INTRODUCTION

1. The appellants have filed the present intra-court appeal impugning a judgment dated 22.05.2023 [hereinafter ‘the impugned order’] passed by the learned Single Judge of this Court dismissing the writ petition filed by the appellants– W.P.No.46495/2012 (GM-KEB).

2. Appellant No.1 - Karnataka Power Transmission Corporation Limited [hereinafter referred to as ‘KPTCL’], is a Government Company and its shares are held by the State of Karnataka. It is the State Transmission Utility as defined under Section 39 of the Electricity Act, 2003 [hereinafter referred to as ‘the Act’]. KPTCL is engaged in the business of transmission of electricity in the State of Karnataka, and its functions are set out under Sections 39(2) and 40 of the Act. Appellant No. 2 - the State Load Despatch Centre [hereinafter referred to as ‘SLDC’], constituted under Section 31 of the Act. KPTCL operates the SLDC as per the first proviso to Section 31(2) of the Act. The primary function of the SLDC is to ensure integrated operation of the power system in the State of Karnataka.

3. Respondent No.1, M/s.Shamanur Sugars Limited [hereinafter ‘SSL’], is a company incorporated under the provisions of the Companies Act, 1956, having its registered office at Davangere, Karnataka. SSL is a generating company and has established a bagasse-based co-generation power plant with a capacity of 20 MWs. Respondent No.2 is the Central Electricity Regulatory Commission [hereinafter referred to as ‘CERC’], constituted under Section 76 of the Act to discharge the functions enumerated under Section 79 of the Act.

4. The appellants had filed the writ petition, from which the present appeal arises, challenging an order dated 09.10.2012 (hereafter ‘the CERC’s order’) passed by the CERC in Petition No. 124/MP/2011. SSL had filed the said petition, inter alia, challenging the amended condition, Clause (m) (hereafter referred to as ‘the impugned condition’ or ‘the impugned clause’), inserted by the SLDC in the Standing Clearance and No-Objection Certificate [hereinafter referred to as ‘SC/NOC’] issued to SSL for inter-State open access transmission. The CERC set aside the impugned clause and directed the appellants to settle the dues of SSL from January, 2010 onwards in accordance with Regulation 20 (5) of the CERC (Open Access in Inter-State Transmission) Regulations, 2008 [hereinafter referred to as ‘the Open Access Regulations’]. The appellants, inter alia, contended that (i) the CERC lacks the jurisdiction to pass the said order; (ii) the SLDC’s action in inserting the said clause was statutory in nature and not administrative ; and (iii) Regulation 8 of the Open Access Regulations is ultra vires the provisions of the Act. The learned Single Judge dismissed the writ petition by the impugned order. The learned Single Judge upheld the CERC’s order and further directed the State Government to establish a separate independent entity to function as the SLDC.

5. Before considering the import of the reliefs sought by the appellants in the writ petition and the challenge raised in the present appeal, it is relevant to set out the factual context in which the controversy involved in the writ petition and the present appeal arises.

PREFATORY FACTS

6. SSL commissioned a 2,500 TCD sugar plant along with a 20 MW bagasse-based co-generation power plant, which commenced commercial operations in September 1999. On 07.03.1998, SSL entered into a Power Purchase Agreement [hereinafter referred to as ‘the PPA’] with KPTCL for selling surplus power of 10 to 15 MWs to the State grid. The PPA was for a term of ten years.

7. The PPA came to an end in September 2009. Thereafter, SSL was under no obligation to sell power to KPTCL or its successors. SSL, after meeting its captive load, commenced selling its surplus power on short-term open access through bilateral sales and the Power Exchange to consumers outside Karnataka. Accordingly, SSL applied for SC/NOC from the SLDC as mandatorily required f