The Electricity Act, 2003: Chapter - 19

288
Chapter - 19
THE ELECTRICITY ACT, 2003
The Electricity Act, 2003 (hereinafter referred as the "Act") is the latest
comprehensive enactment which has been passed to deal with various
matters relating to generation, transmission, distribution, trading and use of
electricity. The Act aims at taking measures conducive to the development
of electricity industry, through promotion of competition and protection of
the interests of consumers in terms of supply and rationalization of tariff.
Adoption of transparent policies regarding subsidies, promotion of efficient
and environmentally benign policies, constitution of a Central Electricity
Authority, framing of regulatory commissions and the establishment of an
Appellate Tribunal constitute the basic policies of the Act.
Earlier, there were three enactments, the Indian Electricity Act, 1910,
the Electricity (Supply) Act, 1948 and the Electricity R e g u l a t o r y
Commission Act, 1998, in force to regulate the generation and supply of
electricity. The Indian Electricity Act, 1910 had e m p o w e r e d the
government to grant licences to private undertakings for generation and
supply of electricity on certain terms and conditions, enabling the licence
holders to construct works and lay supply lines. It had also made provisions
for imposition of duties and for fair and non-discriminationary treatment of
consumers. The licensees under that Act had a subordinate character. In
1948, the overall responsibility for management and administration of
electricity in the states was given to state boards created under the
Electricity (Supply) Act, 1948 to fix tariff for supply of electricity to
consumers and other terms and conditions on which the supply was to be
made. The state governments could grant licence to any person after
consulting the concerned board. The licensee could, however, change rates
of supply to the consumers without obtaining the sanction of the state
government. A licensee could disconnect the supply to a consumer if he
failed to pay charges, after giving him at least seven days' clear notice before
disconnecting the supply.
Over a period of time, the performance of state electricity boards had
deteriorated and they had been found unable to take decisions on tariffs in
a professional and independent manner. The task of determining tariff in
practice was being performed by the state governments. To address this
issue, the Electricity Regulatory Commissions Act, 1998 was passed to
constitute state electricity regulatory commissions, which were empowered
to fix tariffs independently of the government.
THE ELECTRICITY ACT, 2003 289
N o w these three enactments have been repealed by the Electricity Act

of 2003, which is an improvement on them. It has given a compact shape to
the law on electricity, matching it to the changing trends in economy. It has
conveniently retained some of the institutions established earlier.
I. Underlying Policies of the Act

The policy of the Act is to promote competition in electricity industry which
is of great benefit to the consumers as it could enable them to choose
supply from the best servicing undertaking in their respective areas. The Act
has made possible for groups of people or cooperatives to get together and
set-up their own power plants to generate and to supply electricity to a
specified area like a residential colony. Accordingly, the consumers need not
be at the mercy of public sector power utilities and face increasing power
cuts for long hours. The Act not only tries to promote competition from
private sector but also seeks to extend the electricity facility to all parts of
the country. To prevent theft of electricity, the states are required to set-up
special courts to try cases relating to electricity speedily. The provisions
relating to the control of theft of electricity have a revenue focus and the
punishments have been related to quantum of electricity stolen. The Act,
therefore, pushes the reforms in the electricity supply system through three
radical measures:
(a) competition in power distribution through an open access
system;
(b) extension of the scope of captive p o w e r generation 1 to
cooperatives and associations; and
(c) forcing state electricity boards to unbundle their three functions
of power generation, transmission and distribution.
For the implementation of these policies, the following measures have
been conceived:
(i) G e n e r a t i o n of electricity is being delicensed and captive
generation is being freely permitted, though the hydro-electric
projects would need approval of the state government and
clearance from the Central Electricity Authority with a view to
take care of dam safety and optimal utilisation of water resources.
(ii) The transmission network at the central as well as state level
would be developed by a government company to be called
"Transmission Utility", having the responsibility of ensuring its
1. The Electricity Act, 2003, sec. 2(8). "Captive Generating Plant" means a power plant
set-up by any person to generate electricity primarily for his own use and includes a
power plant set-up by any co-operative society or association of persons for
generating electricity primarily for use of members of such co-operative society or
association.
290 A TREATISE ON CONSUMER PROTECTION LAWS
development in a planned and coordinated manner.

(iii) The load despatch function may be kept with the Transmission
Utility or separated from it, and in case of separation, would be
with a state government organisation/company.
(iv) Provision has been adopted for private transmission licensees.2
(v) Open access3 in transmission has been allowed with provision for
surcharge, which may be gradually .phased out.
(vi) Distribution licensees4 would be free to undertake generation and
generating companies can take up as distribution licensees.
(vii) For rural and remote areas, 'stand alone systems' 5 for generation
and d i s t r i b u t i o n have been allowed, and a decentralised
management of distribution through panchayats, users' associations,
cooperatives or franchisees has been allowed.
(viii) Trading as a distinct activity has been recognised with the
safeguard of the regulatory commissions authorised to fix ceilings
on trading margins.
(ix) In cases of direct commercial relationship between a consumer
and a generating company or a trader, the price of power would
not be regulated and only the transmission and 'wheeling
charges' 6 with surcharge would be regulated.
(x) The state governments have the option of continuing with the
state electricity boards (which under the new scheme of things
would be a distribution licensee) and the state transmission utility
(which would also be owning generation assets) without affecting
the service conditions of the employees.
(xi) An Appellate Tribunal has to be established by the central
government for disposal of appeals against the decisions of
electricity regulatory commissions.
The Act defines a "consumer" 7 to include any person who is supplied
2. Id., sec. 2(73). "Transmission licensee" means a licensee authorized to establish or

operate transmission lines.
3. Id., sec. 2(47). "Open access" means the non-discriminatory provision for the use of
transmission lines or distribution system or associated facilities with such lines or
system by any licensee or consumer or a person engaged in generation in accordance
with the regulations specified by the appropriate commission.
4. Id., sec. 2(17). "Distribution licensee" means a licensee authorized to operate and
maintain a distribution system for supplying electricity to the consumers in his area
of supply.
5. Id., sec. 2(63); 'State alone system' means the electricity system set-up to generate
power and distribute electricity in a specified area without connection to the grid.
6. See infra note 6.
7. Id., sec. 2(15).
with electricity for his own use by a licensee or the government or by any
other person engaged in the business of supplying electricity to the public. It
also includes any person whose premises have been connected for the
purpose of receiving electricity with the works of a licensee, the government
or such other person engaged in the business of supplying electricity.
II. System for Distribution of Electricity
The scheme of distribution

As regards the pro-consumer provisions of the Act, section 42 of the Act
casts a duty on every distribution licensee to develop and maintain an
efficient, coordinated and economical distribution system in his area of
supply and to supply electricity in accordance with the terms and conditions
prescribed by the Act. W i t h the permission of the state regulatory
commission, consumers may receive supply of electricity from persons other
than the distribution licensees of his area of supply. In such a situation the
consumer would have to pay an additional surcharge on the charges of
wheeling, 8 as may be specified by the state commission. 9
Every distribution licensee is bound to establish a forum for redressal of
grievances of the consumers in accordance with the guidelines as may be
specified by the state commission. 10 Such forum should be established
within six months from the date of grant of licence or any appointed date.
Any consumer, who is aggrieved by non-redressal of his grievances, may
make a representation for the redressal of his grievance to an authority to be
k n o w n as O m b u d s m a n to be appointed or designated by the state
commission. 11 The Ombudsman is supposed to settle the grievances of the
consumer within the period specified by the state commission. 12
It will be the duty of the distribution licensee to give supply of
electricity to the owner or occupier of any premises within a period of one
month after receipt of the application requiring such supply.13 If the supply
requires extension of distribution mains, or commissioning of new sub
stations, the distribution licensee shall supply the electricity to such premises
immediately after such extension or commissioning or within the period
specified by the appropriate commission. In case of a village or hamlet or
area in which no provision for supply of electricity exists, the appropriate
8. Id., sec. 2(76).'Wheeling' means the operation whereby the distribution system and
associated facilities of a transmission licensee or distribution licensee, as the case may
be, are used by another person for the conveyance of electricity on payment of
charges to be determined under section 62.
9. Id., sec. 42(4)
10. Id. sec. 42(5)
11. Id. sec. 42(6)
12. Id. sec. 42(7)
13. Id. sec. 43(1)
commission may extend the said period further as it may consider

necessary.14 If a distribution licensee fails to supply the electricity within the
specified period, he would be liable to a penalty which may be extended to
one thousand rupees for each day of default.15 These provisions would not
apply if the distribution licensee is prevented from doing so by
circumstances beyond his control or by cyclone, floods or storms or by
some other such occurrence. 16
The distribution licensee can charge prices for the supply of electricity
in accordance with the tariff fixed from time to time and the conditions of
licence. 17 The methods and principles for fixing charges for electricity are
specified by the concerned state commission. These methods and principles
should be published to give adequate publicity. 18 The charge for electricity
supplied by a distribution licensee includes a fixed charge in addition to the
charge for the actual electricity supplied and rent or other charges in respect
of any electric meter or electrical plant provided by the distribution
licensee.19
The distribution licensee is empowered to charge from a consumer any
reasonable expenses incurred in providing any electric line or electric plant
used for the purpose of giving that supply.20 A reasonable security can also
be charged from a consumer who requires supply of electricity. The security
amount will be refundable and it will carry interest equivalent to bank rate or
more as may be specified by the concerned state commission. However, a
distribution licensee will not be entitled to any security if the person
requiring supply is proposed to take supply through a pre-payment meter. 21
Further, the Act provides that where the appropriate commission has
allowed open access to certain consumers, such consumers can enter into
agreement with any person for supply or purchase of electricity.22 The state
commission will specify an electricity supply code to provide for, inter alia,
recovery of charges, disconnection for non-payment, tampering of electric
lines or meters, etc. 23
Provisions for safety

The Act contains certain provisions for the safety of persons and property
14. Id., proviso to sec. 43(1).

15. Id., sec. 43(3).
16. Id., sec. 44.
17. Id., sec. 45(1).
18. Id., sec. 45(2).
19. Id., sec. 45(3).
20. Id., sec. 46.
21. Id., sec. 47.
22. Id., sec. 49.
23. Id., sec. 50.
in the process of generation and distribution of electricity. It has been

accordingly provided that the Central Electricity Authority may, in
consultation with the state government, specify suitable measures for the
p r o t e c t i o n of the public from dangers arising from the generation,
transmission or distribution or trading of electricity, or use of electricity or
installation, maintenance or use of any electric line or electrical plant.
Measures are to be adopted for the elimination and reduction of the risk of
personal injury to any person, or damage to property of any person or
interference with use of such property. The supply or transmission of
electricity by any means not in conformity with the prescribed specifications
s h o u l d be p r o h i b i t e d . A b o u t accidents and failures of supplies or
transmissions of electricity, arrangements should be made by the Authority
for giving notice in the specified form to the appropriate commission and
the electricity inspector. 24
The A u t h o r i t y should direct a generating company or licensee to
maintain the maps, plans and sections relating to supply or transmission of
electricity. Procedure should be prescribed for the inspection of maps, plans
and sections by any person authorized by it or by electrical inspector or by
any person on payment of specified fee. Measures should also be prescribed
for specifying action to be taken in relation to any electric line or electrical
plant, or any electrical appliance under the control of a consumer for the
purpose of eliminating or reducing the risk of personal injury or damage to
property or interference with its use.25
Meters are t o be installed and operated in accordance w i t h the
regulations to be made in this behalf by the Authority. 26 This should not be
delayed by more than two years. A consumer who requires electricity would
have required to give security for the price of the meter and enter into an
agreement with the licensee for its hire. The consumer can, however, elect
to purchase his own meter. 27 The state commission is empowered to extend
the period of two years for the installation of meter by notification for a
class or classes of consumers or for an area. If a person violates any of the
conditions, the appropriate commission may make an order requiring the
default to be rectified by the concerned generating company or the
licensee. 28
Recovery of charges
In case a consumer neglects to pay any sum due from him to a licensee or a
generating company in respect of supply, transmission, distribution or
24. Id., sec. 53.

25. Ibid.
26. Id., sec. 55(1).
28. Id., sec. 55(3).
wheeling of electricity, the licensee or the generating company is empowered

to disconnect supply after giving him a notice of fifteen days. 29 However,
the supply of the electricity cannot be cut off if the consumer deposits the
amount equal to the sum claimed under protest or as security pending
disposal of the dispute. 30 It is also provided that the sum due from any
consumer cannot be recovered after a period of two years from the date
when such sum first became due, unless the same has been shown
continuously as recoverable as arrears of charges for electricity supplied. 31
Maintenance of standards of performance

The standards of performance of a licensee or a class of licensees can be
specified by the appropriate commissions after consultation with the
licensees and persons likely to be affected by them. 32 If a licensee fails to
meet the specified standards of performance, he will be liable to pay such
compensation to the person affected as will be determined by appropriate
commission. 3 3 This compensation would be in addition to any penalty
which may be imposed or prosecution initiated against him. A reasonable
o p p o r t u n i t y of being heard will be given to the licensee before
determination of compensation. The compensation will be paid by the
concerned licensee within ninety days of such determination. 34 Different
standards can be specified for a class or classes of licensees. 35 Every
licensee has to furnish to the commission information about the level of
performance achieved and the number of cases in which compensation was
paid and aggregate amount of compensation within the period specified by
the appropriate commission.36
III. Regulatory Machinery
Central Electricity Authority

Section 70 of the Act provides for the establishment of a Central Electricity
Authority as a central agency to lay down the basic guidelines for the
development of electricity system in the country and to advise central and
state governments and regulatory commission in that context. In fact, the
Central Electricity Authority, established under section 3 of the Electricity
(Supply) Act, 1948 has been deemed as established under the Act of 2003.
The chairperson, members, secretary and other officers and employees have
29. Id., sec. 56(1).

31. Id., sec. 56(2).
32. Id., sec. 57(1).
33. Id., sec. 57(2).
34. Id., sec. 57(3).
35. Id., sec. 58.
36. Id., sec. 59.
been deemed to be appointed and continue to hold office on the same terms
and conditions on which they were appointed under the Act of 1948.37 The
Authority is to consist of not more than fourteen members (including its
chairperson) of whom not more than eight are to be full time members to
be appointed by the central government. 38 Functions of the Authority are:
(a) to advise the central government on matters relating to national
electricity policy;
(b) formulate short-term and perspective plan for development of
electricity system;
(c) coordinate the activities of the planning agencies for the optimal
utilization of resources to sub-serve the interests of the national
economy; and
(d) to provide reliable and affordable electricity for all consumers.
It is also required to provide the technical specifications and safety
standards for construction of electrical plants and electrical lines, the
conditions for installation of meters, the grid standards for operation and
maintenance of transmission lines. The Authority is empowered to advise
state governments, licensees or the generating companies on those matters
which would enable them to operate and maintain the electricity system in
an i m p r o v e d m a n n e r . It has general power of advising the central
government and regulatory commissions on all technical matters relating to
generation, transmission and distribution of electricity.39
Central Electricity Regulatory Commission

Section 76 of the Act provides for the establishment of the Central
Electricity Regulatory Commission but envisages that the Central Electricity
Regulatory Commission established under section 3 of the Electricity
Regulatory Commission Act, 1998 be deemed as appointed under this Act
and to continue to work as the main regulating agency in matters of
generation and transmission of electricity and levying of fees for supply of
electricity. 40 The Commission consists of a chairperson and three other
members, the chairperson of the Central Authority being the ex-officio
member of the Central Commission. 41 The Act also provides qualification
for appointment of chairperson and members of the Central Commission.
The chairperson and members of the Commission should be persons having
adequate knowledge or experience in dealing with problems relating to
engineering, law, economics, commerce, financial management. One person
37. Id., sec. 70(2).

38. Id., sec. 70(3).
39. Id., sec. 73.
41. Id., sec. 76(5).
is required to have qualifications and experience in the field of finance, two

persons are required to have qualifications and experience in the field of
economics, commerce, law or management. Not more than one member
would be appointed under the same category. 42 The central government
may appoint any person as the chairperson from amongst persons who is or
has been a judge of Supreme Court or the chief justice of a high court. 43
The appointment of the chairperson would be made only after consultation
with the Chief Justice of India.44
Functions of the Central Commission

The functions of the Central Commission have been detailed out in section
79 of the Act. These include:45
(a) The regulation of the tariff of generating companies owned or
controlled by the central government and such other generating
companies which have entered i n t o or otherwise have a
composite scheme for generation and sale of electricity in more
than one state;
(b) regulation of the inter-state transmission of electricity and
determination of tariff in such cases;
(c) issuing licences to persons to function as transmission licensees
and electricity traders with respect to inter-state operations;
(d) adjudication of disputes involving generating companies or
transmission licensee in regard to inter-state transmission of
electricity by reference to arbitration;
(e) levying of fees chargeable under the Act and specification of
Grid Code having regard to grid standards;
(f) specification and enforcement of the standards with respect to
quality, continuity and reliability of service by licensees;
(g) fixation of the trading margin in the inter-st^ite trading of
electricity.
The Central Commission has also been required to advise the central
government on the following matters: 46
(h) formulation of National Electricity Policy and tariff policy;
(i) promotion of compensation, efficiency and economy in activities
of the electricity industry;
(j) promotion of investment in electricity industry;
42. Id., sec. 77(1).
43. Id. sec. 77(2).
45. Id., sec. 79(1).
46. Id., sec. 79(2).
(k) other matters referred to the Central Commission by the central

government.
The Central Commission has to maintain transparency while exercising
its powers and discharging its functions and will be guided by the National
Electricity Policy.
Central Advisory Committee

Section 80 of the Act, provides that the Central Commission may establish
a committee to be known as the central advisory committee, consisting of
not more than thirty-one members to represent in the electricity sector the
interests of commerce, industry, transport, agriculture, labour, consumer,
non-governmental organizations and academic and research bodies. 47 The
chairperson and the members of the Central Commission would be the ex-
officio chairperson and ex-offico members of the central advisory committee.
The secretary to the government of India, in-charge of the ministry or
department of the central government dealing with consumer affairs and
public distribution system would also be the ex-officio member of the
committee. 48 The committee will advise the Central Commission on major
questions of policy, matters relating to quality, continuity and extent of
service provided by the licensees, compliance by the licensees with the
specific conditions and requirements, protection of consumer interests, the
supply of electricity and overall standards of performance of the utilities. 49
State Electricity Regulatory Commission

Section 82 of the Act provides for the establishment of state electricity
regulatory commissions by state governments. 50 As in case of the Central
Commission, the state electricity regulatory commissions established under
the Electricity Regulatory Commission Act, 1998 have been deemed to be
state commissions appointed under this Act. Each state commission is to
consist of not more than three members, including the chairperson. 51 The
chairperson and members of a state commission would be appointed by the
state government on the recommendations of a selection committee. The
chairperson of the selection committee will be a person who has been the
judge of a high court. The chief secretary of the concerned state and the
chairperson of the central authority or the central commission would be the
members of the selection committee. 52
47. Id., sec. 80(1) and (2).

48. Id., sec. 80(3).
49. Id,, sec. 81.
50. Id., sec. 82(1).
51. Id., sec. 82(4).
52. Id., sec. 85(1).
53. Id., sec. 83(1).
Section 83 of the Act makes provisions for the constitution of a joint

commission 33 by agreement between two or more state governments or by
the central government in respect of one or more union territories or one or
more governments of states and union territories. Any joint commission
constituted under the Electricity Regulatory Commission Act, 1998 is
considered as a joint commission appointed under this Act. Each joint
commission is to consist of one member from each of the participating
states and union territories and the chairperson is to be appointed from
amongst the members by consensus, failing which by rotation.' 4
Functions of state commissions

Tfie functions of each state commission include: 55
(a) determination of tariff for generation, supply transmission and
wheeling of electricity, wholesale, bulk or retail as the case may
be, within the state;56
(b) regulation of purchase of electricity and procurement process of
distribution licensees including the price at which electricity is to
be procured from the generating companies or licensees or from
other sources through agreements for purchase of power for
distribution and supply within the state;
(c) facilitating intra-state transmission and wheeling of electricity;
(d) issuing licences to persons seeking to act as transmission
licensees, distribution licensees and electricity traders with
respect to their operations within the state;
(e) promoting co-generation and generation of electricity from
renewable sources of energy by providing suitable measures for
connectivity with the grid and sale of electricity to any person;
(f) adjudication of disputes between the licensees and generating
companies and to refer any dispute for arbitration;
(g) levying of fee for the purposes of this act and specification of
state grid code consistent with the grid code specified under the
Act;
(h) specification or enforcement of standards with respect to quality,
continuity and reliability of service by licensees;
(i) fixation of the trading margin in the intra-state trading of
54. Id., sec. 83(2).

55. Id., sec. 86.
56. Where open access has been permitted to a category of consumers, the state
commission shall determine only the wheeling charges and surcharge thereon, if any,
for the said category of consumers.
electricity, if necessary.
The state commission is also required to advise the state government on
the following matters:
(a) promotion of competition, efficiency and economy in activities
of the electricity industry;
(b) promotion of investment in electricity;
(c) recognition and restructuring of electricity industry in the state;
(d) matters concerning generation, transmission, distribution and
trading of electricity; and
(e) such other matters as may be referred to the state commission by
that government. 57
While exercising its powers and discharging its functions, the state
commission has to ensure transparency and follow the national electricity
policy, national electricity plan and tariff policy.58
State Advisory Committee

In line with the Central Commission, which is empowered to constitute an
advisory committee, the state commission may also constitute a committee
to be known as the state advisory committee consisting of not more than
twenty-one members to represent the interests of commerce, industry,
transport, agriculture, labour, consumer, non-governmental organizations
and academic and research bodies in the electricity sector. 5 9 The
chairperson of the state commission will be ex-officio chairperson of state
advisory committee and the members of that commission and the secretary
to the concerned state government in charge of the ministry or department
dealing with consumer affairs and public distribution system would be the
ex-officio members of the committee. 60 The functions of the committee are
to advise the state commission on major question of policy, matters relating
to quality, c o n t i n u i t y and extent of service provided by licensees,
compliance by licensees with the condition and requirements of their
licence, protection of consumer interest, and electricity supply and overall
standards of performance by utilities. 61
IV. Appellate Tribunal for Electricity

The Act authorizes the central government to establish an Appellate
57. Id., sec. 86(2).

58. Id., sec. 86(3) and (4).
59. Id., sec. 87 (1) and (2).
60. Id., sec. 87(3).
61. Id., sec. 88.
62. Id., sec. 110.
63. Id., sec. 111(1).
Tribunal for Electricity to hear appeals against the orders of the adjudicatory
officer or the appropriate commission under this Act. 6 2 Any person
aggrieved by an order made by the adjudicatory officer or by the appropriate
commission can prefer an appeal to the Appellate Tribunal. 63 Appeal can be
filed within a period of forty-five days from the date on which a copy of the
order made by the adjudicatory officer or the appropriate commission is
received by the aggrieved person.64 The appellate tribunal may entertain an
appeal after the expiry of forty-five days, if he is satisfied that there was
sufficient cause for not filing it within that period. 65
The other party would have to be given an opportunity to present its
defence. The Tribunal may confirm, modify or set aside the order appealed
against. 66 A copy of each order would be sent to the parties and to the
concerned adjudicating officer or the appropriate commission by the
Tribunal. 67 Appeals would have to be dealt with as expeditiously as possible
and endeavour would have to be made to dispose of the appeals finally
within one hundred and eighty days from the date of filing of the appeal.68
Where any appeal could not be disposed of within the stipulated period, the
Tribunal has to record its reason in writing for not disposing of the appeal
in time. 69 The Appellate Tribunal is authorized to examine the legality,
propriety or correctness of any order made by the adjudicating officer or the
appropriate commission. It may call for the records of the proceedings on
its own motion or otherwise, and make necessary orders. 70
The Act further provides that any person aggrieved by the decision or
order of the Appellate Tribunal can file an appeal to the Supreme Court
within sixty days from the date of communication of the decision or order
of the Appellate Tribunal. 71
V. Offences and Penalties

If any person dishonestly taps, makes or causes to be made any connection
with overhead, underground or under-water lines or cables, or service wire,
or service facilities of a licensee, he will be punished with imprisonment for
a term which may be extended to three years or with fine or with both. 72
Similar punishment will be given to a person who tampers a meter, installs
64. Id., sec. 111(2).

66. Id., sec. 111(3).
67. Id., sec. 111(4).
68. Id., sec. 111(5).
70. Id., sec. 111(6).
71. Id., sec. 125.
72. Id., sec. 135(l)(a).
73. Id., sec. 135(l)(b).
or uses a tempered meter, current reversing transformer, loop connection or

any other device or method which interferes with accurate or proper
registration, calibration or metering of electric current or otherwise results in
a manner whereby electricity is stolen or wasted.73 A person who damages
or destroys an electric meter, apparatus, equipment, or wire or causes or
allows any of them to be so damaged or destroyed as to interfere with the
proper or accurate metering of electricity will also be punished as mentioned
above. 74
In case the electricity so abstracted, consumed or used is up to 10
kilowatt, the fine imposed on first conviction would not be less than three
times the financial gain on account of such theft of electricity and in the
event of second or subsequent conviction the fine imposed would not be
less than six times the financial gain on account of such theft of electricity.
If the load abstracted consumed or used exceeds 10 kilowatt, the fine
imposed on first conviction would not be less than three times the financial
gain on account of such theft of electricity and in the event of second or
subsequent conviction, the punishment would be imprisonment for six
months to five year and fine not less than six times the financial gain on
account of such theft of electricity.75 Attempt to commit any such offences
is equally punishable. 76
If it is proved that any artificial or unauthorized means for the
abstraction, consumption or use of electricity by the consumer have been
found in use, the p r e s u m p t i o n would be that such an abstraction,
consumption or use of electricity has been dishonestly caused by such
consumer. 77
An authorized officer, as may be appointed by the state government,
can enter, inspect, and search any place or premises to find out the
unauthorized use of electricity. Such an authorised officer can search, seize
and remove all the devices, instruments, wires and any other facilitator or
article which has been or is likely to be put to an unauthorized use of
electricity. He can also examine or seize the books of account or documents
which may be useful for any proceedings for establishing an offence under
the Act. 78
The occupant of the place or any other person on his behalf should
remain present during the search and a list of all things seized in the course
74. Id., sec. 135(l)(c).

75. Id., proviso to sec.l35(l).
76. Ibid.
77. Id., proviso (ii) to sec. 135(1).
78. Id., sec. 135(2).
80. Id., sec. 135(3).
of such search should be prepared and delivered to such occupant or

person. 79 The inspection, search and seizure cannot be carried out between
sunset and sunrise except in the presence of an adult male m e m b e r
occupying such premises.80
The cutting, removing or tracking way or transfer of any electric line,
material or meter from a tower, pole, any other installation etc. without the
consent of the licensee or the owner, as the case may be, whether or not the
act is done for profit or gain, is punishable with imprisonment upto three
years or with fine or with both. Also, if any person stores, possesses or
otherwise keeps in his premises, custody or control, any electric line,
material or meter or moves from one place to another any such object
without the consent of its owner, can be said to have committed an offence
of theft of electric lines and materials, and is punishable with imprisonment
for a term which may extend to three years or with fine or with both. 81 For
any subsequent offence, he will be punishable with imprisonment from six
months to five years and will also be liable to fine of not less than ten
thousand rupees. 82
The other offences punishable under the Act include:
(a) receiving stolen properties; 83
(b) interference with meters or other works of licensee;84
(c) negligently wasting electricity or injuring works; 85
(d) maliciously wasting electricity or injuring works; 86
(e) extinguishing public lamps;
(f) non-compliance of directions given by appropriate
commission; 87 and
(g) abetment of any offence under the Act. 88
V. Special Courts for Speedy Trial

For the purpose of speedy trial in matters related to electricity, the state
government may constitute necessary number of special courts for any
81. Id., sec. 136(1).

82. Id., sec. 136(2).
83. Id., sec. 137.
84. Id., sec. 138.
85. Id., sec. 139.
86. Id., sec. 140.
87. Id., sec. 141.
88. Id., sec. 142.
89. Id., sec. 153(1).
90. Id., sec. 153(2).
91. Id., sec. 153(3).
area.89 A special court is to consist of a single judge to be appointed by the

state government with the concurrence of the concerned high court. 90 The
person to be re-appointed must have been an additional district and sessions
judge immediately before his appointment. 91 In case the office of the judge
of special court is vacant, or such judge is absent from the ordinary place of
sitting of such special court, or he is incapacitated by illness or otherwise for
the performance of his duties, any urgent business in the special court can
be disposed of by any other judge, if any, exercising jurisdiction in the
special court. If there is no such other judge available, then the business
should be disposed of in accordance with the directions of the district and
sessions judge having jurisdiction over the ordinary place of sitting of the
special court. 92
The special court is deemed to be a court of sessions and has all the
powers of a court of sessions. The person conducting a prosecution before
the special court is deemed to be a public prosecutor. 93
On the application of either party, the appropriate commission may
nominate an arbitrator as per the provisions of the Arbitration and
Conciliation Act, 1996 to determine the dispute referred to it.94
The basic policies laid down in the Act for generation and supply of
electricity and the authorities established thereunder are in consonance with
the ongoing trends of privatization and libralisation in the country. In view
of this the Act has made express provisions about the manner and
conditions of supplying electricity to consumers and to protect them from
exploitation by private trading agencies. The success of the legislation would
depend upon the concern with which the regulatory bodies actually operate.
The provisions of the Act providing for punishment of offenders are
important from the point of view of enforcement of the regulations
governing the functioning of the electricity system. Transparency in the
functioning of the Central Electricity Authority and various commissions
and committees can help in better management and in involving the people
with the working of the system.
92. Id., sec. 153(4).

93. Id., sec. 155.
94. Id., sec. 158.
304
Chapter - 20
THE COMPETITION ACT, 2002
The Competition Act, 2002 (hereinafter referred as the "Act") is one of the
most important legislations passed in India to regulate the new economic
regime characterised by privatisation, liberalisation and competition. The
Act has replaced the Monopolies and Restrictive Trade Practice (MRTP)
Act, 1969 which had been enacted to prevent concentration of economic
power to the common detriment. The Act contained certain provisions for
prevention of unfair trade practices, impacting consumer interests. A
Commission, namely, the Monopolies and Restrictive Trade Practices
Commission had also been established to enforce the policies of the Act. In
place of this Commission now another Commission, called the Competition
Commission of India has been established to prevent practices having
adverse effect on competition and to protect the interest of consumers.
I. The MRTP Act

The MRTP Act, as originally enacted, provided for the operation of the
economic system ensuring that there was no concentration of economic
power to common detriment. It also provided for the control of monopolies
and prohibition of monopolistic and restrictive trade practices. In 1978, the
High Powered Expert Committee on Companies and the M R T P Act,
commonly known as the Sachar Committee expressed the view that
consumers needed to be protected not only from the effects of restrictive
trade practices but also from practices which were resorted to by the trade
industry to mislead or dupe the consumers.1 Pursuant to this, by the MRTP
(Amendment) Act, 1984, some provisions related to unfair trade practices
were inserted in Chapter V, Part B (sections 36A to 36E) of the Act on the
pretext that the consumers could be granted protection against false or
misleading advertisements or other similar unfair trade practices. The unfair
trade practices as defined in section 36A of that Act covered:
(a) misleading advertisements and false representations;
(b) falsely offering sale of goods or services at bargain price;
(c) offering gifts or prizes to consumers with the intention of not
providing them later;
(d) non-compliance of product safety standards; and
(e) hoarding and other like practices to raise the price of goods.
1. Report of the High Powered Expert Committee on Companies and MRTP Act, 262-263
(1978).
THE COMPETITION ACT, 2002 305
In the matter of misleading advertisements and false representations,

the statements amounting to unfair trade practices had been enumerated in
section 36A(1) of that Act and according to that section, making of a
statement could amount to an unfair trade practice if it was falsely
representing: 2
(i) the standard, quality, quantity, grade, composition, style or model
of goods;
(ii) standard, quality or grade of services;
(iii) any re-built, second-hand, renovated, re-conditioned or old
goods as new goods.
(iv) the sponsorship, approval, performance, characteristics,
accessories, uses or benefits of goods or services;
(v) the sponsorship, approval or affiliation of the seller or supplier;
(vi) need or usefulness of any goods or services;
(vii) any warranty or guarantee of the performance, efficacy or length
of life of a product or of any goods without any adequate or
proper test.
The unfair trade practices also included the making of a false promise to
replace, maintain or repair an article or any part thereof or to repeat or
continue a service for specified result. Misleading the public concerning the
price of any product or services and giving false or misleading facts
disparaging the goods, services or trade of another person. 3 The statement
amounting to false representation or misleading advertisement should have
been expressed:
(a) on the article offered or displayed for sale, or on its wrapper or
container; or
(b) on anything attached to, inserted in, or accompanying, an article
offered or displayed for sale, or on anything on which the article
is mounted for display or sale; or
(c) on anything that is sold, sent, delivered, transmitted or in any
other manner made available to a member of the public. 4
Section 36A(2) M R T P Act had made the p u b l i c a t i o n of any
advertisement relating to sale or supply of any goods or services at the
bargain price, that were not intended to be so provided, an unfair trade
practice. Bargain price had been defined to mean the price stated in an
advertisement to be a bargain price, by reference to an ordinary price or
otherwise; or a price reasonably understood to be the bargain price after
2. The Monopolies and Restrictive Trade Practices Act, 1969, sec. 36A(1).
3. Ibid.
4. Id., Explanation to sec. 36A(1).
reading, hearing or seeing the advertisement. Besides, an advertisement

offering any gift, prize or any other item with the intention of not providing
it as offered, or creating an impression that something was being given or
offered free of charge, when in reality it was fully or partly covered by the
amount charged in the transaction, did amount to unfair trade practice. 5
Likewise, conducting of any contest, lottery or game of chance or skill, for
the purpose of promoting the sale, use or supply of any product or any
business interest was also an unfair trade practice. 6
Supplying any consumer product, knowing or having reasons to believe
that it was not conforming to the necessary standards prescribed by the
competent authority and thereby caused loss or injury to the consumer, had
been declared as an unfair trade practice under section 36A(4). This was
aimed at putting a check on the manufactures requiring them to sell to the
consumers goods in accordance with the specifications of safety and
prevention of health-hazards or accidents. Additionally, the unfair trade
practices included hoarding or destruction of goods, or refusal to sell the
goods or make them available for sale, or to provide any services with an
intent to raise the cost of those goods or other similar goods or services.7
The MRTP Commission was authorised to initiate an inquiry into any
unfair trade practice:8
(a) on a complaint received from any trade association or any
consumer or a registered consumers' association;
(b) on a reference received from the central government or any state
government;
(c) on an application received from the Director-General of
Investigation and Registration; and
(d) on its own knowledge or information (i.e., suo motu inquiry).
Before instituting an inquiry into an unfair trade practice, the MRTP
Commission could get a preliminary investigation conducted by the
Director-General, to satisfy itself that the case in point had any substance
and deserved a statutory inquiry. 9 The manner in which the investigation
was to be conducted and the time within which the report was to be
submitted had been left to the discretion of the Commission. It was to
ensure that no frivolous complaint or reference was made. The preliminary
investigation, as a fact-finding investigation, was, therefore, intended to
assist the Commission in making the opinion that there existed a prima facie
case for instituting an inquiry into unfair trade practice. On finding the
5. Id, sec. 36A(3).

6. Ibid.
7. Id., sec. 36A(5).
8. Id., sec. 36B.
9. Id., sec. 36C.
impugned trade practice as prejudicial to the public interest or to the interest

of any particular consumer or of consumers in general, the Commission
could issue 'cease-and-desist' orders about any such practice. 10 Besides, it
could declare the agreement relating to the impugned unfair trade practice as
void or direct the parties to modify the impugned agreement in a certain
manner. 1 1 The Commission could also direct the person concerned to
publish a corrective advertisement. 12
Since the M R T P Act was enacted with the objective of preventing
concentration of economic power to the common detriment and to control
m o n o p o l i s t i c , restrictive, and unfair trade practices, it suited the
requirements of a particular period of time prior to the beginning of the new
economic order. Now there has been a major shift in the approach towards
these issues paving way for the new economic order characterised by
globalisation, libralisation and privatisation.
The MRTP Act remained on the statute book for more than 30 years
during which, inspite of several amendments, it could not control the anti
competitive practices like cartels, boycotts and refusal to deal, predatory
pricing, bid rigging, abuse of dominance. In October 1999, the Government
of India appointed a committee, under the chairmanship of Mr. S.V.S.
Raghawan, to propose a modern competition law suitable to new economic
conditions in India. The committee submitted its report to the government
on 22 n d May, 2000, recommending the repeal of the M R T P Act and
enactment of a new law in its place. The central government after
considering these suggestions, decided to enact the new law on competition,
i.e., the Competition Act, 2002.
II. The Competition Act

The main objects of the Competition Act, 2002 are: (a) promotion and
sustenance of competition in markets; (b) prevention of practices having
adverse effect on competition; (c) protection of consumer interest; and (d)
ensuring freedom of trade. The Act also provides for the establishment of a
Competition Commission with specific powers and functions related to
promotion of competition in India and control of practices adverse to it.
Since various provisions of the Competition Act are of great relevance
to consumers, the Act has adopted its own definition of "consumer". 13
According to this definition, a buyer of any goods and the hirer of any
services for consideration is a consumer. However, a "consumer" includes,
besides the purchaser of goods or hirer of services, the users of goods and
10. Id., sec. 36D(l)(a).

11. Id., sec. 36D(l)(b).
12. Id., sec. 36D(3).
13. The Competition Act, 2002, sec. 2(f).
the beneficiaries of services who use or avail them with the approval of the
first purchaser or the hirer. It is immaterial that such purchase of goods or
hiring or availing of services was for resale or any commercial purpose or for
personal use.
III. Pro-consumer Policies under the Competition Act
Restrictions of anti-competitive agreements

The Act restricts all anti-competitive agreements, which may lead to
monopoly and concentration of economic power in few hands leading to
exploitation of the consumers. Section 3 of the Competition Act prohibits
all enterprises and persons from entering into any agreement in respect of
production, supply, distribution, storage, acquisition or control of goods or
provision of services which may have an appreciable adverse effect on
competition and declares them void.
The term 'enterprise' has been given a wide meaning under the Act.14 It
includes a person or a department of the government engaged in any activity
relating to the production, storage, supply, acquisition or control of goods
or services of any kind. Any person or government department engaged in
investment or business of acquiring or dealing with shares, other securities
of any other body corporate are also covered by the definition of the
enterprise. The term enterprise, however, does not include any activity of
the government relatable to the sovereign functions and the activities carried
on by the departments of the central government dealing with atomic
energy, currency, defence and space.
Sub-section (3) of section 3 expressesly declares certain agreements,
practice and decisions, including cartels, as having an appreciable adverse
effect on competition which may have been resorted to by any enterprise or
association or person, with respect to any goods or services:
(a) to directly or indirectly determine the purchase or sale prices; or
(b) to limit or control production, supply, marketing, technical
development, investment or provision of services; or
(c) to share the market or sources of production or provision of
services by way of allocation of geographical area, or type of
goods or services, or number of customers in the market or any
other similar ways; or
(d) to attain, directly or indirectly, the purpose of bid-rigging or
collusive-bidding.
It is evident from the provisions of the Act that any agreement entered
into by way of joint ventures would not be deemed as void or anti-
14. Id., sec. 2(h).

competitive if such agreement increases efficiency in production, supply,

distribution, storage, acquisition or control of goods or provision of
services.15 But any agreement at any stage or level of the production chain
in different markets, would be deemed as a contravening agreement if it
causes an appreciable adverse effect on competition. 16 The agreement may
be in respect of production, supply, distribution, storage, sale, price, or trade
in goods or provision of service, including tie-in agreement, exclusive supply
agreement, exclusive distribution agreement, refusal to deal, re-sale or price
maintenance. 17
Prohibition on abuse of dominant position

For the protection of consumers, the Act prohibits every enterprise from
restoring to any activity which can amount to abuse of its dominant
position. 18 The abuse of dominant position includes:
(a) imposition of unfair or discriminatory conditions or price
(including predatory prices) 19 on purchase or sale of goods or
service;20
(b) limiting production of goods or provision of services or market
therefor; 21
(c) indulging in practices resulting in denial of market access;22
(d) making the conclusion of contracts subject to acceptance by
other parties of supplementary obligations which have no
connection with the subject of such contracts, either by nature or
according to commercial usage;23 and
(e) using dominant position in one relevant market to enter into or
protect other relevant market. 24

16. Id., sec. 3(4).
17. Ibid.
18. Id., Explanation to sec. 4; the "dominant position" means a position of strength,
enjoyed by an enterprise, in the relevant market, in India, which enables it to - (i)
operate independently of competitive forces prevailing in the relevant market; or (ii)
affect its competitors or consumers or the relevant market in its favour.
19. Ibid., "Predatory price" means the sale of goods or provision of services, at a price
which is below the cost, as may be determined by regulations, of production of the
goods or provisions of services, with a view to reduce competition or eliminate the
competitors.
20. Id., sec. 4(2).
21. Id., sec. 4(2)(b)(i).
22. Id., sec. 4(2)(c).
23. Id., sec. 4(2)(d).
24. Id., sec. 4(2)(e).
Regulation of combinations
Sections 5 and 6 of the Competition Act make provisions for regulation of
combinations or cartels to prevent anti-competition operations and anti-
c o n s u m e r policies. The combination means further acquisition of
enterprises by a person or enterprise in similar trade or business and
mergers, amalgamations, joint ventures, or taking over of friendly or hostile
enterprises. This is a kind of monopolisation of trade or supply. According
to section 5 the acquisition of one or more enterprises by one or more
persons or acquiring of control or merger or amalgamation of enterprises"
adverse to competition should be construed as combination.
Section 6 of the Act, dealing with the matter, prohibits any person or
enterprise from entering into combinations which may cause an appreciable
adverse effect on competition within the relevant market and declares them
void. 25 By implications, combinations are permissible if they cause no
appreciable adverse effect on competition. However, any person or
enterprise that proposes to enter into a combination should give to the
Competition Commission a notice disclosing the details of the proposed
combination. The notice should be given within seven days of approval of
the proposal relating to merger or amalgamation by the board of directors of
the enterprises concerned. Similarly, notice shall be given on the execution
of any agreement or other document for acquisition or acquiring of control
over an enterprise. 26
After receiving the notice, the Commission has to make investigations
into the combination as to its effect on competition and conduct enquiries
about the disclosures made in the notice and issue orders accordingly, in
favour or against combination. 27 These regulatory provisions do not apply
to share subscription or financing or any acquisition by a public financial
institution investor 28 or bank or venture capital fund, 29 pursuant to any
covenant of a loan agreement or investment agreement. 3 0 Any such
institution should file, within seven days from the date of the acquisition,
with the Commission the details of the acquisition including the details of
c o n t r o l , the circumstances for exercise of such c o n t r o l and the
consequences of default arising out of such loan agreement or investment
agreement, as the case may be. 31 Obviously, all these requirements have
been prescribed to check malaflde combinations and protection of the
interests of the consumers.
25. Id., sec. 6(1).

26. Id., sec. 6(2).
27. Id., sees. 6(3), 29, 30 and 31.
28. The Income Tax Act, 1961, sec. 115A.
29. Id., sec. 10(23FB).
30. Supra note 13, sec. 6(4).
'31. Id., sec. 6(5).
IV. Competition Commission of India
Composition
The Act, as mentioned above, provides for the establishment of the
Competition Commission of India to control practices adverse to the
promotion and sustenance of competition in India.32 The Commission is to
consist of a chairperson and two to ten members, as may be specified by the
central government. 33 The chairperson and every other member should be
a person of ability, integrity and standing, having been or is qualified to be
the judge of a high court or having special knowledge and professional
experience of at least fifteen years in international trade, economics,
business, commerce, law, finance, accountancy, management, industry,
public affairs, administration or in any other matter useful to the
Commission. 34
The chairperson and other members can be appointed for five years and
may be eligible for reappointment. 35 The chairperson may hold office up to
the age of sixty seven years and a member can hold office only up to the age
of sixty five years. In the event of any vacancy in the office of the
chairperson, the senior most member can discharge the functions of the
chairperson. 36
T o assist the Commission in the discharge of its functions and
performance of duties, the Act provides for the appointment of a director
general and additional, joint, deputy and assistant directors and advisors,
c o n s u l t a n t s or officers. 3 7 Like the chairperson and members of the
Commission, they should also be persons with integrity and outstanding
ability, having experience in investigation and knowledge of accountancy,
management, business, public administration, international trade, law or
economics. 38
Duties, powers and functions of the Commission

The main duty of the Commission is to ensure freedom of trade and
eliminate practices having adverse effect on competition. It is duty bound to
32. Id., sec. 7(1).

33. Id., sec. 8(1). The central government can appoint the chairperson and a member
during first year of the establishment of the Commission.
34. Id., sec. 8(2). Recently, the Government of India appointed a bureaucrat as
chairperson of the Commission. This appointment has been challenged before the
Supreme Court. The court has taken exception to the appointment of a bureaucrat as
the chairperson of the Commission observing that the government had encroached
on the domain of the judiciary. See The Indian Express, November 1, 2003.
35. Id., sec. 10(1).
36. Id., sec. 10(5).
37. Id., sec. 16(1).
38. Id., sec. 16(4).
p r o m o t e and sustain competition in markets and t o protect the interests of

c o n s u m e r s . 3 9 F o r the p u r p o s e of discharging its duties or p e r f o r m i n g its
f u n c t i o n s , t h e C o m m i s s i o n has b e e n e m p o w e r e d t o e n t e r i n t o a n y
m e m o r a n d u m o r arrangement with agencies in any foreign c o u n t r y . F o r
e n t e r i n g i n t o a n y such a r r a n g e m e n t , t h e C o m m i s s i o n s h o u l d , h o w e v e r ,
acquire the prior approval of the central government. 4 0
T h e C o m m i s s i o n has t o perform the task of inquiring into violation of
the provisions of the Act prohibiting agreements having adverse effect o n
c o m p e t i t i o n 4 1 and the abuse of d o m i n a n t p o s i t i o n b y any e n t e r p r i s e o r
p e r s o n . 4 2 T h e i n q u i r y m a y be initiated either o n its o w n m o t i o n o r o n
r e c e i p t of a c o m p l a i n t f r o m a n y p e r s o n , a c o n s u m e r o r a c o n s u m e r
association or a trade association or on a reference made to it by the central
g o v e r n m e n t o r a state g o v e r n m e n t or any s t a t u t o r y a u t h o r i t y . 4 3 W h i l e
d e t e r m i n i n g w h e t h e r an agreement has an appreciable adverse effect o n
c o m p e t i t i o n , the C o m m i s s i o n will have t o give due c o n s i d e r a t i o n t o the
following factors:
(a) creation of barriers t o new entrants in the market;
(b) driving existing competitors out of the market;
(c) foreclosure of competition by hindering entry into market;
(d) accrual of benefits to consumers;
(e) i m p r o v e m e n t s in p r o d u c t i o n o r d i s t r i b u t i o n of g o o d s o r
provision of services; and
(f) p r o m o t i o n of technical, scientific and economic development b y
means of p r o d u c t i o n or d i s t r i b u t i o n of goods o r p r o v i s i o n of
44
service.
T h e factors to be looked into for finding whether an enterprise enjoys a
d o m i n a n t position or not are as follows:
(a) market share of the enterprise;
(b) size and resources of the enterprise;
(c) size and importance of the competitors;
(d) e c o n o m i c p o w e r of t h e e n t e r p r i s e i n c l u d i n g c o m m e r c i a l
advantage over competitors;
39. Id., sec. 18.

40. Id., proviso to sec. 18.
41. Id., sec. 3(1): "No enterprise or association of enterprise or person or association of
persons shall enter into any agreement in respect of production, supply, distribution,
storage, acquisition or control of goods or provisions of services, which causes or is
likely to cause an appreciable adverse effect on competition within India."
42. Id., sec. 4(1): "No enterprise shall abuse its dominant position".
43. Id., sec. 19(1).
44. Id., sec. 19(3).
(e) vertical integration of the enterprises or sale or service network

of such enterprises;
(f) dependence of consumers on the enterprises;
(g) monopoly or dominant position whether acquired as a result of
any statute or by virtue of being a government company or a
public sector undertaking or otherwise;
(h) entry barriers including barriers such as regulatory barriers,
financial risk, high capital cost of entry, marketing entry barriers,
technical entry barriers, economies of scale, high cost of
substitutable goods or service for consumers;
(i) countervailing buying power;
(j) market structure and size of market;
(k) social obligations and social costs;
(1) relative advantage, by way of contribution to the economic
development by the enterprise enjoying a dominant position
having or likely to have an appreciable adverse effect on
competition; and
(m) any other factor which the Commission may consider relevant
for the inquiry. 45
Guidelines have been prescribed for determination by the Commission
as to find out whether a market constitutes a "relevant market" and in this
respect it has been made clear that this question should be determined with
reference to the "relevant geographic market" and "relevant product
market". 46 This implies that the Commission should first determine, with
respect to any case, the "relevant geographic market" and the "relevant
product market". While determining the "relevant geographic market", 47 the
Commission is required to have due regard to:
(a) regulatory trade barriers;
(b) local specification requirements;
(c) national procurement policies;
(d) adequate distribution facilities;
(e) transport costs;
45. Id., sec. 19(4).

46. Id., sec. 19(5). Id., sec. 2(r), "relevant market" means the market which may be
determined by the Commission with reference to the relevant product market or the
relevant geographic market or with reference to both the markets.
47. Id., sec. 2(s), "relevant geographic market" means a market comprising the area in
which the conditions of competition for supply of goods or provision of services or
demand of goods or services are distinctly homogenous and can be distinguished
from the conditions prevailing in the neighbouring areas.
(f) language;
(g) consumer references; and
(h) need for secure or regular supplies or rapid after-sales services.48
While determining the "relevant product market", 49 the Commission
should give due consideration to:
(a) physical characteristics or end-use of goods;
(b) price of goods or service;
(c) consumer preferences;
(d) exclusion of in-house production;
(e) existence of specialised producers; and
(f) classification of industrial products. 50
Beside inquiring into contravention of the provisions of the Act about
p r o h i b i t e d agreements having adverse effect on c o m p e t i t i o n , the
Commission is empowered to make inquiry as to whether a particular
combination causes or is likely to cause an appreciable adverse effect on
competition in India. If such an inquiry is conducted by the Commission suo
motu, upon its own knowledge or information, it should be started within
one year from the date when such contravening combination takes place.
Further, the Act specifies the factors which the Commission should take
into account for determining whether the combination has appreciable
adverse effect on the competition in the relevant market. These factors
are:51
(a) actual and potential level of competition through imports in the
market;
(b) extent of barriers to entry into the market;
(c) level of combination in the market;
(d) degree of countervailing power in the market;
(e) likelihood that the combination would result in increase in prices
or profit margins;
(f) extent of effective competition likely to sustain in a market;
(g) extent to which substitutes are available or are likely to be
available in the market;
48. Id., sec. 19(6).

49. Id., sec. 2(f): "relevant product market" means a market comprising all those
products or services which are regarded as interchangeable or substitutable by the
consumer, by reason of characteristics of the products and services, their prices and
intended use.
50. Id., sec. 19(7).
51. Id., sec. 20.
(h) market share, in the relevant market, of the persons or enterprise

in a combination, individually and as a combination;
(i) likelihood that the combination would result in the removal of a
vigorous and effective competitor or competitors in the market;
(j) nature and extent of vertical integration in the market;
(k) possibility of a failing business;
(1) nature and extent of innovation;
(m) relative advantage by way of contribution to the economic
development, by any combination having or likely to have
appreciable adverse effect on competition; and
(n) whether the benefits of the combination outweigh the adverse
impact of the combination, if any.
A reference for inquiry about any combination can be made to the
Commission by any statutory authority also. 52 So, if in the course of a
proceeding before any statutory authority an issue has been raised that any
of its decisions would be contrary to the provisions of this Act, then the
c o n c e r n e d a u t h o r i t y may make a reference of that issue to the
C o m m i s s i o n . 5 3 After hearing the parties to the proceedings, the
Commission would give its opinion, after which the authority would pass its
orders on the issue. The Commission has to give its opinion within sixty
days of the receipt of such reference.54
Benches of the Commission

Section 22 of the Act contains provisions relating to constitution of Benches
of the Commission and exercise of jurisdiction, powers and authority by
such Benches. Each Bench would be constituted by the chair-person of the
Commission. 55 There would be at least two members in each Bench and
one of them must be a judicial member. 56 The judicial member should have
been or is qualified to be a judge of a high court. The Bench which is
presided over by the chairperson is the Principal Bench and the other
Benches are known a Additional Benches.57 The chairperson can constitute
one or more Benches as Mergers Benches exclusively to deal with matters
related to regulation of combinations. 5 8 The central government is
52. The statutory authority includes any authority, board, corporation, council, institute,
university or any other body corporate.
53. Id., sec. 21(1).
54. Id., sec. 21(2).
55. Id., sec. 22(2).
56. Id., sec. 22(3).
57. Id., sec. 22(4).
58. Id., sec. 22(5).
316 A TREATISE O N CONSUMER PROTECTION LAWS
empowered to specify by notification, the places at which the Principal

Bench and other Benches would sit.59
The distribution of the business of the Commission among the Benches
and the specification of matters to be dealt with by each Bench is to be
made by the chairperson. 60 If any question arises as to whether any matter
falls within the purview of the business allocated to a bench, the decision of
the chairperson will be final.61 The chairperson can transfer a member from
one Bench to another and authorise a member of one Bench to discharge
the functions as a member of any other Bench with the prior approval of
the central government. 62 If in the opinion of the chairperson any case or
matter requires to be decided by a Bench composed of more than t w o
members he may issue necessary orders, general or special, to that effect.63
In case of difference of opinion on any point or points between the
members of a Bench, they are supposed to make a reference of that to the
chairperson. The chairperson may hear such point himself or refer the case
for hearing by one or more of the other members. The opinion of the
majority would be the decision of the Commission. 64
The proceedings of inquiry can be conducted by a Bench within the
local limits of whose jurisdiction the respondent or each of the respondents
resides or carries on business or personally works for gain or the cause of
action, wholly or in part, has arisen.65
Procedure for inquiry on complaints

O n receipt of a complaint or a reference, if the Commission is of the
opinion that there exists zprima facie case, the Director-General of the
Commission is to be directed to cause an investigation to be made into the
matter 66 and submit a report on his findings to the Commission within the
59. Id., sec. 22(6).

60. Id., sec. 23(1).
61. Id., sec. 23(2).
62. Id., sec. 23(3).
63. Id., sec. 23(4).
64. Id., sec. 24.
65. Id., sec. 25.
66. Id., sec. 26(1). As per section 41 of the Competition Act, the Director-General is
duty bound to assist the Commission in investigating any contravention of the
provisions of the Act or any rules or regulations made thereunder. He has all the
powers of a civil court as are vested with the Commission about production of
documents and evidence and witnesses. The provisions of section 240A relating to
seizure of documents by inspector under the Companies Act, 1956 would so far as
may be, apply in conducting the investigations by the Director General or any other
person investigating under his authority as they apply to an inspector appointed
under that Act.
time period allowed for the purpose. 67 In case the Commission is of the
opinion that no prima facie case is existing, the complaint should be dismissed
and necessary orders, including imposition of costs, if any are to be
passed.68 On receipt of the report of the Director-General, the Commission
has to forward a copy of the report to the parties concerned or to the
central government or the state government as the case may be. 69 In case
the report recommends that there is no contravention of the provisions of
the Act, the complainant will be given an opportunity to rebut the findings
of the Director General.70 If after hearing the complainant, the Commission
agrees with the recommendations of the Director-General, the Commission
can dismiss the complaint. 7 1 In case the Commission, after hearing the
complainant, is of the opinion that further inquiry is required to be
conducted, it will direct the complainant to proceed with the complaint.72 If
the report relating to a reference recommends that there is contravention of
any of the provisions of the Act, the Commission will invite the comments
from the central government or the state government or the statutory
authority, as the case may be, and it will return reference if there is no prima
facie case or the Commission may proceed with the reference as a complaint
if there is a prima facie case.73
Section 27 of the Act specifies the actions which the Commission is
competent to take after an inquiry. If on inquiry, the Commission finds that
any agreement or action by an enterprise in a dominant position is in
contravention of the provision of the Act on anti-competitive agreements
and abuse of dominant position, it may order the enterprise or person
involved to discontinue the abuse and not to re-enter into any such
agreement. 74 It may also impose on any contravening person or enterprise
such penalty for such an action as it may deem fit. The penalty should not
be more than ten per cent of the average of the turnover of the enterprise
for the last three preceding years. If the agreement involved in the case has
been entered into by any cartel, the Commission shall impose upon each
producer, seller, distributor, trader or service provider included in that
cartel, a penalty equivalent to three times of the amount of profits made out
of such agreement by the cartel or ten per cent of the average of the
turnover as stated above. 75
67. Id., sec. 26(2).

68. Id., sec. 26(3).
69. Id., sec. 26(4).
70. Id., sec. 26(5).
71. Id., sec. 26(6).
72. Id.,. sec. 26(7).
73. Id.,, sec. 26(8).
74. Id.,, sec. 27(a).
75. Id.., sec. 27(b) to (g).
The Commission can grant relief by way of a temporary injunction if it

is proved to the satisfaction of the Commission that an act in contravention
of the provisions of the Act has been committed and continues to be
committed or is likely to be committed. The party concerned would be
restrained from carrying on such act until the conclusion of the inquiry or as
the situation requires. The injunction can be granted even without giving
notice to the opposite party, where it may be deemed necessary.76 Grant of
injunction is possible in any case of import of goods also.
The Commission is empowered to award compensation to an applicant
from any enterprise for any loss or damage shown to have been suffered by
him as a result of any contravention of the provisions under the Act relating
to anti-competitive agreements, abuse of dominant position and regulation
of combinations by an enterprise. 77 If loss or damage has been caused to
numerous persons having the same interest, one or more of such persons
may, with the permission of the Commission, make an application for and
on behalf of or for the benefit of the persons so interested. 78
The Act has made provisions relating to the persons who are entitled to
appear in proceeding before the C o m m i s s i o n and provides that a
complainant, defendant or the Director-General, may either appear in
person or authorise one or more chartered accountants, or company
secretaries or cost accountants or legal practitioners, or any of his or its
officers to present his or its case before the Commission. 79
The Commission is empowered to regulate its own procedure while
conducting inquiries. It would not be bound by the procedure laid down by
the CPC but will be guided by the principles of natural justice.80 As regards
powers, the Act confers upon the Commission the same powers as are
vested in a civil court under the CPC while trying a suit. Such powers
include power about summoning witnesses, production of documents,
receiving of evidence on affidavits, deciding cases ex-parte etc.81 Proceedings
before the Commission are judicial proceedings. 82 The Commission is
empowered to call certain experts from fields of economics, commerce,
accountancy, international trade or from any other discipline as it may deem
necessary to assist it in the conduct of any inquiry or proceedings before
it.8-1 The Commission can direct any person to produce before the Director-
General or the Registrar or any authorised officer any books, accounts or
76. Id., sec. 33(1).

77. Id., sec. 34(1).
78. Id., sec. 34(3).
79. Id., sec. 35.
80. Id., sec. 36(1).
81. Id., sec. 36(2).
82. Id., sec. 36(3).
83. Id., sec. 36(4).
other documents in the custody or under the control of that person 84 and
to furnish any other information relating to trade which may be in his
possession. 85 The Commission is also empowered to conduct inquiry or
adjudicate matters after giving oral hearing to the parties concerned. 86
Review of orders is allowed by the Commission. Any person aggrieved
by an order of the Commission, from which an appeal is allowed by this Act
but no appeal has been preferred, may apply to the Commission within
thirty days from the date of the order for review of its order and the
Commission may make any appropriate order thereon. However, the
Commission may entertain a review application after the expiry of the
period of thirty days, if it is satisfied that the applicant was prevented by
sufficient cause from preferring the appeal in time. Further, no order can be
modified or set aside without giving an opportunity of being heard to the
person about whom the order has been issued and the Director-General
where he was a party to the proceedings.87
From the decisions and orders of the Commission, appeal can lie before
the Supreme Court. If any person is aggrieved by any decision or order of
the Commission, he may file an appeal before the Supreme Court within
sixty days from the date of communication of the decision or order to him
on one or more grounds arising out of such decision or order. However, in
case of delay in filing appeal, the Supreme Court, may allow filing of appeal
within a further period not exceeding sixty days if the appellant can satisfy
the court that he was prevented by sufficient cause from filing the appeal
within the given time. 88 However, no appeal can lie against any decision or
order of the Commission made with the consent of the parties.
V. Penalties
If any person contravenes without any reasonable ground any order of the
Commission, he shall be liable to be detained in civil prison for a term
which may extend to one year or may be charged with a penalty not
exceeding rupees ten lakhs. 8 9 Same punishment would be imposed for
contraventions of any condition or restriction subject to which any
approval, sanction, direction or exemption in relation to any matter had
been accorded. 90 Any person who has failed to pay any penalty imposed
under the Act would also be charged with the same punishment. 91
84. Id., sec. 36(5)(a).

85. Id., sec. 36(5)(b).
86. Id., sec. 36(6).
87. Id., sec. 37.
88. Id., sec. 40.
89. Id., sec. 42.
90. Ibid.
91 Ibid.
The Act also provides for imposition of penalty for failure of any
person to comply with the directions of the Commission or the Director-
General about production of any books, account or documents required by
the Commission or the Director-General. In this respect, the Commission
may impose a penalty of rupees one lakh for each day during which the
person concerned has failed to comply with the said directions by the
Commission or the Director-General. 92
Penalty has also been provided for making fake statements or omissions
to furnish material information by any person being a p a r t y to a
combination. Such penalty will not be less than rupees fifty lakh but it may
extend up to rupees one crore.93 A penalty, extending up to rupees ten lakh,
can be imposed upon a person who furnishes any false statement or
document or fails to state any material fact, about matters other than
c o m b i n a t i o n , which he might have been required t o furnish. Same
punishment can be imposed about altering, suppressing or destroying any
document of that kind. The Commission can also pass such other orders as
it may deem fit in a particular case.94
From the scheme of the Competition Act, it can be inferred that this
has been enacted mainly for the regulation of trade and promotion of
competition in market. It has a direct bearing on the interest of consumers,
availability of quality products in sufficient quantities at reasonable prices
and efficient services from multiple service providers. Therefore, any kind of
manipulation by business houses affecting quality or supply of goods or
services in the form of mutual agreements, mergers or combinations or
abuse of dominant position needs to be stopped with a heavy hand. Main
responsibility lies on the Competition Commission established under the
Act. Implementation of the policies of the Act and goals to be achieved
thereunder lie with this important institution. Its efficient working can go a
long way in controlling the practices having adverse effect on competition.
Common masses should be educated through media about the significance
of the Commission and its role without delay, to make it effective, without
which the Commission may, in due course of time, get confined to routine
paper work.
The Act makes express provisions related to competition advocacy. This
is a very ambitious feature of the Act. The Commission should take suitable
measure for the promotion of competition advocacy creating awareness and
imparting training about the competition issues as may be prescribed.95 The
opinions given by the Commission framing the competition policy may not
92. W., sec. 43.

93. Id., sec. 44.
94. Id., sec. 45.
95. Id., sec. 49(1).
be binding upon the central government in formulating such policy, 96 but

for the promotion of the competition advocacy or creating awareness and
imparting training about competition issues, the Commission should not
omit to take suitable measures. 97
96. Id., sec. 49(2).

97. Id., sec. 49(3).

The Electricity Act, 2003: Chapter - 19

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

The Electricity Act, 2003: Chapter - 19

Uploaded by

Copyright:

Available Formats

288

N o w these three enactments have been repealed by the Electricity Act

I. Underlying Policies of the Act

development in a planned and coordinated manner.

2. Id., sec. 2(73). "Transmission licensee" means a licensee authorized to establish or

II. System for Distribution of Electricity

The scheme of distribution

commission may extend the said period further as it may consider

Provisions for safety

14. Id., proviso to sec. 43(1).

in the process of generation and distribution of electricity. It has been

24. Id., sec. 53.

wheeling of electricity, the licensee or the generating company is empowered

Maintenance of standards of performance

III. Regulatory Machinery

Central Electricity Authority

29. Id., sec. 56(1).

Central Electricity Regulatory Commission

37. Id., sec. 70(2).

is required to have qualifications and experience in the field of finance, two

Functions of the Central Commission

(k) other matters referred to the Central Commission by the central

Central Advisory Committee

State Electricity Regulatory Commission

47. Id., sec. 80(1) and (2).

Section 83 of the Act makes provisions for the constitution of a joint

Functions of state commissions

54. Id., sec. 83(2).

State Advisory Committee

IV. Appellate Tribunal for Electricity

57. Id., sec. 86(2).

V. Offences and Penalties

64. Id., sec. 111(2).

or uses a tempered meter, current reversing transformer, loop connection or

74. Id., sec. 135(l)(c).

of such search should be prepared and delivered to such occupant or

V. Special Courts for Speedy Trial

81. Id., sec. 136(1).

area.89 A special court is to consist of a single judge to be appointed by the

92. Id., sec. 153(4).

I. The MRTP Act

In the matter of misleading advertisements and false representations,

reading, hearing or seeing the advertisement. Besides, an advertisement

5. Id, sec. 36A(3).

impugned trade practice as prejudicial to the public interest or to the interest

II. The Competition Act

10. Id., sec. 36D(l)(a).

III. Pro-consumer Policies under the Competition Act

Restrictions of anti-competitive agreements

14. Id., sec. 2(h).

competitive if such agreement increases efficiency in production, supply,

Prohibition on abuse of dominant position

15. Id., proviso to sec. 3(3).

25. Id., sec. 6(1).

IV. Competition Commission of India

Duties, powers and functions of the Commission

32. Id., sec. 7(1).

p r o m o t e and sustain competition in markets and t o protect the interests of

39. Id., sec. 18.

(e) vertical integration of the enterprises or sale or service network

45. Id., sec. 19(4).

48. Id., sec. 19(6).

(h) market share, in the relevant market, of the persons or enterprise