Chapter IV LICENSING OF TRANSMISSION AND SUPPLY OF ELECTRICITY

(1) No person shall carry on business of transmitting, distributing or supplying (whether in bulk or not) electricity in the State except-

(a) the Board constituted under section 5 of the Electricity (Supply) Act, 1948,

(b) a Government company or a body corporate owned or controlled by the State Government to which undertakings vested in the State alongwith functions, duties, powers and obligations, are transferred under sub-section (3) of section 28 by schemes published in the Official Gazette, hereunder,

(c) under a licence granted under section 20 or exemption granted by the Commission under section 26 or under a sanction granted by the State Government under section 27,

(d) under a licence granted by the State Government under section 3 of the Indian Electricity Act, 1910 before the commencement of this Act or under sanction given by the Government under section 28 of that Act before such commencement so long as such licence or sanction is subsisting: Provided that the Board referred to in clause (a) and the Government company or body corporate owned or controlled by the State Government referred to in clause (b) shall carry on business of transmitting or supplying (whether in bulk or not) electricity subject to such terms and conditions as the Commission may, by notification in the Official Gazette, specify:

Provided further that the persons to whom a licence or sanction referred to in clause (d) has been granted or given shall -

(i) be deemed to be licensees or exemption holders under this Act on the terms and conditions on which the licence or sanction had been granted;

(ii) the provisions of this Act applicable to a licensee shall mutatis mutandis apply to such deemed licensees or exemption holders; and (iii) the licence, or sanction granted to the deemed licensees or exemption holders shall be subject to such modification as the Commission may make consistent with the objective and purpose of the Act.

(2) Where any difference or dispute arises as to whether any person is or is not engaged or about to engage in the business of transmitting or supplying or distributing electricity, the matter shall be referred to the Commission and the decision of the Commission thereon shall be final.

(3) No licensee shall, on or after the date of the commencement of this Act, supply electricity to any consumer unless a meter is installed for ascertaining the quantity of electricity supplied to the consumer: Provided that a licensee who on the date of the commencement of this Act supplies electricity without installation of a meter to an occupant of land assessed or held for the purpose of agriculture in the specified area of supply of the licensee may continue to supply till 30th June, 2006 electricity to such occupant without installation of a meter: Provided further that the licensee shall before the said date install meters for ascertaining the quantity of electricity supplied to such occupants in a specified area of supply of the licensee in accordance with a scheme for progressive installation of meters formulated by the Commission.

(4) No licence to distribute or supply electricity in a specified area of distribution or supply shall be granted to a generating company-

(a) if grant of such licence is likely to adversely affect the operation of the power system or organised development of electricity industry or is not in public interest or in the interest of the consumers in the specified area of distribution or supply, or

(b) unless the generating company undertakes to charge such tariff to the consumers in a specified area of distribution or supply of an existing licensee as is equal to or less than the 3tariff charged by such licensee in such area.

(1) The Commission may, on an application made to it in such form and on payment of such fee as may be specified by regulations, grant a licence to any person- (a) to transmit electricity in a specified area of transmission; or

(b) to distribute electricity in a specified area of distribution; or

(c) to supply electricity in a specified area of supply; or

(d) to supply electricity in bulk to any other licensee; or

(e) to engage in one or more of the activities mentioned in clauses (a) to (d):

Provided that no application for a licence to transmit electricity shall be entertained unless the applicant has obtained the approval of the State Transmission Utility in such manner as may be specified by regulations.

Explanation.- For the purpose of this Chapter and Chapter VI, the expression `specified area’ means the area specified in the licence.

(2) (a) (i) A person who applies for a licence under sub-section (1) shall publish a notice of his application for the information of the public specifying therein that if there is any objection to the application, the same may be sent to the Commission for its consideration;

(ii) the notice of his application shall be published within such time, in such manner and containing such particulars as the Commission may specify by regulations. (b) The Commission shall not grant a licence until,- (i) all objections and suggestions received by the Commission with reference to the application have been considered by the Commission:

Provided that no objection or suggestion shall be considered unless it is received before the expiration of such period not being less than a month from the date of the first publication of the notice under clause (a), as the Commission may by regulations specify; and

(ii) in the case of an application for a licence for an area including the whole or any part of any cantonment, aerodrome, fortress, arsenal, dockyard or camp or of any building or place in the occupation of the Central Government for defence purposes, the Commission has ascertained that there is no objection from the Central Government to the grant of the licence.

(c) Where an objection is received from any local authority concerned, the Commission shall, if in its opinion, the objection is untenable, record the opinion in writing and communicate it to such local authority alongwith reasons therefore.

(3) (a) There shall be specified in a licence -

(i) the specified area of transmission, or

(ii) the specified area of distribution, or

(iii) the specified area of supply, or

(iv) other licensee or person to whom electricity may be supplied in bulk, and

(v) such terms and conditions including those relating to transmission or distribution or supply as may be specified by regulations.

(b) The Commission may specify by regulations the conditions to be included in a licence requiring a licensee to-

(i) enter into an agreement with another person permitting such person to use electric lines, electrical plant and associated equipment operated by the licensee;

(ii) furnish information and documents which the Commission may require for its purpose;

(iii) inform the Commission of any scheme permitted by the licence which the licensee proposes to undertake;

(iv) undertake such functions and obligations of the Board under the Indian Electricity Act, 1910 and the Electricity (Supply) Act, 1948 as the Commission may specify by regulations;

(v) refer a disupte arising under the licence for determination by the Commission or by an arbitrator appointed by the Commission;

(vi) supply electricity in bulk to other licensees or exemption holder or sanction holder in the State or to any person outside the State;

(vii) comply with any direction given by the Commission; and (viii) act in accordance with the terms and conditions of the licence.

(4) A licence granted for transmission of electricity may authorise the licensee to construct, maintain or operate any intra-State transmission system under the direction, control and supervision of the State Transmission Utility.

(5) The provisions contained in the Schedule to the Indian Electricity Act, 1910 shall be deemed to be incorporated with, and to form part of, every licence granted under this Chapter save in so far as they are expressly added to, varied or excluded by the licence and shall, subject to any such additions, variations or exceptions which the Commission may make, apply to the undertaking authorised by the licence in relation to its activities in the State: Provided that where a licence is granted by the Commission for the bulk supply of electricity to other licensees for distribution or supply by them, then in so far as such licence relates to such bulk supply, the provisions of clauses IV, V, VI, VII, VIII and XII of the said Schedule shall not be deemed to be incorporated in the licence.

(6) The grant of a licence to a person shall not in any way hinder or restrict the power of the Commission to grant a licence to another person within the same specified area for a like purpose.

(1) Subject to the provisions of this Act, the provisions of sections 12 to 26 of the Indian Electricity Act, 1910 shall have effect as if reference to a licensee in those provisions is a reference to a licensee under this Act.

(2) (a) Where-

(i) any person neglects to pay any charge for electricity or any sum other than a charge for electricity due from him to the Board, or a licensee (hereinafter in this sub-section referred to as “the licensee”) in respect of the supply of electricity to him, and

(ii) the Board or the licensee to whom such charge or other sum is due is a Government company or a corporation owned or controlled by the State Government,

such charge or other sum or the aggregate of such charge and other sum due to the Board or the licensee shall be recoverable as arrears of land revenue.

(b) For the purpose of effecting recovery of the charge or sum or both the charge and sum due from a person under clause (a) as the arrears of land revenue, such officer as may be appointed by the State Government in this behalf by notification in the Official Gazette, shall have and exercise all the powers and perform all the duties of the Collector under the Bombay Land Revenue Code, 1879.

(c) No suit or other legal proceeding shall lie in any civil court against the recovery of charge or other sum due as arrears of land revenue unless the person from whom such charge or sum is due deposits the amount of such charge or sum with the Board or the licensee:

Provided that the court may, in the case of hardship caused to the person from whom such charge or sum is due, in depositing the whole amount, dispense with deposit of the amount to the extent of not more than twenty-five percent of the amount due.

(1) Where in its opinion the public interest so requires, the Commission may, on the application of the licensee and if the licensee is not a local authority, on the application of the local authority concerned or otherwise, may make such amendments in the terms and conditions of a licence as it thinks fit having regard to the object and purposes of this Act: Provided that no such amendment, other than an amendment by virtue of a term or condition of a licence or of a term or condition imposed under sub-section (5) of section 23, shall be made except with the consent of the licensee. (2) Where the licensee has made an application under sub-section (1) proposing an amendment in his licence, the following provisions shall apply, namely:- (a) the licensee shall invite objections from interested persons by publishing a notice of the application in such manner and with such particulars as the Commission may specify by regulations; (b) the Commission shall not make any amendment until all objections received by it with reference to the application within one month from the date of the first publication of the notice have been considered; (c) in the case of an application proposing an amendment in an area of supply or distribution comprising the whole or any part of the cantonment, aerodrome, fortress, arsenal, dockyard or camp or of any building or place in the occupation of the Central Government for defence purposes, the Commission shall not make the amendment except with the consent of the Central Government. (3) Before making any amendment in a licence otherwise than on the application of the licensee, the Commission shall publish the proposed amendment in such manner and with such particulars as the Commission may specify by regulations and consider all objections received by it with reference to the proposed amendment within one month from the date of the publication of the notice.

(1) The Commission may inquire into the functioning of any licensee in carrying out the obligations under this Act or regulations made thereunder or the terms and conditions of the licence,- (a) upon receiving a complaint relating to the functioning of the licensee from a consumer or association of consumers; or (b) upon a reference made to it by the State Government, Central Government, the Central Commission, Central Electricity Authority or any other Authority; or (c) on its own motion. (2) If upon making such inquiry, the Commission is of the opinion, that the public interest so requires, it may revoke a licence in any of the following cases, namely:- (a) where the licensee, in the opinion of the Commission, has committed a willful or unreasonably prolonged default in doing anything required by or under this Act or regulations; (b) where the licensee commits a breach of any of the terms and conditions of the licence, the breach of which is expressly declared by such licence to render it liable to revocation; (c) where the licensee fails within the period specified in the licence or any longer period that the Commission may, by order, allow - (i) to show, to the satisfaction of the Commission, that he is in a position to discharge the duties and obligations imposed on him by the licence; and (ii) to make the deposit or furnish the security required by the licence; (d) where in the opinion of the Commission the financial position of the licensee is such that the licensee is unable to discharge the duties and obligations imposed on him; and (e) where the licensee, in the opinion of the Commission has made default in complying with a direction given by the Commission. (3) Where in its opinion the public interest so requires, the Commission may, on the application or with the consent of the licensee, and if the licensee is not a local authority, after consulting the local authority concerned, revoke a licence as to the whole or any part of the area of transmission, distribution or supply upon such terms and conditions as it thinks fit. (4) No licence shall be revoked under sub-section (2) unless the Commission has given to the licensee not less than thirty days’ notice in writing, stating the grounds on which it is proposed to revoke the licence and has considered any cause shown by the licensee within the period of that notice, against the proposed revocation. (5) The Commission may, instead of revoking the licence under sub-section (2), permit it to remain in force subject to such modifications or such further terms and conditions as it thinks fit to impose and the terms and conditions so imposed shall be binding upon, and be complied with by, the licensee, and be of like force and effect as if they were contained in the licence.

(1) Where the Commission revokes a licence, under sub-section (2) of section 23, the following provisions shall apply, namely:- (a) The Commission shall serve a notice of revocation upon the licensee and shall fix a date on which the revocation shall take effect and on and with effect from that date or on and with effect from an earlier date, on which the undertaking of the licensee is sold to a purchaser in pursuance of clause (c) or is delivered to a designated purchaser in pursuance of sub-section (3), all the rights, duties, obligations and liabilities of the licensee under this Act shall cease and determine. (b) The Commission shall invite applications for purchase of the undertaking of the licensee whose licence is revoked and determine the price and other terms and conditions of the sale of the undertaking in consultation with the licensee and the person whose application has been accepted. (c) The Commission may by notice in writing require the licensee to sell, and thereupon the licensee shall sell the undertaking to the person whose application has been accepted by the Commission (hereinafter in this section referred to as “the purchaser”). (2) Where an undertaking is sold under sub-section (1), the purchaser shall pay to the licensee the purchase price of the undertaking determined under clause (b) of sub-section (1). (3) Where the Commission issues any notice under clause (c) of sub-section (1) requiring the licensee to sell the undertaking, it may by such notice require the licensee to deliver, and thereupon the licensee shall deliver on a date specified in the notice, the undertaking to the designated purchaser pending the payment of the purchase price of the undertaking: Provided that in any such case, the purchaser shall pay to the licensee interest at such per cent not exceeding the Reserve Bank lending rate prevailing at the time of delivery of the undertaking as the Commission may decide, on the purchase price of the undertaking for the period from the date of delivery of the undertaking to the date of payment of the purchase price. (4) (a) Where for any reason no sale of the undertaking has been effected under sub-section (1), the Commission may, in consultation with the State Government - (i) by an order published in the Official Gazette, authorise any person or body of persons to take over the management of the undertaking of a licensee for such period not exceeding five years from the date of revocation as may be specified in the order, (ii) endeavour to sell the undertaking during the aforesaid period. (b) On the issue of the order authorising the taking over of the management of the undertaking - (i) all persons in-charge of the management immediately before the issue of the order shall be deemed to have vacated their offices; and (ii) the person or body of persons authorised to take over (hereinafter in this section referred to as “the authorised person or body”) shall take all such steps as may be necessary to take into his or their custody or control all the property, effects and actionable claims to which the undertaking is or appears to be entitled and all the property and effects of the undertaking shall be deemed to be in the custody of the person or, as the case may be, body of persons as from the date of the order; (iii) where the undertaking of a licensee is a company, the persons authorised to take over the management of the undertaking shall, for all purposes, be the directors of the undertaking duly constituted under the Companies Act, 1956 and shall alone be entitled to exercise the powers of the directors of the undertaking whether such powers are derived from the said Act or the Memorandum or Articles of Association of the undertaking or from any other source; (iv) subject to the control of the Commission, the authorised person or body shall take such steps as may be necessary for the purpose of effectively managing the business of the undertaking and shall exercise such other powers and have such other duties as may be specified by the Commission; (v) the authorised person or body shall, notwithstanding anything contained in the Memorandum or Articles of Association of the licensee, exercise his or their functions in accordance with such directions as may be given by the Commission. (c) Where the undertaking of the licensee is sold within the period specified in the order issued under sub-clause (i) of clause (a), the order shall be deemed to have been rescinded from the date of sale. (d) Where the undertaking of the licensee is not sold within the period specified in clause (a), the undertaking shall vest in the State Government free from all encumbrances. (e) Where an undertaking of the licensee vests in the State Government under clause (d), there shall be paid to the licensee such value as may be determined by the State Government.

(1) No licensee shall, at any time, without the previous consent in writing of the Commission, acquire by purchase or otherwise the licence or the undertaking of, or associate himself so far as the business of transmission, distribution or supply of electricity is concerned with any person transmitting, distributing or supplying under any other licence or intending to transmit, distribute or supply electricity or with any generating company.

(2) The licensee shall not, at any time, assign his licence or transfer his undertaking, or any part thereof, by sale, mortgage, lease, exchange or otherwise without the previous consent in writing of the Commission.

(3) A holder of a licence for supply or transmission of electricity may, unless expressly prohibited by the terms of his licence or by a general or special order passed by the Commission, enter into arrangements for the purchase of electricity from -

(a) the holder of a licence for supply of electricity which permits the holder to supply electricity to other licensees for distribution or supply by them; and

(b) any supplier of electricity in accordance with the regulations of the Commission governing the power purchase and procurement process.

(4) Any agreement relating to any transaction of the nature described in sub-section (1) or sub-section (2) made without the consent of the Commission or any arrangement entered into in contravention of sub-section (3), shall be void.

(1) Notwithstanding anything contained in this Act, the Commission may by a general or special order grant exemption to any person from the requirement to have a licence to engage in transmission, distribution or supply of electricity including bulk supply subject to compliance with such conditions as may be specified by the regulations.

(2) The Commission shall not grant any exemption under sub-section (1):

(a) except with the consent of the Central Government, in any case where electricity is to be transmitted, distributed or supplied in any area forming part of any cantonment, aerodrome, fortress, arsenal, or camp or any building or place in the occupation of the Central Government for defence purposes;

(b) in any area falling within the area of transmission, distribution or supply, without giving an opportunity of hearing to the licensee of such area.

(3) An exemption under sub-section (1) may be granted having regard to such guidelines as may be specified in the regulations --

(a) to persons of a particular category; or

(b) to a particular person; or

(c) for a particular period.

(4) An exemption granted under sub-section (1) shall be published in such manner as the Commission considers appropriate.

(5) The exemption granted under sub-section (1) may be revoked by the Commission at any time for reasons to be recorded in writing.

(6) An exemption granted under sub-section (1), unless previously revoked, shall continue in force for such period as may be specified in or determined by or under the order granting the exemption.

Notwithstanding anything contained in this Act, where the State Government is of the opinion that an emergency has arisen wherein it is necessary to transmit, distribute or supply electricity to the public in an area, it may, on an application made to it in such form and on payment of such fees as may be prescribed by an order in writing grant sanction to a person to engage temporarily, for a period not exceeding six months, in the business or activity of transmission, distribution or supplying electricity in such area and in accordance with such conditions as may be specified in the order.