1. Rule. Service of rule is waived by learned advocate Shri Gaurav Mathur for respondent No. 1 and learned advocate Shri Premal Joshi for respondent No. 2.

2. The present petition has been filed by the petitioners under Articles 14, 19(1)(g) and 226 of the Constitution of India as well as under the Gujarat Electricity Regulatory Commission (Security Deposit) Regulations, 2005 (hereinafter referred to as ‘the GERC Regulations’) read with the Security Deposit (Removal of Difficulties) Order, 2008, for the prayers, inter alia, that appropriate order or direction may be issued quashing and setting aside the order dated 11.4.2008 passed by respondent No. 1 and also that appropriate writ, order or direction may be issued quashing and setting aside the impugned Notices dated 6.6.2012, 21.7.2012 and 14.9.2012 issued by respondent No.2 on the grounds stated in the memo of petition.

3. The facts of the case, briefly summarized, are as follows:

3.1 It is the case of the petitions that petitioner No. 1 is a company engaged in the business of manufacturing and production of POY, dyed and grey textured yarn for which it requires electricity. Petitioner No. 1 company had executed an agreement with respondent No.1 (the then Gujarat Electricity Board (GEB) on 22.8.1995 for the power requirement of the petitioner company as stated in detail and the contract demand was fixed at 4000 KVA and also enhanced to 10000 KVA. However, the petitioner company started procuring electricity from exchanges under the Short Term Open Access Regulation of respondent No. 1 after obtaining permission from respondent No.2 since 2010. The petitioner company entered into a commercial agreement with Knowledge Infrastructure Systems Pvt. Ltd. (for short ‘KISP’) which is rendering services of power trading for purchase of electricity on/from Indian Energy Exchange (IEX). It is stated that KISP is a clearing member of IEX and the petitioner is purchasing such power. However, when the petitioner purchase power from IEX through Open Access, the consumption of power by petitioner No.1 from respondent No.2 MGVCL is reduced. It is the case of the petitioners that by the impugned order, respondent No. 2 demanded additional security in the form of bank guarantee for the total consumption even though the electricity is not supplied or purchased from the MGVCL and it is purchased directly through IEX from other suppliers. In other words, the demand (security) is insisted in respect of electricity purchased through IEX from any other supplier and not from respondent No. 2. Thus, even though electricity is not purchased or consumed, supplied by respondent No. 2, but it is purchased through IEX under Open Access, respondent No. 2 is asking for security deposit in purported exercise of powers under the Electricity Act, 2003 read with the provision of GERC Regulations and also the Security Deposit (Removal of Difficulties) Order, 2008.

4. An affidavit-in-reply is filed on behalf of respondent No.2 contending that the idea behind the security deposit is clear, that is, to protect the licensee of possible financial risks and exposure in case of default on the part of the consumer. It is contended that the object of the security deposit is to secure payment of the financial commitment of the petitioner and is to be at a level which covers the possible total consumption of electricity of the petitioner from the answering respondent No. 2. It is also contended that respondent No.2 is also a licensee under the Electricity Act, 2003 and it is under an obligation to make supply of electricity and to maintain the supply position it has to maintain the power availability position based on the demand of consumers. Thus, the arrangement has to be made with regard to possible average consumption of the consumer like the petitioner for which the security is demanded.

5. Reliance is placed by respondent No.2 on the judgment reported in 1993 Supp (4) SCC 136 in the case of Ferro Alloys Corporatio