IMPORTANT POINTS
RERC (Renewable Energy Obligation) Regulations, 2007 and RERC (Renewable Energy Certificate and Renewable Purchase Obligation Compliance Framework) Regulations, 2010 are valid and legal.
Rajasthan Electricity Regulatory Commission constituted u/s 82 of the Electricity Act, 2003 has jurisdiction to frame regulations u/s 86 on matters enumerated u/s 181 of the Act.
Rules and Regulations are presumed to be intra vires. In case the presumption is rebutted, Courts should read the provision down to save it from being declared ultra vires.
Renewable Purchase Obligation (RPO) is obligatory not for distribution licensee only.
RE obligation has been imposed on consumption and not distribution of electricity.
‘Total consumption’ in an area of supply also includes consumption by captive power plant and open access consumers.
RERC Regulations have imposed RE restrictions to serve a public purpose of reducing dependence on fossil fuels.
Provisions of National Electricity Policy cannot be read and interpreted as statutory provisions.
Regulations 2007 and 2010 do not relate to determination of tariff.

Headnote:(a) RERC (Renewable Energy Obligation) Regulations, 2007 – Regulation 9 r/w Article 48A, 51A(g), 14 and 19(1)(g) – Regulations imposing RE Obligation upon Captive Power Plants – Aiming to achieve Directive Principles of the State and Fundamental Duties– Regulations framed to implement laudable object of National Electricity Policy, 2005 – Imposing reasonable restrictions as per Article 19(6). (Para 14, 15, 16)
       (2012) 6 SCC 1 – Relied upon
       (b) Electricity Act, 2003 – Section 86(1)(e), 181, 2(3), 2(8), 2(17), 2(39) and 86(4) – Regulation 9, RERC (Renewable Energy Obligation) Regulations, 2007 – Jurisdiction of RERC – Substantive provision for the issue in question is section 86(1)(e) and not 86(4) – RERC has jurisdiction to frame the Regulations. (Para 17, 18, 19, 20, 25)
       (2009) 16 SCC 659; (2009) 15 SCC 570; (2003) 2 SCC 593; (2009) 4 SCC 72; (1992) 3 SCC 285; (2011) 5 SCC 360; (2012) 7 SCC 683 – Distinguished
       (c) Electricity Act, 2003 – Sections 82, 151, 181, 86 – Functions of Rajasthan Electricity Regulatory Commission constituted u/s 82 include framing Regulations u/s 86 on matters enumerated u/s 181 – Impugned RERC (Renewable Energy Obligation) Regulations, 2007 and RERC (Renewable Energy Certificate and Renewable Purchase Obligation Compliance Framework) Regulations, 2010 consistent with provisions of the Act – Made for carrying out the provisions of the Act – Also sub-serves mandate of Article 21 read with Article 48A and Article 51A(g) – Framing of Regulation No. 9 by the RERC in exercise of statutory power u/s 181, as provided u/s 86(1)(e) of the Act of 2003 – Held valid and legal. (Para 26, 27, 29, 30)
       (2010) 4 SCC 603; (2012) 6 SCC 1 – Relied upon
       (2004) 3 SCC 48; (2003) 7 SCC 1; (2007) 13 SCC 673 – Distinguished
       (d) Interpretation of statute – Rules and Regulations – Presumed to be intra vires – In case the presumption is rebutted, Courts should read the provision down to save it from being declared ultra vires. (Para 28)
       (e) Electricity Act, 2003 – Section 86(1)(e) r/w Article 48A, Constitution of India – If not expressly provided in an enactment, Directive principles cannot be read into the provisions – Instantly, section 86(1)(e) provides for specifying a percentage of total consumption in the area of Distribution Licensee from renewable sources of energy – Contention that Renewable Purchase Obligation (RPO) is obligatory for distribution licensee only, rejected. (Para 31)
       (2001) 8 SCC 501 – Distinguished
       (f) Electricity Act, 2003 – Section 86(1)(e) – The phrase "percentage of total consumption of electricity in the area of supply of distribution licensee" – Whether pertains to distribution licensee only – Removing requirement for licence for captive power plants does not mean that they cannot be subjected to Regulatory Jurisdiction of the Commission – RE obligation imposed on consumption and not distribution – Interpretation of statute. (Para 34)
       AIR 1961 SC 1170; AIR 1952 SC 369 – Referred
       (g) Electricity Act, 2003 – Section 86(1)(e) r/w section 2(3) – Expression 'in the area of distribution licensee' occurring in section 86(1)(e) – 'Area of supply' as defined u/s 2(3) – ‘Total consumption’ in an area of supply – Also includes consumption by captive plants. (Para 35)
       (h) Electricity Act, 2003 – Section 43(2) and 86(1)(e) – Total consumption in area of supply – By way of (i) supply by distribution licensee; (ii) supply by captive power plants using lines and transmission lines of distribution licensee and (iii) from any other sources by using transmission lines of distribution licensee – Open access consumers and captive power consumers being consumers of the distribution licensees, total consumption includes consumption by consumers of distribution licensee, captive power plant and open access consumers. (Para 36, 37)
       (i) Electricity Act, 2003 – Section 43 r/w Article 19(6), Constitution of India – Distribution licensees obliged to supply power to Captive Power Plants and Open Access Consumer – No discrimination can be made between them and regular consumers – Regulations imposing restrictions in order to reduce dependence on fossil fuels – Reasonable under Article 19(6). (Para 39)
       (2001) 8 SCC 501 – Referred
       (j) Electricity Act, 2003 – Section 86(1)(3) r/w Article 21, Constitution of India – RERC (Renewable Energy Obligation) Regulations, 2007 and RERC (Renewable Energy Certificate and Renewable Purchase Obligation Compliance Framework) Regulations, 2010 – Requiring Captive Power Plants and Open Access Consumers to purchase a minimum quantum of Energy from Renewable Energy Sources – Giving effect to Constitutional guarantee under Article 21 to pollution free life – Regulations in consonance with Electricity Act, 2003 and National Electricity Policy, 2005 – Regulations are in public interest. (Para 40)
       (1991) 1 SCC 598; (2004) 12 SCC 118; (2014) 4 SCC 538 – Relied upon
       (k) Electricity Act, 2003 – Section 86(1)(g) – RERC (Renewable Energy Obligation) Regulations, 2007 – Penalty for default of Regulation 9 – Not tax – It is surcharge – Section 86(1)(g) empowering State Commission to 'levy fee for the purposes of the Act’ – It is surcharge u/s 39(2) – Compensatory in nature – Authorised by sections 142 and 147 – Provision to carry forward of RE obligation or even seeking waiver in case of genuine difficulties – Not punitive – Regulation 9, held valid. (Para 42, 43, 44)
       (2006) 5 SCC 361 – Relied upon
       (l) RERC (Renewable Energy Obligation) Regulations, 2007 – Regulation 9 r/w regulation 5, RERC (Renewable Energy Certificate and Renewable Purchase Obligation Compliance Framework) Regulations, 2010 – RPO – Captive Power Plants have right to supply power to the grid – Not necessary to curtail captive generation to satisfy RPO – Can purchase Renewable Energy Certificate. (Para 46)
       (m) Interpretation of policy – Provisions of National Electricity Policy – Cannot be read and interpreted as statutory provisions. (Para 46)
       (n) Electricity Act, 2003 – Section 62 – Regulations 2007 and 2010 not relating to determination of tariff – Section 62 not applicable. (Para 47)
       (2003) 7 SCC 1 – Relied upon
       (o) Electricity Act, 2003 – Section 181(1) and (2) r/w section 86(1)(e) and 86(4) – Section 181(2) conferring special power whereas section 181(1) confers general power to make regulations – Power u/s 181(2) being without prejudice to power u/s 181(1) – Regulations framed u/s 181(1) to give effect to section 86(1)(e) and 86(4) – Not invalid. (Para 48)
       Facts of the case:
       The Appellants are companies engaged in the business of production, manufacturing, selling non-ferrous metals, zinc and their by-products. They have established their own captive generation power plants. The Rajasthan Electricity Regulatory Commission framed RERC (Renewable Energy Obligation) Regulations, 2007 and RERC (Renewable Energy Certificate and Renewable Purchase Obligation Compliance Framework) Regulations, 2010 respectively.
       The impugned Regulations imposed Renewable Energy obligation (RE obligation) on the Captive Gencos and other obligated entities including the Appellants herein, who are Captive Gencos and open access consumers, to purchase minimum energy from renewable sources and to pay surcharge in case of shortfall in meeting the RE obligation.
       The Appellants challenged the validity of the above-mentioned Regulations before the High Court.
       The High Court has dismissed the writ petitions as being devoid of merit.
       Finding of the Court:
       The High Court has rightly upheld the validity of the impugned Regulation.
       Result: All appeals dismissed.

JUDGMENT

V. Gopala Gowda, J.

1. Leave granted.

2. These appeals by way of Special Leave are filed seeking to assail the order dated 31.08.2012, passed by the High Court of Rajasthan at Jaipur, in D.B. Civil Writ Petition No. 10911 of 2012 and batch matters, whereby, the High Court has upheld the validity of the Rajasthan Electricity Regulatory Commission (Renewable Energy Obligation) Regulations, 2007 and Rajasthan Electricity Regulatory Commission (Renewable Energy Certificate and Renewable Purchase Obligation Compliance Framework) Regulations, 2010, directing the Appellants to purchase minimum energy from renewable sources and comply with their liability under the said Regulations.

3. Brief facts which led to the filing of these cases are as under:

The Appellants in this group of appeals are companies engaged in the business of production, manufacturing, selling non-ferrous metals, zinc and their by-products. They have established their own captive generation power plants in terms of the Electricity Act, 2003 (for brevity 'Act of 2003'). The Rajasthan Electricity Regulatory Commission (for brevity 'RERC') in exercise of its power Under Sections 61, 66, 86(1)(e) and 181 of the Act of 2003, vide Notifications dated 23.3.2007 and 23.12.2010, framed RERC (Renewable Energy Obligation) Regulations, 2007 (for brevity "the Regulations of 2007") and RERC (Renewable Energy Certificate and Renewable Purchase Obligation Compliance Framework) Regulations, 2010 (for brevity "the Regulations of 2010"), respectively. The impugned Regulations imposed Renewable Energy obligation (RE obligation) on the Captive Gencos and other obligated entities including the Appellants herein, who are Captive Gencos and open access consumers, to purchase minimum energy from renewable sources and to pay surcharge in case of shortfall in meeting the RE obligation.

4. The Appellants have challenged the validity of the above-mentioned Regulations, by filing writ petitions before the High Court. The High Court vide its common impugned judgment dated 31.8.2012, after having discussed the legal contentions urged on behalf of the parties at length, has dismissed the writ petitions as being devoid of merit. The High Court held that the RERC is empowered to frame the impugned Regulations of 2007 and 2010 and levy charge and surcharge thereby for not complying with obligations, in exercise of the powers conferred Under Sections 61, 66, 86(1)(e) and 181 of the Act of 2003, in respect of the RE obligation imposed upon captive power plants and open access consumers, to purchase minimum energy from renewable sources and to pay surcharge in case of shortfall in fulfillment of such RE obligation. The High Court was of the opinion that neither the impugned Regulations can be said to be ultra vires the provisions of the Act of 2003 nor can it be said to be repugnant to Articles 14 and 19(1)(g) of the Constitution of India or the National Electricity Policy, 2005 or the Tariff Policy, 2006 framed Under Section 3 of the Act of 2003. The Appellants herein are seeking to assail the above common judgment and order dated 31.08.2012 passed by the Division Bench of the High Court.

5. Learned senior Counsel for the Appellants contended that the impugned Regulations are ultra vires to Sections 7, 9, 86(1)(a) and (e) and 181 of the Act of 2003, and also the fundamental rights guaranteed to the Appellants Under Articles 14, 19(1)(g) and it is in violation of Article 265 of the Constitution of India, the National Electricity Policy, 2005 and the Tariff Policy, 2006. They have contended that the Act of 2003 has been enacted by the Parliament with a view to encourage participation of private sectors involved in generation of electricity and with that objective, generation of electricity was de-licensed and captive generation was freely promoted and in this manner the impugned Regulations are vio

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2015 Supreme(SC) 658

Cases Referred (20)