Summary of the Judgment: Torrent Power Limited vs. U.P. Electricity Regulatory Commission & Ors. (2025 INSC 838)

Related Law

This judgment pertains to the Electricity Act, 2003, specifically addressing:

• Jurisdiction of Electricity Regulatory Commissions (ERCs) under Sections 2(27), 14, 17, 61-63, 86, 128, and 129.

• The role of distribution licensees and franchisees in electricity distribution.

• Maintainability of petitions filed in public interest before ERCs.

• Regulatory oversight over franchisee agreements.

Background & Key Issues

1. Parties Involved:
   Appellant: Torrent Power Limited (Distribution Franchisee for Agra’s urban area).
   Respondents: U.P. Electricity Regulatory Commission (UPERC), Dakshinanchal Vidyut Vitran Nigam Ltd. (DVVNL), and Rama Shanker Awasthi (Respondent No. 4).

2. Dispute:
   Respondent No. 4 filed a petition before UPERC under Section 128 of the Electricity Act, 2003, challenging:
   The Distribution Franchisee Agreement (DFA) between Torrent Power and DVVNL.
   Alleged violation of Section 17 (transfer of utility without UPERC approval).
   Undervalued input rates leading to cross-subsidization by other consumers.

3. UPERC’s Order (16.07.2015):
   Held the petition maintainable in public interest.
   Formed an Expert Committee to assess:
   Yearly reduction in losses.
   Improvement in collection efficiency.
   Benefits passed to consumers.

4. APTEL’s Order (28.07.2016):
   Upheld UPERC’s jurisdiction but clarified that ERCs cannot entertain Public Interest Litigations (PILs).
   Stated that franchisee performance impacts tariff, hence UPERC can review.

5. Supreme Court’s Analysis:

Key Legal Questions & Findings

1. Whether ERCs Can Entertain Petitions in Public Interest?

• Held: No.
  ERCs derive power from the Electricity Act, 2003 and cannot assume jurisdiction beyond statutory provisions.
  Section 86(1)(f) allows adjudication only between licensees & generating companies, not individual consumers.
  Consumer grievances must be addressed via Section 42(5) (Consumer Grievance Redressal Forum).
  Exception: If a petition relates to tariff determination (Sections 61-63), ERCs can intervene as it affects public interest.

2. Whether UPERC Could Investigate the Franchisee Agreement Under Section 128?

• Held: No.
  Section 128 permits investigation only if:
  A licensee violates license conditions.
  A licensee/generating company contravenes the Act or regulations.
  Franchisees are not licensees; they operate under the distribution licensee (DVVNL).
  No violation of Section 17 (no transfer of utility; franchisee is an agent, not a licensee).
  No proof of tariff violation by Torrent Power.

3. Whether ERCs Can Review Franchisee Performance?

• Held: No direct regulatory oversight.
  Franchisees are agents of distribution licensees (Section 2(27) & 7th proviso to Section 14).
  ERCs regulate only licensees, not franchisees.
  UPERC overstepped by micromanaging Torrent’s efficiency, losses, and collections.

Conclusion & Final Decision

• Supreme Court Allowed the Appeal:
  Set aside APTEL’s order and UPERC’s investigation.
  Held that:
  ERCs cannot entertain PILs under the Electricity Act.
  No violation of Section 17 (franchisee agreement valid).
  Section 128 investigation unjustified (no breach by DVVNL).
  ERCs cannot regulate franchisees directly (only through licensees).

• Expert Committee’s report disregarded.

• No costs imposed.