Sandeep Rani, Assistant Professor Laws

St. Soldier Law College Jalandhar

For B.Com, B.A. LL.B. 7th Semester and B.A.,B.Com, BB.A. LL.B 5th Semester

Negotiable Instrument Act 1881

Question 1. What are the offences and penalities under Negotiable Instrument Act 1881?
Ans. DISHONOUR OF CHEQUE: A person suffers a lot if a cheque issued in his favour is
dishonoured due to the insufficiency of funds in the account of the drawer of the cheque. To
discourage such dishonour, it has been made an offence by an amendment of the Negotiable
Instrument Act by the Banking, Public Financial Institution and Negotiable Instrument Laws
(Amendment ) Act, 1988. A new Chapter VII consisting of Sections 138 to 142 has been inserted in
the Negotiable Instrument Act. Section 138 makes the dishonour of cheque an offence. The payee or
holder in due course can have recourse against the drawer, who may be held liable for the offence.

Under Section 138 – Where any cheque drawn by a person on an account maintained by him with a
banker for payment of any amount of money to another person from out of that account for the
discharge, in whole or part, of any debt or other liability, is returned by the bank unpaid, either
because of the amount of money standing to the credit of that account is insufficient to honour the
cheque or that it exceeds the amount arranged to be paid from that account by an agreement made
with that bank, such person shall be deemed to have committed an offence and shall, without
prejudice to any other provision of this Act be punished with imprisonment [a term may be
extended to 2 years], or with fine which may extend to twice the amount of the cheque, or with
both.

ESSENTIAL FOR AN ACTION UNDER SECTION 138

1. There should be dishonour of cheque: Section 138 makes dishonour of cheque in certain cases an
offence. Cheque is the most common mode of making the payment. In order to duly protect the
interest of its payee, holder in due course, there is an attempt to discourage dishonour of a cheque
by making it an offence. These provisions do not cover the dishonour of other negotiable
instruments.
2. Payment in discharge of debtor liability: The cheque should have been drawn by a person on an
account with a banker for payment of money to another person for the discharge, in whole or part,
of any debt or other liability. The debt or other liability in such a case means a legally enforceable
debt or other liability. If the payment by way of cheque is made as gift or charity, it is not the
payment for legally enforceable debt or liability. The dishonour of such cheque does not attract the
provisions of Section 138 of the Negotiable Instrument Act.
3. Presentment of the cheque within the period of its validity: It is further necessary that the cheque
has been presented before it became stale and invalid. It means that the cheque has been presented
within a period of 6 months from the date on which it is drawn or within the period of validity,
whichever is earlier.
4. Dishonour due to insufficient fund: It is also necessary that the cheque should be returned by the
bank unpaid. Dishonour may be because of 2 reasons: Either the amount of money present in the
account is insufficient Or the amount to be paid has exceeded the amount to be paid from that
account as in the agreement made with that bank. It has been generally held in various cases that
dishonour due to the insufficiency of funds has to be interpreted liberally. Dishonour due to the
remarks like “Account closed”, “Refer to the drawer” or “Stop payment” of the cheque may be
deemed to be covered by the provision contained in Section 138 of the Act.
5. Notice and demand from the drawer and drawer’s failure to pay: Within 15 days of receipt of
information from the bank about the dishonour of the cheque, the payee or holder in due course of
the negotiable instrument, as the case may be, must make a demand of the said amount from the
drawer by giving a notice in writing. Inspite of such a notice the drawer of the cheque should fail to
make the payment of the said amount of money to the payee or the holder in due course of the
cheque, within 15 days of the receipt of the said notice.

CIRCUMSTANCES IN WHICH A BANKER IS JUSTIFIED IN DISHONOURING

CUSTOMER’S CHEQUE
1. PAYMENT COUNTERMANDED BY THE DRAWER: When the cheque drawer of the cheque
countermands the payment, that is it issues the instruction to the bank not to make the payment. On
receipt of a valid stop payment order, the cheque must be returned unpaid with the
remark “payment countermanded by drawer“
2. NOTICE OF DRAWER’S DEATH: On receipt of the confirmed news of death of account holder,
cheques signed by him should be returned unpaid with the remark “Drawer deceased”.
3. NOTICE OF CUSTOMER’S INSANITY: Where the account holder is certified as insane by a
recognised medical practitioner then the cheques signed by him should be signed by him
should be returned unpaid.
4. NOTICE OF CUSTOMER’S INSOLVENCY: Where a customer is adjudged insolvent, the
banker must refuse to pay cheques drawn by the customer.
5. LIQUIDATION OF COMPANY: When a bank receives notice from the liquidator in accordance
with the provisions of Companies Act, requiring to pay the balance to liquidator’s account , all the
cheques by the companies should be returned unpaid.

OFFENCE BY COMPANY
A juristic person like incorporated companies and partnership firms are also made liable for the
offence of dishonour of cheque described under section 138.

Under Section 141 – If the person committing an offence under section 138 is a company , every
person who, at the time the offence was committed, was in charge of, and was responsible to the
company for the conduct of the business of the company ,as well as the company, shall be deemed
to be guilty of the offence and shall be liable to be proceeded against and punished accordingly.
Provided that nothing contained in this sub-section shall render any person liable to punishment if
he proves that the offence was committed without his knowledge, or that he had exercised all due
diligence to prevent the commission of such offence
Provided further that where a person is nominated as a Director of a Company by virtue of his
holding any office or employment in the central Government or State Government or a financial
corporation owned or controlled by the Central Government as the case may be, he shall not be
liable for prosecution under this chapter.
Not withstanding anything contained in sub-section (1), where any offence under this Act has been
committed by a company and it is proved that the offence has been committed with the consent or
connivance of or is attributable to, any neglect on the part of, any director, manager, secretary, or
other
officer and shall also be deemed to be guilty of that offence and shall be liable to be proceeded
against and punished accordingly.
Explanation- For the purpose of this section –
“Company” means any body corporate and includes a firm or other association of individuals; and
“Director” in relation to a firm, means a partner in the firm
Section 141 covers 3 categories of person liable for offence under Section 138-
• The company as principal offender
• Persons who were in charge and were responsible for the business of company
• Any other person who is director or a manager or secretary or officer of the company
There must be a specific accusation against each of the persons alleged as accused that such person
was in charge of and responsible for the conduct of the business of the company or the firm at the
relevant time when the alleged offence was committed by the company or the firm.

COGNIZANCE OF OFFENCES
Section 142 of Negotiable Instrument Act of 1881 deals with cognizance of offences.

CONDITION ESSENTIAL FOR COGNIZANCE

For initiating proceedings against the drawer of dishonoured cheque drawee has to fulfil following
conditions –
• The payee or the holder in due course has to file a written complaint.
• The complaint is to be made within one month of the date on which the cause of action arose
under clause (c) of the proviso to Section 138
• Only the court of Metropolitan Magistrate or a Judicial Magistrate of First Class is empowered to
try the offence defined under the provision of Section 138.

It must be noted that the offence under Section 138 of the Act, has been made compoundable.
Recent Supreme Court rulings for speedy disposal of cases under Section 138 of the Act: In 2017,
Delhi High Court in Dayawati v. Yogesh Kumar Gosain took into account the question whether an
offence under Section 138, which is a criminally compoundable case, could be settled by mediation.
The Court held that even though an express statutory provision enabling the criminal court to refer
the complainant and accused persons to alternate dispute redressal mechanisms has not been
specifically provided by the Legislature. The Code of Criminal Procedure ("Cr.P.C.") does permit
and recognize settlement without stipulating or restricting the process by which it may be reached.
Thus, there is no bar to utilizing the alternate dispute mechanisms including arbitration, mediation,
conciliation (recognized under Section 89 of Civil Procedure Code, 19083) for the purposes of
settling disputes which are the subject matter of offences covered under Section 320 of the Cr.P.C. It
also stated the proceedings under Section 138 of the Act is distinct from other criminal cases and
are really in the nature of a civil wrong which has been given criminal overtones.

LIABILITY OF A DRAWER OF A DISHONOURED CHEQUE

Civil liability: Where a cheque is dishonoured, the legal position of the drawer of the cheque
becomes that of a principal debtor to the holder. The holder can bring civil suit just like any creditor
to recover the amount from the drawer making him liable as principal debtor.
Criminal liability: A drawer of a cheque is deemed to have committed a criminal offence when the
cheque drawn by him is dishonoured by the drawee on account of insufficiency of funds. The
criminal liability of a drawer in case of dishonour of cheque is dealt in section 138 to Section 142 of
Negotiable Instrument Act 1881. Procedure that is followed in matters with regard to Section 138 of
the Act is as follows:
• A legal notice is to be issued to the drawer within 15 days of dishonor of cheque by registered post
with all relevant facts. The drawer is given a time of 15 days to make the payment, if the payment is
made then the matter is served and the issue is settled. On the other hand if the payment is not made
then the complainant is to file a criminal case process under Section 138 of the Act, against the
drawer within 30 days from the date of expiry of 15 days specified the notice,with the concerned
magistrate court within the jurisdiction.
• The complainant or his authorized agent should appear in the witness box and provide relevant
details for filing the case. If the court is satisfied and finds substance in the complainant, then
summons will be issued to the accused to appear before the Court.
• If after being served with the summons the accused abstains himself from appearing then the court
may issue a bailable warrant. Even after this if the drawer does not appear a non-bailable warrant
may be issued.
• On appearance of the drawer/accused, he may furnish a bail bond to ensure his appearance
during trial. After which the plea of accused is recorded.In case he pleads guilty, the court will
post the matter for punishment. If the accused, denies the charges then he will be served with
the copy of complaint.
• The Complainant may present his evidence by way of affidavit and produce all documents
including the original in support of his complaint. The complainant will be cross examined by the
accused or his counsel.
• The accused will be given an opportunity to lead his evidence. The accused will also be afforded
an opportunity to submit his documents in support of his case, as well as witnesses in his support.
Accused and his witnesses will be cross examined by the complainant.
• The last stage of the proceeding is that of the arguments after which the court will pass a
judgment. If the accused is acquitted then the matter ends, but the complainant can go on further
appeal in the High Court, similarly if the accused is convicted he can file an appeal in the Sessions
Court. Procedure for trial of cases under Chapter XVII of the Act has normally to be summary. The
discretion of the Magistrate under second proviso to Section 143, to hold that it was undesirable to
try the case summarily as sentence of more than one year may have to be passed, is to be exercised
after considering the further fact that apart from the sentence of imprisonment, the Court has
jurisdiction under Section 357(3) Cr.P.C.6 to award suitable compensation with default sentence
under Section 64 IPC and with further powers of recovery under Section 431 Cr.P.C.7 With this
approach, prison sentence of more than one year may not be required in all cases. Since evidence of
the complaint can be given on affidavit, subject to the Court summoning the person giving affidavit
and examining him and the bank's slip being prima facie evidence of the dishonour of cheque, it is
unnecessary for the Magistrate to record any further preliminary evidence. Such affidavit evidence
can be read as evidence at all stages of trial or other proceedings. The manner of examination of the
person giving affidavit can be as per Section 264 Cr.P.C. The scheme is to follow summary
procedure except where exercise of power under second proviso to Section 143 becomes necessary,
where sentence of one year may have to be awarded and compensation under Section 357(3) is
considered inadequate, having regard to the amount of the cheque, the financial capacity and the
conduct of the accused or any other circumstances."

PENALTY:
The maximum punishment for such an offence is imprisonment upto 2 years or fine upto twice the
amount of cheque or both. Where the cheque is drawn by a company, a firm, or association of
individuals, the punishment can be awarded to every person who was in-charge of and was
responsible for its conduct of business and also to the company.

Interim compensation to the complainant

Section 143-A empowers the Court trying an offence under Section 138, to order the drawer of the
cheque to pay interim compensation to the complainant which shall not be more than 20% of the
amount of the cheque. Such interim compensation has to be paid by the drawer within a period of
60 days (extendable by 30 days) from the date of the order directing such compensation. Such
compensation may be recovered as if it were a fine under Section 421 CrPC. If the drawer of the
cheque is acquitted, the complainant has to repay the amount of such compensation received within
60 days (extendable by 30 days) from the date of the acquittal order. The complainant has also to
pay interest on such amount at the bank rate as published by RBI prevalent at the beginning of the
relevant financial year.

Electricity Act 2003

Q. 1. Write down about the National Electricity Policy and Plan under Electricity Act 2003?
Ans. NATIONAL ELECTRICITY POLICY AND PLAN :
Section 3. (1) The Central Government shall, from time to time, prepare the National Electricity
Policy and tariff policy, in consultation with the State Governments and the Authority for
development of the power system based on optimal utilisation of resources such as coal, natural gas,
nuclear substances or materials, hydro and renewable sources of energy.
(2) The Central Government shall publish National Electricity Policy and tariff policy from time to
time.
(3) The Central Government may, from time to time, in consultation with the State Governments
and the Authority, review or revise, the National Electricity Policy and tariff policy referred to in
sub-section (1).
(4) The Authority shall prepare a National Electricity Plan in accordance with the National
Electricity Policy and notify such plan once in five years: Provided that the Authority while
preparing the National Electricity Plan shall publish the draft National Electricity Plan and invite
suggestions and objections thereon from licensees, generating companies and the public within such
time as may be prescribed: Provided further that the Authority shall - (a) notify the plan after
obtaining the approval of the Central Government; (b) revise the plan incorporating therein the
directions, if any, given by the Central Government while granting approval under clause (a).
(5) The Authority may review or revise the National Electricity Plan in accordance with the
National Electricity Policy.
Section 4. National Policy on stand alone systems for rural areas and non-conventional energy
systems: The Central Government shall, after consultation with the State Governments, prepare and
notify a national policy, permitting stand alone systems (including those based on renewable
sources of energy and other non-conventional sources of energy) for rural areas.
Section 5. National policy on electrification and local distribution in rural areas: The Central
Government shall also formulate a national policy, in consultation with the State Governments and
the State Commissions, for rural electrification and for bulk purchase of power and management of
local distribution in rural areas through Panchayat Institutions, users’ associations, co-operative
societies, non-Governmental organisations or franchisees.

Section 6. Joint responsibility of State Government and Central Government in rural

electrification: The concerned State Government and the Central Government shall jointly
endeavour to provide access to electricity to all areas including villages and hamlets through rural
electricity infrastructure and electrification of households.

Q. 2. Write down the provisions regarding licensing under The Electricity Act, 2003?
Ans. LICENSING: Section 12. Authorised persons to transmit, supply, etc., electricity: No
person shall (a) transmit electricity; or (b) distribute electricity; or (c) undertake trading in
electricity, unless he is authorised to do so by a licence issued under section 14, or is exempt under
section 13.
Section 13. Power to exempt: The Appropriate Commission may, on the recommendations, of the
Appropriate Government, in accordance with the national policy formulated under section 5 and in
the public interest, direct, by notification that subject to such conditions and restrictions, if any, and
for such period or periods, as may be specified in the notification, the provisions of section 12 shall
not apply to any local authority, Panchayat Institution, users’ association, co-operative societies,
non-governmental organizations, or franchisees:

Section 14. Grant of licence: The Appropriate Commission may, on an application made to it
under section 15, grant a licence to any person - (a) to transmit electricity as a transmission licensee;
or (b) to distribute electricity as a distribution licensee; or (c) to undertake trading in electricity as
an electricity trader, in any area as may be specified in the licence:

PROVISO:
1. That any person engaged in the business of transmission or supply of electricity under the
provisions of the repealed laws or any Act specified in the Schedule on or before the appointed
date shall be deemed to be a licensee under this Act for such period as may be stipulated in the
licence, clearance or approval granted to him under the repealed laws or such Act specified in
the Schedule, and the provisions of the repealed laws or such Act in respect of such licence shall
apply for a period of one year from the date of commencement of this Act or such earlier period
as may be specified, at the request of the licensee, by the Appropriate Commission and
thereafter the provisions of this Act shall apply to such business.
2. That the Central Transmission Utility or the State Transmission Utility shall be deemed to be a
transmission licensee under this Act.
3. That in case an Appropriate Government transmits electricity or distributes electricity or
undertakes trading in electricity, whether before or after the commencement of this Act, such
Government shall be deemed to be a licensee under this Act, but shall not be required to obtain a
licence under this Act.
4. That the Damodar Valley Corporation, established under sub-section (1) of section 3 of the
Damodar Valley Corporation Act, 1948, shall be deemed to be a licensee under this Act but shall
 not be required to obtain a licence under this Act and the provisions of the Damodar Valley
Corporation Act, 1948, in so far as they are not inconsistent with the provisions of this Act, shall
continue to apply to that Corporation.
5. That the Government company or the company referred to in sub-section (2) of section 131 of
this Act and the company or companies created in pursuance of the Acts shall be deemed to be a
licensee under this Act:
6. That the Appropriate Commission may grant a licence to two or more persons for distribution of
electricity through their own distribution system within the same area, subject to the conditions
that the applicant for grant of licence within the same area shall, without prejudice to the other
conditions or requirements under this Act, comply with the additional requirements [relating to
the capital adequacy, credit-worthiness, or code of conduct] as may be prescribed by the Central
Government, and no such applicant, who complies with all the requirements for grant of licence,
shall be refused grant of licence on the ground that there already exists a licensee in the same
area for the same purpose.
7. That in a case where a distribution licensee proposes to undertake distribution of electricity for a
specified area within his area of supply through another person, that person shall not be required
to obtain any separate licence from the concerned State Commission and such distribution
licensee shall be responsible for distribution of electricity in his area of supply.
8. That where a person intends to generate and distribute electricity in a rural area to be notified by
the State Government, such person shall not require any licence for such generation and
distribution of electricity, but he shall comply with the measures which may be specified by the
Authority under section 53.
9. That a distribution licensee shall not require a licence to undertake trading in electricity.

Section 15. Procedure for grant of licence: --- (1) Every application under section 14 shall be
made in such form and in such manner as may be specified by the Appropriate Commission and
shall be accompanied by such fee as may be prescribed.

(2) Any person who has made an application for grant of licence shall, within seven days after
making such application, publish a notice of his application with such particulars and in such
manner as may be specified and a licence shall not be granted - (i) until the objections, if any,
received by the Appropriate Commission in response to publication of the application have been
considered by it: Provided that no objection shall be so considered unless it is received before the
expiration of thirty days from the date of the publication of the notice as aforesaid; (ii) until, 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
Government for defence purposes, the Appropriate Commission has ascertained that there is no
objection to the grant of the licence on the part of the Central Government.

3) A person intending to act as a transmission licensee shall, immediately on making the

application, forward a copy of such application to the Central Transmission Utility or the State
Transmission Utility, as the case may be.

(4) The Central Transmission Utility or the State Transmission Utility, as the case may be, shall,
within thirty days after the receipt of the copy of the application referred to in sub-section (3), send
its recommendations, if any, to the Appropriate Commission: Provided that such recommendations
shall not be binding on the Commission.

(5) Before granting a licence under section 14, the Appropriate Commission shall - (a) publish a
notice in two such daily newspapers, as that Commission may consider necessary, stating the name
and address of the person to whom it proposes to issue the licence; (b) consider all suggestions or
objections and the recommendations, if any, of the Central Transmission Utility or State
Transmission Utility, as the case may be.

(6) Where a person makes an application under sub-section (1) of section 14 to act as a licensee, the
Appropriate Commission shall, as far as practicable, within ninety days after receipt of such
application, - (a) issue a licence subject to the provisions of this Act and the rules and regulations
made thereunder; or (b) reject the application for reasons to be recorded in writing if such
application does not conform to the provisions of this Act or the rules and regulations made
thereunder or the provisions of any other law for the time being in force: Provided that no
application shall be rejected unless the applicant has been given an opportunity of being heard.

(7) The Appropriate Commission shall, immediately after issue of a licence, forward a copy of the
licence to the Appropriate Government, Authority, local authority, and to such other person as the
Appropriate Commission considers necessary.

(8) A licence shall continue to be in force for a period of twenty- five years unless such licence is
revoked.

Section 16. Condition of licence: The Appropriate Commission may specify any general or
specific conditions which shall apply either to a licensee or class of licensees and such conditions
shall be deemed to be conditions of such licence: Provided that the Appropriate Commission shall,
within one year from the appointed date, specify any general or specific conditions of licence
applicable to the licensees referred to in the first, second, third, fourth and fifth provisos to section
14 after the expiry of one year from the commencement of this Act.

Section 17. (Licensee not to do certain things): ---

(1) No licensee shall, without prior approval of the Appropriate Commission, - (a) undertake any
transaction to acquire by purchase or takeover or otherwise, the utility of any other licensee; or (b)
merge his utility with the utility of any other licensee: Provided that nothing contained in this sub-
section shall apply if the utility of the licensee is situate in a State other than the State in which the
utility referred to in clause (a) or clause (b) is situate.
(2) Every licensee shall, before obtaining the approval under sub-section (1), give not less than one
month’s notice to every other licensee who transmits or distributes, electricity in the area of such
licensee who applies for such approval.
(3) No licensee shall at any time assign his licence or transfer his utility, or any part thereof, by sale,
lease, exchange or otherwise without the prior approval of the Appropriate Commission.
(4) Any agreement, relating to any transaction specified in sub-section (1) or sub-section (3), unless
made with the prior approval of the Appropriate Commission, shall be void.

Section 18. Amendment of licence:

(1) Where in its opinion the public interest so permits, the Appropriate Commission, may, on the
application of the licensee or otherwise, make such alterations and amendments in the terms and
conditions of his licence as it thinks fit: Provided that no such alterations or amendments shall be
made except with the consent of the licensee unless such consent has, in the opinion of the
Appropriate Commission, been unreasonably withheld.
(2) Before any alterations or amendments in the licence are made under this section, the following
provisions shall have effect, namely: - (a) where the licensee has made an application under sub-
section (1) proposing any alteration or modifications in his licence, the licensee shall publish a
notice of such application with such particulars and in such manner as may be specified; (b) in the
case of an application proposing alterations or modifications in the area of supply comprising the
whole or any part of any cantonment, aerodrome, fortress, arsenal, dockyard or camp or any
building or place in the occupation of the Government for defence purposes, the Appropriate
Commission shall not make any alterations or modifications except with the consent of the Central
Government; (c) where any alterations or modifications in a licence are proposed to be made
otherwise than on the application of the licensee, the Appropriate Commission shall publish the
proposed alterations or modifications with such particulars and in such manner as may be specified;
(d) the Appropriate Commission shall not make any alterations or modification unless all
suggestions or objections received within thirty days from the date of the first publication of the
notice have been considered.

Section 19. Revocation of licence: -- (1) If the Appropriate Commission, after making an enquiry,
is satisfied that 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 Appropriate Commission, makes wilful and
prolonged default in doing anything required of him by or under this Act or the rules or regulations
made thereunder;
(b) where the licensee breaks any of the terms or conditions of his 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 fixed in this behalf by his licence, or any longer
period which the Appropriate Commission may have granted therefor – (I) to show, to the
satisfaction of the Appropriate Commission, that he is in a position fully and efficiently to discharge
the duties and obligations imposed on him by his licence; or (ii) to make the deposit or furnish the
security, or pay the fees or other charges required by his licence;
(d) where in the opinion of the Appropriate Commission the financial position of the licensee is
such that he is unable fully and efficiently to discharge the duties and obligations imposed on him
by his licence.

(2) Where in its opinion the public interest so requires, the Appropriate Commission may, on
application, or with the consent of the licensee, revoke his licence as to the whole or any part of his
area of distribution or transmission or trading upon such terms and conditions as it thinks fit.

(3) No licence shall be revoked under sub-section (1) unless the Appropriate Commission has given
to the licensee not less than three months’ 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.
(4) The Appropriate Commission may, instead of revoking a licence under sub-section (1), permit it
to remain in force subject to such further terms and conditions as it thinks fit to impose, and any
further terms and conditions so imposed shall be binding upon and be observed by the licensee and
shall be of like force and effect as if they were contained in the licence.

(5) Where the Commission revokes a licence under this section, it shall serve a notice of revocation
upon the licensee and fix a date on which the revocation shall take effect.

(6) Where the Appropriate Commission has given notice for revocation of licence under sub-section
(5), without prejudice to any penalty which may be imposed or prosecution proceeding which may
be initiated under this Act, the licensee may, after prior approval of that Commission, sell his utility
to any person who is found eligible by that Commission for grant of licence.

Section 20. Sale of utilities of licensees -

(1) Where the Appropriate Commission revokes under section 19 the licence of any licensee, the
following provisions shall apply, namely:- (a) the Appropriate Commission shall invite applications
for acquiring the utility of the licensee whose licence has been revoked and determine which of
such applications should be accepted, primarily on the basis of the highest and best price offered for
the utility; (b) the Appropriate Commission
may, by notice in writing, require the licensee to sell his utility and thereupon the licensee shall sell
his utility to the person (hereafter in this section referred to as the “purchaser”) whose application
has been accepted by that Commission; (c) all the rights, duties, obligations and liabilities of the
licensee, on and from the date of revocation of licence or on and from the date, if earlier, on which
the utility of the licensee is sold to a purchaser, shall absolutely cease except for any liabilities
which have accrued prior to that date; (d) the Appropriate Commission may make such interim
arrangements in regard to the operation of the utility as may be considered appropriate including the
appointment of Administrators; (e) The Administrator appointed under clause (d) shall exercise such
powers and discharge such functions as the Appropriate Commission may direct.

(2) Where a utility is sold under sub-section (1), the purchaser shall pay to the licensee the purchase
price of the utility in such manner as may be agreed upon.

(3) Where the Appropriate Commission issues any notice under sub-section (1) requiring the
licensee to sell the utility, it may, by such notice, require the licensee to deliver the utility, and
thereupon the licensee shall deliver on a date specified in the notice, the utility to the designated
purchaser on payment of the purchase price thereof.

(4) Where the licensee has delivered the utility referred to in sub-section(3) to the purchaser but its
sale has not been completed by the date fixed in the notice issued under that sub-section, the
Appropriate Commission may, if it deems fit, permit the intending purchaser to operate and
maintain the utility system pending the completion of the sale.

Section 21. Vesting of utility in purchaser: Where a utility is sold under section 20 or section 24,
then, upon completion of the sale or on the date on which the utility is delivered to the intending
purchaser, as the case may be, whichever is earlier- (a) the utility shall vest in the purchaser or the
intending purchaser, as the case may be, free from any debt, mortgage or similar obligation of the
licensee or attaching to the utility: Provided that any such debt, mortgage or similar obligation shall
attach to the purchase money in substitution for the utility; and (b) the rights, powers, authorities,
duties and obligations of the licensee under his licence shall stand transferred to the purchaser and
such purchaser shall be deemed to be the licensee.

Section 22. Provisions where no purchase takes place:- (1) If the utility is not sold in the manner
provided under section 20 or section 24, the Appropriate Commission may, to protect the interest of
consumers or in the public interest, issue such directions or formulate such scheme as it may deem
necessary for operation of the utility.(2) Where no directions are issued or scheme is formulated by
the Appropriate Commission under sub-section (1), the licensee referred to in section
20 or section 24 may dispose of the utility in such manner as it may deem fit: Provided that, if the
licensee does not dispose of the utility, within a period of six months from the date of revocation,
under section 20 or section 24, the Appropriate Commission may cause the works of the licensee in,
under, over, along, or across any street or public land to be removed and every such street or public
land to be reinstated, and recover the cost of such removal and reinstatement from the licensee.

Section 23. Directions to licensees: If the Appropriate Commission is of the opinion that it is
necessary or expedient so to do for maintaining the efficient supply, securing the equitable
distribution of electricity and promoting competition, it may, by order, provide for regulating
supply, distribution, consumption or use thereof.

Section 24. Suspension of distribution licence and sale of utility:- (1) If the Appropriate
Commission is of the opinion that a distribution licensee – (a) has persistently failed to maintain
uninterrupted supply of electricity conforming to standards regarding quality of electricity to the
consumers; or (b)is unable to discharge the functions or perform the duties imposed on it by or
under the provisions of this Act; or (c)has persistently defaulted in complying with any direction
given by the Appropriate Commission under this Act; or (d)has broken the terms and conditions of
licence, and circumstances exist which render it necessary for it in public interest so to do, the
Appropriate Commission may, for reasons to be recorded in writing, suspend, for a period not
exceeding one year, the licence of the distribution licensee and appoint an Administrator to
discharge the functions of the distribution licensee in accordance with the terms and conditions of
the licence:
Provided that before suspending a licence under this section, the Appropriate Commission shall give
a reasonable opportunity to the distribution licensee to make representations against the proposed
suspension of license and shall consider the representations, if any, of the distribution licensee. (2)
Upon suspension of license under sub-section (1) the utilities of the distribution licensee shall vest
in the Administrator for a period not exceeding one year or up to the date on which such utility is
sold in accordance with the provisions contained in section 20, whichever is later. (3) The
Appropriate Commission shall, within one year of appointment of the Administrator under sub-
section (1) either revoke the licence in accordance with the provisions contained in section 19 or
revoke suspension of the licence and restore the utility to the distribution licensee whose licence
had been suspended, as the case may be.
(4) In a case where the Appropriate Commission revokes the licence under sub-section (3), the
utility of the distribution licensee shall be sold within a period of one year from the date of
revocation of the licence in accordance with the provisions of section 20 and the price after
deducting the administrative and other expenses on sale of utilities be remitted to the distribution
licensee.

Question 4. Write down the provisions relating to distribution of electricity under Electricity
Act 2003?
Ans. DISTRIBUTION OF ELECTRICITY: PART VI of The Electricity Act, 2003 deals with
the Provisions with respect to distribution licensee:
Section 42. Duties of distribution licensee and open access:- (1) It shall be the duty of a
distribution licensee to develop and maintain an efficient, co-ordinated and economical distribution
system in his area of supply and to supply electricity in accordance with the provisions contained in
this Act.
(2) The State Commission shall introduce open access in such phases and subject to such
conditions, as may be specified within one year of the appointed date by it and in specifying the
extent of open access in successive phases and in determining the charges for wheeling, it shall
have due regard to all relevant factors including such cross subsidies, and other operational
constraints:
Provided that such open access shall be allowed on payment of a surcharge in addition to the
charges for wheeling as may be determined by the State Commission:
Provided further that such surcharge shall be utilised to meet the requirements of current level of
cross subsidy within the area of supply of the distribution licensee:
Provided also that such surcharge and cross subsidies shall be progressively reduced in the manner
as may be specified by the State Commission:
Provided also that such surcharge shall 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:
Provided also that the State Commission shall, not later than five years from the date of
commencement of the Electricity (Amendment) Act, 2003, by regulations, provide such open access
to all consumers who require a supply of electricity where the maximum power to be made
available at any time exceeds one megawatt.]

(3) Where any person, whose premises are situated within the area of supply of a distribution
licensee, (not being a local authority engaged in the business of distribution of electricity before the
appointed date) requires a supply of electricity from a generating company or any licensee other
than such distribution licensee, such person may, by notice, require the distribution licensee for
wheeling such electricity in accordance with regulations made by the State Commission and the
duties of the distribution licensee with respect to such supply shall be of a common carrier
providing non-discriminatory open access .

(4) Where the State Commission permits a consumer or class of consumers to receive supply of
electricity from a person other than the distribution licensee of his area of supply, such consumer
shall be liable to pay an additional surcharge on the charges of wheeling, as may be specified by the
State Commission, to meet the fixed cost of such distribution licensee arising out of his obligation
to supply.
(5) Every distribution licensee shall, within six months from the appointed date or date of
grant of licence, whichever is earlier, establish a forum for redressal of grievances of the consumers
in accordance with the guidelines as may be specified by the State Commission.

(6) Any consumer, who is aggrieved by non-redressal of his grievances under sub-section (5), may
make a representation for the redressal of his grievance to an authority to be known as Ombudsman
to be appointed or designated by the State Commission.

(7) The Ombudsman shall settle the grievance of the consumer within such time and in such
manner as may be specified by the State Commission.

(8) The provisions of sub-sections (5),(6) and (7) shall be without prejudice to right which the
consumer may have apart from the rights conferred upon him by those sub-section.

Section 43. Duty to supply on request:- (1) 1[Save as otherwise provided in this Act, every
distribution] licensee, shall, on an application by the owner or occupier of any premises, give supply
of electricity to such premises, within one month after receipt of the application requiring such
supply:
Provided that where such 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 such period as may be specified by the Appropriate
Commission:

Provided further that in case of a village or hamlet or area wherein no provision for supply of
electricity exists, the Appropriate Commission may extend the said period as it may consider
necessary for electrification of such village or hamlet or area.

(2) It shall be the duty of every distribution licensee to provide, if required, electric plant
or electric line for giving electric supply to the premises specified in sub-section (1) :Provided that
no person shall be entitled to demand, or to continue to receive, from a licensee a supply of
electricity for any premises having a separate supply unless he has agreed with the licensee to
pay to him such price as determined by the Appropriate Commission.

(3) If a distribution licensee fails to supply the electricity within the period specified in sub-
section (1), he shall be liable to a penalty which may extend to one thousand rupees for each day of
default.

Section 44. Exceptions from duty to supply electricity: Nothing contained in section 43 shall
be taken as requiring a distribution licensee to give supply of electricity to any premises if he
is prevented from so doing by cyclone, floods, storms or other occurrences beyond his control.

Section 45. Power to recover charges: --- (1) Subject to the provisions of this section, the
prices to be charged by a distribution licensee for the supply of electricity by him in
pursuance of section 43 shall be in accordance with such tariffs fixed from time to time and
conditions of his licence.
(2) The charges for electricity supplied by a distribution licensee shall be -
(a) fixed in accordance with the methods and the principles as may be specified by the concerned
State Commission;

(b) published in such manner so as to give adequate publicity for such charges and prices.

(3) The charges for electricity supplied by a distribution licensee may include
(a) a fixed charge in addition to the charge for the actual electricity supplied;
(b) a rent or other charges in respect of any electric meter or electrical plant provided by the
distribution licensee.

(4) Subject to the provisions of section 62, in fixing charges under this section a distribution
licensee shall not show undue preference to any person or class of persons or discrimination against
any person or class of persons.

(5) The charges fixed by the distribution licensee shall be in accordance with the provisions of
this Act and the regulations made in this behalf by the concerned State Commission.

Section 46. Power to recover expenditure:

The State Commission may, by regulations, authorise a distribution licensee to charge from a person
requiring a supply of electricity in pursuance of section 43 any expenses reasonably incurred in
providing any electric line or electrical plant used for the purpose of giving that supply.

Section 47. (Power to require security): - (1) Subject to the provisions of this section, a distribution
licensee may require any person, who requires a supply of electricity in pursuance of section 43, to
give him reasonable security, as may be determined by regulations, for the payment to him of all
monies which may become due to him -
(a) in respect of the electricity supplied to such persons; or
(b) where any electric line or electrical plant or electric meter is to be provided for supplying
electricity to person, in respect of the provision of such line or plant or meter, and if that person
fails to give such security, the distribution licensee may, if he thinks fit, refuse to give the supply of
electricity or to provide the line or plant or meter for the period during which the failure continues.

(2) Where any person has not given such security as is mentioned in sub-section (1) or the
security given by any person has become invalid or insufficient, the distribution licensee may, by
notice, require that person, within thirty days after the service of the notice, to give him
reasonable security for the payment of all monies which may become due to him in respect of the
supply of electricity or provision of such line or plant or meter.

(3) If the person referred to in sub-section (2) fails to give such security, the distribution
licensee may, if he thinks fit, discontinue the supply of electricity for the period during
which the failure continues.
(4) The distribution licensee shall pay interest equivalent to the bank rate or more, as may be
specified by the concerned State Commission, on the security referred to in sub-section (1) and
refund such security on the request of the person who gave such security.
(5) A distribution licensee shall not be entitled to require security in pursuance of clause (a) of
sub-section (1) if the person requiring the supply is prepared to take the supply through a pre-
payment meter.

Section 48. (Additional terms of supply):

A distribution licensee may require any person who requires a supply of electricity in
pursuance of section 43 to accept -
(a) any restrictions which may be imposed for the purpose of enabling the distribution licensee to
comply with the regulations made under section 53;

(b) any terms restricting any liability of the distribution licensee for economic loss resulting
from negligence of the person to whom the electricity is supplied.

Section 49. (Agreement with respect to supply or purchase of electricity):

Where the Appropriate Commission has allowed open access to certain consumers under
section 42, such consumers, notwithstanding the provisions contained in clause (d) of
subsection (1) of section 62, may enter into an agreement with any person for supply or
purchase of electricity on such terms and conditions (including tariff) as may be agreed upon by
them.

Section 50. (The Electricity Supply Code):

The State Commission shall specify an electricity supply code to provide for recovery of
electricity charges, intervals for billing of electricity charges, disconnection of supply of
electricity for non-payment thereof, restoration of supply of electricity; measures for
preventing tampering, distress or damage to electrical plant, or electrical line or meter, entry
of distribution licensee or any person acting on his behalf for disconnecting supply and
removing the meter; entry for replacing, altering or maintaining electric lines or electrical
plants or meter and such other matters.]

Section 51. (Other businesses of distribution licensees):

A distribution licensee may, with prior intimation to the Appropriate Commission, engage in any
other business for optimum utilisation of its assets:
Provided that a proportion of the revenues derived from such business shall, as may be specified by
the concerned State Commission, be utilised for reducing its charges for wheeling :

Provided further that the distribution licensee shall maintain separate accounts for each such
business undertaking to ensure that distribution business neither subsidises in any way such
business undertaking nor encumbers its distribution assets in any way to support such business.

Provided also that nothing contained in this section shall apply to a local authority engaged, before
the commencement of this Act, in the business of distribution of electricity.
Section 52. (Provisions with respect to electricity traders): --- (1) Without prejudice to the
provisions contained in clause (c) of section 12, the Appropriate Commission may, specify the
technical requirement, capital adequacy requirement and credit worthiness for being an electricity
trader.
(2) Every electricity trader shall discharge such duties, in relation to supply and trading in
electricity, as may be specified by the Appropriate Commission.

Section 53. (Provisions relating to safety and electricity supply):

The Authority may in consultation with the State Government, specify suitable measures for–
(a) protecting the public (including the persons engaged in the generation, transmission or
distribution or trading) from dangers arising from the generation, transmission or distribution or
trading of electricity, or use of electricity supplied or installation, maintenance or use of any
electric line or electrical plant;
(b) eliminating or reducing the risks of personal injury to any person, or damage to property of
any person or interference with use of such property ;
(c) prohibiting the supply or transmission of electricity except by means of a system which
conforms to the specification as may be specified;
(d) giving notice in the specified form to the Appropriate Commission and the Electrical Inspector,
of accidents and failures of supplies or transmissions of electricity;
(e) keeping by a generating company or licensee the maps, plans and sections relating
to supply or transmission of electricity;
(f) inspection of maps, plans and sections by any person authorised by it or by Electrical Inspector
or by any person on payment of specified fee;
(g) 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.

Section 54. (Control of transmission and use of electricity): --- (1) Save as otherwise exempted
under this Act, no person other than the Central Transmission Utility or a State Transmission
Utility, or a licensee shall transmit or use electricity at a rate exceeding two hundred and
fifty watts and one hundred volts –
(a) in any street, or
(b) in any place,-
(i) in which one hundred or more persons are ordinarily likely to be assembled; or
(ii) which is a factory within the meaning of the Factories Act, 1948 or a mine within the meaning
of the Mines Act, 1952; or
(iii) to which the State Government, by general or special order, declares the provisions of this
sub-section to apply, without giving, before the commencement of transmission or use of
electricity, not less than seven days’ notice in writing of his intention to the Electrical
Inspector and to the District Magistrate, or the Commissioner of Police, as the case may
be, containing particulars of the electrical installation and plant, if any, the nature and the
purpose of supply and complying with such of the provisions of Part XVII of this Act, as may be
applicable:
Provided that nothing in this section shall apply to electricity used for the public carriage
of passengers, animals or goods, on, or for the lighting or ventilation of the rolling stock
of any railway or tramway subject to the provisions of the Railways Act, 1989.
(2) Where any difference or dispute arises as to whether a place is or is not one in which one
hundred or more persons are ordinarily likely to be assembled, the matter shall be referred to the
State Government, and the decision of the State Government thereon shall be final.
(3) The provisions of this section shall be binding on the Government.

Section 55. (Use, etc., of meters): --- (1) No licensee shall supply electricity, after the expiry of two
years from the appointed date, except through installation of a correct meter in accordance with the
regulations to be made in this behalf by the Authority:
Provided that the licensee may require the consumer to give him security for the price of a
meter and enter into an agreement for the hire thereof, unless the consumer elects to purchase
a meter:
Provided further that the State Commission may, by notification, extend the said period of two
years for a class or classes of persons or for such area as may be specified in that notification.
(2) For proper accounting and audit in the generation, transmission and distribution or trading of
electricity, the Authority may direct the installation of meters by a generating company or licensee
at such stages of generation, transmission or distribution or trading of electricity and at such
locations of generation, transmission or distribution or trading, as it may deem necessary.
(3) If a person makes default in complying with the provisions contained in this section or the
regulations made under sub-section (1), the Appropriate Commission may make such order as it
thinks fit for requiring the default to be made good by the generating company or licensee or by any
officers of a company or other association or any other person who is responsible for its default.

Section 56. (Disconnection of supply in default of payment): -- (1) Where any person neglects to
pay any charge for electricity or any sum other than a charge for electricity due from him to a
licensee or the generating company in respect of supply, transmission or distribution or wheeling of
electricity to him, the licensee or the generating company may, after giving not less than fifteen
clear days’ notice in writing, to such person and without prejudice to his rights to recover such
charge or other sum by suit, cut off the supply of electricity and for that purpose cut or disconnect
any electric supply line or other works being the property of such licensee or the generating
company through which electricity may have been supplied, transmitted, distributed or wheeled and
may discontinue the supply until such charge or other sum, together with any expenses incurred by
him in cutting off and reconnecting the supply, are paid, but no longer:
Provided that the supply of electricity shall not be cut off if such person deposits, under protest, -
(a) an amount equal to the sum claimed from him, or
b) the electricity charges due from him for each month calculated on the basis of average charge for
electricity paid by him during the preceding six months, whichever is less, pending disposal of any
dispute between him and the licensee.
(2) Notwithstanding anything contained in any other law for the time being in force, no sum due
from any consumer, under this section shall be recoverable after the period of two years from the
date when such sum became first due unless such sum has been shown continuously as recoverable
as arrear of charges for electricity supplied and the licensee shall not cut off the supply of the
electricity.

Section 57. (Consumer Protection: Standards of performance of licensee): (1) The Appropriate
Commission may, after consultation with the licensees and persons likely to be affected, specify
standards of performance of a licensee or a class of licensees.
(2) If a licensee fails to meet the standards specified under sub-section (1), without prejudice to any
penalty which may be imposed or prosecution be initiated, he shall be liable to pay such
compensation to the person affected as may be determined by the Appropriate Commission:
Provided that before determination of compensation, the concerned licensee shall be given a
reasonable opportunity of being heard.
(3) The compensation determined under sub-section (2) shall be paid by the concerned licensee
within ninety days of such determination.

Section 58. (Different standards of performance by licensee): The Appropriate Commission may
specify different standards under sub-section (1) of section 57 for a class or classes of licensee.

Section 59. (Information with respect to levels of performance): (1) Every licensee shall, within the
period specified by the Appropriate Commission, furnish to the Commission the following
information, namely:-
(a) the level of performance achieved under sub-section (1) of the section 57;
(b) the number of cases in which compensation was made under sub-section (2) of section
57 and the aggregate amount of the compensation.
(2) The Appropriate Commission shall at least once in every year arrange for the publication, in
such form and manner as it considers appropriate, of such of the information furnished to it under
sub-section (1).
Section 60. (Market domination): The Appropriate Commission may issue such directions as it
considers appropriate to a licensee or a generating company if such licensee or generating company
enters into any agreement or abuses its dominant position or enters into a combination which is
likely to cause or causes an adverse effect on competition in electricity industry.

Q. 5. Write down the Constitution and Functions of Central Electricity Authority.

Ans. Section 70. Constitution of Central Electricity Authority: ---
(1) There shall be a body to be called the Central Electricity Authority to exercise such functions
and perform such duties as are assigned to it under this Act.
(2) The Central Electricity Authority, established under section 3 of the Electricity (Supply) Act,
1948 and functioning as such immediately before the appointed date, shall be the Central Electricity
Authority for the purposes of this Act and the Chairperson , Members, Secretary and other officers
and employees thereof shall be deemed to have been appointed under this Act and they shall
continue to hold office on the same terms and conditions on which they were appointed under the
Electricity (Supply) Act, 1948.
(3) The Authority shall consist of not more than fourteen Members (including its Chairperson) of
whom not more than eight shall be full-time Members to be appointed by the Central Government.
(4) The Central Government may appoint any person, eligible to be appointed as Member of the
Authority, as the Chairperson of the Authority, or, designate one of the full time Members as the
Chairperson of the Authority.
(5) The Members of the Authority shall be appointed from amongst persons of ability, integrity and
standing who have knowledge of, and adequate experience and capacity in, dealing with problems
relating to engineering, finance, commerce, economics or industrial matters, and at least one
Member shall be appointed from each of the following categories, namely:- (a) engineering with
specialisation in design, construction, operation and maintenance of generating stations; (b)
engineering with specialisation in transmission and supply of electricity; (c) applied research in the
field of electricity; (d) applied economics, accounting, commerce or finance.
(6) The Chairperson and all the Members of the Authority shall hold office during the pleasure of
the Central Government.
(7) The Chairperson shall be the Chief Executive of the Authority.
(8) The headquarters of the Authority shall be at Delhi.
(9) The Authority shall meet at the head office or any other place at such time as the Chairperson
may direct, and shall observe such rules of procedure in regard to the transaction of business at its
meetings (including the quorum at its meetings) as it may specify.
(10) The Chairperson, or if he is unable to attend a meeting of the Authority, any other Member
nominated by the Chairperson in this behalf and in the absence of such nomination or where there is
no Chairperson, any Member chosen by the Members present from among themselves shall preside
at the meeting.
(11) All questions which come up before any meeting of the Authority shall be decided by a
majority of votes of the Members present and voting, and in the event of an equality of votes, the
Chairperson or the person presiding shall have the right to exercise a second or casting vote.
(12) All orders and decisions of the Authority shall be authenticated by the Secretary or any other
officer of the Authority duly authorised by the Chairperson in this behalf.
(13) No act or proceedings of the Authority shall be questioned or shall be invalidated merely on the
ground of existence of any vacancy in, or any defect in, the constitution of, the Authority.
(14) The Chairperson of the Authority and other full time Members shall receive such salary and
allowances as may be determined by the Central Government and other Members shall receive such
allowances and fees for attending the meetings of the Authority, as the Central Government may
prescribe.
(15) The other terms and conditions of service of the Chairperson and Members of the Authority
including their terms of office shall be such as the Central Government may prescribe.

Section 71. (Members not to have certain interest): No Member of the Authority shall have any
share or interest, whether in his own name or otherwise, in any company or other body corporate or
an association of persons (whether incorporated or not), or a firm engaged in the business of
generation, transmission, distribution and trading of electricity or fuel for the generation thereof or
in the manufacture of electrical equipment.

Section 72. Officers and staff of Authority: The Authority may appoint a Secretary and such other
officers and employees as it considers necessary for the performance of its functions under this Act
and on such terms as to salary, remuneration, fee, allowance, pension, leave and gratuity, as the
authority may in consultation with the Central Government, fix: Provided that the appointment of
the Secretary shall be subject to the approval of the Central Government.

Section 73. Functions and duties of Authority: The Authority shall perform such functions and
duties as the Central Government may prescribe or direct, and in particular to -
(a) advise the Central Government on the matters relating to the national electricity policy,
formulate short-term and perspective plans for development of the electricity system and coordinate
the activities of the planning agencies for the optimal utilisation of resources to subserve the
interests of the national economy and to provide reliable and affordable electricity for all
consumers;
(b) specify the technical standards for construction of electrical plants, electric lines and
connectivity to the grid;
(c) specify the safety requirements for construction, operation and maintenance of electrical plants
and electric lines;
(d) specify the Grid Standards for operation and maintenance of transmission lines;
(e) specify the conditions for installation of meters for transmission and supply of electricity;
(f) promote and assist in the timely completion of schemes and projects for improving and
augmenting the electricity system;
(g) promote measures for advancing the skill of persons engaged in the electricity industry;
(h) advise the Central Government on any matter on which its advice is sought or make
recommendation to that Government on any matter if, in the opinion of the Authority, the
recommendation would help in improving the generation, transmission, trading, distribution and
utilisation of electricity;
(i) collect and record the data concerning the generation, transmission, trading, distribution and
utilisation of electricity and carry out studies relating to cost, efficiency, competitiveness and such
like matters;
(j) make public from time to time the information secured under this Act, and provide for the
publication of reports and investigations;
(k) promote research in matters affecting the generation, transmission, distribution and trading of
electricity; (l) carry out, or cause to be carried out , any investigation for the purposes of generating
or transmitting or distributing electricity;
(m) advise any State Government, licensees or the generating companies on such matters which
shall enable them to operate and maintain the electricity system under their ownership or control in
an improved manner and where necessary, in co-ordination with any other Government, licensee or
the generating company owning or having the control of another electricity system;
(n) advise the Appropriate Government and the Appropriate Commission on all technical matters
relating to generation, transmission and distribution of electricity; and
(o) discharge such other functions as may be provided under this Act.
Certain powers and directions Section 74. Power to require statistics and returns: It shall be
the
duty of every licensee, generating company or person generating electricity for its or his own use to
furnish to the Authority such statistics, returns or other information relating to generation,
transmission, distribution, trading and use of electricity as it may require and at such times and in
such form and manner as may be specified by the Authority.

Section 75. Directions by Central Government to Authority: --- (1) In the discharge of its
functions, the Authority shall be guided by such directions in matters of policy involving public
interest as the Central Government may give to it in writing. (2) If any question arises as to whether
any such direction relates to a matter of policy involving public interest, the decision of the Central
Government thereon shall be final.

Question 4. Write down about the Regulatory Commissions?

Ans. The increased demand for electricity due to the economic liberalisation brought about certain
fundamental issues to the power sector namely, lack of rational retail tariffs, high level of cross-
subsidies, poor planning and operation, inadequate capacity, neglect of the consumer, limited
involvement of private sector skills and resources and the absence of an independent regulatory
authority. This not only placed the need for some urgent reforms in the power sector but also
pointed towards the lack of an independent regulatory authority in the sector. Therefore, the
Government of India provided for the establishment of independent regulatory authorities at both
the (Central Electricity Regulatory Commission) and the State level (State Electricity Regulatory
Commissions). For the purpose of establishment of the commissions, the Central Government
enacted the Electricity Regulatory Commission Act, 1998 which was further replaced by the
Electricity Act 2003 for bringing transformation in the power sector of India.

Central Electricity Regulatory Commission

Central Electricity Regulatory Commission (CERC) is a statutory body established and
incorporated under Section 3 of the Electricity Regulatory Commission Act 1998 is now guided by
Section 76 of the Electricity Act 2003. Enacted for the purpose of rationalization of electricity
tariffs, formulation of transparent policies regarding subsidies, promotion of efficient and
environmentally benign policies, and for matters connected to Electricity Tariff regulation, CERC
functions with quasi-judicial status under the the Electricity Act 2003

Members and their qualifications:

As per Section 76(5) of the Electricity Act 2003, the CERC shall comprise a chairperson and three
other members who shall be appointed by the Central Government on the recommendation of the
Selection Committee. The chairperson of CERC is an ex-officio chairperson as he is a member as
well. The member and the chairperson shall hold the office for 5 years or till the age of 65 years,
whichever is earlier.
For being a chairperson and a member of CERC, there are certain qualifications that are required to
be fulfilled as per Section 77 of the Electricity Act 2003. They should have adequate knowledge
with experience, or capacity to deal with issues relating to power, finance, commerce, engineering,
law, or management. The members shall be appointed as follows:
1. One person with qualifications and experience in the field of finance;
2. One person with qualifications and experience in the field of engineering along with
specialization in the generation, transmission, or distribution of electricity.
3. Two persons with qualifications and experience in the field of law, economics, commerce, or
management.
The person who is, or has been a Supreme Court judge or the Chief Justice of any High Court shall
be appointed as the Chairperson of the CERC. Further, there is a commission staff which assists the
members of CERC in a certain manner:
1. Scrutinizing and analyzing the petitions, rejoinders, and replies of the respondent;
2. Preparing briefs of hearing and draft orders;
3. Assisting the members in technical, legal, and financial aspects of the petitions;
4. Assisting the commission in adjudicating upon the arbitration matters;
5. Checking the calculation of tariff components for determining tariffs of various petitions.
Mission and objective of Central Electricity Regulatory Commission
As per the mission statement, the CERC intends to increase the efficiency and economy of the
power market, promote competition and investment in the power market, improve the quality of
power supply and advise the government for removing barriers to entry in the market in order to
abridge the gap between demand and supply of power. Thus, in order to attain these objectives, the
CERC aims to:
1. Improve the functioning of the transmission systems through the Indian Electricity Grid
Code, Availability Based Tariff, etc.
2. Improve the efficiency of the tariff mechanism.
3. Facilitate inter-state transmission of power.
4. Enhance the availability of information to the shareholders.
5. Upgrade the technological changes in the power plants.
6. Advise the government on the removal of barriers to entry and exit of capital in the market.

Nature of Central Electricity Regulatory Commission:

The CERC functions with a quasi-judicial status with powers similar to the powers of a Civil Court
for the purpose of holding any inquiry or proceedings under the Electricity Act 2003. Such powers
are:
1. To summon and enforce the attendance of any witness;
2. To examine any witness under the oath;
3. To discover and produce any document or object which is producible as evidence;
4. To receive evidence on affidavits;
5. To requisite any public record;
6. To examine the witnesses;
7. To review its directions, orders, and decisions.

Functions of Central Electricity Regulatory Commission

The CERC has been entrusted with certain functions to perform by the Electricity Act, 2003 under
Section 79. While Section 79(1) of the Act provides for mandatory functions of the CERC, Section
79(2) lays down the advisory functions. These functions are as follows:

Mandatory functions
1. Regulating tariffs of power generating companies owned or controlled by the Central
Government;
2. Regulating tariffs of companies engaged in power generation along with the interstate
transmission of power;
3. Regulating interstate power transmission and fixation of interstate trading margin, if
required;
4. Determining tariffs for interstate transmission of power;
5. Issuing licenses for people to act as an electricity trader for interstate operation;
6. Availing information to the stakeholders;
7. Speedy Adjudication of disputes involving the power generating companies or transmission
licensees;
 8. Improving the operation of the regional transmission system by specifying the grid code as
per the grid standards;
9. Specifying standards regarding the reliability, and continuity of services by the licensees.
10.Performing any other function that may be assigned to the commission under the act.

Advisory functions
1. To formulate National Electricity Policy;
2. To formulate National Tariff Policy;
3. To promote investment in the electricity industry;
4. To enhance the efficiency of the electricity industry;
5. To improve the economy of the electricity industry;
6. To perform any other function being assigned by the Central Government.
Further, as per Section 79(3) of the Electricity Act 2003, the commission has to ensure transparency
while exercising its powers and discharging its functions. The Commission is guided by the
National Electricity Policy, National Electricity Plan, and tariff policy published under Section 3 for
the purpose of discharging its functions.

Central Electricity Advisor

Central Electricity Advisory (CEA) is a statutory body established under Section 3(1) of the
Electricity Supply Act, 1948. However, with the introduction of the Electricity Act, 2003, the CEA
is now dealt with under Section 70(1) of the Electricity Act, 2003. The CEA advises the central
government, state governments, and the regulatory commissions regarding the technical matters
pertaining to the generation, transmission, and distribution of electricity. Since 1st April 1999, the
task of regulating power tariffs of centrally owned companies, inter-state generating companies and
the setting of inter-state transmission tariffs has been transferred from CEA to the CERC. Since
then, the CEA has two main tasks to perform:
1. Planning Regulation: The CEA regulates the demand and supply gap of power.
2. Construction Regulation: The CEA regulates the construction of thermal, hydro, and gas-
based thermal power plants and systems.
Whereas, the task of tariff regulation has completely been transferred to the CERC. Further, CEA
also plays a major role in the formulation of any National Electricity policy since it is done only
after proper consultation of the regulating bodies of the country namely, CERC, CEA, and the state
governments.

State Electricity Regulatory Commission

SERC is one of the electricity regulators of the country operating at the state level. The main
function of SERC includes:
• Determination of the retail tariffs to be charged from the customers;
• Regulation of the intrastate transmission of power;
• Setting standards for the quality, continuity, and reliability of services for the electricity
industries.
Q. 5. What is the Appellate Tribunal? Write down about its composition, procedure and
powers of this Tribunal under the Electricity Act 2003.

Ans. The Appellate Tribunal to be known as the ‘Appellate Tribunal for Electricity’ for the purpose
of hearing appeals against the orders of the adjudicating officer or the Appropriate Commission
under this Act is established by the Central Government under section 110 of the Electricity Act.
The Appellate Tribunal consists of a Chairperson and three other Members. Section 113 of the Act
deals with qualifications for appointment of Chairperson and Members of Appellate Tribunal. All
proceedings before the Appellate Tribunal are deemed to be judicial proceedings within the
meaning of sections 193 and 228 of the Indian Penal Code and the Appellate Tribunal is deemed to
be a civil court for the purposes of section 345 and 346 of the Code of Criminal Procedure, 1973.
Any aggrieved person may file an appeal before the Appellate Tribunal within 45 days from the date
of receipt of copy of impugned order of Adjudicating officer or the Appropriate Commission,
subject to deposit of amount of penalty. However Appellate Tribunal for reasons to be recorded may
exempt the appellant from depositing such penalty if in its opinion the deposit of such penalty
would cause undue hardship to such person. The Appellate Tribunal may entertain the appeal filed
after said 45 days if it is satisfied that there was sufficient cause for not filing it within that period.
The Tribunal is to dispose of the appeal within 180 days from filing and if not then the Tribunal is
to record the reasons for such delay in its final order. Appellate Tribunal may, after giving the
parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit,
confirming, modifying or setting aside the order appealed against. The order of the Appellate
Tribunal is deemed to be a decree of civil court and, for this purpose, the Appellate Tribunal shall
have all the powers of a civil court.

Procedure and Powers of the Appellate Tribunal:

Section 120 of the Act deals with the Procedure and powers of Appellate Tribunal, as per which the
Appellate Tribunal is not be bound by the procedure laid down by the Code of Civil Procedure,
1908, but is guided by the principles of natural justice and, subject to the other provisions of this
Act, the Appellate Tribunal have powers to regulate its own procedure. However, for the purposes
of discharging its functions under this Act, the Tribunal have the same powers as are vested in a
civil court under the Code of Civil Procedure, 1908, while trying a suit, in respect ofthe following
matters, namely:-
(a) summoning and enforcing the attendance of any person and examining him on oath;
(b) requiring the discovery and production of documents;
(c) receiving evidence on affidavits;
(d) subject to the provisions of sections 123 and 124 of the Indian Evidence Act, 1872,
requisitioning any public record or document or copy of such record or document from any office;
(e) issuing commissions for the examination of witnesses or documents;
(f) reviewing its decisions;
(g) dismissing a representation of default or deciding it ex-parte;
(h) setting aside any order of dismissal or any representation for default or any order passed by it
ex-parte;
(i) any other matter which may be prescribed by the Central Government.

The decision by Appellate Tribunal is to be made by majority, as the Tribunal consists of three
members including the Chairperson. The person or the appellant who filed an appeal before the
Tribunal may either appear in person or take the assistance of a legal practitioner of his choice to
present his case before the Appellate Tribunal, as the case may be. The Appropriate Commission
may authorise one or more legal practitioners or any of its officers to act as presenting officers and
every person so authorised may present the case with respect to any appeal before the Appellate
Tribunal, as the case may be. Section 125 of the Act deals with Appeal to the Supreme Court. As per
this section, any person aggrieved by any decision or order of the Appellate Tribunal, may, file an
appeal to the Supreme Court within 60 days from the date of communication of the decision or
order of the Appellate Tribunal, to him, on any one or more of the grounds specified in section 100
of the Code of Civil Procedure, 1908. The delay in filing the appeal may be condoned by the
Supreme Court may, if it is satisfied that the appellant was prevented by sufficient cause from filing
the appeal within the said period, allow it to be filed within a further period not exceeding 60 days.

Q. 5. What are the Offences and Penalties under the Electricity Act, 2003?
Ans. The Part XIV of the Electricity Act, 2003 from section 135 to 142 deals with 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 under section 135(l)(a) of the Electricity Act 2003. Further under section
135(l)(b) of the Electricity Act 2003 Similar punishment will be given to a person who tampers a
meter, installs 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. Under
section 135(l)(c) of the Electricity Act 2003, 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.
Section 135 of the Electricity Act also provides that 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. Attempt to commit any such offences is equally punishable.

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 presumption would be that such an
abstraction, consumption or use of electricity has been dishonestly caused by such consumer. 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. 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 of such search should be prepared and
delivered to such occupant or person. The inspection, search and seizure cannot be carried out
between sunset and sunrise except in the presence of an adult male member occupying such
premises.
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 up to
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.

The provision of section 136(2) provides that for any subsequent offence, the offender 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.
From section 137 to 142 of the Act the other offences punishable under the Act include:
(a) receiving stolen properties;
(b) interference with meters or other works of licensee;
(c) negligently wasting electricity or injuring works;
(d) maliciously wasting electricity or injuring works;
(e) extinguishing public lamps;
(f) non-compliance of directions given by appropriate commission; and
(g) abetment of any offence under the Act.

As per Section 151B of the Electricity Act, 2003 an offence punishable under sections 135 to 140 or
section 150 shall be cognizable and non-bailable and Section 151A empowers the police officer to
investigate an offence punishable under this Act by using the powers as provided in Chapter XII of
the Code of Criminal Procedure, 1973. The offence/s under Electricity Act are triable by the Special
Court established under the Electricity Act, 2003 and the Special Court can take direct cognizance
of an offence without the accused being committed to it for trial, on the basis of a written complaint
made an Authorized officer or upon a report under section 173 CrPC filed by a police officer.

Q. 6. Write down about the Special Court under the Electricity Act 2003 for Speedy Trial?
Ans. For the purpose of speedy trial in matters related to electricity, the state government may
constitute necessary number of special courts for any area under sec. 153(1) of the Act, 2003.
However to deal with other matters under the Act, Adjudicating officer or the Appropriate
Commission, the Appellate Tribunal are established under the Act for redressal of disputes. As per
section 151B Electricity Act, 2003, the offence punishable under section 135 to 140 or section 150
are cognizable and non-bailable. Section 151A empowers the police officer to investigate an offence
punishable under this Act by using the powers as provided in Chapter XII of the Code of Criminal
Procedure, 1973. The offence/s under Electricity Act are triable by the Special Court established
under the Electricity Act, 2003 and the Special Court can take direct cognizance of an offence
without the accused being committed to it for trial, on the basis of a written complaint made an
Authorized officer or upon a report under section 173 CrPC filed by a police officer.
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. The person to be re-appointed must have been an
additional district and sessions judge immediately before his appointment. 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 under section 153(4) Electricity Act, 2003. As
per the provision of section 155 of the Electricity Act 2003, 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. 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 under section 158 of the Act.

OFFENCES AND PENALTIES UNDER BANKING REGULATION ACT 1949

Introduction
The Banking Regulation Act, 1949 was passed by the parliament in the year 1949 with the aim to
regulate all banks along with consolidating and amending the banking laws in India. It regulates and
supervises the functioning of the commercial banks in India. Before 1965, the Act only took into
cognizance the banking firms but in the year 1965, the Act was amended making provision for the
inclusion of cooperative banks. The Act confers powers on Reserve Bank Of India (RBI) to regulate
and control voting rights of shareholders, to provide the license to the bank, to supervise over the
appointment of management and board, to regulate bank operation along with mergers and
liquidation along with issuing directives and imposing penalties.
Penalties Provided
Penalties provided under Section 46 of the Banking Regulation Act, 1949 for any irregularity are as
follows:
• A person who willfully misrepresents facts or omits material facts in the balance sheet or while
filing any return or while furnishing any other document, or presents such facts which is known to
be false by the concerned person, is liable for imprisonment of up to three years along with fine.
• If a person fails to furnish documents, books, accounts or any statement which he is liable to
produce under Section 35 or if he fails to answer any question which he was asked to by any
inspection officer, he shall be punished with fine extending up to Rs. 2000 per offence and if he
refuses to follow the procedure fine may extend to Rs. 100 per day during which the offence
continues.
• If a banking company receives any deposit which is in contravention of any order under Section
35(4)(a), all officers and directors will be deemed guilty and shall be punishable with a fine which
may extend to twice the amount of the deposits so received unless the person proves that he was
unaware of the contravention or that he exercised all due diligence to prevent the occurrence of the
contravention. Further, a person will be punishable with fine which may extend to Rs. 50,000 or
double the amount of default or contravention along with an additional charge of Rs. 2500 per day
will continue until the contravention or default ends, if
◦ the person does not comply with the orders, direction or any rule made or imposed
◦ any default has been made in carrying out the terms or obligations given under Section 45(7).
• Where a company has defaulted any terms or order, every person employed by the company or
responsible to the company or was in charge of the company at the time of occurrence of the
contravention shall be punished.
• Notwithstanding anything mentioned under sub-section 5 of Section 46, where a company has
committed a default or contravention and if it is proved that the default took place with the consent
of or due to any gross negligence on part of any director, secretary or another officer, such officers
or directors shall be punishable.
Power of RBI to impose penalties
The Banking Regulation Act, 1949 confers power on Reserve Bank of India under Section 47(A) to
impose penalties if there has been any default or contravention. Such powers are explained in
details hereunder.
• If there is any contravention or default of the same nature as discussed above and given under
Section 46(3) and Section 46(4) on part of the banking company, RBI has the power to impose a
penalty not exceeding twice the amount of the deposits in respect of which such contravention was
made [where the contravention is in line with the default specified under Section 46 (3)] and a
penalty not exceeding Rs. 5,00,000 or twice the amount involved in such contravention or default
where such amount is quantifiable, whichever is more, and where such the contravention or default
is a continuing one, a further penalty which may extend to Rs. 25,000 until the default comes to an
end.
• One cannot file a complaint in any court of law against any banking firm with respect to any
contravention or default against which the RBI has imposed a penalty.
• The banking firm, against which the RBI has imposed a penalty, is liable to proceed with the
payment within 14 days of issuance of notice by the RBI for making the said payment. In case of
any failure in making such payment a principal court having jurisdiction over the area where the
registered office of such banking company is situated or in the case where the firm is incorporated
in foreign lands, that court will have jurisdiction where the principal business of the company is
situated, in order to levy the defaulted payment.
• A certificate shall be issued by the court making such direction under Section 47(A)(5)
specifying the amount payable by the banking company which shall be enforceable in the manner
same as an order from a civil court.
• No proceedings can be initiated against the imposition of any penalties on the banking company
if any complaint has been filed against any contravention.
Telecom Regulatory Authority of India Act 2000.
Question.1. Write down the Powers and Function of the Telecom Regulatory Authority of
India Act
2000.
Ans. Powers and Functions of TRAI: The functions of the TRAI are enumerated under section 11 of
the TRAI Act. The function mentioned under the provision has an overriding effect on any
provision ofthe Indian Telegraph Act, 1885. According to the TRAI act amended in 2000, the
functions of the original TRAI have now been divided between two separate bodies namely:
i. The Telecom Regulatory Authority of India (TRAI)
ii. The Telecom Disputes Settlement and Appellate Tribunal
The Recommendatory and Regulatory functions are vested with the TRAI while dispute settlement
functions are handled by the Appellate Tribunal. The 2000 Amendment ACT classified the TRAI’s
functions into four broad categories:
1.Making recommendations on various issues;
2.General administrative and regulatory functions;
3.Fixing tariffs and rates for telecom services; and
4.Any other functions entrusted by the Central Government.
Recommendatory functions : TRAI has the power to make recommendations either on its own
initiative or on a request from a licensor on the following matters:
i. Need and timing for introduction of new service provider
ii. Terms and Conditions of license to a service provider
iii. Revocation of license for Non-compliance with its terms and conditions
iv. Measures to facilitate competition and promote efficiency in the operation of telecommunication
services so as to facilitate growth in such services.
v. Technological improvements in the services provided by the service providers
vi. Type of equipment to be used by the service providers after inspection of equipment used in the
network
vii. Measures for the development of technology and any other matter relatable to
telecommunications industry in general
viii. Efficient management of available spectrum
The recommendations made by the TRAI are not binding on the Central Government. However, the
Central Government has to mandatorily ask for recommendations from TRAI with respect to need
and timing of new service provider and terms and conditions of the licence to be granted to the
service
provider. TRAI has the obligation to forward the recommendation to the Central Government within
60 days from the date of the request for recommendation. TRAI may also request for relevant
information or documents from the Central Government to make such recommendations and the
Central Government has to furnish such information within seven days from the date of the request.
The Central Government can issue licence to the service provider, if TRAI fails to give any
recommendation within the stipulated period. Where the Central Government is of the opinion that
the recommendations made by TRAI cannot be accepted or need modification, then it can send
them back to TRAI for reconsideration. TRAI may reply within a period of 15 days from the date of
reference. TRAI also has the power to notify in the official gazette the rates at which
telecommunication services are being provided in and outside India. TRAI shall ensure
transparency while exercising its powers and discharging its functions. TRAI under section 12 has
the power to call for information and conduct investigation. It also has got powers to issue
directions under section 13.

Regulatory Functions of TRAI: The regulatory functions of TRAI are as mentioned below:
i. Ensure compliance of terms and conditions of license. The TRAI has two-fold options to ‘ensure’
compliance –
a. It can either issue directions or
b. Recommend termination of license for non-compliance. TRAI has limited powers in this regard
because any action under the license can only be taken by the licensor. But TRAI has the freedom to
issue any kind of directions to the service providers.
ii. Fix the terms and conditions of inter-connectivity between the service providers, irrespective of
the terms of the license issued prior to the TRAI Amendment Act 2000.
iii. Ensure technical compatibility and effective inter-connection between different service providers
iv. Regulate arrangements amongst service providers for sharing their revenue derived from
providing telecommunication services
v. Lay down the standards of quality of service to be provided by the service providers to ensure the
quality of service and conduct periodic survey of such service providers so as to protect the interest
of the consumers of telecommunication service.
vi. Lay down and ensure the time period for providing local and long distance circuits of
telecommunication between different service providers
vii. Maintain register of interconnection agreements and of all other matters as may be provided in
the regulations.
viii. Ensure effective compliance of universal service obligation.
ix. Levy fees and other charges at such rates and in respect of such services as may be determined
by regulations.
x. Notwithstanding anything contained in the Telegraph Act 1885, the TRAI may, from time to time,
by order, notify in the Official Gazette the rates at which the telecommunication services within and
outside India shall be provided including the rates at which messages shall be transmitted to any
country outside India. The TRAI may notify different rates for different persons or class of persons
for similar telecommunication services after recording the reasons.

Telecom Disputes Settlement Appellate Tribunal: By virtue of the TRAI Amendment Act 2000,
the adjudicatory functions of the TRAI are vested with a new body- The Telecom Disputes
Settlement and Appellate Tribunal. The Telecom Dispute Settlement Appellate Tribunal (Tribunal)
is established under section 14 of the Act. It is the sole dispute resolution body in the
communication sector. The functions of the Telecom Disputes Settlement and Appellate Tribunal
are:
a. To adjudicate disputes between a licensor and a licensee, two or more service provider and a
group of consumers.
Earlier the disputes between the government as a licensor and a licensee were not falling under the
dispute settlement functions of the TRAI. But now, it is clearly covered by a quasi judicial authority
which is a very positive feature of the new regime. However, there are exceptions to this
jurisdiction:
a. dispute relating to monopolistic trade practice or an unfair trade practice over which the
Monopoliesand Restrictive Trade Practices Commission has jurisdiction under the provisions of the
MRTP Act, 1969;
b. Complaint of an individual consumer maintainable before a consumer redressal forum under the
Consumer Protection Act, 1986;
c. Dispute concerning any telegraph line, appliance or apparatus between the telegraph authority
and the person for whose benefit the line, appliance or apparatus is or has been provided, which
disputeshave to be settled by arbitration under s 7B of the Indian Telegraph Act, 1885.
d. To hear and dispose of appeal against any direction, decision or order of the TRAI.
This is the appellate function of the Tribunal provided as alternative to filing an appeal in the High
Court. An appeal from any order, other than an interim order of the tribunal, lies with the Supreme
Court of India.

Grounds and Procedures for Appeal to the Tribunal (Section 14A): The Central Government,
State
Government, any local authority or any person can approach the Tribunal for adjudication on
matters related to dispute between parties mentioned above. It can make recommendation either on
its own accord or on the request of the Government on the following matters:
•Need and timing of new service provider.
•Terms and conditions of the licence which may be granted to the service provider.
•Revocation of licence for not following the term and conditions of the licence.
•Measures to facilitate competition in the market and promote efficiency and growth in the
telecom sector.
•Type of equipment to be used by service provider.
•Technological improvements in the services.
•Measure for development of telecommunication technology.
•Spectrum management.
Composition of the Tribunal (Section 14B)
The Tribunal consists of a chairperson and two other members, appointed by the Central
Government.Selection of chairperson and the two members is done in consultation with Chief
Justice of India. Qualification and term of office of the Chairperson and Members The minimum
qualification for a Chairperson is that he is or has been a judge of the Supreme Court or a Chief
Justice of a High Court and the minimum qualification for a member is that he should have been at
the post of a secretary to the Central Government or at any equivalent post in the Central
Government. A person can also be qualified as a member of the Tribunal if he has held the position
of Secretary under the State Government for a period more than two years and has knowledge and
experience in technology, telecommunication, industry, commerce or administration.
Term of Office
The Chairperson can hold office till he attains the age of 75 or completes three years, whichever is
earlier. The members of the Tribunal can hold office till they attain the age of 65 years or complete
three years, whichever is earlier.
Procedure of the Tribunal
Procedure and powers of the Tribunal is laid down under section 16 of the TRAI Act. The Civil
Procedure Code, 1908 which lays down the procedure of the conventional courts is not applicable to
the Tribunal. An appeal from the Tribunal’s final order in a matter can be directly referred to the
Supreme Court under section 18 of the TRAI Act. However, in the circumstance where the Tribunal
has passed an order with the consent of the parties to the dispute, no appeal can be made to any
court or tribunal. Within five years of its creation the Tribunal has already decided 400 cases
consisting of complex questions of law.
Reserve Bank of India Act 1934.

Question. Write down the functions of the Reserve Bank of India under Reserve Bank of
India Act 1934.
Ans. The Reserve Bank of India is the Central Bank of India. Following are the main functions of
the RBI contained under Chapter 3 of Reserve Bank of India Act:
1. Currency Authority: The Reserve Bank is the sole authority for the issue of currency in India
other than one rupee coins/notes and subsidiary coins, the magnituse of which is relatively small. In
India, currency still forms the major part of the money supply even though its importance has
declined in recent years due to the spread of banking facilities and the banking habit. Since currency
constitutes the base for the expansion of money supply, regulation of currency is an important
element of monetary control. In fact, the Statute itself imposes some restrictions on note issue. One
Rupee Coins and notes are issued by the Government of India. In terms of the Reserve Bank of
India Act, the affairs of the Bank relating to note issue and its general banking business are
conducted through two separate departments, viz., the Issue and the Banking Departments. The
assets of the Issue Department, which form the backing for the note issue, are kept wholly distinct
from those of the Banking Department. In practice, the distinction between the two Departments has
little economic significance, since there are frequent shifts between the assets of the Issue and the
Banking Departments.
Process of Notes Issue : The issue of currency into circulation and its withdrawal from circulation
(that is, expansion and contraction of currency, respectively) take place through Banking
Department of the Bank. In respect of the exchange of bank notes for coins and coins for notes, and
change from one denomination of notes to another, the Issue Department deals directly with the
public and not through the Banking Department.
2. Banker to the Government: The Reserve Bank of India is banker to the central Government as
well as State Governments. It makes reciepts and payments on behalf of the Governement and
perform other banking operations for it. All the Governments maintain their current accounts with
RBI.
Legal Basis of the Function : Section 20, 21 and 2I A of the Reserve Bank of India Act form the
statutory basis for these functions. In terms of the first two sections, the Bank has the obligation to
transact the banking business of the Central Government who, In turn, are obliged to entrust the
conduct Of such business to the Bank. The Bank accordingly undertakes to accept money on
account of that Government, to make payments on their behalf and also to carry out their exchange,
remittance and other banking operations including the management of the public debt. In terms of
Section 21 A the Bank performs similar functions on behalf of the Governments by virtue of
agreements entered into with them. As banker it makes short term credit to the Government. Under
law the Central Government can borrow any amount from Reserve Bank of India. But State
Governments do not enjoy unlimited borrowing powers. They can borrow only up to sanctioned
limits. However, in actual practice the State Governments have become used to borrow in excess of
the limits. The short term advances to the State Governments are called ways and means advances.
As a manager of public department, it manages all issues, services and creates market for the
Government securities. Further, it is responsible for smooth functioning of securities market i.e.
maintaining its stability by regulating demand and supply of the securities. As banker to the
Government it advises it on all banking and financial matters which include matters relating to
international finance, mobilization of resources, changes in banking laws, merger and consolidation
of banks.
3. Advisor to the Government: Like all central banks, the Reserve Bank acts as adviser to
Government not only on banking and financial matters but also on a wide range of economic issues
including those in the field of planning and resource mobilisation. It has of course a special
responsibility in respect of financial policies and measures concerning new loans, agricultural
finance, co-operative organisation, industrial finance and legislation affecting banking and credit.
The Bank's advice is sought on certain aspects of formulation of the country's Five Year Plans such
as the financing pattern, mobilisation of resources and institutional arrangements with regard to
banking and credit matters. The Bank has also to rrender advice to Government on various matters
of international finance. For the purpose, the contact between the Government and the Bank is
maintained formally and informally and at various levels from the Governor downwards. The Bank
also keeps the Government informed of developments in the financial markets periodically.
4 . Bankers' Bank: The Reserve Bank of India is statutory banker to the Government of India. It is
also banker to the state Government as per agreements signed with them. In this capacity it holds
their cash reserves, lends those funds for short terms and provides economical and expeditious
central clearing and remittance facilities. Thus it performs all banking operations for them. The RBI
rediscounts the bills of the commercial banks. It provides leadership, guidance and direction in
regulating their practices. The centralisation of cash reserves with RBI is a source of strength for the
system and can be employed most effectively during the periods of seasonal strain and financial
crisis. It is for this reason that it is called "Reserve Bank". As Banker's bank the RBI can implement
its monetary policy more effectively.
5. Lender of the Last Resort: It is lender of the last resort for the scheduled commercial banks in
India. It provides credit to these banks through rediscounting facility. It is called lender of the last
resort as normally the banks are expected to meet their requirements from sources other than the
Reserve Bank of India. In fact, this function developed out of the unique position as central bank of
the country. This function has come to be regarded as the sine qua non of the central banking. In this
capacity RBI assumes the responsibility of meeting directly or indirectly all reasonable demands for
financial accommodation from commercial banks, and other financial institutions.
6. Supervision of Banks: The Reserve Bank's responsibilities include, in addition to the traditional
central banking functions, the development of an adequate and sound banking system are catering
to the needs of trade, commerce, industry and agriculture. Under the Reserve Bank of India Act
1934 and Banking and Regulations Act 1949, the Bank has been vested with extensive powers of
supervision and control over commercial and co-operative banks. The Bank’s powers extend to
calling for information from and giving directions to even non-banking institutions receiving
deposits. The Act empowers the Bank to regulate through licensing of branch expansion,
management of reserves and assets and regarding the amalgamations, reconstruction and
liquidation. The banks send their periodic reports to the Reserve Bank of India. The RBI conducts
periodic inspection of the banks. The regulation and control are required for the proper growth of
sound banking.
7. Controller of Money Supply and Credit: One of the most important functions of the Reserve
Bank of India is to control the money supply and credit in the economy. This becomes all the more
important as India is following the managed paper currency system which has inherent inflationary
tendency. The RBI has to control money supply and credit in such a way as to ensure the reasonable
achievements of all the objectives of credit control e.g. price stability, full employment, economic
growth, equilibrium in the balance of payments, etc. For performing this function it has various
techniques of credit control available with it. It has the wide powers to influence the volume of
money supply directly or indirectly
8. Foreign Exchange Control and Management: The Reserve Bank of India is the custodian of the
country's foreign exchange reserves. It manages the exchange control. Exchange control was first
imposed in India in September 1939. Exchange transactions receipts and payments are controlled
now under the Foreign Exchange Regulation Act 1973 which is proposed to be replaced by Foreign
Exchange Management Act (FEMA). The law has centralised the foreign exchange reserves in the
hands of the Reserve Bank of India. The purpose of the control is to regulate the demand for foreign
exchange according to available supplies, which is very important in view of the shortage of foreign
exchange reserves due to growing economy.The Reserve Bank of India also acts as the agent of the
Government of India in connection With membership of the International Monetary Fund (IMF).
9. Monetary Data and Publications: The Reserve Bank of India is the main source of monetary data
and also of the data relating to banking. Obviously, the data are very important for framing the
economic policies and banking policies. The Bank collects and publishes the data regularly through
Weekly statements, monthly bulletin, annual report, annual report on currency and finance; report
on trends and progress of banking in India, etc. The availability of this important data is very useful
to all those who are interested in the various aspects of the Indian economy.
10. Promotional Functions: In addition to the usual central banking functions, the Reserve Bank of
India has been performing a variety of promotional functions. Its promotional functions and
activities have been mainly directed towards building up and strengthening financial infrastructure
and filling the institutional gap by setting up new financial institutions; and by ensuring the
allocation of credit in the socially desired directions. Some of its promotional activities are briefly
discussed below :
a) Promotion of Commercial Banking. Under the powers vested in it under the RBI. Act of 1934
and the Banking (Companies) Regulation Act 1949, it has taken a number of steps from time to time
for the growth of commercial banks and putting the Indian Banking System on a sound footing.
These Acts include regulation of banks, setting up of Deposit Insurance Corporation, amalgamation
and consolidation of banks.
b) Promotion of Co-operative Bank: In India’s rural based economy co-operative banks have an
important role to play. The credit for expansion of co-operative banking goes on to the Reserve
Bank of India, which is directly or indirectly source of funds for these co-operative banks.
c) Promotion of Agricultural and Rural Credit. In the Reserve Bank of India Act itself, it is
recognised that it has special responsibility for providing institutional credit to agriculture and allied
activities. It has a separate Agricultural Department. A major step in the direction was setting up of
the Agricultural Refinance and Development Corporation, a subsidiary of the RBI. Nationalisation
of banks gave a further push to institutional credit in rural areas. Establishing Regional Rural Banks
and inclusion of agriculture in the priority sector are other major steps. Another development in this
direction was the establishing of the National Bank for Agriculture and Rural Development
(NABARD) in 1982, which took over the Agricultural Refinance and Development Corporation.
d) Promotion of Industrial Finance. The commercial banks can take care of the working capital
requirements of the industrial units. However, industrial growth cannot take place in the absence of
medium of long term finance. Moreover, small scale industries need special attention. Setting up of
Industrial Development Bank of India, Industrial Finance Corporation of India, State Financial
Corporations, Small Scale Industries, State Financial Corporations etc are the notable steps in
direction. RBI is the main force behind these institutions. Setting up of SIDBI is another important
step.
e) Promotion of Finance for Exports. To encourage exports, the Reserve Bank of India has been
playing its role through refinance to banks against export credit under various schemes e.g. The
Market Scheme; Export Bills Credit Schemes, Shipment Credit Scheme, Duty Scheme. Export has
been recognised as a priority sector. In 1982, the Government of India established Export Import
Bank (EXIM) as an apex bank for financing the foreign trade.

PROHIBITORY FUNCTIONS OF RBI: Being the central bank of the country, the Reserve Bank
(a) should not compete with member banks and (b) should keep its assets in liquid form to meet any
situation of economic crisis. Therefore, the Reserve Bank has been prohibited to do certain type of
business.
(a)Reserve Bank can neither participate nor provide any direct financial assistance to any industry,
trade or business.
(b)It can not purchase its own shares.
(c)It can not purchase shares of any commercial or industrial undertaking and any other banking
company.
(d)It can not purchase immovable property except for the establishment of its offices.
(e)It cannot give interest on deposits held by it.
(f)It can not give loans on the security of shares and immovable property.
(g) It cannot draw or accept bills not payable on demand.