AN ASSOCIATION OF CORPORATE BODIES CAN ESTABLISH A CAPTIVE POWER PLANT PRIMARILY FOR THEIR OWN USE: SUPREME COURT

The Supreme Court in the case Chhattisgarh State

Power Distribution Company Ltd. vs Chhattisgarh

State Electricity Regulatory Commission observed that a captive power plant primarily for their own

use can be established by an association of corporate bodies.

The requirement would be that the consumption of SBIPL and SBMPL together should not be less than

51% of the power generated. Admittedly, the joint consumption by SBIPL and

SBMPL is more than 51% and under the provisions of the said Act, the use of electricity by it would be

for captive use only even an association of corporate bodies can establish a power plant. Since SBMPL

holds 27.6% of the ownership, the requirement of not less than 26% of shares is fulfilled by SBMPL as SBMPL holds 27.6% equity shares in SBPIL.

The fourth proviso to subsection (2) of Section 42 of

the said Act would also reveal that surcharge would not be leviable in case open access is provided to a person who has established a captive generating plant for carrying the electricity to

the destination of his own use and under Section 9 of the said Act, could be an

individual or a body corporate or association or body of individuals, whether incorporated or not, it is clear that the person will get

benefit even an association of corporate bodies can establish a captive power

plant it has been seen. The definition of “person” is

wide enough to include any company or body corporate or association or body of individuals, whether

incorporated or not, or artificial juridical person it should be primarily for the

use of the members of such cooperative society or association is the requirement,

the Bench observed while referring to the provisions of the Electricity Act.

The BPIL, the respondent contended and supported the impugned judgment that no permission is required from the Commission for supply of electricity for its own use. Thereafter the appellant Company contended that unless SBPIL consumes 51% of the aggregate electricity generated by it, it will not be entitled to get the benefit under

Section 9 of the said Act, in an appeal filled before the Apex Court.

An appeal was dismissed by the Appellate Tribunal for Electricity filed by

the Company further The Commission held that SBPIL was entitled to supply electricity to its sister concern SBMPL and the

same would qualify to be treating as own consumption and within the ambit of Section 9 read with Section 2(8) of the Electricity Act, 2003 and Rule 3 of the Electricity Rules, 2005 SBPIL submitted a petition

for providing open access and wheeling of power

through the transmission system of the Chhattisgarh

State Power Distribution Company Ltd (Company) for captive use by SBMPL to the Chhattisgarh State Electricity Regulatory Commission, the commission. A Captive Generation Plant is established by

SBPIL, and is a sister concern of SBPIL Shri Bajrang Power and I spat Ltd and

Shri Bajrang Metallics and Power Ltd, SBMPL.