IMPORTANT POINTS
Section 84(2) of the Act is only an enabling provision to appoint a High Court Judge as a Chairperson of the State Commission of the said Act and it is not mandatory to do so.
The commission must have a person of law as a Member.
In any adjudicatory function of the State Commission, it is mandatory for a member having the aforesaid legal expertise to be a member of the Bench.
This judgment will apply prospectively and would not affect the orders already passed by the Commission from time to time.

Headnote:(a) Electricity Act, 2003 – Sections 84 and 85 – Chairperson or a Member of the State Commission can be chosen from fields mentioned – However, section 84(2) providing for selection of a person who is, or has been, a Judge of the High Court as Chairperson and in consultation with Chief Justice of the respective High Court – Use of word ‘shall’ in section 84(1) and word ‘may’ in section 84(2) – Whether section 84(2) mandatory or facilitative – Held, legislature only envisaging a possibility of appointment of a Chairperson from the pool of sitting or retired Judges of the High Court, in which case the method of appointment would be different from the one as envisaged under Section 85. (Para 75, 80)
       (b) Electricity Act, 2003 – Section 86 – Functions of State commission – held not adjudicatory but regulatory – Only section 86(1)(f) requires the Commission to adjudicate disputes between the licencees and generating companies – Here also commission has option to refer the dispute to arbitration – Held, functions of State Commission do not require its Chairperson to be a Judge. (Para 81)
       (2014) 11 SCC 53; 1992 Supp (2) SCC 651; (2008) 14 SCC 107; (2011) 12 SCC 400; (2012) 10 SCC 1; (2005) 2 SCC 431; (2008) 12 SCC 372; (2013) 10 SCC 359; (1955) 1 SCR 206; (1999) 7 SCC 209; (1962) 1 SCR 517; (1961) 2 SCR 679; AIR 1992 SC 1341 – Referred
       (c) Electricity Act, 2003 – Section 84 – A Judge would have to be appointed mandatorily where judicial function is sought to be shifted through process of ‘tribunalisation’. (Para 86)
       (d) Interpretation of statute – Section 84(2), Electricity Act, 2003 – ‘Notwithstanding anything contained in subsection (1)’ – Dose not take away what is stated in subsection (1) – Held, non-obstante clause used to emphasize necessity of consultation with Chief Justice of High Court in case of appointment of a Judge – Provision held not mandatory in nature. (Para 87)
       (2014) 10 SCC 1 (MJ-II); (2010) 11 SCC 1 (MJ-I); (2008) 4 SCC 755 (GJ-I) – Relied upon
       (2016) 9 SCC 103 (GJ-II) – Referred
       (e) Electricity Act, 2003 – Sections 94, 95, 96, 129, 142 and 146 – U/s 94 Commission having powers of civil court as regards summoning, enforcement of attendance of any person and examination on oath, discovery and production of documents, receiving affidavit of evidence, requisitioning of public records, etc. – Proceedings of Commission deemed to be judicial proceedings u/s 95 – Section 96 conferring powers of entry and seizure – Similarly, section 129 conferring power for securing compliance and sections 142 and 146 powers to punish for non-compliance of its orders – Thus Commission having all ‘trappings of a court’. (Para 93, 94
       (2016) 3 SCC 468; (1931) AC 275; 1963 Supp (1) SCR 242; AIR 1963 SC 874; (1964) 6 SCR 594; (1965) 2 SCR 366; (1992) 4 SCC 506; (2012) 10 SCC 353; (2008) 4 SCC 755 (GJ-I) – Relied upon
       (1931) 2 KB 215; 8 CLR 330, 357; (1937) 2 KB 309 – Referred
       (f) Electricity Act, 2003 – Section 84 – Two ex officials appointed as Members – Commission hiking tariff by 2:1 majority – No infirmity. (Para 111, 113)
       (2013) 1 SCC 501; (2002) 6 SCC 269 – Distinguished
       Facts of the case:
       The Electricity Act, 2003 provides for Central and State Regulatory Commissions. Insofar as the appointment of the Chairperson of these Commissions is concerned, the relevant provisions stipulate that the Chairperson “may” be a Judge of a High Court for the State Commission, a Judge of the Supreme Court or the Chief Justice of a High Court for the Central Commission. The common question, which arises for consideration in these appeals is whether the expression “may” should be read as “shall”, i.e., whether it is mandatory to have a judicial mind presiding over these Commissions in the form of a Judge.
       The Division Bench of the Madras High Court took the view that there was no such mandatory requirement though there was an option to appoint a Judge.
       The Division Bench of the Gujarat High Court in a similar case opined that it was so mandatory.
       Finding of the Court:
       Section 84(2) of the Act is only an enabling provision to appoint a High Court Judge as a Chairperson of the State Commission of the said Act and it is not mandatory to do so.
       Result:
       The appeals as well as the other transferred cases and pending application(s), if any, disposed of.

JUDGMENT :

Sanjay Kishan Kaul, J.

1. The Electricity Act, 2003 (hereinafter referred to as the ‘said Act’) provides for Central and State Regulatory Commissions. Insofar as the appointment of the Chairperson of these Commissions is concerned, the relevant provisions stipulate that the Chairperson “may” be a Judge of a High Court for the State Commission, a Judge of the Supreme Court or the Chief Justice of a High Court for the Central Commission. The common question, which arises for consideration in these appeals is whether the expression “may” should be read as “shall”, i.e., whether it is mandatory to have a judicial mind presiding over these Commissions in the form of a Judge.

2. The Division Bench of the Madras High Court vide judgment dated 7.2.2014 took the view in respect of the challenge laid to the selection process of the Chairman of the Tamil Nadu State Electricity Commission that there was no such mandatory requirement though there was an option to appoint a Judge.

3. The Division Bench of the Gujarat High Court in a similar case in respect of the appointment of a Chairperson of the Gujarat State Regulatory Commission vide impugned order dated 8.10.2015 opined that it was so mandatory.

4. The aforesaid judicial conflict being before this Court, the challenges laid in different States were transferred to this Court through Transfer Petitions vide order dated 3.11.2015.

5. The Union of India, as also some of the State Commissions are arrayed on the one side to canvas for an interpretation of the provision as it reads, while on the other side, are consumers, activists and some affected parties, who canvassed the importance of the State Regulatory Commissions and the nature of functions it performs, to establish that a Judge alone should preside over these Commissions.

6. We do not see the necessity of going into individual facts nor were the pleas advanced on that basis before us. The submissions have been based on the provisions of the said Act and the legal pronouncements dealing with the issue of the mandatory requirement of certain Commissions to be headed by a judicial mind.

The Act:

7. The said Act came into force on 10.6.2003 on publication in the Gazette. The Act seeks to consolidate the laws relating to generation, transmission, distribution, trading and use of electricity. The Preamble to the said Act states as under:

“An Act to consolidate the laws relating to generation, transmission, distribution, trading and use of electricity and generally for taking measures conducive to development of electricity industry, promoting competition therein, protecting interest of consumers and supply of electricity to all areas, rationalisation of electricity tariff, ensuring transparent policies regarding subsidies, promotion of efficient and environmentally benign policies, constitution of Central Electricity Authority, Regulatory Commissions and establishment of Appellate Tribunal and for matters connected therewith or incidental thereto.”

8. The detailed Statement of Objects & Reasons mentions that the Electricity Supply Industry in India was governed by the Indian Electricity Act, 1910, the Electricity (Supply) Act, 1948 and the Electricity Regulatory Commission Act, 1998. The State Electricity Boards constituted under the Electricity (Supply) Act, 1948 failed to perform on account of various factors inter alia fixation of appropriate tariff and the cross-subsidies reached unsustainable levels. The Electricity Regulatory Commission Act of 1998 was an endeavour to distance the Government from determination of tariffs by having independent regulatory commissions.

9. Part X of the said Act deals with matters relating to Regulatory Commissions – their constitution, powers and functions, etc. Sections 76 & 77 of the said Act are concerned with the constitution of the Central Commission and the qualifications for appointment of Members of the Central Commission. The provisions are similar to the appointment of the Members and Chairpe

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2018 Supreme(SC) 332

SUPREME COURT OF INDIAJ. Chelameswar, Sanjay Kishan Kaul, JJ.State of Gujarat & Ors. - AppellantsVersusUtility Users’ Welfare Association & Ors. - RespondentsCivil Appeal Nos. 14697, 13451 of 2015 & 3759-3760 of 2016; T.C. (C) Nos. 139, 138, 137, 140 of 2015 & 974 of 2016Decided On : 12-04-2018

Cases Referred (26)