Holding

Tata Power Company Ltd is entitled to supply electricity directly to retail consumers with demand below 1000 kVA within its licensed area, subject to the constraints in Clause 5 of its licences.

Summary

The dispute arose when Reliance Energy (formerly BSES) alleged that Tata Power Company (TPC) was encroaching on its distribution area by supplying electricity directly to retail consumers, contrary to licence terms and government policy. The Maharashtra Electricity Regulatory Commission (MERC) initially held that TPC’s licences might permit such supply but directed a study on competition and restrained TPC from new connections below 1000 kVA. Both parties appealed; the Appellate Tribunal for Electricity concluded that TPC could only make bulk supplies to other licencees and not retail supply. The Supreme Court examined the historic licences (1907, 1919, 1921, 1953) and their amendments, finding that they expressly allowed TPC to sell electricity directly to consumers whose maximum demand is less than 1000 kVA, subject to specific lighting‑use limits. The Court held that MERC had exceeded its jurisdiction by creating a “level‑playing‑field” case not raised by BSES and that the Tribunal mis‑interpreted the licence provisions. Consequently, the orders of MERC and the Appellate Tribunal were set aside and the appeals were allowed. The decision affirms competition‑friendly provisions of the Electricity Acts and the 2003 Act, permitting multiple distributors in the same area.

Issues considered

Whether Tata Power’s licences entitle it to supply electricity directly to retail consumers within the area of supply of Reliance Energy.
Whether the restrictions in Clause 5 of the licences limit Tata Power to bulk supplies only.
Whether MERC had jurisdiction to impose a ‘level‑playing‑field’ requirement not sought by the petitioner.

Legislation cited

Electricity Act, 1910
Electricity Act, 2003s. 14, s. 42, s. 60, s. 79(2)(B)
Electricity Regulatory Commissions Act, 1998
Electricity (Supply) Act, 1948

Subjects

electricity licenceretail supplybulk supplycompetitionopen accesselectricity regulationconsumer choicelicence interpretation

Judgment

[2008] 10 S.C.R. 293

TA,WER C~MPANY LIMITED A

RELi ENERGY LIMITED & ORS.
(Civi Appeal. No.2898 of 2006)
JULY 8, 2008
I·~ B
[ASHOK BHAN AND ALTAMAS KABIR, JJ]

ELECTRICITY
'
Licence to sell, supply and distribute electricity to other ·
distribution licensees and direct consumers of electricity - C
Licensee supplying electricity also to consumers directly -
Complaint by distribution licensee that the first licensee was
not entitled to supply electricity directly to retail consumers
falling within its area of supply - Held: under the terms and
conditions of the licences held by the first licensee, it is en- D
titled to effect supply of electrical energy in retail directly to
consumers whose demand is Jess than 1000 KVA apart from·
its entitlement to supply energy to other licensees for their ·
own purpose and in bulk within its area of supply, subject to·:-
the constraints indicat!;d in sub-clause(/) of Clause 5 of the E
licences - The Electricity Acts encourage competition in elec-
tricity trade and the same is incorporated in the licences is-
sued to distribution licensees - Electricity Act 1910, Electricity
(Supply) Act, 1948 and Electricity Act, 2003 - s. 42. ~- ·

The predecessor-in-interest of the respondent(REL), F
namely, BSES, filed a petition before the Maharashtra Elec-
tricity Regulatory Commission(MERC) complaining_ of en-
croachment by the appellant(TPC) within its area of sup-
ply. Its case before the MERC was that supply of elec-
tricity by the appellant directly to retail consumers was G
contrary to the provisions of the Indian Electricity Act,
1910, the Electricity(Supply) Act, 1948, the policy con-
tained in the Schedule to the 1948 Act, as also the Gov-
ernment Policy. The case of the appellant was that un-
293 H
294 SUPREME COURT REPORTS [2008] 10 S.C.R.

A der the licences of 1907, 1919 and 19:2(granted to the
companies predecessors-in-interest • .h~ ·appellant and
the 1953 licence granted to the appe ·t, it was entitled ..
to sell, supply and distribute electricity not only to other J
distribution licensees, such as the respondent, but also
B to direct consumers of electricity.
The MERC though held that the terms and condi-
tions of the licences of the appellant would give it an un-
fettered right to supply electricity to all ·or any consumer
in the BSES' area of supply, it directed the parties to file
C the terms of ·reference to engage ·a c.onsultancy firm to
study the· issues relating to ss.42 and 14·of the Electricity
Act, 2003 and that the report of the said consultancy firm
would be implemented as per the Commission's Regula-
"tions. Both the parties filed appeals before the Appellate L
.
i
D •tribunal, which he.Id that the appellant was not granted
licence to undertake retail distribution of electricity in the, r
.'
;-
area with.in which the respondent was distributing power
in retaff to consumers directly and that the appellant could ·
~undertake only bulk supplies to licensees such as the re-
E spondenf. Aggrieved, the TPC and two consumers filed
·the 'instant appeals.
The question for consideration before the Court
was: whether TPC was entitled under the licences granted
to 'it'to effect distribution of electricity directly to consum-
F ers. within the area of supply indicated in the licences
granted to BSES /REL.
Allowing the appeals, the. Court
HELD: 1.1. Under-the terms and conditions of the
G licences held by TPC, it is entitled to effect supply of elec-
trical energy in retail directly to co'nsumers, whose maxi- )'
mum demand is less than 1000 KVA, apart from its en-
titlement to supply energy to other licensees for their own
purposes and in bulk, within its area of supply as stipu-
H lated in its l~cences and also subject to the constraints
11
TATA POWER COMPANY LTD'. v. RELIANCE 295
ENERGY LTD. & ORS.

indicated in sub-clause (I) of Clause 5 of the licences in rela- A
tion to factories ai;id the Railways. [para 78] [331-8,C, D]
1.2 ..Clause 5 of the 1919, 1921 and 1953 Licences
held by TPC indicates the purpose of supply and is di-
vided into two parts - (i) for power and (ii) for lighting and
general purposes, other than power. Sub-clause (I) deals 8
with supply to licensees for their own purposes and in
bulk. Sub-clause (II) provides for supply of electricity for
lighting and general purposes, other than power, includ-
ing the supply of energy in bulk to other licensees for dis-
tribution by them. Sub-clause (II) is followed by an Expla- C
nation to both Sub-clause (I) and Sub-clause (II) of Clause
5. It has been clarified that the energy supply to any con-
sumer for power, that is, under Sub-clause (I}, could be
used by such consumer for lighting his premises to a
_J
maximum amount of 20% of the total energy supplied to D
such consumer, and it has also been stipulated that TPC
would not supply energy for lighting purposes referred
to in Sub-clause (II) except by agreement with Bombay
Electric Supply and Tramways Company Limited. [para
74] [329-8,C,D,E,F] E
2.1. MERC, having once held on the principal issue
that TPC was entitled to supply electrical energy to all con-
sumers under the licences granted to it, should have re-
strained itself from unilaterally making out a third case
regarding establishment of a level playing field when such F
a case had neither been made out nor any relief in that
regard had been prayed for by BSES. [para 71] [327-A,B]
2.2. MERC also lost sight of the fact that the first three
licences had been granted to TPC long before a separate G
licence was granted in favour of BSES. From the materi-
"' als on record it stands amply proved that TPC had all
along been supplying electrical energy directly even to
retail customers, whose maximum demand was less than
1000 KVA, within the area which later came to be included H
296 SUPREME COURT REPORTS [2008] 10 S.C.R.

('

A in BSES and subsequently REL's area of supply, and no
objection thereto was raised by either BSES or REL till
the year 1998 when TPC submitted its proposal for do-
mestic tariff for approval to the Board. It was only there-
after that REL raised objection in the form of its petition
B to MERC under Sections 22(2)(e)and (n) of the ERC Act
1998. [para 72 and 73] [327-B; 328-E,F]
3.1. The Appellate Tribunal, in dealing with the ap-
peals filed both by REL .and TPC, misinterpreted the pro-
visions of the licences granted to TPC for supply and dis-
c tribution of electrical energy. The Tribunal ignored not
only the situation prior to 1926 when BSES was granted
licence but also the subsequent. amendments to the. li-
cences held by TPC whereby Clause 5 of the 1919 and ·
1921 licences were altered to permit it to supply electrical
L
D energy for lighting and general purposes, other than power,
and including the supply of energy in bulk to other .licens- .
ees for distribution by them. [para 73] [327-F,G, 328-A]
3.2. The Appellate Tribunal also overlooked the or-
E der passed by the Industries Energy and Labour Depart-
ment of the Government of Maharashtra on 7 .12.1978,
whereby from 1.7.1980 TPC was required .to transfer to
the Maharashtra. State Electricity Board its distribution
.
'
1:

rights under the 1907 licence and assets pertaining
thereto as set out in part 2 of the Annexure to the said
i
F . licence. The Tribunal also overlooked the fact that by vir-
tue of tile aforesaid arrangements, Clause 6 of the 1907 li-
cence relating to "purpose of supply" was also amended to
bring it in parity with the amendments to the First Annexure
to the 1919 and 1921 licences. [para 73] [328-A,B, C]
G
4.1. It is no doubt true that Section 42 of the Electric-
ity Act, 2003 empowers the State Commission to intro-
duce a system of open access within one year of the ap-
pointed date fixed by it and· in specifying the extent of
H open access in successive phases and in determining
TATA POWER COMPA~Y LTD. v. RELIANCE 297
ENERGY LTD. & ORS.

the charges for wheeling having due regard to the rel- A
evant factors. The concept of wheeling has been intro-
duced in the 2003 Act to enable distribution licensees
. who '

are yet to instal their distribution line to supply electricity
directly to retail consumers, subject to payment of surr
charge in addition to the charges for wheeling as the State s
Commission may determine. [para 75] [329-G, 330-A,B,C]
4.2. Tbe provisions of both the 1903 and 1910 Elec~
tricity Acts encourage competition. in. the electricity trade
and the same is also incorpo-rated in the licences issued
in favour of the distribution licensees, which also incJude C
licencees generating power for supply. The element of
competition has been included in the Preamble to the
2003 Act arid permeates its.various provisions. The Act is'
meant to be consumer-friendly and one of the objectives
it sets out to achieve .is to .give the consumer an option to D
choose the distribution licensee from whom it wishes to
receive supply of electrical energy; The intervention of the
two consumers and the appeals filed by them obviously
are in that context. [para 76] [330-D,E,F,G]
5. MERC overstepped its jurisdiction in making out a E
third case ~hich had not been made out by BSES and had
on the basis thereof issued orders which had not even been
prayed for by BSES. The Appellate Tribunal erred in coming ·
to a finding that under its licences TPC was entitled to sup-
ply energy only in bulk and not for general purposes and in F
. retail to all consumers, irrespective of their demand, except
for those consumers indicated in Sub-clause (I) of clause 5
of the several licenses held by TPC. The orders passed both
by MERC and the Appellate Tribunal for Electricity are·
quashed. [Para 77 and 78] [330-G-331-A,8] G
... 'I
CIVILAPPELLATE JURISDICTION: Civil Appeal No. 2898
of 2006
From the Judgment and Order dated 22/5/2006 of the
Appellate Tribunal for Electricity, New Delhi in Appeal No~./ 31 H
298 SUPREME COURT REPORTS [2.00e] 10 S.C.R.

A and 43 of 2005
WITH
C.A. Nos. 3466 and 3467 of 2006 .... ) ,
·,
·Iqbal Chagla, Janak Dwarkadas, Darius Khambata; K.K;
8 Venugopal, J.J. Bhatt, Shrikant Doijod.e·, Ruby Singh Ahuja,
Prachi Goel, Sonia Nigam (for Manik Karanjawala), Jay.Savla.;
Reena Bagga (for Rakhi R~y), Anjali Chandurkar, Smieetaa
Inna, Haripriya '(for Rajesh Kumar), Sushi! ka'ranjakar (for
Ravindra Keshavrao Adsure), Parekh & Co. and A.P. Mayee·
C forJhe Appearing Parties. · ·-
~ ' ,.

. The Judgment-of the. Court was delivered by
AL,TAMAS'KABIR,J. 1. As these.three appeals arise.'out
of a comn:ion judgment of the Appellate tribunal for ·El.ectrlcity,
D tlJey w~re taken up for final hearing ·together. · ·· · ··
' i • ' ' - , ... ~ - ' :•. - - .

2. The genesis of these thr.ee appeals is .a -petition filed by
Mis BSES·Limited on 23.7.2002 before the Maharashtra Elec-
tr:icity Regulatory Commission· (hereina.Uer referred to as·
E 'MERC'), under Section 22(2)(e) and (n}of the Electricity. Regu-
. latory Commissions Act, 1998 (hereinafter referred t9 as 'the
: ERG Act'), cciniplaining of allegedencroachmen_t by Tata Pow~r
Compa_ny Limited (hereinafter referred to as 'TPC') within it~·
area of supply.. _ In the said applic~tl~n Mb{BSES; inter: a!ia,
prayed fo.r the following' ·~elie{s: ·'· · · · · · ,
F.. , ... _.. ,· 7· f'

a) That Tata Power Company Limited be ~estrained
fromin any manner selling; supplying and distributing·
electricity to the consumers situated within the area
~·
.of
--i•-) ""\
supply
.,r. of BSES in contravention
~' r ,....tJ
of the terms arid
I~ f

· · - ·conditions of their licenses and the poli'cy of the
l_"'I j..'}. :" . I

Government of Maharashtra.
{._· ·.b) That· TPC be ordered· to pay BSES or to the
Government of Maharashtra all profits and gains
made· from January 1998 until TPC discontinued sale
M-1 of energy to such consumers, i.e:situated in BSES's
TATA POWER COMPANY LTD. v. RELIANCE 299
ENERGY LTD. & ORS. [AlTAMAS KABIR,J.]

licensed area of supply and having energy A
requirement below 1000 KVA (maximum demand)
and/or with lighting consumption exceeding 20 per
cent of 'the total;
.'. ~

c) That, pending the disposal of the petition TPC be
restrained in terms of the prayer at (a) above and B
from offering new connections to any entities for sale,
supply or distribution of electricity in BSES's licensed
area of supply, with energy requirement below 1000
KVA (maximum demand) and/or with lighting
consumption exceeding 20 per cent of the total. C
3. From the materials on record it appears that the princi-
pal question which fell for the decision of MERC was whether
TPC was·entitled under the licences granted to it to effect dis-
J tribution of electricity directly to customers within the area of D
supply indicated in the licences granted to BSES.
4. In order to appreciate the circumstances giving rise to
the above dispute, it is necessary to set out some of the facts
as also the terms and conditions of the licences granted to the
contesting ·parties for distribution of electricity within Bombay E
city and its suburbs. ·
5. At the relevant time TPC was holding four licences for
th.e aforesaid purposes, as described hereinbelow:
.. i) The 190? Licence- Commonly known as the Bombay F'
(Hydro-electric) Licence, which was originally granted
on 5.3.1907 to Dorabji J. Tata and Ratanji J. Tata;
ii) 1919 Licence - Known as the Andhra Valley (Hydro-
electric) Licence, which was issued on 3.4.1919 in
favour of the Tata Hydro Electricity Supply Company G
r ltd.;
iii) The 1921 L'icence - Known as Nila Mula Valley
Licence, which was issued on 15.11.1921 in favour
of Tata Power; and .,
H
300 SUPREME COURT REPORTS [2008] 10 S.C.R.

A iv) The 1953 Licence - Known as Trombay Thermal
·- Power Electric Licence Which was issued on
19.11.1953 in favour of the Tata (Hydro-Electric)
Power Supply Company Limited, the Andhra Valley
Power Supply Company and Tata Power.
B 6. Consequent upon amalgamation of the Tata Hydro-Elec.:.
tric Power Supply Company Limited and the Andhra Valley
Power Supply Company Limited.with Tata Power, the Govern-
ment ofMaharashtra bn 12.7.2001transferred the said 1907..
licence, 1919 licence and the 1953 licence to Tata Power and .
C accordingly on and trom 12.7.2001 Tata Power came to hold
the aforesaid four licences· on the b·asis of which it had been
contended on behalf of Tata Power that itwas entitled to sell,
supply and distribute electricity not only to other distributing lic-
ensees, such as Reliance ~~ergy Limited and The Bombay
D Electric Supply and Transport Undertaking (hereinafter referred
to as the 'BEST'), but also to direct consumers of el~ctricity.
7. As far as M/s Reliance Energy Limited, hereinafter re-
ferred to as "R.E.L.", is concerned it acquir~d a licence known
as the Bombay Suburban Electr]c Licence which had initially
E been issued on 29.5.1926 +nfavour of Killick, Nixon and Com.;.
pany and CaTlender's Cable & Construction Company Limited.
The said licence was assigned to the .Bombay Suburban Elec-
tric Supply Limited on 13.5.1930. The Bombay Suburban Elec-
tric Supply Limited was first renamed as BSES Limited and
F thereafter as Reliance Energy Limited.
8. Before MERC it was contended on behalf ofBSES that
TPC was contravening the terms and conditions of the licences
which had been granted to it by the State Government, as also
G the stated policy of the Government, by poaching consumers
within the BSES' area of supply. It was contended before the
Commission that _supply of electricity by TPC directly to retail
consumers was contrary to the provisions of the Indian Electric-
ity Act, 1910 (hereinafter referred to as 'the 191 OAct'). The Elec-
>
H tricity (Supply) Act. 1948 (hereinafter referred to as 'the 1948 I
TATA POWER COMPANY LTD. v. RELIANCE 301
ENERGY LTD. & ORS. [ALTAMAS KABIR,J.]
j.

Act'), and the policy contained in the Schedule to the 1948 Act. A
9. It was also contended, without prejudice to the above
submission, that TPC could not, in any event, effect any retail
supply of electricity to consumers with a maximum demand
below 1000 KVA, in terms of the licences held by them. It was
submitted that such supply by TPC to direct retail consumers B
was also contrary to Government policy.
10. It was urged that, in view of the above, the Comm is-
sion, in exercise of its powers under the ERC Act, should re-
strain TPC from supplying electricity to retail consumers within c
BSES' territory.
11. The aforesaid issue raised on behalf of BSES Lim-
ited was considered at length by MERC in relation to the terms
and conditions of the licences held by Tata Power and Reli-
_,
ance Energy Limited and in para 81.2 of its judgment and or- D
der, the Commission observed as follows:
"81 .2 The starting point of both parties is the provisions .
of Clause 5 (1),(1) and (Ill) of TPC's licenses, which are
quoted at para 8 of this order. The contesting arguments
regarding the interpretation and implications of this Clause E
have been set out at length above. After considering the
arguments put forward and the provisions of the licenses
and statutes, the Commission has come to the conclusion
that the license to supply energy "for all purposes including
' supply to other licensees for their own purposes and in F
bulk", read with the succeeding terms of Clause 5 and
other provisions, may give TPC an unfettered right to supply
energy directly to all or any consumers in the BSES area
of supply but no obligation to supply power, but it militates,
in particular, against the provisions of Sec. 22(2)(e) of the G
,, Commission's power of regulating and promoting the
working of licensees in an efficient, economical and
"':
equitable manner and, in general, against the provisions
of Sec. 22(1 )(d) enjoining the Commission to promote
competition, efficiency and economy i'n the activities of H
302 SUPREME COURT REPORTS [2008] 10 S.C.R. ,.'
,
\ .t..

A the electricity industry."
12. In its aforesaid judgment and order MERC also held:
"Apart from the claimed entitlement under their lice.nses
as interpreted by them, TPC have urged that. thi?
B entitlement and their consequent actions are also
supported by the mandate given to the Commission under
the ERCAct. Indeed, Sec.22(1)(d) enjoins the Commission
to promote competition, efficiency and economy in the
activities of the electricity industry to achieve the objects
c and purposes of the Act. The Electricity Act,2003, which
. has replaced the ERC Act after hearings in this case were
concluded, also specifically refers to the promotion of
competition in its Preamble."
' - l .

13: It was further held that strictly speaking there was noth-
L·
D ing in either the 1910 Act o(the 1948 Act which bars the grant
of licences to more than one party for similar purposes in the
same area, which, in effect, is also the aim and object of the
Electricity Act, 2003, which replaced all the earlier enactments.
t4. Despite having held in favour of .Tata Power that the
E terms and conditions of its licences may give it an unfettered
right to supply electricity to all or any consumers in the BSES'
area of supply without any obligation in that regard, MERC ulti-
mately disposed of the petition fil~d by BSES with the following
directions : i
F
"(i) TPC and BSES should file the terms of reference for
engaging a consultancy firm to study the issues
relating to Sections 42 and 14 of the Electricity Act,
2003.
G (ii) Select a consultancy firm/s (if need be, international
·· level firms may be considered for selection, severally .;

or jointly with Indian firms) for the purpose;
t
(iii) The cost of the study should be equally shared by
both parties;
H
TATA POWER COMPANY LTD. v. RELIANCE 303
,,,. ENERGY LTD. & ORS. [ALTAMAS KABIR,J.]

(iv) The study report should be widely disseminat~d A
among stakeholders in the city;
(v) Adoption of the report would be decided after a public
hearing; and Implementation of the report would be
i· undertaken as per the Commission's Regulations."
B
15. While disposing of the petition MERC also restrained
TPC from offering new connections to new consumers with en-
ergy requirement below 1000 KVA on the basis of an agree-
ment purported to have been arrived at between TPC a~d
BSES that they would maintain the status-quo till the disposal c
of the petition and would not encourage any existing consumer
·to switch over from one to the other.
16. Two appeals were preferred from the judgment and
order of MERC before the Electricity Appellate Tribunal. Ap-.
peal No.31 of2005 was filed by Reliance Ene.rgy Limited which D
had in the meantime succeeded to the interest of BSES Lim-
ited. Appeal No.43 of 2005 was filed by the Tata Power Com-.
pany Limited.
17. In the first appeal, M/s Reliance Energy Limited ques-
tioned the findings of MERC that under the licences issued to E
Tata Power Company it could also undertake retail supply of
energy directly to retail consumers and prayed for a declara- ·
tion that Tata Power was not entitled to effect direct supply of
energy to consumers, except to other licensees and consum-
ers contemplated in clause (xv) of the licences granted to Tata F
Power, read .with clause (VI) of the Schedule to the 1910 Act.
18. In Appeal No.43 of 2005 Tata Power questioned the
findings in the order and directions of MERC contained in para-
graphs 81.10, 81.11, 81.12 and 81.14 to the effect that the terms
.G
of the licences held by Tata Power militated against the provi-
-·
\.
sions of Sections 22(i)(d) and 22(ii) (e) of the ERC Act. TPC
also questioned the restraint order passed by MERC restrain-
ing TPC from offering new connections to consumers with a
maximum demand of less than 1000 KVA and also to stay the
H
''
304 SUPREME COURT REPORTS [2008] 10 S.C.R.

A directions of MERC directing the parties· to engage a
consultancy firm to study the issues relating, to Section 14 and
14(2) of the Electricity Act, 2003 and from taking further action
in terms of the directions contai'ned in paragraphs 81.12. and
81.1·4 of the order passed by_ MERC.
B · 19. Both the appeals were disposed of by the Appellate
Tribunal for Electricity, New Delhi, by a common judgment dated
22·.5.2006, iriter alia, holding that Tata Po~er had- not been
granted licence to undertake retail dis_tribution of electricity in
the area within Which REL h·ad been distributing power in retail
C to customets directly. The order and findings recorded by
MERC in that regard were set aside. It was also held that Tata
Power could undertake only bulk supplies to licensees such as
REL under the licenses held by it.
· 20. _In addition to -the above, it \i\'.asalso held by the Appel-
0
late Tribunal that Tata Power was riot undertaking retail distri-
bution of power but was only undertaking distribution of power ,
in bulk to licensees prior to the differences that arose between
REL and Tata Power. . .
E 21.Although, it was held by the Appellate Tribunal th~t more
than one distribution licence could be granted in terms of Sec-
tion 62(1) of the Electricity Act, 2003, it held that since th11 Ii- /
cences granted to Tata Power did not entitle it to effect.retail
distribution directly to consumers it was not necess~ryttd·/re-
F strain Tata Power from effecting such distribution. "
1
22. Accordingly, the appeal preferred by Reliance Energy
Limited was allowed and the appeal preferred by Tata Power
Company Limited was dismissed. · ·
G 23. The thre.e appeals before us have been filed by' Tata
Power Company Limited and M/s MIDC Marol Industries As-
sociation. against the said judgment of the Appellate Tribunal.
While Civil Appeal No.2989 of 2006 has -been filed by Tata
Power Company Limited, Civil Appeals No.3466 of 2006 and
1
3467 of 2006 have been filed by MIDC Marci Industries Asso-
H
TATA POWER COMPANY LTD. v. RELIANCE 305
A
ENERGY LTD. & ORS. [AlTAMAS KABIR,J.]
~

ciation. Though the said appellant in Civil Appeal Nos. 3466 A
and 3467 of 2006 was not a party before the MERC, it had
been allowed to intervene during the hearing of the petition filed
by M/s BSES Limited which was subsequently taken over by
Reliance Energy Limited.
24. Appearing for TPC, learned Senior Counsel, Mr. Iqbal B
Chagla, submitted that of all the distribution licences granted
for supply of electricity within the island city of Bombay, the first
distribution licence was issued to Bombay Electric Supply and
Tramways Company Limited, hereinafter referred to as the
"BEST Licence", on 7.7.1905, under the provisions of the In- c
dian Electricity Act, 1903, hereinafter referred to as "the 1903
Act". Subsequently, on 5.3.1907, the Bombay (Hydro-Electric)
licence was granted to Dorabji J. Tata and Ratanji J. Tata.which
is one of the four licences currently held by TPC. Mr. Chagla
~
submitted that the purpose for which the said licence was D
granted is contained in clause 6 of the licence which is relevant
for arriving at a decision in these appeals. The same is accord-
ingly reproduced hereinbelow:-
"6. Unless herein otherwise expressly provided energy
shall be supplied under this licence only - E

I. For Power:-
a. To other licensees for their own purposes and
in bulk.
'
' b. To Factories within the meaning of the Indian
F
Factories Act 1881 and to any Railways
previously approved by the Local Government;
provided that the licensees shall not supply any
such Factory or Railway as aforesaid unless
G
such Factory or Railway, as the case may be,
\._
4 shall require not less than 5,00,000 units per
annum, such amount being the bona fide
average computed annual consumption of such
Factory or Railway
H
'
306 SUPREME COURT REPORTS . [20,08] 10 S.C.R.

A P~ovided .that in regard. to supply unde~ 's.ub-seci(o~~ (a)
.· the licensees shall not be under obligation to sµppJy energy
. in bulk to other licensees for the purpose of enaqling suqh
other licensees for the purpose of en~bling .such'. other
licensees to supply any consumer requiring more than
B 5,00;000 units per annum calculated as aforesaid. And
provided that no supply by the licensees under the powers
contained in stJb-section (b) shall be open to question as
betWeen the licensees and the Bombay Electric Supply
and Tramways Company Limited, if the licensees· -shall
c have given previous notice in writing to the Bombay Elecfric
Supply and Tramways Company Limited of their intentibn
to make such'supply and the Bombay Electric Supply and.
Tramways Company Limited shall not fOr thirty'days after
·delivery of such notice at their office in Born.bay have
objected in writing, and provided that the Bombay' Electric
D
Supply and Tramways Company Limited, shall not ·be
·en'titled.to take any objection except·upon the·ground that
the consumer intended to be supplied does· not fall within
the scope or does not fulfil the .conditions of sub-section(b).

E The energy supplied under this license to any consumer for
power may be used by such consumer for lighting his premises,
provided that the energy used by such consumer for such
lighting purposes shall not ih any' year exeed twenty per cent
of the total amount of energy supplieCf to such consumer and
F save as a~oresaid, the licensees sh~ll not supp.ly energy for
·· lighting :purposes except by agreement·with ·the Bombay
' '
· E;lectric
..\..
Supply
.
and Tramsw~ys
. ..
Company, Limited.
~; ~..( '

In the event of any dispute ~rrSing between the licensees
and the Bombay EleCtric St.ipplY' arid Tramways Company, ,....
Limited, by reason o(i:my 6ojection by the latter to any '
·· > 'supply. by the licensees under:is·tib-section (1)(b) of!his.
clause, or in regard ·tcf the interpretation of the terms of
this clause, such dispute'shall be referred to an Arbitrator ".-
appointed by the Local Government,' whose decision sha)I' ·
H be fina;." ·,
TATA POWER COMPANY LTD. v. RELIANCE 307
ENERGY LTD. & ORS. [AlTAMAS KABIR,J.)

Mr. Chagla submitted that though TPC did not start gener- A
ating power till 1915, it purchased electricity from BEST to sell
and distribute the same to Pearl Mills Limited and Simplex Mills
Limited during 1914 and 1915. In 1915 Tata Hydro started gen-
erating electricity and between 1917 and 1930, it began to sup-
ply electricity directly to a number of consumers within the city B
of Bombay and to Swadeshi Mills Ltd. and Coorla Mills Ltd. in
the suburbs and also to B.B.& C.I. Railway (now known as West~
ern Railway).
25. Mr. Chagla then referred to the Andhra Valley (Hydro-
Electric) Licence which was issued in favour of Tata Hydro Elec- C
tric Supply Co. Ltd. on 3.4.1919. He submitted that the said
licence contained clause 5 which was similar to clause 6 of the
1907 licence reproduced hereinabove, but with two significant
changes. He pointed out that while clause 6 of the 1907 li-
cence entitled Tata Power to supply energy for power "to other D
licences for their own purposes and in bulk", clause 5(11) of the
1919 Licence entitled Tata Power to supply energy for lighting
and general purposes other than power, including the supply of
energy in bulk to other licensees for distribution by them. Fur-
thermore, Tata Power's area of supply was extended beyond E
the island city of Bombay to the suburbs an'd included C1reas
which from 1926 would also form part of R.E.L's area of supply.
26. Mr. Chagla submitted that the NHa Mula Valley (Hydro-
Electric) Licence was issued to Tata Power on 15.11 .1921 and
it too contained clause 5 which was similar to clauses 6 and 5 F
of the 1907 and the 1919 licences referred to herein above. Mr.
Chagla submitted that under the 1921 Licence Tata Power was
empowered without any restriction to supply eiectriGitydirectly
to consumers, except in the island city of Bombay where an
agreement with BEST was required to be arrived at for making G
such supply.
27. Mr.Chagla submitted that subsequently on 2~.5.1926
the BSES Licence was granted in favour of Killick Nixon and
Company and Callender's Cable and Construction Company
H
308 SUPREME COURT REPORTS [2008] 10 S.C.R.

A Ltd. and the area of supply under the said.licence included sub-
urban areas which were covered by the 1919 and 1921 licences
grallted'in favour of Tata :Power. ·The said BSES Licence was
ultimately assigned to Reliance Energy Limited.
28. Mr.Chagla contended that between 1930 ~md 1980
8 TPC continued to supply electricity to consumers directly,_ and
to the distributing licensees, in ·all parts of Bombay, including
the suburbs. Furthermore, by a Gazette Notification dafed
/ '
10.3.1934, the First Annexures to the 1907, 1919 and 1921
·Licences held by TPC were amended to· include:-
c
i. . The island of Salsette, a portion of which falls· within
BSES' area of supply; and ·. ·
ii. An area within a circle of 8 iniles radius around Tata
Power's sub-station at Kalyan:
D
. A proviso was, however, added whereby Tata.Power was (

required to obtain the written consenfof,the Governrrient to sup-
or
ply to any consumer other.than licensees permit holders and
.the Governmer:ifwas required. to consu_IJ the.existing licensees
E and permit holders before granting such consent. .
29. The inclusion of the island· of Salsette and an area
within a c!.rcle of 8 miles in radiu.s around T~ta Power Sub-sta-
.. fion at Kalyan necessitated.a change of the First Annexures to
the licenses held by Tata P_o\l\ler.,, $uch change w.as effected on
F ·. 26)_. 1'94i by the substitution .o'f tb~ FirstAnnexure to the Tata 'f
. Power Licences of .1907, 1919 and 1921 on 26.2.1942 to re-
. gefinejhe.ar~a of ,supply, n,amely ~
...(1) . The area .contained within the limits of the City of
Bombay, as defined by section· 3( 10) of the Bombay
G General Clauses Act, 1904.
(2) The whole of thafportion of the is.land.of Salsette, as .:.
is bounded on the so·uth by the Town and island of
Bombay,· and on the North by the Bassein and Thane
Creeks
H
TATA POWER COMPANY LTD. v. RELIANCE 309
ENERGY LTD. & ORS. [ALTAMAS KABIR,J.]

(3) The.area contained within a circle of eight miles radius A
round the Tata Power Company's Sub-station near
Kalyan.
(4) The area contained within the Municipal limits of
Matheran in the Kolaba District.
B
(5) The area contained within the limits of the Municipal
Borough of Lonavla in the Poona District.
(6) The area contained within the Municipal limits of
Panvel in the Kolaba District.
c
(7) · The area contained within a circle of ten miles radius
round the head-quarters of the Collector of Poona in
the Poona City.
Provided however that in the case of area of supply '
mentioned _in items (2), (3) and (7) above the licensees D
shall not, except with the written consent of Government, '
given after consulting the other licensees, be entitled to
supply energy to any consumer other than such licensees
·within their respective areas of supply."
30. It was submitted that thereafter on 19.11.1953 the E
Trombay Thermal Power Electric Licence was granted to the
Tata Valley Power Supply Company Limited and Tata Power.
The said licence contained provisions which were similar to
those of the earlier 3 licences held by TPC, together with a simi-
lar restriction as provided by the 1942 amendment by the addi- F
tion of the proviso to the First Annexure.
31. ·on 23.10.64 the restrictions imposed on TPC on
10.3.34 were removed by further amendments to the several
licences held by TPC.
G
32. In 1965 Tata Power constructed a further 150 MW unit
which was commissioned at Trombay.
33. On 7.12.78 an amendment was effected to the sev-
eral licences held by TPC by which it was indicated that with H
t
310 SUPREME COURT REPORTS [2008] 10 S.C.R. '

A effect from 1.7.80 the distributing rights in respect of several
areas would stand transferred from TPC to the Maharashtra
State Electricity Board. Even thereafter, TPC continued to sup-
ply electricity to various consumers in different parts of Bombay
and the suburbs. According to Mr.Chagla a meeting was held
B between REL and TPC on 27.1.94 in which suggestions were
made that the parties should avoid the practice of winning away
consumers from one another. Ultimately, however, no such ·
agreement could be arrived at between the parties.
34. Mr. Chagla submitted that in September 1995 REL
C started supplying power to consumers in the suburbs of Bombay
city from the power generated at Dahanu. Mr. Chagla contended
that as on 1.1.1998 the TPC had approximately 114 direct con-
sumers in the city of Bombay, of whom 51 consumers were
common to REL's area of supply, within which 14 had a sane- } ~
D tioned maximum demand of less than 1000 KVA.
35. Mr.Chagla urged that in September 1998 TPC sub-
mitted a proposed tariff for domestic consumers to be effective
from December 1998 which was opposed by REL. He also
urged that prior to the submission of such tariff for domestic
E consumers REL had never objected to the distribution of elec-
tricity directly to consumers by TPC in the area of supply con-
tained in the licences granted to TPC. It was only after TPC
submitted the tariff for domestic consumers that the predeces-
sor-in-interest of REL, Mis BSES Ltd., filed the petition before .,
F MERC under Section 22(2) (e) and (n) of the ERC Act 1998 on
23. 7.2002 and the same was registered as Case No.14 of
2002. Mr. Chagla submitted that in its said petition BSES Ltd.
prayed for the following reliefs:
"(a) That Tata Power be restrained from in any manner
G
selling, supplying and distributing electricity to consumers
situated within the area of supply of BSES in contravention
of the terms and conditions of their licences and the policy
of the Government of Maharashtra;
H b) That Tata Power be ordered to pay to BSES or to the
TATA POWER COMPANY LTD. v. RELIANCE 311
ENERGY LTD. & ORS. [ALTAMAS KABIR,J.]

Government of Maharashtra all profits and gains made A
from January 1998 until Tata Power discontinues sale of
energy to such consumers i.e. situated in BSES' licensed
area of supply and having energy requirement below 1000
KVA (maximum demand) and/or with lighting consumption
exceeding 20% of the total; B

c) That pending disposal of the petition Tata Power be ,
restrained in terms of the prayer at (a) above and from
offering new connections to any entities for sale supply
or distribution of electricity in BSES' licensed area of
supply, with energy requirement below 1000 KVA p
(maximum demand) and/or with lighting consumption
exceeding 20% of the total". ·
36. Mr. Chagla submitted that after the aforesaid case was
admitted by MERC on 10.10.2002 REL fi1ed a petition for in- b
terim relief in the said proceedings on 14.10.2002. The peti-
tion was contested by Tata Power, and, ultimately, on 31.10.2002
the parties agreed before MERC that till the next date of hear-
ing they would not lure away any existing consumers of either
party.
E
37. Ultimately, no interim relief as prayed for by BSES was
granted in its favour but the agreement arrived at between the
parties remained in force pending disposal of the Case. Mr.
Chagla submitted that on 3.7.2003 MERC disposed of the afore-
,- said case upon holding, inter alia, that TPC's licences to sup- F
ply energy for all purposes, including supply to other licensees
for their own purposes and in bulk, read with the terms of clause
5 of the licences and other provisions, might give TPC an unfet-
tered right to supply energy directly to all or any consumer in the
BSES' area of supply without any obligation to supply such G
power. Despite holding as above, MERC also was of the view
·~ that such provisions of the licence militates in particular against
the provisions of Section 22(2)(e) of the ERC Act, 1998, which
empowers the State Government by notification in the Official
Gazette to confer upon the State Commission the function of
lrl
312 SUPREME COURT REPORTS .[2008] 10 S.C.R.
~

A regulating the work of the licensees and other persons autho-
rized or permitt~d. to engage in the electricity industry in the
State and to promote their working in an efficient, economical
and equitable' manner. '•. .

38. Mr.Chagla submitted that MERC also observed in its ..,
B judgment and order that there is nothing in the 1910 or the 1948
Act or the terms of the Tata Power's licences to support BSES'
.primary contention.that Tata Power could riot supply energy di-
rectly to any consumer apart fromthose to whom they were sup-
plying energy in accordance with their licenced entitlement prior
c to.the amendments of 1964, subject to a minimum demand
stipulation. It was further observed that clause 5 and the other
licence terms do not envisage that Tata Power could supply
energy only to a distributing licensee for onward supply to di-
rect consumers.
D
39. Mr.Chagla pointed out that although BSES had· de-
nied such submission it had itself put forth a possible alterna-
tive, namely, that in addition to supply to the distributing licens-
ees Tata Power is also entitled to effect such supply directly to
parties in the area of supply common to BSES whose maxi-
E mum demand exceeds 1000 KVA and Whose consumption for
light is less than 20% of their total consumption.
(
40. Mr. C.hagla submitted that MERC also recorded the

F
fact that BSES has not only a right but an obligation to supply
energy to a large number and category of consumers on de-
., ~

mand. On the other hand, Tata Power has an obligation to. sup-
ply energy to BSES to enable them to serve certain categories
of consumers, but its claim that it also has the unfettered right,
but no obligation, to provide power to consumers·. to whom
BSES has an obligation to supply, militates against the require-
G
ment of a level playing field for promoting competition.
,I
T
41. It was pointed out that after proposing to engage a
consultancy firm to enable it to determine how competitio·n in ~

sale of electricity in each licensed area could be introduced,
H MERC while finally disposing of the petition without assigning
TATA POWER COMPANY LTD. v. RELIANCE 313
ENERGY LTD. & ORS. [ALTAMAS KABIR,J.]
~

any reason and contrary to its own findings restrained TPC from A
offering new connections to any consumer with energy require-
ment below 1000 KVA (maximum demand). According to
MERC this direction was required to be made as part of the
process of introducing competition and choice.
42. Mr.Chagla then subm'itted that both TPC as well as B
REL filed MERC appeals before the High Court, but the same
were dismissed as not maintainable in view of the coming into
\
force of the Electricity Act, 2003. However, since the Appellate
-- Tribunal for Electricity contemplated under the Act had not been
c
set up separate writ petitions were filed, which were also with-
drawn when it was brought to the notice of the High Court that
the Appellate Tribunal for Electricity had since become opera-
tional. Mr. Chagla submitted that thereafter Tata Power filed
Appeal No.43 of 2005 before the Appellate Tribunal challeng-
ing MERC's order and REL filed Appeal No.31 of 2005 against D
the same order. It was stated that on 22.5.2006 the order im-
pugned in these present appeals was passed by the Appellate
Tribunal allowing Appeal No.31 of 2005 filed by REL and dis-
missing Appeal N0.43 of 2005 filed by Tata Power, upon hold-
ing that: E
"(i) Tata Power has not been granted licence to undertake
retail distribution of electricity in the area within which
REL has been distributing power in retail to
customers directly.
~
F
ii) Tata Power has licences only to undertake bulk supply
to licensees like REL.
iii) Tata Power was not undertaking retail distribution of
power but only undertaking distribution of power in
bulk to licensees prior to the differences that arose G
between REL and Tata Power."

43. Mr. Chagla submitted that immediately after the pro-
nouncement of the impugned order. an oral application was
made on behalf of Tata Power for stay of operation of the order
H
314 SUPREME COURT REPORTS [2008] 10 S.C.R.
;.. ~

A for a period of eight weeks. On the statement made by REL's
counsel that it would not seek implementation of the impugned
order for a period of eight weeks .and upon Tata Power repre-
senting that it would maintain status quo with regard to the retail
, supply to consumers and would not supply in retail to any further
..,,
B consumers, no interim order of stay was.passed, but both the
statements made o·n behalf of'the respective parties were re-
corded by the Appellate Tribunal by a separate order.
44. Mr. Chagla submitted that thereafter these three ap-
peals have been fited·before'this Court, including the two filed
c by MIDC, Marol Industries Association, being Civil Appeal
Nos.3466 and 3467 of 2006.

45. Mt. Chagla submitted that while 'holding in favour of
TPC that the terms nf its licgnces :did not ·expressly bar TPC
from supplying electricity directly to consumers, MERC, erro- -~
D
neously decided to introduce the conceptof a level .playing field
purportedly for introducing competition ·in the electricity trade.
Mr.Chagla submitted that MERC had also erroneously held that
apart from its obligation to supply energy to BSES, Tata Power
had also the unfettered right, but no obligation, to provide power
E to consumers to whom BSES had an obligation to supply but
thatthe same militated against the requirement of a level play-
ing field for the purpose of promoting competition. Mr. Chagla
submitted that only on the said ground, which was without any
substance having regard to the terms and conditions of the Ii-
F cences held by TPC, which were duly recognized by MERC, it
r
not only directed that a consultancy firm be engaged to enable
it to determine how competition in sale of electricity in each
licensed area could be introduced, but it also restrained Tata
Power from offering new connections to any consumer with en-
G ergy requirement below 1000 KVA (maximum demand. Mr.
Chagla submitted that such direction of MERC was based on
.{
the supposition that Tata Power could supply electricity directly
only to consumers whose demand was above 1000 KVA (maxi-
mum demand) but was contrary to its own finding in its judg-
H merit that under the licences granted to it, Tata Power was en-
TATA POWER COMPANY LTD. v. RELIANCE 315
ENERGY LTD. & ORS. [ALTAMAS KABIR,J.]

titled to supply electricity to all consumers directly. A
46. Mr. Chagla submitted that the arguments advanced
before MERC should have been confined only to the question
of whether TPC was entitled under the licences granted to it to
supply electricity directly to consumers within its area of supply,
which, in certain cases, overlapped the area of supply included $
in RE L's licence. He submitted that even if there may have been
some doubt with regard to the wordings of clause 6 of the 1907
..... licence, such doubts were removed by the wordings of clause
5 in the subsequent licences where the purpose of supply was
worded in a manner which entitled Tata Power to supply energy c
',

for lighting and general purposes, other than power, including
the supply of energy in bulk to other licensees for distribution
by them. Mr. Chagla reiterated that even the area of supply was
amended and extended beyond the island city of Bombay to
~-
the suburbs and included areas which from 1926 onwards also D
formed part of RE L's area of supply. The learned counsel urged
that the right of TPC to supply directly to consumers was in-
eluded in the licences of 1919, 1921 and 1953 with the condi-
tion that energy supplied to any consumer for power could be
used by such a consumer for lighting his premises, but the en- E
ergy used for such lighting purposes should not in any year ex-
ceed 20% of the total amount of energy supplied to him.
47. A separate restriction was incorporated in the licence
.., to the extent that TPC would not supply energy for lighting pur-
1
poses except by agreement with the Bombay Electric Supply F
and Tramways Company Limited.
48. Mr. Chagla referred to a resolution adopted by the In-
dustries and Labour Department of the Government of
Maharashtra on 4.6.1962 in exercise of the powers conferred
G
by Section 21 (2) of the 1910 Act sanctioning the form· of agree-
~ ment with High Tension consumers. As an example, Mr.Chagla
referred to an agreement entered into by Tata Power with Model
Woollen Mills on 1.4.1965 agreeing to supply 780 KVA (maxi-
mum demand) for operation of its factory. From the said agree-
H
316 SUPREME COURT REPORTS [2008) 10 S.C.R.

A ment, Mr. Chagla pointed out that in the said case the maxi-
mum demand was below 1000 KVA and the Appellate Tribunal
had erred on the m~terials before it in holding in para 50(C) of
its judgment thatTPCwas not supplying electricity/power to the
consumers having a maximum demand of less than 1000 KVA.
B 49. In this regard, Mr.Chagla referred to the definition of
the expression 'consumer' as indicated in Section 2(c) of the
1910 Act and provides as follows: ·
."2(c) 'Consumer' means any person who is supplied with
c energy by a licensee or the Government or by any other
person not only in the absence of supplying energy to the
public under. this Act or any other law for the time being in
force and includes any person whose premises are for
the. time being .connected for the purpose of receiving
energy with the works of a. licensee, the Government or
D
such other person as the case may be."
Mr.Chagla submitted that any person who was being sup-
plied with energy would, therefore, be recognized as a con-
sumer for the purposes of the Act.
E 50. Urging. that the incorporation of the modification in
clause 6 of the 1907 Licence in clause 5 of the licences, com-
mon to all the three. licences granted to Tata Power after 1907,
clearly spelt out the Government's intention of permitting TPC
to supply electricity to all types of consumers within its area of
F supply, though with certain restrictions, which if removed in in-
dividual cases, would enable TPC tb effect supply to such con-
sumers who were covered by such restrictions. Mr. Chagla
pointed out that right from the 1903 Act it had always been the
intention of the Government to introduce competition in the elec-
G tricity trade and the same was explicitly mentioned not only in
the Preamble to the Electricity Act, 2003, but also in the Sixth
proviso to Section 14 thereof, which deals with grant of licence,
indicating that the appropriate Commission could grant a li-
cence to two or more persons for distribution of electricity through
H their distribution systems withw the same area, Mr. Chagla sub-
TATA POWER COMPANY LTD. v. RELIANCE 317
-'f ENERGY LTD. & ORS. [ALTAMAS KABIR,J.]

mitted that after the enactment of the Electricity Act 2003, it would A
not have been necessary to pursue these appeals having re-
gard to the specifiG provision that two or more licences could
be granted within a common area of supply, but that in view of
the observations.made by the Electricity Appellate Tribunal that
l(
its licences did not entitle it to supply electricity directly to retail B
consumers it had become necessary to press these appeals
to correct the erroneous finding ·of the said Tribunal.
51. Mr.' Chagla submitted that while MERC had correctly
interpreted the provisions· of the licences granted to TPC re-
garding supply of electricity to consumers in general, apart from c
bulk. supply to a consumer whose requirement.was above 1000
KVA, it had gone off at a tangent in directing that a consultancy
firm be appointed to study the issues relating to Sections 42
.t and 14 of the Electricity Act, 2003, for the purpose of introduc-
ing a level playing field. Mr. Chagla urged that on account of D
such directions given by MERC, which were de hors the reliefs
prayed for by BSES in its petition under Section 22(2)(e) and
(n) of the ERC Act, that TPC had to prefer an appeal before the
Electricity App~llate Tribunal, which came to the perverse find-
ing referred to above which necessitated the filing of the ap- E
peal by T.P.C.
52. Mr. Chagla submitted that the error in the reasoning
! of the High Court was required to be corrected so that TPC

" could continue to supply its current and future consumers in ac-
cordance with the provisions of the 2003 Ad. F
53. Appearing on behalf of the MIDC, Marci Industries
Association, the appellant in CivU Appeal Nos.3466 and 3467
of 2006, Mr. J. Savla, learned advocate, submitted that although
the appellant had not been made a party before the Tribunal, it
G
was permitted to intervene in the proceedings by MERC through
\. the Bombay Small Scale Industries Association which was the
parent body. Mr. Savla submitted that since the appellant would
be one of the parties who would be affected by the outcome of
these proceedings it had been permitted to file ~he aforesaid
H
318 SUPREME COURT REPORTS [2008] 10 S.C.R.

A two appeals by order dated 7.8.2006.
54. While supporting the submissions made on behalf of
TPC, Mr. Savla also referred to the Preamble and the provi-
sions of Section 14 of the 2003 Act in support of the contention
that the Act encouraged competition so as to give a choice to a
8 consumer to opt for any of the distributing licensees supplying
electricity directly to the consumers. He urged that many of the
members of the aforesaid Association receive supply of en-
ergy from TPC and they would also be adversely affected if the
orders passed by the Commission and the Tribunal were al-
e lowed to stand. He also referred to Section 79(2)(B) of the 2003
Act which provides as follows:

"79(2)(ii) The Central Commission shall advise the Central
Government on all or any of the following matters, namely:-
D (i) .......... .
(ii) promotion of competition, efficiency and economy in
activities of the electricity industry;
(iii)
E
(iv)

55. Mr. Savla ended on the note that notwithstanding the
clarity of the provisions of the licences granted in favour of Tata
Power for the purpose of distr~bution of electricity to all types of
F consumers, even if two interpretations were possible, the view
which was favourable to the consumers should be accepted by
the Court .
.56. Appearing for REL, Mr. K.K.Venugopal, learned se-
nior counsel, echoed Mr. Chagla's contention that in order to
G arrive at a decision in these appeals it would be necessary to
apply the provisions of the different enactments to the licences
granted in favour of Tata Power in order to identify the purposes
forwhich such licences had been granted. Referring to the In-
dian Electricity Act, 1903, Mr. Venugopal firstly referred to Sec-·
H tion 2(f) which defines "distributing main" to mean the portion of
TATA POWER COMPANY LTD. v. RELIANCE 319
ENERGY LTD. & ORS. [ALTAMAS KABIR,J.]

any main which is used for transmitting energy to the service A
lines for the purpose of general supply. He then referred to
Section 20) which defines "general supply" to mean the general
supply of energy to ordinary consumers and includes in the ab-
sence of a special agreement to the contrary with the Govern-
ment or with a local authority, the general supply of electricity for B
public lamps but does not include the supply of energy to par-
ticular consumers under special agreement. Reference was
then made to Section 2(o) which defines 'service line' to mean
any electric supply line through which energy may be supplied,
or is intended to be supplied, by a licensee to a consumer ei- c
ther from a main or directly from the licensee's premises. Hav-
ing regard to the aforesaid definitions, Mr. Venugopal submit-
ted that the 1903 Act contemplated 3 types of supply, i.e. (i)
General supply to ordinary consumers, (ii) supply to public
lamps; and (iii) supply to consumers under special agreement.
0
Referring to Section 4 (1 )(d),(e) and (f) of the 1903 Act Mr.
Venugopal submitted that a licence issued under the said Act
could prescribe such terms and conditions as to the limits within
which and the conditions under which the supply of energy was
to be compulsory or permissive and as to the limits of the price
to be charged in respect of the supply of energy and that a grant E
of a licence under the said enactment for any purpose would
not in any way hinder or restrict the grant of another licence to
another person within the same area of supply for a like pur-
pose. However, as far as TPC is concerned, restrictions had
been imposed on its power of general supply to consumers, F
which supply could only be effected under a special agreement
after due sanction from the Government. It brought such agree-
ments within the purview of the licences granted to TPC.
57. Mr. Venugopal submitted that clause 2 of the 1907 G
Licence granted in favour of Tata Power is an interpretation
clause where the expression "the licensees" used in the Act
was to mean and include Dorabji J. Tata and Ratanji J. Tata
and subsequently TPC, while the expression "other licensees"
was meant to cover any person or persons, other than the lic-
H
320 SUPREME COURT REPORTS-- [2008) 10 S.C.R.

A · ensees, who on the date of the grant of licence was duly autho-
rized to supply energy to the public within the area of,supply or
to a licensee who may subsequently be authorized bya licence
to generate and supply electricity for sections of the Tramways
of the Bombay Electric Supply ·Company and Tramways Com-
B pany Limited. Mr. Venugopal urged that clause (6) of the licence ,_
limits the supply byTPC to bulk supply only and that sub-clause
(II) relates only to a consumer of such bulk supply and not ordi-
n.ary consum·ers. He also urged that the exclusion of ·clauses
VllJ, IX, X and XIII of the Schedule to the Act disentitled TPC
·c from making· supply to public 'lamps. In comparison, Mr.
Venugopal referred to REL's licence where the purpose of sup-
ply has oeen indicated in 'ciaus'e 6 .and provides that it would
be entitled during the continuance of licence to supply energy
for all purposes within the are~ of supply. ·
' .
D 58: Referring to the Statement of Objects and Reasons of
the 1910 Act, Mr. Venugopal submitted that it had been indi-
cated therein that varJo'us diffi~ulties had arisen i_n the working
of the 1903 Act which were referred by the Government of 1,ndia
to a Gommittee OA which technical and.financial inte"rests were
E represented. The result was t~e Act of 1910 which came into
effect on 1.1.1911 and was altogether a new Act which repealed
the 1903 Act. Accordingly, the 1907 licence could not be a con-
. side ration for interpretin.g the. provisions of the 1919 licence
and the licences granted thereafter. Refe)rring to the definition
F of 'consumer' in section 2(c) of the 1910 Act, Mr. Veriugopal
contended that aconsumerwouldmean any person who is sup-
plied by a licensee, by the Government, or by any other person
engaged in the business of supplying energy to the public un-
der the said Act or any other law for the time being in force, and
G includes a·ny person whose premises are· for the time being
connected, for the'purpose of receiving energy, with the works
'.of a licensee, the Government or such other person, as the cas~ -/-
may be. In other words, according to Mr. Venugopal, only a
person whose premises were connected for the purpose of re-
H ceiving energy could be said to be a consumer and not any
TATA POWER COMPANY LTD. v. RELIANCE 321
ENERGY LTD. & ORS. [ALTAMAS KABIR,J.]

person who was yet to receive such supply. He then referred to A
the definition of "Public lamp" in Section 2(k) meaning an elec-
tric lamp used for the lighting of any street. Mr. Venugopal reit-
' erated that in terms of clause XV of the 1919 licence granted to
Tata Power, the requirement of clauses IV, V, VI of Schedule II
l.. of the 1910 Act for supply to public lamps had. been omitted, B
which indicated that Tata Power could supply energy only in bulk
..., and not directly to consumers whose maximum demand was
less than 1000 KVA. Mr. Venugopal also submitted that sub-
clause (2) of Clause 5 of the 1919 Licence and those granted
thereafter would be rendered tautologous if an attempt was c
made to read the same in a manner independent of sub-clause
(1 ), since, if Tata Power was allowed to supply for general pur-
poses no restrictions would ha've been. placed on the supply of
power to factories. Mr. Venugopal would have us believe that
~ notwithstanding the provisions of Sub-clause(1) of clause (5),
D
Sub-clause (2) would have to be :read independent of Sub-
clause(1) in relation to supply of power for general purposes.
59. Mr. Venugopal submitted that, on the other hand, in
accordance with the provisions of its licence, REL was under
compulsion to supply to public lamps at rates which were lower E
than those charged by Tata Power from its consumers, which
gave Tata Power an unfair advantage over REL whose profits
were thereby adversely affected. Mr. Venugopal submitted that
it was in such context that the concept of level playing field arose
\i; in the proceedings on the basis whereof MERC disposed of its F
petition under the ERC Act.

60. Mr. Venugopal then referred to the Notification dated
10.3.1934 published by the Public Works Department inform-
ing the public that areas of supply under the licences granted to
Tata Power had been .extended as indicated hereinbefore so G'
as to include the whole of that portion of the island of Salsette
\
as bounded on the South by the town and island of Bombay.
and on the north by the Bassein and Thana creeks and the
area contained within a circle of 8 miles radius around the Tata
Power company's sub-station near Kalyan, subject, however. H
322 SUPREME COURT REPORTS [2008] 10 S.C.R.

A to the proviso that notwithstanding.such extended powers Tata
Power would not, except with.thewritten consent of the Govern-
ment given after consulting, the existing licences or permit hold-
ers, be entitled to supply energy to any consumer other than
such licensee or permit holder within their respective areas. It .,._
B was urged that by such amendment Tata Power coulc:f not sup-
ply energy directly to consumers, even if it wanted to do so,
except with the written consent of the Government in the man-
ner indicated hereinabove. It was urged that such a bar pre-
vented Tata Power from supplying energy directly to cons um-
c ers whose capacity of consumption. was less than 1000 KVA
(maximum.demand) and· such bar continued till the year 1964.
In this regard, Mr. Venug.opal referred to the amendment effected
by the Government of Maharashtra to the 1921 licence held by
Tata Power. wherein in amended: clause 5 it was provided that
-1;
although Tata Power could supply energy under the licenoe for
D
all purposes, including supply to other agencies for their own
purposes, and in bulk, it would not be under any obligation to
supply energy in bulk to other licensees such as REL, for the
purpose of enabling such other licensees to supply any con-
sumer with power where the demand exceeded 250 KVA, ex-
E cept for Thana Electric Supply Company Limited for whom the
maximum limit would be 300 KVA; for any consumer in the area
of supply of REL whose maximum demand would be 1000 KVA
and 5000 KVA for a customer of the Maharashtra State Elec-
tricity Board.
F
61. Mr. Venugopal also referred to the Order passed by
the Industries Energy and Labour Department of the Govern-
ment of Maharashtra on 7 .12.1978 making further alterations
in the 1907 Licence held by Tata Power whereby from 1 .7 .1980
Tata Power would transfer to the Maharashtra State Electricity
G
Board its distribution rights and assets pertaining thereto as
set out in Part II of the said annexure to the said licence. By -I
virtue of such arrangement clause 6 relating to the 'purpose of
supply' was amended to bring it in parity with the amendment
to the First Annexure to the 1921 Licence. Reference was also
H
TATA POWER COMPANY LTD. v. RELIANCE 323
~ -f ENERGY LTD. & ORS. [ALTAMAS KABIR,J.]

made to the commencement of discussion with the Maharashtra A
State Electricity Board for delimitation of the area of supply and
distribution ..In other words, under the licence in respect of the
licensees' area of supply covered by the licence granted in
favour of BSES the guiding principle would be that Tata Power
~
'
would be allowed to retain such distribution rights and loads in B
the said area as would be warranted by the surplus generating
capacity of Tata Power after meeting the requirements in the
area served by BEST as well as the bulk supplied to the
Maharashtra State Electricity Board at various points. Accord-
ing to Mr. Venugopal, such discussion was only with the object c
of allowing Tata Power to utilise its surplus generating capacity
on account of the transfer of its customers to the Maharashtra
State Electricity Board.

~ 62. Mr. Venugopal contended that in order to interpret a
licence for distribution of energy, what is important is not the D
terminology included in such licence but the purpose of supply
for which such licence had been granted. It was submitted that
under the Electricity Act, 2003, a 'distribution licensee' was
defined in Section 2(17) to mean a licensee authorized to op-
erate and maintain distribution system for supplying electricity E
to consumers in his area of supply. Mr. Venugopal urged that
Tata Power had not even set up such a distribution system and
~
was not, therefore, in a position to supply energy to any cus-
,,... tomer on demand as required under Section 43 of the said Act.
Tata Power, could not, therefore, be described as a distributing F
licensee within the meaning of the aforesaid definition. With
regard to the definition of 'consumers' in Section 2(15), Mr.
Venugopal reiterated his earlier submission that only such per-
son could be said to be a consumer who was being supplied
with electricity or was for the time being connected for the said
G
purpose with the works of a licensee, the Government or any
other person engaged in the supply of electricity to the public.
According to Mr. Venugopal in the absence of any distribution
system within REL's area of supply, TPC could not have any
consumer within REL's area of supply. Reference was also
H
324 SUPREME COURT REPORTS [2008] 10 S.C.R.

A made in this regard to the definition of 'service line' in Section
2(61) to drive home his point.
63. Mr. Venugopal lastly referred to Section 42 of the 2003
Act dealing with distribution of electricity, the duties of a distri-
bution licensee and open access. He pointed out that sub-sec-
B tion(2) of Section 42 empowers the State Commission to intro-
duce a system of open access in such phases and subject to
such conditions, including Trust subsidies and other operational
constraints as may be specified, within one year ofthe ap-
pointed date fixed by it, and in specifying the ·extent of open
C access in successive phases and in determining the charges
for wheeling having due regard to all the relevant factors.
64. Mr. Venugopal submitted that by amendment of the
proviso on 15.6.2007 it was provided that such open access
was to be allowed. on payment of a surcharge in addition to the
0
charges for wheeling as might be determined by the State Com-
mission.
65. Referring to the Maharashtra Electricity .Regulatory
Commission (Distribution, open access), Regulation, 2005, Mr.
E Venugopal referred to Regulation 3 indicating the right of a con-
sumer of a distribution licensee to seek open access to the
distribution system of such distribution licensee for obtaining
supply of electricity from a generating company or from a lic-
ensee other than such distribution licensee. Mr. Venugopal then
F referred to the various restrictions relating to the contract de-
mand of the consumer which made it quite clear that the distri-
bution licensee could not of its own accord supply electricity to
any consumer, without conforming to the eligibility conditions.
Mr. Venugopai submitted·that the right to such open access was
G available to the consumer and not to the distribution licensee
which had to cater to the demand made by the consumer. In
support of the directions given by MERC in its Order disposing
of BSES' application, Mr. Venugopal in conclusion referred to
Section 60 of the 2003 Act which reads as follows:
H "60. Market domination. - The appropriate Commisstor:i
TATA POWER COMPANY LTD. v. RELIANCE 325

• ~ ENERGY LTD. & ORS. [AlTAMAS KABIR,J.}

may issue such directions as it considers appropriate to A
a licensee or a generating company if such licensee or
generating company enters into any agreement or abuses
its dominant position or enters into a combination which
is likely to cause or causes an adverse effect on
\
competition in electricity industry." B
66. Mr. Venugopal submitted that the concept of level play-
ing field as reflected in the order passed by MERC was in exer-
cise of the powers vested in MERC to prevent monopolisation
and to encourage competition and the Appellate Tribunal had
chosen not to interfere with such finding but had, on the other c
hand, dismissed the appeal filed by the appellant on the ground
that under the licences held by it the appellant was not entitled
to supply energy to any consumer, except in bulk.
67. Mr. Venugopal urged that no interference was called
D
for either with the judgment and order of MERC or that of the
Appellate Tribunal and the appeal filed by the Tata Power was
liable to be dismissed along with the appeals filed by MIDC,
Marol Industries Association.
68. Replying to Mr. Venugopal's submissions, Mr. Chag!a E,
submitted that the 2003 Act was a customer- friendly enact-
ment and competition was accordingly one of its objects. He
~ also submitted that no appeal had been filed either by BSES or
.....
BEST against the orders of the Appellate Tribunal. He added
\
that the submissions made on behalf of REL supporting the or- F
der of MERC on the ground of a level playing field was wholly
erroneous since in ground RRR of the appeals filed by TPC in
this Court it has been specifically stated that the Appellate Tri-
bunal had failed to take note of the fact that if the root cause of
the dispute was the difference in tariffs, that purportedly made
G'
RE L's tariff less competitive than that of Tata Power, then such
"':\- dispute had been duly addressed in the Tariff Order dated
11.6.2004 wherein it had been stated in paragraph 10 as fol-
lows:
"The Commission had determined the tariffs in such a H
326 SUPREME COURT REPORTS [2008] 10 S.C.R.

A way that the Bulk Supply Tariffs (BST) applicable to BSES
and BEST are significantly lower than the tariffs applicable
to TPCs retail HTLT consumers. The Commission has
admitted to rationalize the bulk and retail tariff supply so
that they are in consonance with the principles that the )
B BST should be lower than the retail tariffs. This will also
facilitate healthy competition between different licensees
on a more even footing."
69. Mr.Chagla submitted that the aforesaid order of the
Commission put at rest the bogey of a level playing field raised
C by MERC, which otherwise had completely supported the
appellant's case on interpretation of the licences held by it.
70. Mr. Chagla also submitted that the chart submitted on
behalf of TPC would clearly show that the Appellate Tribunal
had committed an error in coming to a finding that TPC was not
0
engaged in making retail supply directly to consumers, on which
basis it had dismissed the appeals filed by TPC.
71. In the opening paragraphs of this judgment we have
indicated that the principal question which fell for the decision
E of MERC was whether Tata Power was entitled under the li-
cences granted to it to effect distribution of electricity directly to
consumers within BSES' (Now REL's) area of supply. While
MERC answered the said question in favour of Tata Power upon
holding that there was nothing in the licences granted to Tata
F Power to prevent it from doing so and that it could effect supply
of electricity to any consumer, it also held that the terms and
conditions in the said licences gave it an advantage over BSES
in regard to fixation and charge of tariff which necessitated the
establishment of a level playing field in order to encourage com-
G petition. Apparently, while dealing with the grievances projected
by BSES, MERC lost sight of the reliefs prayed for BSES which
was based on the contention that according to the terms and
conditions of the licences granted to it Tata Power was not en-
titled to supply energy in retail to domestic customers, at least
not to consumers whose demand was less than a maximum
H
TATA POWER COMPANY LTD. v. RELIANCE 327
ENERGY LTD. & ORS. [AlTAMAS KABIR,J.]

demand of 1000 KVA. Having once held on the principal issue A
that Tata Power was entitled to supply electrical energy ·to all
consumers under the licences granted to it, MERC should have
restrained itself from unilaterally making out a third case regard-
ing the establishment of a level playing field when such a case
had neither been made out nor any relief in that regard had B
been prayed for by BSES.
72. MERC also appears to have lost sight of the fact that
the first three licences had been granted to Tata Power long
before a separate licence was granted in favour of BSES.
There is sufficient material on record to establish that Tata Power C
had been supplying energy to domestic consumers on retail
basis within areas which subsequently came to be included in
BSES' (and subsequently REL's) area of supply and no objec-
tion was raised in that regard till TPC submitted its proposed
tariff for domestic retail consumers for approval in September, D
1998. MERC appears to have confused the two issues whiie
dealing with BSES' petition under section 22(2)(e) and {n) of
the Electricity Regulatory Commissions Act, 1998. In fact, it
appears that based on the third case made out by it, MERC
restrained Tata Power from supplying electrical energy to con- E i
sumers whose demand was less than 1000 KVA (maximum
demand) despite holding that under the licences granted to it
Tata Power was entitled to do so.
73. In dealing with the appeals filed both by REL and Tata
\ Power, the Appellate Tribunal for Electricity misinterpreted the F
provisions of the licences granted to TPC for supply and distri-
bution of electrical energy. The arguments advanced on behalf.
of REL before the learned Tribunal, which were also advanced
before us by Mr. Venugopal, found favour with the Tribunal which
arrived at the conclusion that the terms and conditions of the G i
licences granted to TPC did not entitle it to supply electrical
energy directly to consumers whose demand was below 1000
KVA (maximum). In reaching such conclusion the Tribunal not
only ignored the situation prior to 1926 when BSES was granted
its licence, but also the subsequent amendments to the licences H
328 SUPREME COURT REPORTS [2008] 10 S.C.R.

~

A held by TPC whereby clause 5 of the 1919 and 1921 licences
were altered to permit Tata Power to supply electrical energy
for lighting and general purposes, other than power and includ-
ing the supply of energy in bulk to other licensees for distribu-
tion by them. The Appellate Tribunal also overlooked the order
B passed by the Industries Energy and Labour Department of the t
Government of Maharashtra on 7.12.1978, whereby from c;-
1. 7 .1980 Tata Power was required to transfer to the Maharashtra
State Electricity Board its distribution rights under the 1907 Ii-
cence and assets pertaining thereto as set out in part 2 of the
c Annexure to the said licence. The Tribunal also overlooked the
fact that by virtue of the aforesaid arrangements, clause 6 of
the 1907 licence relating to "purpose of supply" was also
amended to bring it in parity with the amendments to the First
Annexure to the 1919 and 1921 licences. Although, Mr.
Venugopal tried to convince us that the changes effected in
D
clause 6 of the 1907 licence and clause 5 of the remaining three
licences held by TPC was only to compensate TPC for giving
up its rights to supply in favour of the Maharashtra State Elec-
tricity Board and to help it to utilise its surplus generation of
power, we are unable to accept Mr. Venugopal's contentions,
E since from the materials on record it stands amply proved that
Tata Power had all along been supplying electrical energy di-

-
rectly even to retail customers whose maximum demand was
less than 1000 KVA and no objection thereof was raised by
either BSES or REL till the year 1998 when Tata Power submit-
F /.
ted its proposal fo_r domestic tariff for approval to the Board. It
was only thereafter that REL raised its objection in the form of
its petition to MERC under Section 22(2)(e) and (n) of the ERC
Act 1998. The list of consumers to whom retail supply was be-
ing effected by TPC in the island city of Bombay and its sub-
G urbs, discloses that at least 51 such consumers were within
REL's area of supply. In fact, Mr. Venugopal by way of an alter-
native submission also indicated that Tata Power under the -.J.'
terms and conditions of the licences held by it, could supply
energy to any consumer whose demand was above 1000 KVA
H within the area of supply covered by the said licences.
TATA POWER COMPAt\jY LTD. v. RELIANCE 329
ENERGY LTD. & ORS. [AlTAMAS KABIR,J.]
-.It·
74. V\fe are also unable to accept Mr. Venugopal's inter- A
pretation of clause 6 of the 1907 licences and clause 5 of the
other licences to the effect that Sub-clause (II) thereof would be
rendered tautologous, if the ~ame was read independer.tly of
Sub-clause (I). His submission that if Sub-clause (II) is to be
read in a manner which allowed Tata Power to supply energy B
for general purposes to all consumers, no restrictions would
have been placed on the supply of power to factories and the
Railways, appears to us to be without substance.

Clause 5 of the 1919, 1921 and 1953 Licences held by
Tata Power indicates the purpose of supply and is divided into Ic
two parts - (i) for power and (ii) for lighting and general pur-
poses, other than power. Simply stated, Sub-clause (I) deals
with supply to licensees for their own purposes and in bulk. The
restriction indicated by Mr. Venugopal is in respect of such bulk
supply where the consumer required less than 5,00,000 units 0
per annum which was also stipulated to be the bona fide aver-
age computed annual consumption of a Factory or Railway. On
the other hand, Sub-clause (II) provides for supply of electricity
for lighting and general purposes, other than power, including
the supply of energy in bulk to other licensees for distribution by E
them. Sub-clause (II) is followed by an Explanation to both Sub-
clause (I) and Sub-clause (II) of Clause 5. It has been clarified
that the energy supply to any consumer for power, that is under
Sub-clause (I), could be used by such consumer for lighting his
"""' 1 premises to a maximum amount of 20% of the total energy sup- F
plied to such consumer, and it has also been stipulated that
Tata Power would not supply energy for lighting purposes re-
ferred to in Sub-clause (II) except by agreement with Bombay
Electric Supply and Tramways Company Limited.
75. Regarding Mr. Venugopal's other submission relating G
to Section 42 of the 2003 Act, we are unable to appreciate how
t.J. the same is relevant for interpreting the prov~sions of the licences
held by TPC. It is no doubt true that Section 42 empowers the
State Commission to introduce a system of open access within
one year of the appointed date fixed by it and in specifying the H
330 SUPREME COURT REPORTS [2008] 10 S.C.R.

A extent of open access in successive phases and in determin-
ing the charges for wheeling having due regard to the relevant
factors, but the introduction of the very concept of wheeling is
against Mr. Venugopal's submission that not having a distribu-
tion line in place, disentitles T.P.C. to supply electricity in retail
B directly to consumers even if their maximum demand was be-
low 1000 KVA. The concept of wheeling has been introduced
in the 2003 Act to enable distribution licensees who are yet to
instal their distribution line to supply electricity directly to retail
consumers, subject to payment of surcharge in addition to the
C charges for wheeling as the State Commission may determine.
We, therefore, see no substance in the said submissions ad-
vanced by Mr. Venugopal.
76. Mr. Venugopai's last submission relating to market
domination has to be considered by the appropriate Commis-
D sion separately in terms of Section 60 of the 2003 Act and can- ;a.
not be pressed into service for interpreting the terms and con-
ditions of the licences held by TPC.
On the other hand, in our view, the provisions of both the
1903 and 1910 Electricity Acts encourage competition in the
E electricity trade and the same is also incorporated in the licences
issued in favour of the distribution licensees, which also include
licencees generating power for supply. The element of compe-
tition has been included in the Preamble to the 2003 Act and
permeates the same in its various provisions. As submitted by
F Mr. Chagla, the Act is meant to be consumer-friendly and one
of the objectives it sets out to achieve is to give the consumer
an option to choose the distribution licensee from whom it
wishes to receive supply of electrical energy. The intervention
of MIDC, Marol Industries Association and the appeals filed by
G . it, has obviously been made in that context.
77. Having regard to the above and the terms and condi-
tions of the licences held by Tata Power, we have no hesitation
in holding that the Appellate Tribunal for Electricity erred in com-
ing to a finding that under its licences Tata Power was entitled
H
TATA POWER COMPANY LTD. v. RELIANCE 331
ENERGY LTD. & ORS. [AlTAMAS KABIR,J.]
A
to supply energy only in bulk and not for general purposes and A
in retail to all consumers, irrespective of their demand, except
for those consumers indicated in Sub-clause (I) of clause 5 of
the several licenses held by Tata Power.
78. Having earlier held that MERC had overstepped its
jurisdiction in making out a third case which had not been made 8
out by BSES and had on the basis thereof issued orders which
had not even been prayed for by BSES, we quash the orders
passed both by MERC and the Appellate Tribunal for Electricity
l
and allow all these three appeals upon holding that under the
terms and conditions of the licences held by it, Tata Power Com- C 1

pany Ltd. is entitled to effect supply of electrical energy in retail
directly to consumers, whose maximum demand is less than
1000 KVA, apart from its entitlement to supply energy to other
licensees for their own purposes and in bulk, within its area of
supply as stipulated in its licences and also subject to the con- D
straints indicated in relation to Sub-Clause (I) of Clause 5 in
relation to factories and the Railways.
79. The parties shall bear their own costs.
R.P. Appeals allowed.