2010 Supreme(Kar) 363

High Court of Karnataka
THE HONOURABLE MR. JUSTICE N. KUMAR & THE HONOURABLE MR. JUSTICE B. SREENIVASE GOWDA
GMR Energy Limited Represented by its Director & Another
Versus
Government of Karnataka & Others
Writ Petition Nos. 590 and 591 of 2000 (GM-RES) C/w Writ petition No.4693 of 2009 (GM-RES) and Writ Petition Nos. 9721 of 9722 of 2009 (GM-RES)
Decided On : 26-03-2010

Headnote:CONSTITUTION OF INDIA - Article 301: [N. Kumar & B. Sreenivase Gowda,JJ] Direction which totally prohibits the supply of electricity is prohibitive or restrictive of the right to trade, commerce and intercourse throughout the territory of India - Whether the impugned orders are violative of Article 301 of the Constitution of India - Held, the power to regulate is provided in Section 11 of the Act, by the Parliament. It is a statutory right conferred on the appropriate Government. By exercise of such power the Government is not curtailing the production and supply of electricity. On the contrary the direction issued is to operate and maintain the generating station. The operating/generating station means producing electricity and supplying the electricity produced. It really facilitates the production of electricity. It does not retard the production. Similarly the electricity produced is directed to be supplied to the State Grid. Therefore, there is no prohibition or restriction or curtailment of the right to supply the electricity produced. The direction also facilitates the supply of electricity. However, the electricity supplied is regulated. Instead of supplying to the customers of their choice, they are directed to supply the same to the State Grid in public interest i.e., to make it available to the public at large and not to any individual or a particular customer. This regulation is for a limited period to tide over the scarcity of electricity, faced by the common man, a farmer, a worker, and people in lower strata of society, to whom the State owes an obligation to make available electricity, which is the National Policy. If such supply were to have any adverse financial impact on the producer of the electricity, his interest is also protected under law. Therefore, the producer cannot have any grievance. Thus the interest of both the producer and customer is taken care of by law.-The provisions of Section 11 of the Electricity Act is regulatory in nature and it is not a restriction imposed on the petitioners and there is no violation of Article 301 of the constitution of India.

       DOCTRINES & MAXIMS - ’Ejusdem Generis’: [N.Kumar & B.Sreenivase Gowda,JJ] Application of doctrine -True scope of the Rule of Ejusdem Generis-Whether the doctrine of Ejusdem Gneris is attracted to exclude the circumstance of severe scarcity of electricity to the meaning of the word "Extraordinary circumstances" in Section 11 of the Act - Held, "Such other circumstances" is a general word or statement, if it follows an enumeration of circumstances of a particular or specific meaning, such general words are not to be construed in their widest extent, but are to beheld as applying only to circumstances of the same kind or class as those specifically mentioned. It is a cannon of statutory construction that where general words follow the enumeration of particular classes of things, the general words will be construed as applying only to things of the same general class as those enumerated. In the instant case the said expression is used in an explanation where the word "Extra Ordinary Circumstances" is defined, only for the purpose of Section 11(1) of the Act. Firstly the words "such other circumstances" are not used after the words "Public Interest", which is the third category constituting an extra ordinary circumstances. It is used after the two categories. The question is whether the first two categories constitute the same class or kind. If the answer is no, the principle of ejusdem generis has no application in construing the words ’such other circumstances’.-Further, The cardinal rule of interpretation is to allow the general words to take their natural wide meaning. When this general words is added by way of amendment, the intention of the parliament is clear, that these words are in addition to the other two circumstances, in the Bill before amendment, as an independent category or genus. Any other interpretation would negate the parliamentary intention and would not conform to the parliaments intended meaning of the enactment. The application of the rule would produce a result contrary to the legal meaning taking to be intended by parliament. Moreover this principle of ejusdem generis is pressed into service to resolve the ambiguity or uncertainty and reconcile incompatibility between specific and general words. In the instant case there is no ambiguity. There is no incompatibility between specific words and general words used itself constitutes an independent category or genus. "Public interest" itself is a category. If this rule is applied to define and restrict the meaning of public interest, it would lead to absurd result. In the absence of the specific words constituting a genus, there is no room for the application of the rule.

       INDIAN ELECTRICITY ACT, 2003 - Section 2(5): [N.Kumar & B.Sreenivase Gowda,JJ] Appropriate Government - State Government to invoke powers under Section 11 of the Act - Held, The location of the generating company and the power stations within the geographical jurisdiction of a State is a critical factor because the State’s jurisdiction cannot extend beyond its boundaries. The mere existence of de-mimimus supply inter-state would not take away the jurisdiction of the State Government which has to deal with the extra-ordinary circumstances existing within the State. However, even in cases where a generating station is situated within a State and if that generating station is supplying electricity outside the State to a Central Government establishment as mentioned in sub-Clauses(ii) of Clause (a) of sub-Section (5) of Section 2 the jurisdiction of the State Government to issue direction under Section 11 of the Act stands excluded. If so interpreted there is no conflict of interest between the State Government and State Government’s power under the Act as both the Government can exercise this power in public interest or under the circumstances narrated in the explanation to Section 11(1) of the Act. Therefore, in the instant case, the Appropriate Government under Section 11 of the Act, is the State government, as such the power is properly exercised.

       INDIAN ELECTRICITY ACT, 2003 - Sections 2(47), 2(72) & 2(19): [N.Kumar & B.Sreenivase Gowda,JJ] Right to open access - grant of open Access - Regulation - Held, Open access means only that the private generating companies shall not be discriminated in the use of transmission lines or distribution system or associated facilities. It does not means a right is conferred on them absolutely to supply electricity to a consumer or a licencee of their choice and that such a right cannot be curtailed under any circumstances. Therefore, grant of open access is subject to Section 11 of the Act. When electricity is needed to meet a circumstance arising in public interest or natural calamity or circumstances arising out of threat to security of the State, Public Order, the question of anybody enforcing or claiming this right of open access is not permissible. The said right could be exercised in the manner stipulated in the Regulations in the absence of any direction issued by the Government under Section 11. Thus, this right to open access is also regulated under the Act. It is not an absolute right or unbridled right. Further, The Parliament in its wisdom thought it fit to confer power on the Appropriate Government to issue directions to the Generating company to operate and maintain a generating station and the electricity produced to the State Government so that such extraordinary circumstances can be tied over. the very Act which provided for liberalisation, privatisation or open access has conferred such power on the Government to exercise the same in extra-ordinary circumstances as mentioned in the Act. The source of all these rights, obligations and power is the same Act. Therefore, the object with which this enactment is passed, the mischief sought to be remedied and the mechanism adopted, it cannot be said exercise of power under Section 11 of the Act runs counter to this concept of open access, privatisation and liberalisation of power industry in the country. Keeping in mind the interest of all stakeholders, the provisions have to be interpreted harmoniously.

       INDIAN ELECTRICITY ACT, 2003 - Section 11: [N. Kumar & B. Sreenivase Gowda,JJ] Order passed by the Government under-Direction issued to petitioners to operate and maintain generating stations owned by them and to supply the electricity produced to the State Grid - Prayer sought to quash the Government Order- Question relating to finer aspects of the National Policy on power Obligation of the government to encourage private sector participation, deligencing of generation and implementation of the concept of open access in transmission -Appropriate Government invoking Section 11 of the Act in extra-ordinary circumstances - Severe scarcity of electricity, whether constitutes an extra-ordinary circumstance arising in public interest to invoke Section 11 of the Act -Held, Under Section 11 of the Act, the appropriate Government has been vested with the power to issue a direction to a generating company to operate and maintain any generating station in accordance with the directions of the Government. This power has to be exercised only in extra-ordinary circumstances. This power to direct a generating company to operate and maintain as generating station becomes necessary only when there is scarcity of Electricity and such generating company is not producing electricity. Therefore, only when there is a scarcity or shortfall of supply of electricity, such a direction could be given. But, that by itself would not justify issue of such a direction. In other words, in ordinary circumstance, even if there is a short fall of electricity and enough electricity is not produced, the Government is not concerned with such shortfall. It is a matter between a person who generates electricity, who supplies electricity and consumes electricity. Therefore, the Parliament has used the expression "extra-ordinary circumstances" is a circumstance when the Government would be justified in exercising such power. Further, The Parliament has not left it to the discretion of the Government to decide what an extra-ordinary circumstance meant in Section 11. An explanation is added to Section 11(1) explaining the meaning of the term "extra-ordinary circumstances". As per the explanation the "extra-ordinary circumstances" means circumstances arising out of (a) threat to security of the State, public order or (b) a natural calamity or (c) such other circumstances arising in the public interest. On facts held, Therefore, as a matter of policy, in public interest, to mitigate the severe power crisis in the State, all generators of the State were directed to operate, maintain the generating stations and supply all the electricity thus generated to the State grid for the consumption of all the consumers of electricity within the State to bridge the demand-supply gap. It is only a stop gap arrangement. It is for a limited period. It is not a permanent phenomenon. The supply of electricity is sought to be regulated during crisis in public interest. Keeping in mind these well settled principles of interpretation of statutes, the purpose of the legislation, the circumstances under which the amendment was done and for the reasons set out in the impugned order, it can be held that the circumstances set out in the impugned order constitute an ’extra-ordinary circumstance’ justifying the exercise of power under Section 11 of the Act in public interest.

       INDIAN ELECTRICITY ACT, 2003 - Section 11: [N.Kumar & B.Sreenivase Gowda,JJ] Generating Company to operate and maintain the Generating Station - Direction of the Government to meet the extra-ordinary circumstances arising out of scarcity of electricity to meet the public demand -Held, What Section 11 intends is a direction to the generating company to operate and maintain the generating station in accordance with the direction of the Government. The direction to operate means to generate electricity for supply to the State grid only and not for commercial supply. Direction to maintain means to keep the generating company in good condition by checking or repairing it regularly so that the production and supply of electricity in to the State grid is unimpaired, to enable the Government to meet the extraordinary circumstance arising out of scarcity of electricity to meet the public demand. Here the direction is to supply the electricity which is generated in the generating company to the State Grid only and not to supply to their licensee or customer. Therefore, the argument that the Government has no power to issue direction under Section 11 to supply electricity to the State Grid is without any substance and accordingly it is rejected.

       INDIAN ELECTRICITY ACT, 2003 - Sections 62 :[N.Kumar & B.Sreenivase Gowda,JJ] Determination of tariff in case of shortage of supply - Applicability of Section 62 - Held, Section 62 provides for determination of tariff. It empowers the Appropriate Commission to determine the tariff in accordance with the provisions of the Act for supply of electricity by a generating company to a distribution licensee; transmission of electricity; wheeling of electricity and retail sale of electricity. In case of shortage of supply of electricity, the Appropriate Commission is empowered to fix the minimum and maximum ceiling of tariff or sale or purchase of electricity in pursuance of an agreement, entered in to between a generating company and a licensee or between licensee, for a period not exceeding one year to ensure reasonable prices of electricity. Therefore, the proviso which empowers fixation of tariff in case of shortage of supply of electricity is only between a generating company and a licensee and not in other case. Further, Section 11(2) provides that, when there is a direction to supply electricity to a State grid and the price is fixed for such supply by the Appropriate government results in adverse financial impact on such generating company, the Appropriate Commission has been conferred the power to offset the adverse financial impact. Therefore, the argument that the word ’shortage of supply of electricity’ is specifically used in Section 62 and the same is conspicuously absent in Section 11, the shortage of supply of electricity cannot be a ground to exercise power under Section 11 of fix the tariff or such power to be supplied is without any substance. Section 62 applies to a case where there is no direction under Section 11. Once the direction is granted it is Section 11(2) which is attracted and not Section 62.