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2026 Supreme(SC) 510

SUPREME COURT OF INDIA
DIPANKAR DATTA, SATISH CHANDRA SHARMA, JJ.
Indian Railways – Appellant
Versus
West Bengal State Electricity Distribution Company Limited and Others – Respondents
Civil Appeal No. 4652 of 2024, Civil Appeal Nos. 4653-4659 of 2024
Decided On : 08-05-2026

Advocates appeared:
For the Appellant(s) : Mr. Tushar Mehta, Solicitor General Ms. Aishwarya Bhati, Ld. A.S.G. Mr. S.D.Sanjay, Ld. A.S.G. Mr. Gaurang Bhushan, Adv. Mr. Madhav Sinhal, Adv. Mrs. Sansriti Pathak, Adv. Mrs. Bani Dikshit, Adv. Mr. Bhuvan Kapur, Adv. Mr. Siddharth V.thakur, Adv. Mr. Amrish Kumar, AOR
For the Respondent(s):Mr. Sajan Poovayya, Sr. Adv. Ms. Ishita Jain, AOR Mr. Anand Kumar Shrivastava, Adv. Ms. Shruti Kanodia, Adv. Mr. Shivam Sinha, Adv. Mr. Ravi Nair, Adv. Mr. Mudassir, Adv. Mr. Palash Maheshwari, Adv. Mr. Parag Tripathi, Sr. Adv. Ms. Suparna Srivastava, Adv. Ms. Surbhi Gupta, Adv. Mr. Hitakshi Jain, Adv. Ms. Bhairavi, Adv. Mr. S. K. Verma, AOR Mr. G Umapathy, Sr. Adv. Mr. Aditya Singh-1, AOR Ms. Priyanka Singh, Adv. Mr. C.S. Vaidyanathan, Sr. Adv. Mr. Aniket Prasoon, Adv. Mr. Pratiksha Chaturvedi, Adv. Mr. Vinit Kumar, Adv. Mr. Aman Sheikh, Adv. Mr. Adarsh Kumar Bhardwaj, Adv. Mr. Shubham Singh, Adv. Mr. Siddharth Mittal, AOR Mr. Gaurav Agrawal, Sr. Adv. Mr. Ashok Kumar Tripathi, Adv. Mr. Sarthak Pathak, Adv. Mr. Umesh Kumar Shukla, Adv. Mrs. Srabani Mukherjee, Adv. Mr. Shekhar Banerjee, Adv. Mr. Gajendra Singh Negi, Adv. Mr. Md Shah Minhajuddin, Adv. Mr. Md Adil Khan, Adv. Mr. Subhro Prokas Mukherjee, AOR Mr. Nitin Saluja, AOR Mr. Anup Kumar, AOR Mrs. Neha Jaiswal, Adv. Ms. Pragya Choudhary, Adv. Ms. Achint Priya, Adv. Mr. Shivam Kumar, Adv. Ms. Arshi, Adv. Mr. Jaideep Gupta, Sr. Adv. Mr. Sabarish Subramanian, AOR Mr. S.vallinayagam, Adv. Mr. Veshal Tyagi, Adv. Mr. Riddhi Bose, Adv. Ms. Racheeta Chawla, Adv. Ms. Rishi Agarwal, Adv. Ms. Sampriti Baksi, Adv. Mr. Vishnu Unnikrishnan, Adv. Ms. Mandakini Ghosh, AOR Mr. Vikas Upadhyay, AOR Ms. Ankita Kashyap, Adv. Mr. Ranveer Singh, Adv. Mr. Shiva Narang, Adv. Ms. Sunieta Ojha, AOR Mr. Anand K Ganesan, Adv. Mr. Nikunj Dayal, AOR Mr. Amal Nair, Adv. Ms. Devyani Prasad, Adv. Mr. Sandeep Kumar Mahapatra, Adv. Ms. Mrinmayee Sahu, AOR Mr. Sugam Kumar Jha, Adv. Mr. Sreedas Kp, Adv. Ms. Amruta Padhi, Adv. Mr. Pitambar Acharya, Advocate General Mr. Srisatya Mohanty, AOR Ms. Sakshi Mittal, Adv. Mr. G. Umapathy, Sr. Adv. Mr. Rutwik Panda, AOR Ms. Nikhar Berry, Adv. Ms. Anshu Malik, Adv. Mr. Maninder Singh, Sr. Adv. Mr. Prabhas Bajaj, AOR Mr. Rithvik Mathur, Adv. Mr. Rishabh Yadav, Adv. Mr. Dhananjaya Mishra, AOR Mr. Bharadwaj S., AOR Ms. Pratiti Rungta, Adv. Mr. Sumit Pragal, Adv. Mr. Prashant Singh, Adv. Mr. Shivankur Shukla, Adv. Ms. Amita Singh Kalkal, AOR Mr. Tushar Mehta, Solicitor General Mr. Lokesh Sinhal, Sr. A.A.G. Mr. Shekhar Raj Sharma, A.A.G. Mr. Samar Vijay Singh, AOR Mr. Madhav Sinhal, Adv. Ms. Nidhi Narwal, Adv. Ms. Srishti Jain, Adv. Mr. Nikunj Gupta, Adv. Mr. Sarthak Arya, Adv. Mr. Amit Ojha, Adv. Mr. Aman Dev Sharma, Adv. Ms. Sabarni Som, Adv. Mr. Gaj Singh, Adv. Mr. Abhishek Kumar, Adv. Mr. Nived Veerapaneni, Adv. Ms. Shubham Mudgil, Adv. M/s Trilegal Advocates On Record, AOR Mr. K. Parameshwar, Sr. Adv. Mr. Udit Gupta, Adv. Mr. Vyom Chaturvedi, Adv. Ms. Sneha Singh, Adv. Ms. Pragya Gupta, Adv. Ms. Prachi Gupta, Adv. Ms. Veda Singh, Adv. Mr. Prasad Hegde, Adv. M/S. Udit Kishan And Associates, AOR

Entity maintaining internal electricity network solely for own consumption fails to qualify as deemed distribution licensee and remains liable for surcharges as consumer availing open access.

Headnote:(A) Electricity Act - Sections 14, 42, 2(3), 2(5), 2(15), 2(17), 2(19), 2(47), 2(70) - Railways Act - Sections 11, 2(31), 2(32) - Deemed distribution licensee status - Cross-subsidy surcharge - Additional surcharge - An entity must operate and maintain a distribution system connecting to consumer installations to qualify as distribution licensee - Internal conveyance of electricity for own consumption does not constitute distribution or supply to consumers - Non-obstante clause does not override licensing framework absent direct inconsistency. (Paras 16, 21, 26, 36)

(B) Appropriate Government - Definition is context dependent - Central Government control does not confer deemed licensee status without actual performance of distribution functions to consumers - Proposed legislation serves as aid to interpret absence of exemption in existing framework. (Paras 40, 46, 65)

Facts of the case:
The appellant sought connectivity for power procurement through inter-state open access claiming deemed distribution licensee status under the third proviso to Section 14. Multiple state commissions and the appellate tribunal held that the appellant operates a self-contained network for own use as a consumer and is liable to pay charges. Appeals were preferred challenging the denial of deemed status and imposition of surcharges.

Findings of Court:
The appellant's infrastructure serves captive self-consumption and does not connect to consumer installations or involve sale of electricity. It fails to meet twin requirements of operating a distribution system and supplying to consumers. The clarificatory letters lack binding force. The proposed amendment indicates legislative intent that no exemption exists under the current statute.

Issues: The main issues were whether statutory activities amount to distribution of electricity qualifying for deemed licensee status, whether the entity falls within appropriate government definition, liability for surcharges despite such status, and permissibility of relying on proposed legislation for interpretation.

Ratio Decidendi: Activities confined to internal operational use without supply to consumers outside the network do not satisfy the statutory definition of distribution system or licensee obligations - functionality test requires actual performance of licensed activities - open access consumer remains liable for surcharges to offset cross-subsidy and stranded costs irrespective of claimed status. Result : Appeals dismissed and impugned judgment upheld.

Table of Content
1. introduction to electricity act appeals (Para 1 , 2 , 3 , 4)
2. undisputed factual and procedural background (Para 5 , 6)
3. railways arguments on ddl status (Para 7 , 8 , 9)
4. discoms counterarguments on licensee status (Para 10 , 11 , 12 , 13)
5. formulation of four determinative issues (Para 14)
6. railways network not a distribution system (Para 15 , 16 , 17 , 18 , 19 , 20 , 21 , 22 , 23 , 24 , 25 , 26 , 27 , 28 , 29 , 30 , 31 , 32 , 33 , 34 , 35 , 36 , 37)
7. appropriate government does not confer ddl status (Para 38 , 39 , 40 , 41 , 42 , 43 , 44 , 45 , 46 , 47 , 48 , 49 , 50)
8. consumer liable for surcharge despite ddl claim (Para 51 , 52 , 53 , 54 , 55 , 56 , 57 , 58 , 59)
9. proposed amendments confirm no current exemption (Para 60 , 61 , 62 , 63 , 64 , 65 , 66 , 67 , 68 , 69 , 70)
10. appeals dismissed with surcharge liability (Para 71 , 72 , 73 , 74)

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 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 of the Electricity Act.

Factual matrix

5. The facts in the case are undisputed and are succinctly mentioned as under:

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 S

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2026 Supreme(SC) 510

SUPREME COURT OF INDIADIPANKAR DATTA, SATISH CHANDRA SHARMA, JJ.Indian Railways – AppellantVersusWest Bengal State Electricity Distribution Company Limited and Others – RespondentsCivil Appeal No. 4652 of 2024, Civil Appeal Nos. 4653-4659 of 2024Decided On : 08-05-2026

Entity maintaining internal electricity network solely for own consumption fails to qualify as deemed distribution licensee and remains liable for surcharges as consumer availing open access.

Cases Referred (8)

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SUPREME COURT OF INDIA
DIPANKAR DATTA, SATISH CHANDRA SHARMA, JJ.
Indian Railways – Appellant
Versus
West Bengal State Electricity Distribution Company Limited and Others – Respondents
Civil Appeal No. 4652 of 2024, Civil Appeal Nos. 4653-4659 of 2024
Decided On : 08-05-2026