the State Commission was that the price of supply as mutually decided is contrary to the Electricity Act, the terms of the Franchisee Agreement are not in accordance with license terms and conditions, the input price of electricity has been decided without the audited accounts and is undervalued, the State Commission has restrained another distribution licensee in Uttar Pradesh from appointing an input based franchisee. 8. The Respondent No. 4 herein had sought for investigation by the State Commission of the licensees, which are Respondent Nos. 2 and 3 herein. The prayer was not for investigation into the affairs of the Appellant herein. 9. The powers of the State Commission under Sections 128, 129 are not adjudicatory in nature of a lis between two parties, but the regulatory jurisdiction of the State Commission. The role of the Respondent No.

4 is to bring to the attention of the State Commission the relevant facts. It is for the State Commission to investigate in such manner and pass such orders in terms of law as a regulatory authority. 10. The State Commission had by order dated 16. 07. 2015 only directed a report to be submitted on specific aspects of the functioning of the franchisee agreement and the improvements in the distribution function in the City of Agra. 11. The report was submitted by the Committee on 09. 01. 2017. Various issues and remedial measures were also suggested. 12. In fact, the Appellant had itself filed a petition seeking approval of the Infrastructure Roll Out plan before the State Commission. In the said proceedings, the Commission by order dated 18. 12. 2017 had relied on various aspects of the Expert Committee Report on the loss reduction and passed directions on the costs to be allowed. 13.

It is submitted that the Appellant is only seeking to avoid the scrutiny of the State Commission on the terms of the Torrent Power Limited v. U. P. Electricity Regulatory Commission & Ors. Franchisee Agreement and its implementation, which has an impact on all the consumers in the State. The impact is not merely restricted to consumers in Agra, as the input price being not regulated, any loss on the input price of the Respondent Nos. 2 and 3 supplying to the Appellant affects tariff of all the consumers of Respondent Nos. 2 and 3. 14. With regard to the locus of Respondent No. 4 to file a petition, it is submitted that the jurisdiction and powers of the State Commission under Section 128 and 129 of the Electricity Act are not adjudicatory, but inquisitive and regulatory in nature. The proceedings under Section 128 and 129 can be undertaken even suo moto. The role of the Respondent No.

4 is only to bring to the notice of the State Commission the factual position and that there is violation. Any orders passed by the State Commission and benefits if any accruing are not only qua the Respondent No. 4, but all the consumers whose tariff is affected. 15. With regard to the contention that the Appellant is merely an agent of the Respondent Nos. 2 and 3 and there is no separate jurisdiction over the Appellant, it is submitted that the Petition filed was against both the Appellant and the Respondent Nos. 2 and 3. 16. In fact, the petition for network roll out was filed by the Appellant and the Respondent No. 3 before the State Commission, in which the Order dated 18. 12. 2017 was passed by the State Commission. 17. When the Appellant has itself invoked the jurisdiction of the State Commission on tariff issues, it is not open to the Appellant to contend that the State Commission has no jurisdiction over the affairs of the Appellant. 18.

As submitted hereinabove, the issues involved impact on tariff and therefore is within the jurisdiction of the State Commission. " D. ANALYSIS 18. Having heard the learned counsel appearing for the parties and having gone through materials on record, the following questions fall for our consideration: 728 i) Whether any individual can invoke the jurisdiction of a State ERC on the plea of public interest? In other words, whether an ERC has the jurisdiction to consider matters in public interest? ii) Whether the Act, 2003 confers jurisdiction on the State ERCs to consider and adjudicate the efficacy of a distribution franchisee agreement entered between a distribution licensee and a distribution franchisee? In other words, whether ERCs have the jurisdiction to review the functioning of a distribution licensee to supply the electricity through a franchisee? (i) Relevant provisions of the Act, 2003 19.

Before adverting to the rival submissions canvassed on either side, we must look into few relevant provisions of law. 20. Section 2(15) of Electricity Act, 2003 reads as under: "(15) "consumer" means any person who is supplied with electricity for his own use by a licensee or the Government or by any other person engaged in the business of supplying electricity to the public under this Act or any other law for the time being in force and includes any person whose premises are for the time being connected for the purpose of receiving electricity with the works of a licensee, the Government or such other person, as the case may be;" 21. Section 2(17) of Electricity Act, 2003 reads as under: "(17) "distribution licensee" means a licensee authorised to operate and maintain a distribution system for supplying electricity to the consumers in his area of supply;" 22.

Section 2(27) of Electricity Act, 2003 reads as under: "(27) "franchisee" means a persons authorised by a distribution licensee to distribute electricity on its behalf in a particular area within his area of supply;" 23. Section 12 of Electricity Act, 2003 reads as under: "Section 12. (Authorised persons to transmit, supply, etc. , electricity): No person shall (a) transmit electricity; or (b) distribute electricity; or Torrent Power Limited v. U. P. Electricity Regulatory Commission & Ors. (c) undertake trading in electricity, unless he is authorised to do so by a licence issued under section 14, or is exempt under section 13". 24. The seventh proviso to Section 14 reads thus: "(...

) Provided also that in a case where a distribution licensee proposes to undertake distribution of electricity for a specified area within his area of supply through another person, that person shall not be required to obtain any separate licence from the concerned State Commission and such distribution licensee shall be responsible for distribution of electricity in his area of supply: (... )" 25. Part VII of the Electricity Act, 2003 reads thus: "TARIFF Section 61.

(Tariff regulations): The Appropriate Commission shall, subject to the provisions of this Act, specify the terms and conditions for the determination of tariff, and in doing so, shall be guided by the following, namely:- (a) the principles and methodologies specified by the Central Commission for determination of the tariff applicable to generating companies and transmission licensees; (b) the generation, transmission, distribution and supply of electricity are conducted on commercial principles; (c) the factors which would encourage competition, efficiency, economical use of the resources, good performance and optimum investments; (d) safeguarding of consumers' interest and at the same time, recovery of the cost of electricity in a reasonable manner; (e) the principles rewarding efficiency in performance; (f) multi year tariff principles; (g) that the tariff progressively reflects the cost of supply of electricity and also, reduces cross-subsidies in the manner specified by the Appropriate Commission; 730 (h) the promotion of co-generation and generation of electricity from renewable sources of energy; (i) the National Electricity Policy and tariff policy: Provided that the terms and conditions for determination of tariff under the Electricity (Supply) Act, 1948, the Electricity Regulatory Commission Act, 1998 and the enactments specified in the Schedule as they stood immediately before the appointed date, shall continue to apply for a period of one year or until the terms and conditions for tariff are specified under this section, whichever is earlier.

Section 62. (Determination of tariff): --- (1) The Appropriate Commission shall determine the tariff in accordance with the provisions of this Act for - (a) supply of electricity by a generating company to a distribution licensee: Provided that the Appropriate Commission may, in case of shortage of supply of electricity, fix the minimum and maximum ceiling of tariff for sale or purchase of electricity in pursuance of an agreement, entered into between a generating company and a licensee or between licensees, for a period not exceeding one year to ensure reasonable prices of electricity; (b) transmission of electricity ; (c) wheeling of electricity; (d) retail sale of electricity: Provided that in case of distribution of electricity in the same area by two or more distribution licensees, the Appropriate Commission may, for promoting competition among distribution licensees, fix only maximum ceiling of tariff for retail sale of electricity.

(2) The Appropriate Commission may require a licensee or a generating company to furnish separate details, as may be specified in respect of generation, transmission and distribution for determination of tariff. Torrent Power Limited v. U. P. Electricity Regulatory Commission & Ors. (3) The Appropriate Commission shall not, while determining the tariff under this Act, show undue preference to any consumer of electricity but may differentiate according to the consumer's load factor, power factor, voltage, total consumption of electricity during any specified period or the time at which the supply is required or the geographical position of any area, the nature of supply and the purpose for which the supply is required. (4) No tariff or part of any tariff may ordinarily be amended, more frequently than once in any financial year, except in respect of any changes expressly permitted under the terms of any fuel surcharge formula as may be specified.

(5) The Commission may require a licensee or a generating company to comply with such procedures as may be specified for calculating the expected revenues from the tariff and charges which he or it is permitted to recover. (6) If any licensee or a generating company recovers a price or charge exceeding the tariff determined under this section, the excess amount shall be recoverable by the person who has paid such price or charge along with interest equivalent to the bank rate without prejudice to any other liability incurred by the licensee. Section 63. (Determination of tariff by bidding process): Notwithstanding anything contained in section 62, the Appropriate Commission shall adopt the tariff if such tariff has been determined through transparent process of bidding in accordance with the guidelines issued by the Central Government. Section 64.

(Procedure for tariff order): --- (1) An application for determination of tariff under section 62 shall be made by a generating company or licensee in such manner and accompanied by such fee, as may be determined by regulations. (2) Every applicant shall publish the application, in such abridged form and manner, as may be specified by the Appropriate Commission.

732 (3) The Appropriate Commission shall, within one hundred and twenty days from receipt of an application under sub-section (1) and after considering all suggestions and objections received from the public,- (a) issue a tariff order accepting the application with such modifications or such conditions as may be specified in that order; (b) reject the application for reasons to be recorded in writing if such application is not in accordance with the provisions of this Act and the rules and regulations made thereunder or the provisions of any other law for the time being in force: Provided that an applicant shall be given a reasonable opportunity of being heard before rejecting his application. (4) The Appropriate Commission shall, within seven days of making the order, send a copy of the order to the Appropriate Government, the Authority, and the concerned licensees and to the person concerned.

(5) Notwithstanding anything contained in Part X, the tariff for any inter State supply, transmission or wheeling of electricity, as the case may be, involving the territories of two States may, upon application made to it by the parties intending to undertake such supply, transmission or wheeling, be determined under this section by the State Commission having jurisdiction in respect of the licensee who intends to distribute electricity and make payment therefor. (6) A tariff order shall, unless amended or revoked, continue to be in force for such period as may be specified in the tariff order. Section 65.

(Provision of subsidy by State Government): If the State Government requires the grant of any subsidy to any consumer or class of consumers in the tariff determined by the State Commission under section 62, the State Government shall, notwithstanding any direction which may be given under section 108, pay, in advance and in such manner as may be specified, the amount to compensate Torrent Power Limited v. U. P. Electricity Regulatory Commission & Ors. the person affected by the grant of subsidy in the manner the State Commission may direct, as a condition for the licence or any other person concerned to implement the subsidy provided for by the State Government: Provided that no such direction of the State Government shall be operative if the payment is not made in accordance with the provisions contained in this section and the tariff fixed by State Commission shall be applicable from the date of issue of orders by the Commission in this regard. Section 66.

(Development of market): The Appropriate Commission shall endeavour to promote the development of a market (including trading) in power in such manner as may be specified and shall be guided by the National Electricity Policy referred to in section 3 in this regard. " 26. Section 82 of the Electricity Act, 2003 reads as under: "Section 82.

(Constitution of State Commission): --- (1) Every State Government shall, within six months from the appointed date, by notification, constitute for the purposes of this Act, a Commission for the State to be known as the (name of the State) Electricity Regulatory Commission: Provided that the State Electricity Regulatory Commission, established by a State Government under section 17 of the Electricity Regulatory Commissions Act, 1998 and the enactments specified in the Schedule, and functioning as such immediately before the appointed date, shall be the State Commission for the purposes of this Act and the Chairperson, Members, Secretary, and other officers and other employees thereof shall continue to hold office, on the same terms and conditions on which they were appointed under those Acts: Provided further that the Chairperson and other Members of the State Commission appointed, before the commencement of this Act under the Electricity Regulatory Commissions Act, 1998 or under the enactments specified in the Schedule, may on the recommendations of the Selection Committee constituted under sub-section (1) of Section 85 734 be allowed to opt for the terms and conditions under this Act by the concerned State Government.

(2) The State Commission shall be a body corporate by the name aforesaid, having perpetual succession and a common seal, with power to acquire, hold and dispose of property, both movable and immovable, and to contract and shall, by the said name, sue or be sued. (3) The head office of the State Commission shall be at such place as the State Government may, by notification, specify. (4) The State Commission shall consist of not more than three Members, including the Chairperson. (5) The Chairperson and Members of the State Commission shall be appointed by the State Government on the recommendation of a Selection Committee referred to in section 85. " 27. Section 86 of the Electricity Act, 2003 reads thus: "Section 86.

(Functions of State Commission): --- (1) The State Commission shall discharge the following functions, namely: - (a) determine the tariff for generation, supply, transmission and wheeling of electricity, wholesale, bulk or retail, as the case may be, within the State: Provided that where open access has been permitted to a category of consumers under section 42, the State Commission shall determine only the wheeling charges and surcharge thereon, if any, for the said category of consumers; (b) regulate electricity purchase and procurement process of distribution licensees including the price at which electricity shall be procured from the generating companies or licensees or from other sources through agreements for purchase of power for distribution and supp