Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Online)(Kar) 28684

THE HIGH COURT OF KARNATAKA
K.S. Hemalekha, J
Distributed Solar Power Association – Appellant
Versus
Karnataka Electricity Regulatory Commission – Respondent
WRIT PETITION No.13316/2025|WRIT PETITION No.14646/2025|WRIT PETITION No.26022/2025|WRIT PETITION No.30238/2025

Advocates:
For the Appellants/Petitioners: C.K. Nandakumar, Mohammed Shameer, Dhyan Chinnappa, Lomesh Kiran N., Vishrov Mukharjee, Yashaswi Kant, Twinkle J. Chadwa, Ajay T.
For the Respondents: Pratibhanu Singh Kharola, Aravind Kamath, K.N. Phaneendra, Shivaprasad Shanthanagoudar, Shahabaaj Husain

State regulatory bodies cannot impose procedural verification requirements for captive power status that deviate from statutory thresholds and proportionality principles established by judicial precedent, particularly when such procedures are introduced without mandatory public consultation.

Headnote:(A) Electricity Act, 2003 - Sections 9, 42, 86, 181 - Electricity Rules, 2005 - Rule 3(1)(a) - Captive generating plant status - Verification procedure - Proportionality principle - Unitary Qualifying Ratio - Challenge to order prescribing dynamic procedure for data collection, scrutiny, and verification of captive status - Held, impugned order prescribing UQR based on total actual captive consumption deviates from established qualifying benchmarks - (Paras 11, 28, 32, 47)

(B) Principles of Natural Justice - Regulatory order - Requirement of public consultation - When a statutory authority issues a procedure that materially alters the substantive rights and obligations of stakeholders, failure to provide prior notice or consultation violates the legislative scheme and principles of natural justice. (Paras 14, 48)

Facts of the case:
Petitioners, entities involved in captive power generation and consumption, challenged a state regulatory order that introduced a procedure for verifying the captive status of generating plants. The order introduced a dynamic 'Unitary Qualifying Ratio' (UQR) formula based on total actual consumption, which petitioners argued was contrary to statutory rules and binding judicial precedent that established proportionality based on qualifying thresholds.

Findings of Court:
The Court observed that the regulatory commission lacked the power to substitute the statutory qualifying ratio with a dynamic formula based on total consumption. The methodology introduced fundamentally altered the verification mechanism established under the rules and the interpretation provided by the higher judiciary.

Issues: Whether the regulatory commission's order prescribing a proportionality test based on total actual consumption is contrary to statutory rules and established judicial precedent, and whether the process lacked necessary public consultation.

Ratio Decidendi: The proportionality principle, as interpreted by the Supreme Court, is inherently linked to the minimum qualifying captive consumption threshold rather than total actual generation. A regulatory authority cannot, through subordinate procedural orders, override specific qualifying benchmarks or introduce substantive criteria that deviate from the parent rules and authoritative judicial pronouncements without statutory support.

Result: Writ petitions are allowed; the impugned order is quashed, with direction for reconsideration after following due consultative process.

Table of Content
1. procedures for verification of captive power plant status. (Para 1 , 2 , 3 , 4 , 5 , 6 , 7 , 8 , 9 , 10)
2. challenge to kerc's authority and methodology regarding uqr. (Para 11 , 12 , 13 , 14 , 15 , 16 , 17 , 18)
3. regulatory justification for usage of proportionality and anti-gaming tests. (Para 19 , 20 , 21 , 22 , 23 , 24 , 25 , 26 , 27)
4. statutory framework of electricity rules 2005 and precedent. (Para 28 , 29 , 30 , 31 , 32 , 33 , 34 , 35 , 36 , 37)
5. impermissibility of dynamic uqr violating established apex court standards. (Para 38 , 39 , 40 , 41 , 42 , 43 , 44 , 45 , 46 , 47 , 48 , 49)

IN W.P.NO.13316/2025

BETWEEN:

DISTRIBUTED SOLAR POWER ASSOCIATION

THROUGH ITS AUTHORIZED

REPRESENTATIVE FAIZA ZIA

REGISTERED OFFICE OF THE

SOCIETY IS AT A-57,

DDA SHEDS, OKHLA INDUSTRIAL,

PHASE-II, NEW DELHI-110020.

...PETITIONER

(BY SRI C.K. NANDAKUMAR, SENIOR COUNSEL FOR

SRI MOHAMMED SHAMEER, ADVOCATE)

AND:

1. KARNATAKA ELECTRICITY REGULATORY COMMISSION

REGISTERED OFFICE NO.16, C-1,

MILLERS TANK BUND RD,

BED AREA, VASANTH NAGAR,

BANGALORE-560052.

THROUGH SECRETARY.

2. CENTRAL ELECTRICITY AUTHORITY

REGISTERED OFFICE AT SEWA BHAWAN,

RAMA KRISHNA PURAM,

SECTOR-1, NEW DELHI-110066.

THROUGH CHAIRPERSON.

... RESPONDENTS

(BY SMT. PRATIBHANU SINGH KHAROLA, ADVOCATE FOR R-1;

SRI ARAVIND KAMATH, ASG FOR R-2;

SRI K.N. PHANEENDRA, SENIOR COUNSEL FOR

SRI SHIVAPRASAD SHANTHANAGOUDAR, ADVOCATE FOR IMPLEADING

APPLICANT ON I.A.NO.2/2025)

THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227

OF THE CONSTITUTION OF INDIA, PRAYING TO ORDER OR DIRECTION

SETTING ASIDE / QUASH THE SUO-MOTU ORDER PASSED BY LD. KERC

DATED 28.03.2025 VIDE ANNEXURE-A WHEREBY LD. KERC HAS LAID

DOWN THE PROCEDURE FOR DATA COLLECTION, SCRUTINY AND

VERIFICATION OF INTRA-STATE CAPTIVE STATUS OF GENERATING

PLANTS AND CAPTIVE USERS, CHALLENGED HEREIN AND ETC.

IN W.P.NO.14646/2025

BETWEEN:

JSW ENERGY LIMITED

A COMPANY INCORPORATED UNDER

THE COMPANIES ACT, 1956

HAVING ITS REGISTERED OFFICE AT

JSW CENTRE, BANDRA KURLA COMPLEX,

BANDRA (EAST), MUMBAI-400051

REPRESENTED BY ITS

AUTHORIZED SIGNATORY

MR. KARTIKEYA MISRA,

Email: kartikeya.misra@jsw.in

...PETITIONER

(BY SRI DHYAN CHINNAPPA, SENIOR COUNSEL FOR

SRI LOMESH KIRAN N., ADVOCATE)

AND:

KARNATAKA ELECTRICITY REGULATORY COMMISSION

TANK BED AREA, 16C-1,

MILLERS TANK BUND RD,

KAVERAPPA LAYOUT, VASANTH NAGAR,

BENGALURU, KARNATAKA-560052

REPRESENTED THROUGH ITS SECRETARY

Email: kerc-ka@nic.in

...RESPONDENT

(BY SMT. PRATIBHANU SINGH KHAROLA, ADVOCATE)

THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF THE

CONSTITUTION OF INDIA, PRAYING TO QUASH THE IMPUGNED ORDER

DATED 28.03.2025 PASSED BY THE LD. COMMISSION AS BEING,

PRODUCED AT ANNEXURE-A; QUASH THE KERC CAPTIVE VERIFICATION

PROCEDURE FOR VERIFICATION OF CAPTIVE STATUS OF CAPTIVE

GENERATING PLANT AND ITS CAPTIVE USER(S) LOCATED WITHIN

STATE OF KARNATAKA ALONG WITH ITS ANNEXURES AS SET OUT IN

THE IMPUGNED ORDER DATED 28.03.2025 PASSED BY THE LD.

COMMISSION.

IN W.P.NO.26022/2025

BETWEEN:

1. SEMBCORP GREEN INFRA PRIVATE LIMITED

(PREVIOUSLY KNOWN AS GREEN

INFRA WIND ENERGY LIMITED)

A COMPANY REGISTERED UNDER

THE COMPANIES ACT, 2013

THROUGH ITS AUTHORIZED REPRESENTATIVE

SHRIKANTH SHANTESHRAO KULKARNI,

ASSISTANT VICE PRESIDENT

REGISTERED OFFICE AT BUILDING 7A,

LEVEL 5, DLF CYBER CITY,

GURUGRAM-122002.

2. GREEN INFRA WIND POWER GENERATION LIMITED

A COMPANY REGISTERED UNDER

THE COMPANIES ACT, 2013

THROUGH ITS AUTHORISED REPRESENTATIVE

SHRIKANTH SHANTESHRAO KULKARNI

ASSISTANT VICE PRESIDENT

BUILDING 7A, LEVEL 5, DLF CYBER CITY,

GURUGRAM-122 002, HARYANA.

3. GREEN INFRA CLEAN SOLAR ENERGY LIMITED,

A COMPANY REGISTERED UNDER

THE COMPANIES ACT, 2013

THROUGH ITS AUTHORIZED REPRESENTATIVE

SHRIKANTH SHANTESHRAO KULKARNI

ASSISTANT VICE PRESIDENT

REGISTERED OFFICE AT BUILDING 7A,

LEVEL 5, DLF CYBERCITY,

GURUGRAM, HARYANA-122002.

4. GREEN INFRA SOLAR POWER PROJECTS LIMITED

A COMPANY REGISTERED UNDER

THE COMPANIES ACT, 2013

THROUGH ITS AUTHORIZED REPRESENTATIVE

SHRIKANTH SHANTESHRAO KULKARNI

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2026 Supreme(Online)(Kar) 28684

THE HIGH COURT OF KARNATAKAK.S. Hemalekha, JDistributed Solar Power Association – AppellantVersusKarnataka Electricity Regulatory Commission – RespondentWRIT PETITION No.13316/2025|WRIT PETITION No.14646/2025|WRIT PETITION No.26022/2025|WRIT PETITION No.30238/2025

State regulatory bodies cannot impose procedural verification requirements for captive power status that deviate from statutory thresholds and proportionality principles established by judicial precedent, particularly when such procedures are introduced without mandatory public consultation.

THE HIGH COURT OF KARNATAKA
K.S. Hemalekha, J
Distributed Solar Power Association – Appellant
Versus
Karnataka Electricity Regulatory Commission – Respondent
WRIT PETITION No.13316/2025|WRIT PETITION No.14646/2025|WRIT PETITION No.26022/2025|WRIT PETITION No.30238/2025