Holding

Indian Railways does not qualify as a deemed distribution licensee and, as a consumer, is liable to pay Cross‑Subsidy Surcharge and Additional Surcharge for electricity procured through open access.

Summary

Indian Railways sought open access to procure 100 MW of power and claimed it is a deemed distribution licensee (DDL) under the Electricity Act, 2003, thereby exempt from cross‑subsidy surcharge (CSS) and additional surcharge. The dispute centered on whether activities under sections 11(g) and 11(h) of the Railways Act constitute “distribution” of electricity, whether the Railways qualifies as an “Appropriate Government”, and whether it can escape surcharge liability. The Supreme Court examined the statutory definitions of distribution licensee, distribution system and consumer, and held that the Railways’ internal power network is for captive consumption, not commercial supply. It found that the omission of the word “distribution” in the Railways Act is intentional and that the non‑obstante clause does not override the licensing scheme of the Electricity Act. Consequently, Indian Railways is not a DDL and, as a consumer, must pay CSS and additional surcharge for open‑access purchases. The Court also rejected reliance on proposed amendment bills as a basis for exemption and directed the respondents to calculate the outstanding surcharges.

Issues considered

Whether the activities provided under Section 11(g) and (h) of the Railways Act pass muster of “distribution” of electricity, and whether such activities are a necessary pre‑requisite to qualify as a DDL under the Act
Whether the Indian Railways, being an entity of the Central Government, falls within the ambit of “Appropriate Government” under Section 14 of the Electricity Act
Whether the Indian Railways, even if held to be a DDL under the Act, is exempt from the obligation to pay Cross‑Subsidy Surcharge or additional surcharge for the grant of non‑discriminatory open access as per Section 42 of the Act
Whether a proposed legislation may be relied upon as an aid to statutory interpretation for addressing gaps in the existing framework, and to give effect to the parliamentary intent to remedy defects thereunder

Legislation cited

Constitution of Indias. Art.12, s. Art.73
Draft Electricity (Amendment) Bill, 2025s. 61(g)
Electricity Act, 1910
Electricity Act, 2003s. 125, s. 14, s. 2(15), s. 2(17), s. 2(19), s. 2(3), s. 2(47), s. 2(5)(a)(ii), s. 42
Electricity (Amendment) Act, 2025
Electricity (Amendment) Bill, 2014
Government of India (Allocation of Business) Rules, 1961
Government of India (Transaction of Business) Rules, 1961
Railways Act, 1989s. 11(g), s. 11(h)
Sale of Goods Act, 1930

Headnote

Issue for Consideration The specific issues which arise for determination are: (i) Whether the activities provided u/s.11(g) and (h) of the Railways Act pass muster of “distribution” of electricity, and whether such activities are a necessary pre-requisite to the Act; (ii) Whether the Indian Railways, being an entity of the Central Government, falls within the ambit of “Appropriate Government” u/s.14 of the Electricity Act, 2003; (iii) Whether the Indian Railways, even if held to be a DDL under the Act, is exempt from the obligation to

Subjects

ElectricityDeemed Distribution Licensee (DDL)ConsumerDistribution LicenseeCross-Subsidy Surcharge (CSS)Additional Surcharge (AS)Open AccessIndian RailwaysSection 11(g) and (h) of Railways ActAppropriate GovernmentProposed legislationSection 14 of the Electricity Act, 2003Section 2(3) of Electricity Act, 2003Article 12 of ConstitutionSection 2(5)(a) of Electricity Act, 2003Section 42 of Electricity Act, 2003

Judgment

[2026] 5 S.C.R. 479 : 2026 INSC 464

Indian Railways
v.
West Bengal State Electricity Distribution Company
Limited & Ors.
(Civil Appeal No. 4652 of 2024)
08 May 2026
[Dipankar Datta and Satish Chandra Sharma,* JJ.]

Issue for Consideration
The specific issues which arise for determination are: (i) Whether
the activities provided u/s.11(g) and (h) of the Railways Act pass
muster of “distribution” of electricity, and whether such activities
are a necessary pre-requisite to qualify as a DDL under the Act;
(ii) Whether the Indian Railways, being an entity of the Central
Government, falls within the ambit of “Appropriate Government”
u/s.14 of the Electricity Act, 2003; (iii) Whether the Indian Railways,
even if held to be a DDL under the Act, is exempt from the
obligation to pay Cross-Subsidy Surcharge or additional surcharge
for the grant of non-discriminatory open access as per s.42 of the
Electricity Act, 2003; (iv) Whether a proposed legislation may be
relied upon as an aid to statutory interpretation for addressing gaps
in the existing framework, and to give effect to the parliamentary
intent to remedy defects thereunder.

Headnotes†
Electricity Act, 2003 – ss.14, 42, 125 – Whether the Appellant-
Indian Railways qualifies as a deemed distribution licensee
(DDL) under the Electricity Act and if so, whether it remains
liable to pay Cross-Subsidy Surcharge to different distribution
licensees for availing open access in terms of s.42 of the
Electricity Act:
Held: Appellant does not pass muster as a deemed distribution
licensee under the Act, and it can in no circumstances escape the
liability from payment of cross-subsidy surcharge and additional
surcharge as a consumer of electricity through open access – The
Respondents are accordingly directed to compute and issue a
detailed calculation of the Cross-Subsidy Surcharge and Additional

* Author
480 [2026] 5 S.C.R.

Supreme Court Reports

Surcharge amounts outstanding qua the Appellant, disaggregated
by the area of supply and the period of availing such open access.
[Para 72]

Electricity Act, 2003 – Railways Act, 1989 – s.11(g) and (h) –
Whether the activities provided u/s.11(g) and (h) of the Railways
Act pass muster of “distribution” of electricity, and whether
such activities are a necessary pre-requisite to qualify as a
DDL under the Act – In other words, whether the activities
of the Appellant-Indian Railways fall within the purview of
a distribution licensee (or a deemed distribution licensee):
Held: The omission of the words “distribution” or “supply” of
electricity in s.11(g) and (h) is deliberate and intentional – The
legislature while framing these provisions certainly intended to
empower the appellant solely to erect and operate a distribution
infrastructure necessary for railway operations – The language
clearly confines the purpose of these installations to the operational
use of Railways and does not extend any authority to the Appellant
to undertake a commercial distribution or supply of electricity,
beyond the railway’s internal domain – The submission of the
Appellant that it is a deemed distribution licensee, lacks any
substantial basis – The statutory regime under the Electricity Act
regulates the commercial supply of electricity to consumer through
a licensed distribution network – The Appellant, operates a closed
and self-contained electricity network which is for the purposes
of meeting the operational requirements of the railway system,
including traction, signalling, stations – It is only when electricity
is sold or provided to consumers outside the operational domain
of the railway, that the activities undertaken by the Appellant could
intersect with the obligation of a distribution licensee – In the present
case, the Railways is procuring electricity from the Respondent
DISCOMs in various states for its own use and for consumption
to its constituents. [Paras 28, 30, 31, 32]

Electricity Act, 2003 – ss.2(5), 14 – Railways Act, 1989 –
Constitution of India – Art.12 – Whether the Appellant-Indian
Railways, being an entity of the Central Government, falls
within the ambit of “Appropriate Government” u/s. 14 of the
Electricity Act, 2003:
Held: A plain reading of s.2(5)(a)(ii) makes it evident that the
subject of the definition is the Central Government, and the term
[2026] 5 S.C.R. 481

Indian Railways v. West Bengal State Electricity Distribution
Company Limited & Ors

“railways” appears only as a relative reference, and a subject-
matter that triggers the application of the Central Government –
Insofar as the provision does not extend that the Railways itself
is the Appropriate Government, it only expands the scope of the
term to include the Central Government in matters relating to
railways – It is also a well-settled principle of law that the mere
classification of an instrumentality or agency as “State” u/Art.12
of the Constitution of India does not automatically render it as an
“Appropriate Government” – Appellant operates as a functionary of
the Central Government – It is evident that the nominal, pervasive,
administrative as well as fiscal control of the Appellant lies in
the clutches of the Central Government – The scheme of the
Electricity Act makes it clear that a distribution licensee is under
the statutory obligation to supply electricity to its consumers within
its area of supply – Notably, the Appellant’s electrical infrastructure
including traction sub-stations, overhead catenary systems, and
25kV alternating current systems, exists entirely for captive self-
consumption for traction purposes and not for supply to third
party consumers – Therefore, the deemed status as attached
to the Military Engineering Services (MES) is not by virtue of it
being a government entity, but it is a governmental entity that
actually performs the function of distribution within the meaning
and scope of the Electricity Act – It is apparent on the face of
record that the Appellant has no such analogous relationship with
any consumer, and its claim to the deemed distribution licensee
status fails at the very threshold – For the limited purpose of this
analysis, the Appellant is regarded as falling within the ambit of
“Appropriate Government” u/s. 2(5)(a) of the Act, but the observation
carries no determinative consequence for the relief sought by the
Appellant – Nominal virtue, however firmly established, cannot
substitute for the substantive functions that the statute demands.
[Paras 40, 43, 45-48, 50]

Electricity Act, 2003 – s.42 – Railways Act, 1989 – Whether
the Indian Railways, even if held to be a deemed distribution
licensee under the Act, is exempt from the obligation to pay
Cross-Subsidy Surcharge or additional surcharge for the grant
of non-discriminatory open access as per s.42 of the Act:
Held: The Appellant is a consumer within the meaning and scope of
s.2(15) of the Electricity Act – It purchases electricity exclusively for
its own use and supplies it to no one but its own constituents – Thus,
482 [2026] 5 S.C.R.

Supreme Court Reports

like any other consumer, Cross-Subsidy Surcharge and Additional
Surcharge are applicable to the Appellant – In arguendo, even if
the Railways is treated as a deemed distribution licensee (DDL),
its procurement of electricity through open access exclusively for
its own consumption renders it a consumer for that purpose – An
entity, like the Railways in the present case, would be liable to pay
Cross-Subsidy Surcharge and Additional Surcharge if it procures
electricity through open access. [Paras 57, 58]

Electricity Act, 2003 – Electricity (Amendment) Bill, 2014 – Draft
Electricity (Amendment) Bill, 2025 – Railways Act, 1989 –
Whether a proposed legislation may be relied upon as an aid
to statutory interpretation for addressing gaps in the existing
framework, and to give effect to the parliamentary intent to
remedy defects thereunder.
Held: In the present case, the legislative history of the Electricity
Act reflects that previous proposals in 2014 and 2018 had sought to
confer the statutory status of a licensee in favour of the Appellant,
seeking to save it from the binding statutory obligations of paying
Cross-Subsidy Surcharge and additional surcharge – The language
used in the Draft Electricity (Amendment) Bill, 2025 is clear and
simple, to address the existing burden of Cross-Subsidy Surcharge
payable by the Appellant by exempting them from payment of
cross-subsidy and surcharges, within the next five years – In the
present case, the very fact that such legislative actions to exempt
the Appellant from payment of Cross-Subsidy Surcharges have
been proposed to be taken, indicate a coherent, consistent, and
current legislative intent about the absence of such exemption under
the prevailing statute – This absence further implies that even by
adopting a purposive construction to the prevailing statute, such an
exemption cannot be read into the statute – It is a settled canon
of statutory interpretation that a legislative casus omissus cannot
be supplied by a judicial interpretative process – Be that as it may,
the proposed legislative framework in the present case explicates
that the legislative intent of the Parliament under the Electricity
Act was not to exempt the Appellant from the obligations under
the Electricity Act – More so, it puts the controversy to rest as the
Appellant, procuring electricity for its own use and consumption,
is an industrial consumer and for availing open access, it is liable
to pay Cross-Subsidy Surcharge and additional surcharge, like
any other consumer. [Paras 61, 67, 69]
[2026] 5 S.C.R. 483

Indian Railways v. West Bengal State Electricity Distribution
Company Limited & Ors

Case Law Cited
Steel Authority of India Ltd. & Ors. v. National Union
Waterfront Workers & Ors. [2001] Supp. 2 SCR 343 : (2001) 7
SCC 1 – relied on.
General Manager, Northern Railways rep. by Union of India v.
Chairman, Uttar Pradesh State Electricity Board & Ors. [2012]
2 SCR 416 : (2012) 3 SCC 329; Sesa Sterlite Limited v. Orissa
Electricity Regulatory Commission & Ors. [2014] 13 SCR 426 :
(2014) 8 SCC 444; Board of Control for Cricket in India v. Kochi
Cricket Pvt. Ltd. & Ors. [2018] 2 SCR 829 : (2018) 6 SCC 287;
Union of India & Anr. v. Sri Ladulal Jain [1964] 3 SCR 624 : 1963
SCC Online SC 133; Central Bank of India v. State of Kerala &
Ors. [2009] 3 SCR 735 : (2009) 4 SCC 94; Sri Venkataramana
Devaru & Ors. v. State of Mysore & Ors., 1957 SCC OnLine
SC 138; K.C. Ninan v. Kerala State Electricity Board & Ors.
[2023] 9 SCR 637 : (2023) 14 SCC 431; Commissioner of Sales
Tax v. Madhya Pradesh Electricity Board (1961) 1 SCC 200;
Sukhdev Singh & Ors. v. Bhagatram Sardar Singh Raghuvanshi
& Anr. [1975] 3 SCR 619 : (1975) 1 SCC 421; Ajay Hasia
& Ors. v. Khalid Mujib Sehravardi & Ors. [1981] 2 SCR 79 :
(1981) 1 SCC 722; Kalpana Mehta v. Union of India [2018]
4 SCR 1 : (2018) 7 SCC 1; Vodafone International Holdings
B.V. v. Union of India & Anr. [2012] 1 SCR 573 : (2012) 6 SCC
757 – referred to.
Anuj Kumar Agarwal v. Registrar of Cooperative Societies & Ors.,
2024 SCC OnLine Del 5087; Ganv Bhavancho Ekvott v. South
Western Railways, 2022 SCC OnLine Bom 7184; Union of India
(Western Railway) v. MCGM, 2017 SCC OnLine Bom 9424; Goa
Foundation & Anr. v. Konkan Railway Corporation & Ors., AIR 1992
Bom 471; Village Panchayat of Velsao v. Ministry of Railways,
2022 SCC OnLine Bom 3526 – referred to.

List of Acts
Electricity Act, 2003; Railways Act; Electricity Act, 1910; Government
of India (Allocation of Business), Rules, 1961; Government of
India (Transaction of Business) Rules, 1961; Constitution of India;
Draft Electricity Amendment Bill, 2025; Sale of Goods Act, 1930;
Electricity (Amendment) Act, 2025.
484 [2026] 5 S.C.R.

Supreme Court Reports

List of Keywords
Electricity; Deemed Distribution Licensee (DDL); Consumer;
Distribution Licensee; Cross-Subsidy Surcharge (CSS); Additional
Surcharge (AS); Open Access; Captive Consumption; Indian
Railways; Section 11(g) and (h) of Railways Act; Appropriate
Government; Cross-Subsidy Surcharge; Additional surcharge;
Proposed legislation; Parliamentary intent; Section 14 of the
Electricity Act, 2003; Section 2(3) of Electricity Act, 2003; Article
12 of Constitution; Section 2(5)(a) of Electricity Act, 2003; Section
42 of Electricity Act, 2003.

Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4652 of 2024
From the Judgment and Order dated 12.02.2024 of the Appellate
Tribunal for Electricity at New Delhi in AN Nos. 276 of 2015, 320
of 2018, 114 and 133 of 2020, 73 and 213 of 2021 and AN Nos.
170 and 343 of 2019
With
Civil Appeal No(s). 4653-4659 of 2024

Appearances for Parties
Advs. for the Appellant(s):
Tushar Mehta, Solicitor GeneraL,Ms. Aishwarya Bhati, S.D. Sanjay,
A.S.Gs., M.G. Ramachandran, Sr. Adv., Pulkit Agarwal, Ms. Srishti
Khindaria, Ms. Ritika Singhal, Ms. Poornima Singh, Nithin Pavaluri,
Koney Rama Mohan Rao, Gaurang Bhushan, Madhav Sinhal,
Mrs. Sansriti Pathak, Mrs. Bani Dikshit, Bhuvan Kapur, Siddharth
V. Thakur, Amrish Kumar.
Advs. for the Respondent(s):
Lokesh Sinhal, Sr. A.A.G., Shekhar Raj Sharma, A.A.G., Pitambar
Acharya, Advocate General, Maninder Singh, Sajan Poovayya,
Parag Tripathi, G Umapathy, C.s. Vaidyanathan, Gaurav Agrawal,
Jaideep Gupta, Sanjay Sen, G. Umapathy, C.A. Sundaram, Sanjay
Sen, Sr. Advs., Prabhas Bajaj, Rithvik Mathur, Priyanshu Tyagi,
Harsh Chauhan, Ms. Priyanka Bhatt, Rishabh Yadav, Ms. Ishita
Jain, Anand Kumar Shrivastava, Shivam Sinha, Ravi Nair, Mudassir,
Palash Maheshwari, Sindhura N Swamy, Ms. Suparna Srivastava,
Ms. Surbhi Gupta, Hitakshi Jain, Ms. Bhairavi, S. K. Verma, Aditya
[2026] 5 S.C.R. 485

Indian Railways v. West Bengal State Electricity Distribution
Company Limited & Ors

Singh-1, Gaurav Khanna, Siddharth Mittal. Aniket Prasoon, Ronak
Shankar Agarwal, Ms. Pratiksha Chaturvedi, Vinit Kumar, Adarsh
Kumar Bhardwaj, Shubham Singh, Ashok Kumar Tripathi, Sarthak
Pathak, Umesh Kumar Shukla, Gajendra Singh Negi, Mrs. Srabani
Mukherjee, Shekhar Banerjee, Md Shah Minhajuddin, Md Adil Khan,
Subhro Prokas Mukherjee, Shri Venkatesh, Ms. Kanika Chugh,
Suhael Buttan, Shryeshth Ramesh Sharma, Ms. Priya Dhankhar,
Vineet Kumar, Nikunj Bhatnagar, Nitin Saluja, Anup Kumar,
Ms. Gauri Subramanium, Mrs. Shruti Singh, Mrs. Neha Jaiswal,
Ms. Achint Priya, Ms. Arshi, Shivam Kumar, Sabarish Subramanian,
S. Vallinayagam, Veshal Tyagi, Riddhi Bose, Ms. Racheeta Chawla,
Ms. Rishi Agarwal, Ms. Sampriti Baksi, Vishnu Unnikrishnan,
Arijit Maitra, Ms. Mandakini Ghosh, Ms. Neha Dabral, Shivansh
Baghel, Vikas Upadhyay, Ms. Ankita Kashyap, Ranveer Singh,
Shiva Narang, Ms. Sunieta Ojha, Ms. Gargi Kumar, Anand K
Ganesan, Nikunj Dayal, Amal Nair, Ms. Devyani Prasad, Sandeep
Kumar Mahapatra, Ms. Mrinmayee Sahu, Sugam Kumar Jha,
Sreedas Kp, Ms. Sakshi Mittal, Srisatya Mohanty, Rutwik Panda,
Ms. Nikhar Berry, Ms. Anshu Malik, Dhananjaya Mishra, Vignesh
Adithiya, V.M.Eashwar, Bharadwaj S., Ms. Pratiti Rungta, Sumit
Pragal, Prashant Singh, Shivankur Shukla, Ms. Amita Singh Kalkal,
Samar Vijay Singh, Nikunj Gupta, Ms. Sabarni Som, Aman Dev
Sharma, Sarthak Arya, Ms. Nidhi Narwal, Ms. Srishti Jain, Rahul
Khurana, B. Chandra Sekaran, Amit Shrivastava, Dhruv Raman
Singh, Abhishek Kumar, Nived Veerapaneni, Ms. Shubham Mudgil,
Ms. Mandakini Ghosh, Zafar Inayat, Ms. Rohini Musa, Abhishek
Gupta, Rajat Gupta, M/s Trilegal, K. Parameshwar, Udit Gupta,
Vyom Chaturvedi, Ms. Sneha Singh, Ms. Pragya Gupta, Ms.
Veda Singh, Prasad Hegde, N. Sai Kaushal, M/S. Udit Kishan
and Associates.

Judgment / Order of the Supreme Court

Judgment

Satish Chandra Sharma, J.

1. This is a batch of statutory Appeals under Section 125 of the Electricity
Act, 2003 (for short, hereinafter referred to as, “The Electricity Act”)
assailing the common judgment and order dated 12.02.2024 passed
by the Appellate Tribunal for Electricity at New Delhi, (“APTEL”), in
486 [2026] 5 S.C.R.

Supreme Court Reports

Appeal Nos. 276/2015, 320/2018, 114/2020, 73/2021, 213/2021,
170/2019, 343/2019 and 133/2020.
2. By the said judgment, APTEL has set aside the Order dated
05.11.2015 passed by the Central Electricity Regulatory Commission
(“CERC”) in Petition No. 197/MP/2015 along with connected appeals
arising from Orders passed by other State Electricity Regulatory
Commissions (“SERCs”).
3. The proceedings before APTEL were contested by multiple Distribution
Companies (DISCOMS) and SERCs, including the West Bengal State
Electricity Distribution Company Ltd. (WBSEDCL), Odisha Electricity
Regulatory Commission (OERC), Kerala State Electricity Regulatory
Commission (KSERC), Madhya Pradesh Electricity Regulatory
Commission (MPERC), Rajasthan Electricity Regulatory Commission
(RERC), Maharashtra Electricity Regulatory Commission (MERC),
Haryana Electricity Regulation Commission (HERC), Punjab State
Electricity Regulatory Commission (PSERC), as against the Indian
Railways, the Appellant herein.
4. The controversy pertained to common issues: (i) whether Indian
Railways qualifies as a deemed distribution licensee (DDL) under
the third proviso to Section 14 of the Electricity Act; and (ii) if so,
whether it remains liable to pay Cross-Subsidy Surcharge to different
distribution licensees for availing open access in terms of Section 42
of the Electricity Act. Five out of the eight State Electricity Regulatory
Commission (SERCs) had held that the Indian Railways is not a DDL
(“DDL”) in terms of the third proviso to Section 14 of the Electricity Act.

Factual matrix
5. The facts in the case are undisputed and are succinctly mentioned
as under:
5.1. The Appellant, Indian Railways vide Letter dated 17.03.2015
to the Maharashtra State Electricity Transmission Co. Ltd.
(“MSETCL”) sought grant of connectivity for procuring 100
MW power from Gujarat Urja Vikas Nigam (“GUVNL”) for 16
traction substations of the Central and Western railways through
inter-state open access in terms of the Electricity Act. MSETCL
refused to grant connectivity and directed the Indian Railways
to obtain an appropriate order from the competent commission
regarding its status as a DDL.
[2026] 5 S.C.R. 487

Indian Railways v. West Bengal State Electricity Distribution
Company Limited & Ors

5.2. The Appellant approached the CERC by way of a petition, inter-
alia seeking declaration that the Indian Railways is entitled to
the grant of open access for the power to be procured from
the Generating Station through the Inter-State Transmission
System (“ISTS”) of Central Transmission Utility and Intra-State
Transmission System of the States (viz. Maharashtra, Gujarat,
Jharkhand and West Bengal), to its facilities, i.e., traction points
and network of the Indian Railways, and direct that the Indian
Railways in its capacity as an authorised entity to distribute
and supply electricity is a separate participating entity, like any
other State entity notified by the Commission for the purposes
of scheduling and dispatch of electricity. The petition was filed
against the backdrop of the Letter No-25/19/2004-R&R dated
06.05.2014 issued by the Ministry of Power, Government of
India1 which clarified that the Appellant i.e. the Indian Railways
is a deemed licensee under the third proviso to Section 14 of
the Electricity Act and for all purposes thereunder. It was urged
by the Appellant that:
(a) Firstly, it is a DDL under Section 14 of Electricity Act,
and that being a Department of the Ministry of Railways,
Government of India, the Appellant qualifies as the
“Appropriate Government” and therefore has the deemed
licensee status under the third proviso to Section 14 of
the Electricity Act. Reliance was placed on Letter dated
06.05.2014 issued by the Ministry of Power, Government
of India that clarified that “Railways is a deemed licensee
under the third proviso to Section 14 of the Electricity
Act”. It contended that the deeming fiction in the proviso
confers upon it, the status of a DDL and by virtue thereof
shall be subject to benefits and/or privileges emanating
therefrom. It was their unilateral assertion that as regards
the grant of open access, a DDL shall be granted non-
discriminatory open access without the obligation to pay
Cross-Subsidy Surcharge and the Additional Surcharge
under the Electricity Act; and

1 Letter No-25/19/2004-R&R dated 06.05.2014 issued by the Ministry of Power, Government of India
488 [2026] 5 S.C.R.

Supreme Court Reports

(b) Secondly, it operates the rail systems in India as per the
provisions of the Railways Act (“Railways Act”), which
constitutes a complete code in itself and overrides the
provisions of the Electricity Act by virtue of the non-obstante
provision in Section 11 of the Railways Act and Section
173 of the Electricity Act. Therefore, its operations are
independent of its status under the Electricity Act, and it
is entitled to distribute and supply electricity under Section
11 of the Railways Act.
5.3. The West Bengal State Electricity Distribution Company Ltd.
(“WBSEDCL”) impleaded as a party before the CERC vide
Order dated 12.10.2015, challenged the maintainability of the
Petition filed by the Appellant on the grounds that, since no
application for open access had been filed in the respective
States, and that the process for the grant of inter-state open
access as per the extant regulations had not been necessarily
complied with, therefore, the question of dispute with respect
to the open access did not arise.
5.4. The CERC vide Order dated 05.11.2015 observed that Section
11(g) of the Railways Act authorizes the Railway Administration
“to erect, operate or repair any electric traction equipment,
power supply and distribution installation in connection with
the working of the railway.” It held that the use of terms “power
supply and distribution installations” indicates that the Railway
Administration is entrusted with the function of establishing
and operating a distribution network for supply of power to the
various railway installations. Placing reliance on the judgment of
General Manager, Northern Railways rep. by Union of India
v. Chairman, Uttar Pradesh State Electricity Board & Ors.2
and the Letter dated 06.05.2014 issued by the Ministry of Power,
it further held that Indian Railways was authorised under the
Railways Act to undertake transmission and distribution activities
with relation to its operations. Accordingly, the CERC held:
(a) Indian Railways/Appellant is an authorised entity under the
Railways Act for carrying out transmission and distribution
activities for ensuring supply of power in connection with

2 (2012) 3 SCC 329
[2026] 5 S.C.R. 489

Indian Railways v. West Bengal State Electricity Distribution
Company Limited & Ors

the working of the railways, without having to obtain a
license from the appropriate Commission.
(b) Being an authorized entity, it shall be entitled for grant of
open access in connection with the working of the Railways,
as per provisions applicable to a distribution licensee.
(c) It is a DDL under the third proviso to Section 14 of Act
and is bound by the terms and conditions for a licensee as
specified under Section 16. Hence, no separate declaration
to this effect was required.
5.5. Aggrieved by the observations of the CERC, the WBSEDCL
filed Appeal no. 276/2015 before the Appellate Tribunal.
Subsequently, seven appeals as enlisted hereunder were filed by
the Appellant and relevant distribution companies (DISCOMS),
challenging Orders by the respective SERCs on the identical
issue. The following Appeals were heard together by the APTEL:

WBSEDCL v. CERC & Ors; CERC Order dated 05.11.2025
Appeal No. 276/2015
Held: Indian Railways is a DDL
under the third proviso to Section
14 of the Electricity Act.

Indian Railways v. MERC & Ors.; MERC Order dated: 05.04.2019.
Appeal No. 343/2019
Held: Indian Railways is a DDL.

Indian Railways v. Kerala State KSERC Order dated: 12.12.2019.
Electricity Board Limited & Ors.;
Held: Indian Railways is a DDL and
Appeal No. 73 of 2021
was directed to pay charges as
applicable for open access.

Punjab State Power Corporation PSERC Order dated: 28.02.2018.
Ltd v. PSERC & Ors.; Appeal No.
Held: Indian Railways is not a DDL.
320 of 2018

Indian Railways v. Odhisa Power OERC Order dated: 25.02.2020.
Transmission Corporation Ltd &
Held: Indian Railways is not a DDL.
Ors; Appeal No. 114 of 2020

Indian Railways v. MP Poorv MPERC order dated: 05.05.2021.
Kshetra Vidyut Vitran Company
Held: Indian Railways is not a DDL.
Ltd & Ors.; Appeal No. 213 of
2012
490 [2026] 5 S.C.R.

Supreme Court Reports

Indian Railways v. Jaipur Vidyut RERC Order dated: 23.04.2019.
Vitaran Nigam Ltd & Ors.; Appeal
Held: Indian Railways is not a DDL.
No. 170 of 2019

Indian Railways v. Dakshin HERC Order dated: 17.06.2020.
Haryana BijliVitran Nigam Ltd
Held: Indian Railways is not a DDL.
& Ors.; Appeal No. 133 of 2020

5.6. At the outset, APTEL passed an interim Order dated 16.12.2015
in favour of the Appellant, whilst prima facie observing that:
(a) By virtue of Section 11 of the Railways Act, the Appellant
appears to have full authority to undertake distribution
and supply of electricity. Section 11 cannot be given a
restricted meaning in light of the decision in Northern
Railways (supra);
(b) The power to erect, maintain and operate traction
equipment, lines, power supply and distribution installation
under the said provision necessarily implies the use of
such equipment to distribute and supply electricity;
(c) The decision in Sesa Sterlite Limited v. Orissa Electricity
Regulatory Commission & Ors.3, which laid an emphasis
upon a distribution licensee to operate and maintain a
distribution system and supply power to consumers, is not
applicable to the Appellant herein as Section 173 of the
Electricity Act makes it clear that in case of inconsistencies
in the Railways Act, the latter shall prevail over the
Electricity Act;
(d) The relief sought by the Railways was for the grant of open
access through the Inter-State Transmission Network of
the Central Transmission Utility, to which it is entitled on
a non-discriminatory basis. For this reason, the Petition
before the CERC was maintainable despite the absence
of any independent applications to State Transmission
Utilities or distribution licensees. The distribution licensees
of various States were also held to be not necessary or
proper parties to the said petition.

3 (2014) 8 SCC 444
[2026] 5 S.C.R. 491

Indian Railways v. West Bengal State Electricity Distribution
Company Limited & Ors

5.7. Vide its Final Judgment and Order (“Impugned Judgment”)
dated 12.02.2024, however, APTEL rejected the claim of the
Appellant to be recognised as a deemed distribution licensee
within the ambit of the third proviso to Section 14 of the Electricity
Act. It further held that since the entire electricity received by
the Railways is consumed for its own use and its constituents,
it is liable to pay Cross-Subsidy Surcharge and Additional
Surcharge to the respective distribution licenses as any other
consumer under Section 42 of the Electricity Act. The following
are the key observations by APTEL:
(a) Appellant cannot be held to be a DDL, insofar as it does not
distribute electricity. A distribution licensee defined under
Section 2(17) of the Electricity Act must (i) operate and
maintain a distribution system, and (ii) supply electricity to
consumers in its area of supply. The distribution installation
and electric traction of the Appellant is not a distribution
system within Section 2(19) of the Electricity Act, insofar as
a distribution system must connect the delivery point on a
transmission line to the point of connection or installation of
the consumer. Locomotives, signal equipment, and station
facilities are constituents of the Appellant itself and do not
qualify as consumers within the meaning of Section 2(15) of
the Electricity Act. Thus, the Appellant itself is a consumer.
It receives electricity at its traction sub-stations (TSSs)
from distribution licensees, supply authorities, and then
conveys it to locomotives, stations and other installations
within its operational domain. Conveyance of electricity
within this internal network is for the own consumption of
the Appellant and does not constitute distribution.
(b) The Clarificatory Letter dated 06.05.2014 issued by the
Ministry of Power, relied upon by the Appellant is an
administrative directive under Section 107 of the Electricity
Act, and is not mandatory in nature.
(c) The statutory powers granted to the Railways administration
under Section 11 of the Railways Act are confined to the
construction and maintenance of railway works for running
railway operations. Mere establishment of distribution
installation does not authorise the Appellant to qualify as
a DDL and supply electricity to consumers.
492 [2026] 5 S.C.R.

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(d) In light of the decision in Sesa Sterlite (supra), even if the
Appellant was treated as a DDL or transmission licensee
and seeks to avail open access, it is still liable to pay
Cross-Subsidy Surcharge and additional surcharge as
the electricity procured by it, is for its own consumption
and operation.
(e) The contents of the 31st Report of the Parliamentary
Standing Committee on Energy dated 19.12.2002 reflect
that the Appellant had sought exemption from the obligations
of distribution licensees under Sections 12, 42, and 47 of
the Electricity Act. The request by the Appellant seeking
such an exemption itself demonstrates that it was well
aware that Section 2(31)(c) read with Section 11(g) & (h)
of the Railways Act did not absolve it from obtaining a
distribution license and/or discharging the obligations of
a distribution licensee under the Electricity Act.
6. Aggrieved, the Appellant has approached this Court challenging
the legality and correctness of the Impugned Judgement of APTEL
dated 12.02.2024. The captioned Appeal was accompanied by IA no.
80269/2024 seeking stay of the Judgment under challenge passed
by APTEL. Vide Order dated 06.05.2024, this Court had directed that
subject to the final adjudication of the present Appeals, the Appellant
shall not be required to pay either the Cross-Subsidy Surcharge or
Additional Surcharge to the distribution licensees, and it was made
clear that the open access shall not be denied to the Appellant for
that reason.

Submissions on behalf of Railways
7. Mr. M.G. Ramachandran, learned Senior Counsel for the Appellant
challenged the observations of APTEL as unsustainable in law for
the following reasons:
(a) It is the case of the Appellant that it is vested with the statutory
authority under Section 11 read with Section 2(31)(c) of the
Railways Act, to lay down an electrical system, including
a transmission and distribution system within its area of
operation. The authority under the Railways Act expressly
includes executing all necessary works, including laying down
an electric distribution system over the length and breadth of
[2026] 5 S.C.R. 493

Indian Railways v. West Bengal State Electricity Distribution
Company Limited & Ors

the country, and extends to the activities of conveying electricity
necessary for use at different places, points, and purposes for
the operations of the railways, which cannot be interfered with
by the operation of the Electricity Act.
(b) Section 11 of the Railways Act begins with a non-obstante clause,
and the statutory power thereunder is absolute in nature. Placing
reliance on the decision of Northern Railways (supra), it is
contended that APTEL erred in distinguishing that the authority
under Section 11 was confined only to transmission and not
distribution. The Appellant submits that Northern Railways
(supra) authoritatively laid down that the act of constructing
its transmission lines, and drawing power from external power
sources, falls within the statutory domain of the Railways Act.
(c) Section 11 has an overriding effect, and several High Courts
across the country have observed that the Railways Act
consolidates the law and is not a mere regulatory statute.4 It is
contended that enactments such as the Environment Protection
Act have no application over works undertaken by the Railways
in exercise of the powers under Section 11 of the Railways
Act. Learned Senior Counsel submits that APTEL made a fatal
error in construing Section 11 and other allied provisions of the
Railways Act, with reference to the Act.
(d) Reliance was passionately placed on Ganv Bhavancho
Ekvott v. South Western Railways5 whereby the High Court
had held that the Southern Railway (SWR) and the Rail Vikas
Nigam Limited (RVL) were not under any statutory compulsion
to obtain environmental clearances or any building permission
from authorities and agencies under the other legislations.
It was held that the exemption for railway administration to
execute the works of construction and maintenance of railway
is conferred by the non-obstante clause which has an overriding
effect on all other laws except for the Railways Act6 and the
legislation referred to in Section 11 itself. The Appellant herein

4 Ganv Bhavancho Ekvott v. South Western Railways, 2022 SCC OnLine Bom 7184.
5 Ganv Bhavancho Ekvott (supra)
6 Union of India (Western Railway) v. MCGM, 2017 SCC OnLine Bom 9424; Goa Foundation & Anr. v.
Konkan Railway Corporation & Ors., AIR 1992 Bom 471; Village Panchayat of Velsao v. Ministry of
Railways, 2022 SCC OnLine Bom 3526.
494 [2026] 5 S.C.R.

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submitted that power under section 11 is thus unfettered and
unqualified, and the status of the Appellant under the Electricity
Act is inconsequential, insofar as the authority to distribute
electricity is independently conferred under the Railways Act.
The non-obstante clause under Section 11 of the Railways
Act implies that the powers under the provision are exclusive.
Section 173 of the Electricity Act further settles the dispute by
providing that, in the event of any inconsistencies, only the
Railways Act shall prevail.
(e) The Railways Act is a complete code in itself. The statute
expressly authorises the Appellant to lay down a “distribution
installation” for the operation of railways. By their very nature,
such installations are intended for the purpose of distribution,
thereby implying that the Appellant is statutorily empowered
to distribute electricity. Since this power flows directly from the
parent statute, no separate authorization or license under any
other law is required.
(f) Without prejudice, the Appellant is a DDL as per the third
proviso to Section 14 of the Electricity Act. Being an entity
of the Central Government, the Appellant is an Appropriate
Government within the definition of Section 2(5) and is therefore
exempt from obtaining a license in terms of the third proviso
to Section 14 of the Electricity Act. Further, electric traction
equipment, power supply systems, and distribution installation
used for the purposes of, or in connection with a railway, fall
within the statutory definition of railways under Section 2(31) of
the Railways Act. Thus, distribution of electricity is an inherent
function of the Appellant.
(g) Although the term “distribution” is not defined under the Railways
Act or under the Electricity Act, in the ordinary and natural sense,
the term “distribute” means spreading of goods anywhere by
whatever means, and in the context of the present case, it would
mean any activity that involves the conveyance of electricity from
one point to another for use at different locations. Accordingly,
any activity involving the conveyance of electricity from one
source to another would fall within the ambit of “distribution.”
It is argued that in the context of railways, the conveyance of
electricity from traction and non-traction substations through
[2026] 5 S.C.R. 495

Indian Railways v. West Bengal State Electricity Distribution
Company Limited & Ors

wires and associated electrical systems to points of end use
does not merely amount to transmission or consumption in its
area of operation, but constitutes “distribution of electricity”
within the meaning and scope of the Electricity Act.
(h) Section 2(70) that defines “supply” as the sale of electricity, is not
a licensed activity under the Electricity Act. Under the previous
regime of the Indian Electricity Act, 1910, its Section 3 specifically
provided for the grant of a license to a person for the supply of
energy within a specified area, along with the laying of electric
supply lines for the conveyance and transmission of energy.
(i) The statutory scheme of the Electricity Act consciously departed
from this position and distinguishes the two terms of “distribution”
and “supply”. The present statutory framework under the
Electricity Act reflects a deliberate legislative shift by excluding
“supply of electricity” as a licensed activity, while retaining the
licensing requirement for “distribution”, thereby maintaining a
clear distinction between the two activities. It is submitted that
the distinction has been overlooked by APTEL, as it held that
the Appellant cannot claim the status of a DDL under Section
14 of the Act, as it is not in the business of selling electricity to
consumers, and is only an end user of electricity. Being an entity
of the Central Government, it is an Appropriate Government and
has the status of a DDL as per the third proviso to Section 14 of
the Electricity Act. Section 2(5)(a) of the Electricity Act contains
no restriction that the reference to the Central Government should
be only with the references to the activities of other agencies,
supervised or regulated by the Central Government.
8. Ms. Aishwarya Bhati, learned ASG appearing for the Union of India,
submitted that:
(a) The Indian Railways is integrated with the Central Government,
and qualified as the “Appropriate Government” under Section
2(5)(a)(ii), of insofar as:
(i) Railways is a union subject in terms of the Seventh
Schedule of the Constitution of India;
(ii) Rail Budget is part of the General Budget, and its receipts
and expenditure form part of the Annual Financial
Statement under Article 11;
496 [2026] 5 S.C.R.

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(iii) Revenue generated by the Railways is credited to the
Consolidated Fund of India, confirming its status as a
departmentally run undertaking of the Union.
(b) The Government of India (Allocation of Business), Rules, 1961
and the Government of India (Transaction of Business) Rules,
1961 further reflect the sovereign status of the Ministries of
the Government of India. It is argued that the fiscal identity of
the Ministry of Railways is inseparable from the Union of India
and the national exchequer. The status of the Appellant flows
from the sovereign executive power of the Union under Article
73 of the Constitution.
9. Based on the aforesaid submissions, learned senior counsels urged
this Court to allow the Appeal and set aside the Impugned Judgment
of APTEL, and further grant non-discriminatory open access to the
Appellant, recognizing its status as a DDL in terms of the third proviso
to Section 14 of the Electricity Act.

Submissions on behalf of Respondents
10. Per contra, it has been asserted by the Respondents’ DISCOMS
that the Indian Railways is not a DDL under the Electricity Act. It is
submitted that the Appellant is misconstruing Section 11 read with
Section 2(31) of the Railways Act to contend that it is authorized
to distribute electricity. As per the said contention, the statutory
framework under the Railways Act, only empowers the Appellant
to consume electricity for its own use, and does not extend to the
supply of electricity to consumer.
11. The DISCOMS were represented by learned Senior Counsels Mr.
C.A. Sundaram, Mr. Vaidyanathan, Mr. Maninder Singh, Mr. S.
Poovayya, Mr. Parag Tripathi, appearing on behalf of their respective
Respondents. The present submissions are common to all the
Respondents herein and are being advanced collectively under a
single head for the sake of brevity and convenience.
12. The submissions advanced on behalf of the Respondent-DISCOMS
collectively and individually are summarized as follows:
(a) Mr. Vaidyanathan, learned Senior Counsel for WBSEDCL
submitted that distribution is inextricably linked with the supply by
way of sale of electricity to consumers within an area of supply,
[2026] 5 S.C.R. 497

Indian Railways v. West Bengal State Electricity Distribution
Company Limited & Ors

and that the levy of Cross-Subsidy Surcharge and Additional
Surcharge is a statutory consequence of a consumer availing
open access from a source other than the distribution licensee
within its area.
(b) Section 11(g) of the Railways Act is a provision appearing
under the Chapter titled “Construction and Maintenance of
Works”. It merely authorizes the Appellant to erect, operate,
maintain or repair any electric traction equipment, power supply
and distribution installation in connection with the working of
the railways. The non-obstante provision therein would only
be restricted to clauses (a) to (h). Furthermore, there is no
inconsistency between Sections 14 and 42 of the Electricity
Act and Section 11 of the Railways Act in terms of Sections
173 of the Electricity Act. Thus, the Electricity Act shall apply.
(c) Mr. S. Poovayya, learned Senior Counsel for various TP Odisha
DISCOMS, submitted that a system that does not ultimately
connect to the installation of a consumer is not a distribution
system at all under the Electricity Act as Section 2(19) of the
Electricity Act defines “distribution system” as under:
“distribution system” means the system of wires and
associated facilities between the delivery points on the
transmission lines or the generating station connection and
the point of connection to the installation of the consumers;
(d) He submitted that the definition itself indicates that a distribution
system is intended for connection to the installation of the
consumer or last-mile connectivity. In the context of Railways,
only if the system of wires and facilities is connected to the
end point of transmission lines or a generator with the point of
connection to a consumer, will it fall within the specific definition
of a distribution system under the Electricity Act.
(e) Adverting to the activities of the Indian Railways, he submitted
that an installation laid down for the functioning of the Railways,
which does not ultimately connect to the premises of a consumer
cannot be considered a consumer under the Electricity Act. For
this reason alone, the Railways’ internal network and conveyance
of electricity within its area of operation, falls outside the scope
of a distribution system set up for the supply of electricity.
498 [2026] 5 S.C.R.

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(f) He further submitted that “conveyance” of electricity does not
constitute “distribution” of electricity. Even if the sub-station
serves as the delivery point or the final point of connection, it is
only an additional point of internal distribution installation, and
the power procured by the Railways continues to be consumed
solely by itself.
(g) Mr. Maninder Singh, learned Senior Counsel appearing on
behalf of KSEBL submitted that the Petition O.P. No. 31/2019
filed by the Appellant before the KSERC had sought the grant
of open access to avail power supply from a generating station
in Bihar or any other source to the Railway traction substations.
It is argued that the nature of relief sought by the Appellant was
itself for its own consumption, and not for the further distribution
or supply to consumers. Thus, the Appellant is a consumer
as it procures electricity for its own end-use and operations.
Hence, KSERC vide Order dated 12.12.2019 had directed that
the DISCOM/KSEBL shall issue a No-Objection Certificate in
favour of the Appellant to avail open access subject to the
payment of charges applicable to consumers.
(h) Mr. Singh further argued that the Appellant is not an Appropriate
Government in terms of the third proviso to Section 14 as the
definition is context dependent and does not fulfil the statutory
scheme of the Electricity Act. In particular, Section 2(5)(ii)
provides twin conditions that for the Central Government to
be the Appropriate Government there must be any Inter-State
generation, transmission, trading or sale with respect to the
Railways. None of the four activities are undertaken by the
Railways. Accordingly, it is not the Appropriate Government.
(i) He further submitted that the electricity provided by the Railways
within its premises to its vendors, contractors or agencies is
not supply of electricity, as “supply” is defined under Section
2(70) to mean sale of electricity to consumers. In the present
case, the Railways admittedly does not sell the electricity to
consumers, nor does it have any consumers. The reliance
on Northern Railways (supra) is misplaced as the judgment
dealt with the power of the Railways to construct its own
transmission lines, emphasising the non-obstante provision
in Section 11. It is nowhere held that while consuming the
[2026] 5 S.C.R. 499

Indian Railways v. West Bengal State Electricity Distribution
Company Limited & Ors

electricity supplied directly by a Generating Company, it would
be treated as engaged in distribution of electricity. In fact, the
issue of distribution was never considered or dealt with.
(j) Mr. Singh, also brought our attention to the Draft Electricity
Amendment Bill, 2025, and placed reliance on Board of Control
for Cricket in India v. Kochi Cricket Pvt. Ltd. & Ors.7 to assert
that the proposed bill to amend a provision demonstrates that
the provision cannot be interpreted in terms of the proposed
amendment which has not been passed, and buttress the
submission of the Appellant that the exemption in the proposed
Electricity Amendment Bill, 2025 shall be applicable to the
Appellant even before the enactment.
(k) Mr. Parag Tripathi, learned Senior Counsel appearing on behalf
of PSPCL, while re-iterating the submission by other Senior
Counsels specifically brought our attention to the Handbook
on Power Supply Installation in Electric Traction issued by the
Indian Railway Engineering Institute which provided that though
the power supply and distribution system is maintained by the
Appellant, power is availed by the Railways from the ‘supply
authority’ either as a consumer of a distribution licensee or
through a bilateral transaction via open access. This factum
alone establishes that the Appellant is a consumer under the
Electricity Act.
(l) Mr. C.A. Sundaram, learned Senior Counsel for SBPDCL
reiterating the submissions made by the other Counsels,
has further vociferously argued that the Railways is not the
Appropriate Government for the purposes of the third proviso to
Section 14 of the Electricity Act. He submitted that the mere fact
that the Central Government is running the Railways, it will not
convert the activity of carrying on of a business into an activity
of the Central Government as a sovereign body. It was urged
that the “appropriate Government” would necessarily mean the
Government in its sovereign capacity and not the Government
running its business and in exercise of its powers vested under
Article 298 of the Constitution8.

7 (2018) 6 SCC 287
8 Union of India & Anr. v. Sri Ladulal Jain, 1963 SCC OnLine SC 133
500 [2026] 5 S.C.R.

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(m) Mr. Sundaram further brought our attention to the definition of
“railway administration” under section 2(32) of the Railways Act,
and that the mere fact that the Central Government oversees
the operations of the Railways does not transform the Railways
or the railway administration into the Central Government itself.
He further urged that the supply of electricity by the Appellant to
its entities due to a jural relationship is not supply of electricity.
(n) He further submitted that the proposal of a Draft Electricity
Amendment Bill, 2025 seeks to amend Section 61(g) of the
Electricity Act insofar as it aims to reduce and eliminate the
Cross-Subsidy Surcharge for railways within five years. It is
contended that the legislative proposal to amend the existing
legal framework and reduce the Cross-Subsidy Surcharge for the
Indian Railways, itself denotes that no such provision or privilege
exists under the current statute that absolves the Appellant from
payment of the Cross-Subsidy Surcharge applicable to any
consumer in terms of Section 42 of the Electricity Act.
13. Based on the aforesaid submissions, learned Senior Counsels
urged this Court to dismiss the Appeal and uphold the Impugned
Judgment of APTEL.

Issues
14. Based on the submissions of the parties, the specific issues which
arise for determination are:
(i) Whether the activities provided under Section 11(g) and (h) of
the Railways Act pass muster of “distribution” of electricity, and
whether such activities are a necessary pre-requisite to qualify
as a DDL under the Act?
(ii) Whether the Indian Railways, being an entity of the Central
Government, falls within the ambit of “Appropriate Government”
under Section 14 of the Act?
(iii) Whether the Indian Railways, even if held to be a DDL under
the Act, is exempt from the obligation to pay Cross-Subsidy
Surcharge or additional surcharge for the grant of non-
discriminatory open access as per Section 42 of the Act?
(iv) Whether a proposed legislation may be relied upon as an aid
to statutory interpretation for addressing gaps in the existing
[2026] 5 S.C.R. 501

Indian Railways v. West Bengal State Electricity Distribution
Company Limited & Ors

framework, and to give effect to the parliamentary intent to
remedy defects thereunder?

Analysis
Issue (i): Whether the activities provided under Section 11(g) and (h)
of the Railways Act pass muster of “distribution” of electricity, and
whether such activities are a necessary pre-requisite to qualify as
a DDL under the Act?
15. Before examining whether the activities of the Appellant fall within
the purview of a distribution licensee (or a deemed distribution
licensee, as the case may be), it is crucial to examine the statutory
scheme of the Electricity Act to understand the framework governing
the grant of a license as well as obligations accrued to such
licensee.
16. The distribution of electricity under the Electricity Act is subject
to a strict licensed framework. Section 2(17) defines “distribution
licensee” as a licensee authorised to operate and maintain a
distribution system for supplying electricity to consumers in its area
of supply. The term “distribution system” is separately defined under
Section 2(19) as the system of wires and associated facilities between
delivery points on the transmission lines or the generating station
connection and the point of connection to the installation of the
consumers. A conjoint reading of the two provisions makes it clear
that any person or entity seeking the grant of a distribution license
under Section 14 of the Electricity Act must mandatorily fulfil the twin
requirements- (a) operating and maintaining a distribution system
for supply of electricity to consumers and (b) supplying electricity to
consumers within their area of supply.
17. These twin requirements reiterated under Section 42(1) of the
Electricity Act and Sesa Sterlite (supra), mandate that it is the duty
of a distribution licensee to develop and maintain a distribution system
in his area of supply and to supply electricity in accordance with the
Electricity Act. The term “area of supply” defined under Section 2(3)
of the Act, means the area within which a distribution licensee is
authorised by his license to supply electricity. A bare reading of the
provision indicates that the mere operation and maintenance of a
distribution system is not the exclusive basis for the grant of a licence
for distribution of electricity. Such a system must ultimately supply
502 [2026] 5 S.C.R.

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electricity and connect to the point of connection of a consumer as
its end-use.
18. A plain reading of the provisions mentioned hereinabove makes
it evident that the obligation of a distribution or a DDL to supply
electricity is mandatory in nature, and is a necessary corollary of the
interpretation of the current statute. For this reason, the argument
raised by the Appellant that ‘supply’ of electricity is not a licensed
activity under the current statutory regime of the Electricity Act
and was a feature only under the Indian Electricity Act, 1910, is a
semantic issue at best.
19. Be that as it may, the Appellant claims it is a DDL in terms of the
third proviso to Section 14 of the Electricity Act. It differentiates
between the two terms “distribute” and “supply”, and asserts that
the Railways Act statutorily empowers the Appellant to undertake
distribution of electricity. Section 11(g) of the Railways Act authorises
the Railway Administration to erect, operate, maintain or repair electric
power supply, and distribution in connection with the working of the
railway; and Section 11(h) authorises doing all other acts necessary
for making, maintaining, altering or repairing and using the railway.
Both provisions, empower the Railways to lay, maintain and operate
power supply infrastructure for its operations. It is contended by the
Appellant that the express use of the term “distribution installation” in
Section 11 is equivalent to the term “distribution system” under the
Electricity Act and constitutes an independent legislative recognition
that the Railways is statutorily empowered to distribute electricity.
20. The submission of the Appellant is that there is no distinction
between a “distribution system” under the Electricity Act or a
“distribution installation” under the Railways Act. The term “distribution
installation” is not defined under either of the statutes, whereas the
term “distribution system” has been specifically defined as a system
of wires and associated facilities between delivery points on the
transmission lines or the generating station connection and the point
of connection to the installation of the consumers.
21. Even if we consider that the term “distribution installation” as the
term suggests, refers to a distribution or electric infrastructure
authorised to be set up by the Appellant to ensure power supply
for railway operations, it cannot be considered akin to a distribution
system. The definition of a distribution system is two pronged, it is a
[2026] 5 S.C.R. 503

Indian Railways v. West Bengal State Electricity Distribution
Company Limited & Ors

system of wires and associated facilities between the delivery points
on transmission lines or generating companies, which ultimately
terminates at the installation of a consumer or the point of last-mile
connectivity. For this very reason, a distribution installation which
merely conveys electricity within the integrated railway system, from
the overhead equipment to the power locomotives, communication
systems, signals and station facilities, for its own consumption and
use, and does not translate into sale or supply of electricity to a
consumer against consideration, cannot be held to be within the
meaning and scope of a distribution system under the Electricity Act.
22. Additionally, a distribution system also extends to a definite and
specific area of supply. The term ‘area of supply’ defined under
Section 2(3) of the Electricity Act, refers to the area within which the
distribution licensee is authorised by his license to supply electricity.
The Appellant has contended that the area of supply under the
Electricity Act, would mean the same as the area of operation used
under the Railways Act.
23. At the outset, although, the parallels drawn by the Appellant may
prima-facie seem justiciable, the two terms area of supply and area
of operation cannot denote the same meaning. The area of supply
necessarily refers to a designated or authorised area, where a
distribution licensee has been granted the exclusive (or non-exclusive)
right to supply electricity. As such, the Respondent DISCOMs hold
licences granted by their respective State Commissions demarcating
precise territorial limits within which they are authorised to distribute
electricity.
24. On the other hand, an area of operation refers to the operative
dimensions of an entity. In the context of Railways, it would mean the
integrated railway system spread across the length and breadth of
the country, however only limited to operational use and limit of the
railway network. The Appellant’s contention that boundaries, fences
or gates earmarked by the Central Government under Section 18
of the Railways Act, defines the area of supply for the Appellant is
wholly misconceived. To accept this submission of the Appellant
would be to hold that the pan-India operational footprint of the Indian
Railways, constitutes a single area of supply under the Electricity Act.
This is wholly absurd and inconsistent with the scheme of the Act,
insofar as the term “area of supply” is clearly defined as a subject
504 [2026] 5 S.C.R.

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of the licensing obligations of a distribution licensee and not an area
of operation.
25. Notably, under certain sub-delegated legislations issued by the
respective State Commissions, the area of supply is also referred as
the area of distribution. In the context that the terms “distribution” and
“supply” have been used interchangeably save as otherwise provided,
they refer to the salient act of sale of electricity to a consumer. In
context thereof, it appears that the Appellant has taken refuge under
the two terms of ‘distribution installation’ and ‘area of operation’ under
the Railways Act to suggest that it distributes electricity and, hence,
is a DDL under the Electricity Act.
26. Furthermore, the submission of the Appellant that the non-obstante
clause under Section 11 of the Railways shall override the licensing
requirements of the Electricity Act, is premature and untenable. It is
settled that Section 11 of the Railways Act cannot be given a restrictive
meaning, however it cannot be read so expansively as to dispense
with the mandatory licensing framework under Section 12 and 14 of
the Electricity Act. A non-obstante clause operates only in the event
of a direct and irreconcilable inconsistency and cannot function as
a blanket dispensation from the applicability of a subsequent and
special regulatory statutory framework qua a specific subject matter.
This Court in Central Bank of India v. State of Kerala & Ors.9
had clearly opined that the mere introduction of a non-obstante
clause in the legislation is not sufficient to clothe a provision with an
overriding effect, and what must further be established is that the
two provisions are so inconsistent that they cannot stand together.
The Appellant in the present case has failed to demonstrate that
there is a irreconcilable conflict between the Railways Act and the
Electricity Act. There is neither any provision under the Railways Act
that prohibits obtaining a license, nor any provision of the Electricity
Act exempts the railways from being a DDL in terms of section 14.
The Appellant can exercise their operational powers under section
11, while simultaneously comply with the licensing framework under
the Electricity Act. It is a cardinal principle of statutory interpretation
that when two statutes are capable of being read harmoniously, the
judicial endeavour must be to read them together. 10

9 (2009) 4 SCC 94
10 Sri Venkataramana Devaru & Ors. v. State of Mysore & Ors., 1957 SCC OnLine SC 138.
[2026] 5 S.C.R. 505

Indian Railways v. West Bengal State Electricity Distribution
Company Limited & Ors

27. We further deem it appropriate to also clarify that the reliance of the
Appellant on Ganv Bhavancho Ekvott (supra) is misconceived.
The import and independence of section 11 recognised therein
was limited to the exemption to the Railways from procedural
permissions including general environmental clearances, and local
body legislations. The exemption can in no manner be construed
as a blanket immunity from regulatory, procedural and legislative
requirements as noticed in the cited decision itself. The judgment
is distinguishable both on facts, and on the nature of the conflicting
statute, and offers no authority for the proposition that the Appellant
is exempted from the regulatory framework under the Electricity Act.
Additionally, the authority vested in the Appellant to distribute electricity
within its operational domain cannot be said to be unfettered insofar
as it has to meet the fundamental requirements of distribution of
electricity, within the meaning and scope of the Electricity Act. Section
11 on the facts and circumstances of the present case, cannot be
read as a provision of unlimited sweep, and it is therefore incorrect to
contend that Section 11 of the Railways Act operates as an absolute
and unrestricted shield guarding the appellant from its obligations.
28. We are also of the considered view that the omission of the words
“distribution” or “supply” of electricity in Sections 11(g) and (h)
is deliberate and intentional. The legislature while framing these
provisions certainly intended to empower the Appellant solely to
erect and operate a distribution infrastructure necessary for railway
operations. The language clearly confines the purpose of these
installations to the operational use of Railways and does not extend
any authority to the Appellant to undertake a commercial distribution
or supply of electricity, beyond the railway’s internal domain.
29. We further agree with the observation of APTEL and the submissions
made by the Respondents that the reliance of the Appellant on
the decision of General Manager, Northern Railways (supra)
is misplaced. The decision in the said case expressly dealt with
the power of the Railways to construct transmission lines for the
purpose of its operations, and described the expansive scope of
the non-obstante clause under Section 11 of the Railways Act. The
said decision however, did not construe the scope of Section 11 as
being so expansive that it justifies an act that the Railways is not
inherently empowered to do. The erection of transmission lines or
distribution lines as argued by the Appellant, cannot bestow upon
506 [2026] 5 S.C.R.

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the Appellant the authorisation to carry out supply of electricity that
is procured by it, to third party consumers.
30. At this juncture, we deem it appropriate to also observe that the
submission of the Appellant that it is a deemed distribution licensee,
lacks any substantial basis. The statutory regime under the Electricity
Act regulates the commercial supply of electricity to consumer through
a licensed distribution network.
31. The Appellant, operates a closed and self-contained electricity
network which is for the purposes of meeting the operational
requirements of the railway system, including traction, signalling,
stations. It is only when electricity is sold or provided to consumers
outside the operational domain of the railway, that the activities
undertaken by the Appellant could intersect with the obligation of
a distribution licensee.
32. Further, the purpose of a status of a distribution licensee, whether
obtained vide an application or is extended to the entity through a
deemed fiction, is to supply electricity against consideration. The
term ‘consideration’ for distribution licensees with generators would
mean tariff, and as consumers payable to licensees would mean
additional surcharge/Cross-Subsidy Surcharge. In the present case,
the Railways is procuring electricity from the Respondent DISCOMs in
various states for its own use and for consumption to its constituents.
33. The judgment in K.C. Ninan v. Kerala State Electricity Board &
Ors.11 has authoritatively re-iterated that supply of electricity is a
primary and defining function of a distribution licensee. The regulatory
regime under the Indian Electricity Act, 1910 also posed an obligation
on every licensee to supply energy to every person within the area
of supply. Hence, the statutory regime/regulatory regime under
the Electricity Act has been consistent. Additionally, electricity is a
movable good12 under the Sale of Goods Act, 1930. The charges
paid by the consumer to the distribution licensee is essentially the
price paid for goods supplied and consumed. The consumption of
electricity by a consumer is always effected through equipment or
appliances installed within the premises.

11 [2023] 14 SCC 431
12 Commissioner of Sales Tax v. Madhya Pradesh Electricity Board (1961) 1 SCC 200
[2026] 5 S.C.R. 507

Indian Railways v. West Bengal State Electricity Distribution
Company Limited & Ors

34. The tenuous claim of the Appellant is merely based on a thin-iced
assertion that being an entity of the Central Government, the deeming
fiction of an Appropriate Government, as meant to be under the third
proviso to Section 14 of the Electricity Act would ipso facto devolve
upon them without much effort.
35. More-so, the arguments made by the Appellant are more in the
nature of asserting this misplaced notion than being rooted in
the conviction that the activities carried out by it pass muster for
a distribution license in the first place. Hence, the claim of the
Appellant that it is a DDL is not borne from the activities or functions
performed by the railways, but is aimed at the recognition of being
a distribution licensee under the Act, insofar as it is entitled to non-
discriminatory open access from inter-state transmission utilities and
other distribution licensees, without the payment of Cross-Subsidy
Surcharge or additional surcharge.
36. In light thereof, it is pertinent to reflect on the submissions made by
the Appellant whereby it asserts that it is not claiming the right to do
any other activity outside the purpose of the Railways operations or
unconnected with the workings of the Railways, including the right to
supply electricity to third parties beyond the network of Railways or
enter into any business or trade of distributing or using the electricity
outside its area of operation. This stated position, in fact, answers
the controversy, and underscores that the Appellant does not seek
to assume the scope of functions associated with a distribution
licensee. In effect, the Appellant does not seek to assume, nor does
it accept, the role and obligations of a distribution licensee under
the Electricity Act, 2003 and instead selectively relies on such status
only to the extent it is beneficial.
37. This conduct further substantiates the apprehension of the
Respondents that the Appellant’s claim to be treated as a DDL is to
merely circumvent the obligation of payment of the Cross-Subsidy
Surcharge and to evade the corresponding statutory and regulatory
obligations qua a distribution licensee.
Issue No. (ii) Whether the Indian Railways, being an entity of
the Central Government, falls within the ambit of “Appropriate
Government” under section 14 of the Electricity Act, 2003?
38. The Appellant’s claim to be treated as a deemed distribution
licensee under the third proviso to Section 14 of the Electricity Act,
508 [2026] 5 S.C.R.

Supreme Court Reports

2003 hinges upon whether it is squarely covered by the definition
of ‘Appropriate Government’ defined under section 2(5) of the Act,
2003, which reads as under:
“(5) Appropriate Government” means-
(a) the Central Government-
(i) in respect of a generating company wholly or partly
owned by it;
(ii) in relation to any inter-State generation, transmission,
trading or supply of electricity and with respect to any mines,
oil-fields, railways, national highways, airports, telegraphs,
broadcasting stations and any works of defence, dockyard,
nuclear power installations;
(iii) in respect of the National Load Despatch Centre and
Regional Load Despatch Centre;
(iv) in relation to any works or electric installation belong
to it or under its control;
(b) in any other case, the State Government having
jurisdiction under this Act.”
39. The Appellant contends that it is entitled to the status of a deemed
distribution licensee by operation of law, on the ground that it qualifies
as an appropriate Government being an instrumentality of the State
under Article 12 of the Constitution. In contrast, the rival contention
of the Respondent argues that section 2(5) of the Electricity Act
restricts the scope of “Appropriate Government”, and that an entity
can fall within the statutory domain only if it satisfies the conditions
laid down under section 2(5)(a), particularly clause (ii), having regard
to the nature and functions of the entity in question.
40. Before we advert to the functional test, a plain reading of section 2(5)
(a)(ii) makes it evident that the subject of the definition is the Central
Government, and the term “railways” appears only as a relative
reference, and a subject-matter that triggers the application of the
Central Government. Insofar as the provision does not extend that
the Railways itself is the Appropriate Government, it only expands
the scope of the term to include the Central Government in matters
relating to railways.
[2026] 5 S.C.R. 509

Indian Railways v. West Bengal State Electricity Distribution
Company Limited & Ors

41. This distinction at the very outset is critical to the identification of
an entity claiming to be clothed with governmental authority. In
arguendo, if the term “railways” in section 2(5)(a)(ii) were read as
conferring the status of an “Appropriate Government” to the Appellant,
the deeming fiction shall extend to all other authorities mentioned
in the provision including mines, oil-fields, airports, dockyards and
nuclear installations. This clearly does not reflect the legislative
intent of this provision. The categories of functionaries mentioned in
section 2(5)(a)(ii) merely reflect a class of activities, and not stand-
alone entities that can be conferred the status of an “appropriate
Government” for the purposes of the statute.
42. It is also a well-settled principle of law that the mere classification
of an instrumentality or agency as “State” under Article 12 of
the Constitution of India does not automatically render it as an
“Appropriate Government”. This position was authoritatively settled
by this Court in the Steel Authority of India Ltd. & Ors. v. National
Union Waterfront Workers & Ors.13 This Court distilling from its
earlier decisions in Sukhdev Singh & Ors. v. Bhagatram Sardar
Singh Raghuvanshi & Anr.14 and Ajay Hasia & Ors. v. Khalid
Mujib Sehravardi & Ors.15, laid down a functional test holding that
the determinative criterion is whether the industry is carried on under
the authority of the Central Government, and not merely whether the
entity qualifies as “State” under Article 12 of the Constitution. The
relevant extract of the judgment reads as under:
“38.From the above discussion, it follows that the fact of
being an instrumentality of a Central/State Government
or being ‘State’ within the meaning of Article 12 of the
Constitution cannot be determinative of the question as to
whether an industry carried on by a company/corporation
or an instrumentality of the Government is by or under
the authority of the Central Government for the purpose
of or within the meaning of the definition of ‘appropriate
Government’ in the CLRA Act….Further, the definition of
establishment in the CLRA Act takes in it fold purely private

13 (2001) 7 SCC 1
14 (1975) 1 SCC 421
15 (1981) 1 SCC 722
510 [2026] 5 S.C.R.

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undertakings which cannot be brought within the meaning
of Article 12 of the Constitution. In such a case, how is
‘appropriate Government’ determined for the purposes of
the CLRA Act or the Industrial Disputes Act? In our view, the
test which is determinative is: whether the industry carried
on by the establishment in question is under the authority
of the Central Government. Obviously, there cannot be
one test for one part of the definition of ‘establishment’
and another test for another part. Thus, it is clear that
the criterion is whether an undertaking/instrumentality of
the Government and not whether the undertaking is an
instrumentality or agency of the Government for purposes
of Article 12 of the Constitution, be it of the Central
Government or the State Government.”
43. Upon applying the aforesaid test, it is evident that the Appellant
operates as a functionary of the Central Government. Although, the
mention of ‘railways’ in Para 38 of the Court in SAIL (supra) is cursory
and illustrative in nature, the statutory scheme of the Railways Act
and the Statement of Objects and Reason thereunder confirm that the
entire railway system has become part of the Government of India.
The Railway Board constituted under the Act, functions as an extended
arm of the Central Government, with the powers delegated to it by
the Government itself. It is no doubt that the Central Government
has an authoritative control over the Railways.
44. A fortiori, the Central Government exercises control over the Appellant
insofar as the electric installations comprising traction sub-stations,
the overheard catenary systems, high voltage transmission lines,
the 25 kV and 1.5 kV alternating current systems etc., are owned
by the Central Government. The construction and maintenance work
of these equipments are carried out from public funds appropriated
by the Parliament from the Consolidated Fund of India.
45. It is thus evident that the nominal, pervasive, administrative as well
as fiscal control of the Appellant lies in the clutches of the Central
Government. The submission of the Respondents to draw a distinction
between the ‘Central Government’ and ‘railway administration’
is therefore untenable, as such a distinction does not dilute the
overarching control exercised by the Central Government and borders
on technicality.
[2026] 5 S.C.R. 511

Indian Railways v. West Bengal State Electricity Distribution
Company Limited & Ors

46. We agree with the observation made by APTEL that the submission
urged on behalf of the Respondent merits rejection. However, we
cannot assert enough that even if the Appellant is held as falling
within the ambit of Appropriate Government, under section 2(5)(a),
the benefit of being treated as a deemed distribution licensee cannot
be extended to it. The scheme of the Electricity Act makes it clear
that a distribution licensee is under the statutory obligation to supply
electricity to its consumers within its area of supply.
47. Notably, the Appellant’s electrical infrastructure including traction sub-
stations, overhead catenary systems, and 25kV alternating current
systems, exists entirely for captive self-consumption for traction
purposes and not for supply to third party consumers. The case of the
Appellant cannot be held in equivalence with the Military Engineering
Services (MES) which is a recognized deemed distribution licensee
and equally operates under the authority of the Central Government
as much as the Appellant. The distinction between the two entities
is apparent such that MES supplies electricity to consumers which
include residents, personnel and establishment within the defined
cantonment and defense areas, unlike the Appellant. As a matter of
fact, it is the own admission on behalf of the Appellant that it is not
claiming the right to give supply or provide electricity to third parties
unconnected with the working of the railways or outside the area
of operation of the Railways or enter into any business or trade of
distributing electricity or using electricity outside its area of operations.
48. Therefore, the deemed status attached to the MES is not by virtue
of it being a government entity, but it is a governmental entity that
actually performs the function of distribution within the meaning and
scope of the Electricity Act. It is apparent on the face of record that
the Appellant has no such analogous relationship with any consumer,
and its claim to the deemed distribution licensee status fails at the
very threshold.
49. At this juncture, we deem it appropriate to clarify that the Letters
dated 06.05.2014 and 03.04.2023 issued by the Ministry of Power,
are not authoritative in nature, and carry no binding legal force. They
are no more than executive communications that neither amend nor
override the statutory provisions under the Act, and certainly cannot
be relied upon to confer or negate jurisdiction. It is rather unfortunate
that the Appellant has pursued this lis for over 10 years based
512 [2026] 5 S.C.R.

Supreme Court Reports

solely on the tenuous claim that, as a Central Government entity, it
automatically qualifies as the “Appropriate Government” under the
third proviso to section 14 of the Electricity Act. This argument is
more a reliance on a misplaced notion than a demonstration that
the Appellant’s activities satisfy the criteria for a distribution licensee.
50. For the reasons mentioned hereinabove and for the limited purpose
of this analysis, the Appellant is regarded as falling within the
ambit of “Appropriate Government” under section 2(5)(a) of the
Act, but the observation carries no determinative consequence for
the relief sought by the Appellant. Nominal virtue, however firmly
established, cannot substitute for the substantive functions that the
statute demands.
Issue No. (iii) Whether the Indian Railways, even if held to be a
deemed distribution licensee under the Act, is exempt from the
obligation to pay Cross-Subsidy Surcharge or Additional Surcharge
for the grant of non-discriminatory open access as per section 42
of the Act?
51. Section 42 of the Electricity Act mandates the distribution licensees
to develop and maintain an efficient, co-ordinated and economical
distribution system in the area of supply, and to supply electricity to
any consumer, who demands it. To foster competition and consumer
choice, the Electricity Act enables consumers to procure electricity
either from the distribution licensee in their area of supply or from
alternative sources through open access. Section 2(47) defines
“open access” as follows:
“(47) “open access” means the non-discriminatory provision
for the use of transmission lines or distribution system
or associated facilities with such lines or system by any
licensee or consumer or a person engaged in generation
in accordance with the regulations specified by the
Appropriate Commission”
52. Where any consumer avails electricity through open access, two
distinct surcharges arise under the Electricity Act. Section 42(2)
levies a Cross-Subsidy Surcharge to meet the requirements of the
current level of cross-subsidy within the area of supply, while section
42(4) levies an Additional Surcharge to meet the fixed costs of the
distribution licensee arising out of its obligation to supply.
[2026] 5 S.C.R. 513

Indian Railways v. West Bengal State Electricity Distribution
Company Limited & Ors

53. Distribution licensees are mandated, as a matter of social policy,
to supply electricity at concessional tariffs to certain categories of
consumers, such as agricultural users and low-income households.
These subsidised tariffs ensure equitable access to electricity, which
is essential to the very existence of citizens, as held in Anuj Kumar
Agarwal v. Registrar of Cooperative Societies & Ors.16
54. Cross-Subsidy Surcharge is levied on open-access consumers to
off-set the revenue shortfall experienced by distribution licensees
in providing these subsidised tariffs. Thereby, the financial burden
is equitably shared across different consumer categories instead of
burdening the existing consumer base. Additional Surcharge operates
on a distinct footing and is levied to mitigate the potential financial
losses incurred by distribution licensees due to stranded costs. When
high-volume, high-revenue consumers such as the Indian Railways
choose to procure electricity through open-access, distribution
licensees may be left with underutilised infrastructure and power
purchase commitments, leading to financial strain. The National Tariff
Policy, 2016 specifically provides that Additional Surcharge becomes
applicable only upon the conclusive demonstration that a licensee’s
existing power purchase obligations in the capacity of a licensee, has
generated precisely such stranded costs for the distribution licensees
in whose areas its traction installations are located.
55. Thus, the Cross-Subsidy Surcharge and the Additional Surcharge are
critical for maintaining the financial health and operational capacity of
the distribution sector, enabling it to invest in infrastructure upgrades,
ensure reliable service, and continue to meet its obligations to all
consumer categories.
56. The rationale underlying Cross-Subsidy Surcharge and Additional
Surcharge has been authoritatively articulated in Sesa Sterlite as
follows:
“(3) Cross-Subsidy Surcharge (CSS)—Its rationale
27. The issue of open access surcharge is very crucial
and implementation of the provision of open access
depends on judicious determination of surcharge by the

16 2024 SCC OnLine Del 5087
514 [2026] 5 S.C.R.

Supreme Court Reports

State Commissions. There are two aspects to the concept
of surcharge — one, the cross-subsidy surcharge i.e.
the surcharge meant to take care of the requirements of
current levels of cross-subsidy, and the other, the additional
surcharge to meet the fixed cost of the distribution licensee
arising out of his obligation to supply. The presumption,
normally is that generally the bulk consumers would
avail of open access, who also pay at relatively higher
rates. As such, their exit would necessarily have adverse
effect on the finances of the existing licensee, primarily
on two counts — one, on its ability to cross-subsidise
the vulnerable sections of society and the other, in terms
of recovery of the fixed cost such licensee might have
incurred as part of his obligation to supply electricity to that
consumer on demand (stranded costs). The mechanism of
surcharge is meant to compensate the licensee for both
these aspects.
28. Through this provision of open access, the law thus
balances the right of the consumers to procure power from
a source of his choice and the legitimate claims/interests
of the existing licensees. Apart from ensuring freedom to
the consumers, the provision of open access is expected
to encourage competition amongst the suppliers and also
to put pressure on the existing utilities to improve their
performance in terms of quality and price of supply so as
to ensure that the consumers do not go out of their fold
to get supply from some other source.
29. With this open access policy, the consumer is
given a choice to take electricity from any distribution
licensee. However, at the same time the Act makes
provision of surcharge for taking care of the current level
of cross-subsidy. Thus, the State Electricity Regulatory
Commissions are authorised to frame open access in
distribution in phases with surcharge for:
4. (vi)(a) current level of cross-subsidy to be gradually
phased out along with cross-subsidies; and
(b) obligation to supply.”
[2026] 5 S.C.R. 515

Indian Railways v. West Bengal State Electricity Distribution
Company Limited & Ors

30. Therefore, in the aforesaid circumstances though CSS
is payable by the consumer to the distribution licensee of
the area in question when it decides not to take supply
from that company but to avail it from another distribution
licensee. In a nutshell, CSS is a compensation to the
distribution licensee irrespective of the fact whether its
line is used or not, in view of the fact that, but for the
open access the consumer would pay tariff applicable for
supply which would include an element of cross-subsidy
surcharge on certain other categories of consumers.
What is important is that a consumer situated in an area
is bound to contribute to subsidising a low end consumer
if he falls in the category of subsidising consumer. Once
a cross-subsidy surcharge is fixed for an area it is liable
to be paid and such payment will be used for meeting the
current levels of cross-subsidy within the area. A fortiori,
even a licensee which purchases electricity for its own
consumption either through a “dedicated transmission line”
or through “open access” would be liable to pay cross-
subsidy surcharge under the Act. Thus, cross-subsidy
surcharge, broadly speaking, is the charge payable by
a consumer who opt to avail power supply through open
access from someone other than such distribution licensee
in whose area it is situated. Such surcharge is meant to
compensate such distribution licensee from the loss of
cross-subsidy that such distribution licensee would suffer
by reason of the consumer taking supply from someone
other than such distribution licensee.”
57. The legal chain that flows from the foregoing is direct and clear. As
established in Issues (i) and (ii), the Appellant is a consumer within the
meaning and scope of section 2(15) of the Electricity Act. It purchases
electricity exclusively for its own use and supplies it to no one but
its own constituents. Thus, like any other consumer, Cross-Subsidy
Surcharge and Additional Surcharge are applicable to the Appellant.
58. In arguendo, even if the Railways is treated as a deemed distribution
licensee (DDL), its procurement of electricity through open access
exclusively for its own consumption renders it a consumer for that
purpose. Sesa Sterlite adopted a functionality test and held that
an entity which has been accorded the status of a DDL, but which
516 [2026] 5 S.C.R.

Supreme Court Reports

utilises the entire quantum of electricity for its own consumption and
does not have any customers, could not be a distribution licensee
under the Electricity Act and would itself be a consumer. Thus, a
functionality test was adopted, and the operations of a distribution
licensee as a consumer were recognised. Accordingly, such an
entity, like the Railways in the present case, would be liable to pay
Cross-Subsidy Surcharge and Additional Surcharge if it procures
electricity through open access.
59. The Appellant cannot escape this conclusion by inverting the argument
and contending that as a deemed distribution licensee, it is free from
any payment obligations applicable to any consumer. In this respect,
the Appellant is claiming a privileged treatment as compared to other
consumers, which is impermissible in law.
Issue No. (iv) Whether a proposed legislation may be relied upon as
an aid to statutory interpretation for addressing gaps in the existing
framework, and to give effect to the parliamentary intent to remedy
defects thereunder?
60. The use of legislative history as an aid to statutory construction is
no longer res integra17. This Court, in a catena of decisions has held
that in understanding the legislative intent and scheme of a statute,
recourse to legislative material is permissible. In the present case,
reliance is placed on a legislative proposal which seeks to substantially
alter the statutory scheme of the Electricity Act. We are conscious
that a legislative proposal does not have a binding force on the
interpretation of the existing statute, but a careful perusal of the
proposed enactment may aid in resolving apparent incongruencies
and identifying perceived gaps in the existing framework.
61. In the present case, the legislative history of the Electricity Act reflects
that previous proposals in 2014 and 2018 had sought to confer the
statutory status of a licensee in favour of the Appellant, seeking
to save it from the binding statutory obligations of paying Cross-
Subsidy Surcharge and additional surcharge. Insofar as, Section 9
of the Electricity (Amendment) Bill, 2014 sought to clarify that the
Railways shall be a DDL by adding the following proviso after the
present third proviso to Section 14:

17 Kalpana Mehta v. Union of India (2018) 7 SCC 1
[2026] 5 S.C.R. 517

Indian Railways v. West Bengal State Electricity Distribution
Company Limited & Ors

“Provided also that the Railways as defined under the Indian
Railways Act and the Metro Rail Corporation established
under the Metro Railways (Operation and Maintenance)
Act, 2002 be deemed to be a licensee under this Act, and
shall not be required to obtain a licence under this Act”
Be that as it may, this provision of the 2014 Amendment Bill was
rejected and not passed by the Parliament, showing the legislative
intent that the Railways does not constitute a licensee in terms of
Section 14 of the Electricity Act.
62. The Respondents’ DISCOMS brought our attention to the Fourth
Report of the Standing Committee on Energy dated 07.05.2015, which
recorded the unequivocal admission by the Appellant that it is not a
DDL under the scheme of the Electricity Act. APTEL had also placed
reliance on the 31st Report of the Parliamentary Standing Committee,
which recorded that the Appellant had sought exemption from the
obligations of distribution licensees under Section 12, 42, and 47 of
the Electricity Act. The request for exemption from the applicability
of the Electricity Act was neither acceded to by the Parliamentary
Standing Committee nor accepted by the Parliament.
63. The latest Draft Electricity (Amendment) Bill, 2025, particularly seeks
to amend Section 61(g) of the existing statutory regime under the Act,
to progressively reduce and ultimately eliminate the Cross-Subsidy
Surcharge and Additional Surcharge for the Appellant.. The proposed
provision under Section 12 reads as under:
“(g) that the tariff reflects the cost of supply of electricity
and also, progressively reduces cross-subsidies in the
manner specified by the Appropriate Commission;
Provided that cross-subsidy with respect to Railways,
Metro Railways and Manufacturing Enterprises shall
be fully eliminated within five years from the date of
commencement of the Electricity (Amendment) Act, 2025.”
64. The Explanatory Note on the proposed Amendment Bill makes a
specific mention that the Indian Railways and metro/monorail systems
are currently burdened by cross-subsidies and surcharges, and
proposes to exempt the Appellant from cross-subsidy within five years.
A bare reading of the Note confirms that under the extant regime,
the Appellant is treated like any other consumer. It reads as under:
518 [2026] 5 S.C.R.

Supreme Court Reports

“2.2. Reducing Logistics and Mass Transit Cost: Electricity
tariffs for Indian Railways and Metro/Mono Rail systems
are currently burdened by cross-subsidies and surcharges,
which increase costs of transporting goods and people.
These higher costs ultimately raise the price of goods and
services across the economy. To alleviate this burden, it is
proposed to exempt Manufacturing Enterprises, Railways,
and Metro Railways from cross-subsidy within five years.
This measure will help lower transport and logistics costs,
improve efficiency, and enhance India’s competitiveness
in global markets.”
Further, the Comparative Statement to the Draft Electricity
(Amendment) Bill, 2025, in contrast with the current Act as it stands,
states the following:
“13. Cross Subsidy and Surcharges on manufacturing
and clean/public transport: State Commissions impose
substantial cross-subsidies and surcharges on industrial
consumers. Industrial electricity tariffs in India remain
considerably higher than those in developed countries
such as the United States and emerging economies
like China, Vietnam, and Indonesia. This practice
significantly undermines the global competitiveness
of Indian manufacturers by inflating electricity costs.
Elevated electricity costs not only hinder industrial growth
but also stunt employment generation, and deter foreign
investments. Simultaneously, there is a need to create
significant number of job opportunities in the manufacturing
sector. Micro, Small, and Medium Enterprises (MSMEs)
have a high job creation potential in the manufacturing
sector. Reducing industrial electricity tariffs can significantly
accelerate the growth of the manufacturing sector MSMEs
and enable absorption of the large agricultural workforce.
Access to affordable power would lower production
costs, enhance competitiveness of Indian manufactured
goods, and facilitate their scale-up from micro to small or
medium enterprises. This, in turn, would strengthen their
contribution to employment generation and gross value
added (GVA), supporting the national goal of achieving
“Viksit Bharat @ 2047”. Addressing the high industrial tariff
[2026] 5 S.C.R. 519

Indian Railways v. West Bengal State Electricity Distribution
Company Limited & Ors

handicap is crucial to enhancing India’s global industrial
competitiveness, and driving economic growth. The
logistics cost in India constitutes nearly 14 percent of GDP
as opposed to about 8 percent in most major economies.
There is a need to reduce this cost in line with the National
Logistics Policy and make Indian industry cost competitive.
Despite being energy efficient and running on electricity,
Indian Railways and Metro/Mono rail systems across the
country are subjected to elevated electricity tariffs owing
to the imposition of cross-subsidies and surcharges. This
does not align with the goal of electrifying the transport
sector as part of India’s energy transition and increasing
the rate of energy efficiency improvement. The higher
tariffs result in higher transportation and logistics costs
besides discouraging goods and passenger modal shifts.
Public transport costs, particularly in urban and semi-urban
areas, impact the wage rates and standards of living of
working classes. The proposed amendment seeks to
address these challenges by exempting Indian Railways,
Metro rail and manufacturing industries, from payment of
cross-subsidy and surcharges, not later than five years.
This reform aligns with the vision of “Viksit Bharat @ 2047”.
It will help in fostering industrial expansion, attracting
investments, and generating employment opportunities.
It reduces the transport costs for urban commuters and
promotes sustainable economic growth.”
65. On a prima-facie view itself, the nature of the proposed amendment
under the Draft Electricity (Amendment) Bill, 2025 is remedial in
nature. The language used is clear and simple, to address the
existing burden of Cross-Subsidy Surcharge payable by the Appellant
by exempting them from payment of cross-subsidy and surcharges,
within the next five years. By this very objective, an inference can
be made that there was a gap or deficiency that needed to be filled
by legislative action and the shift in the statutory regime would not
have been warranted if the existing statute already provided for
such exemption.
66. As already dealt with hereinabove, it is clear that the Appellant is
a consumer and that it procures electricity for its own consumption
and use. In terms of the Act, open access shall be granted by the
520 [2026] 5 S.C.R.

Supreme Court Reports

distribution licensee subject to the payment of cross-subsidy and
surcharges as decided by the appropriate Commission.
67. This Court, in Vodafone International Holdings BV v. Union of
India & Anr.18, had held that a legislative proposal introducing a
specific provision or exemption is indicative that such provision,
exemption, or privilege was not covered by the existing framework.
In the present case as well, the very fact that such legislative actions
to exempt the Appellant from payment of Cross-Subsidy Surcharges
have been proposed to be taken, indicate a coherent, consistent,
and current legislative intent about the absence of such exemption
under the prevailing statute. This absence further implies that even
by adopting a purposive construction to the prevailing statute, such
an exemption cannot be read into the statute.
68. It was urged by the Appellant that since the proposed amendment
grants an exemption from payment of Cross-Subsidy Surcharge and
AS, the same should be read into a liberal and purposive interpretation
in its favour. Otherwise, an interpretation to impose Cross-Subsidy
Surcharge and Additional Surcharge under the current regime would
render the proposed amendment otiose. We are unable to accept
this approach.
69. It is a settled canon of statutory interpretation that a legislative casus
omissus cannot be supplied by a judicial interpretative process. Be
that as it may, the proposed legislative framework in the present
case explicates that the legislative intent of the Parliament under the
Electricity Act was not to exempt the Appellant from the obligations
under the Electricity Act. More so, it puts the controversy to rest as
the Appellant, procuring electricity for its own use and consumption,
is an industrial consumer and for availing open access, it is liable
to pay Cross-Subsidy Surcharge and additional surcharge, like any
other consumer.
70. Although we are conscious that the proposed legislation is only a
draft amendment bill which has not been enacted by the Parliament,
and lacks any force of law as of today, reliance thereupon has been
crucial to determine the legislative intent of the Government. Further,
the Appellant stands bound by the principle of estoppel. Being an

18 (2012) 6 SCC 757
[2026] 5 S.C.R. 521

Indian Railways v. West Bengal State Electricity Distribution
Company Limited & Ors

entity of the Central Government, the Appellant cannot be permitted
to approbate and reprobate or blow hot and cold, by advancing
contentions contrary to the position adopted under the proposed
statutory scheme.

CONCLUSION
71. It is clear, for the reasons elaborated hereinabove, that the Appellant
does not pass muster as a deemed distribution licensee under the
Act, and it can in no circumstances escape the liability from payment
of cross-subsidy surcharge and additional surcharge as a consumer
of electricity through open access.
72. The Respondents are accordingly directed to compute and issue a
detailed calculation of the Cross-Subsidy Surcharge and Additional
Surcharge amounts outstanding qua the Appellant, disaggregated
by the area of supply and the period of availing such open access.
The Appellant shall be afforded a reasonable opportunity to respond
to the said calculations, and be granted time to furnish and respond
to such outstanding amount at the discretion of the respective
distribution licensees/companies, subject to the judicial scrutiny of
the Appropriate Commission. Ordered accordingly.
73. Consequently, all the Appeals are dismissed and the common
judgment and order dated 12.02.2024 passed by the Appellate
Tribunal for Electricity at New Delhi (“APTEL”) in Appeal Nos.
276/2015, 320/2018, 114/2020, 73/2021, 213/2021, 170/2019,
343/2019 and 133/2020 is upheld. Pending application(s), if any,
shall also stand disposed of.
74. No order as to costs.

Result of the case: Appeals dismissed.

†
Headnotes prepared by: Ankit Gyan