"Supreme Court: State Electricity Commissions Not Bound by Govt Directions Under Section 108"

The Supreme Court has ruled that State Electricity Regulatory Commissions are not required to follow directions from the Central or State Governments under Section 108 of the Electricity Act, 2003. A bench, led by Chief Justice DY Chandrachud, along with Justices JB Pardiwala and Manoj Misra, agreed with a decision by the Appellate Tribunal for Electricity (APTEL). They stated that while state governments can issue policy directions, they cannot force the regulatory commissions to make decisions in a specific way when using their independent judgment. The court clarified that the law says the commissions should be "guided" by government directions, not strictly "bound" by them. This means the commissions must consider these directions but still have the freedom to make their own decisions based on the law. Background In this case, the Kerala Government instructed the Kerala State Electricity Regulatory Commission (KSERC) to reconsider a request from the Kerala State Electricity Board Limited (KSEBL) to approve Power Supply Agreements (PSAs). The state argued that not approving the PSAs would lead to higher electricity costs, affecting both the utility company and consumers. Initially, KSERC followed the state's directions and approved the PSAs. However, APTEL later overturned this decision, stating that KSERC should not be compelled by the government’s instructions but should act independently according to the law. KSEBL then appealed to the Supreme Court, which agreed with APTEL's decision that state regulatory commissions are not strictly required to follow government directives under Section 108. The Supreme Court allowed the original appeal against the KSERC order to be reconsidered by APTEL, but only on issues that were not already settled by APTEL's earlier decision. Appearances: Mr V Giri, senior counsel for the appellant Mr Aryama Sundaram, senior counsel for the first respondent (Jhabua Power Limited) Dr Abhishek Manu Singhvi, senior counsel for the second respondent (Jindal India Power Thermal Limited) Case: Kerala State Electricity Board Ltd Versus Jhabua Power Limited and Others, Civil Appeal Nos 10046-10047 of 2024 www.legalmeet.in