Ramayana Ispat Pvt. Ltd. and Anr. v. State of Rajasthan & Ors.

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access regulations framed under Section 42 of the Act of 2003. The regulatory measures—such as scheduling, penalties for deviations, and drawal limits—are imposed in furtherance of the larger goal of grid discipline and market stability. There is no evidence to suggest that captive generators are being singled out or subjected to harsher conditions compared to other generators.

60. Regulation 21, which governs aspects of scheduling, penalties, and compliance for captive power generators, has been challenged on the ground that it creates an unreasonable distinction between captive generators and state DISCOMs, allegedly discouraging captive generation. However, the respondents argue that the regulation is neither arbitrary nor discriminatory but rather a necessary framework to ensure that all power generators operate under fair and transparent rules. The Act of 2003, through Sections 9 and 42, recognizes the rights of captive power generators while also subjecting them to regulatory oversight to prevent system inefficiencies and inequitable advantages.

61. The distinction between captive power generators and state DISCOMs is not arbitrary but arises from the structural differences in their roles and obligations. While captive generators primarily generate electricity for self-consumption, distribution companies serve a wider consumer base, requiring them to adhere to broader regulatory commitments, including universal supply obligations. As such, differential treatment based on the nature of their functions is legally justified and does not amount to unfair discrimination. Moreover, Regulation 21 does not impose undue restrictions on captive generators but ensures that their operations align with grid discipline, preventing any adverse impact on the larger power ecosystem.

62. Additionally, the principle of non-discrimination under the Act of 2003 does not mandate identical treatment for all entities but rather requires a rational basis for any differentiation. In this case, the regulatory conditions imposed on captive generators are aimed at ensuring a level playing field and preventing misuse of open access provisions. The regulatory framework ensures that captive generators contribute fairly to system stability without imposing additional burdens on distribution licensees and other grid participants. Thus, Regulation 21 is neither arbitrary nor discriminatory but rather a necessary and proportionate measure to balance the interests of various stakeholders in the electricity sector.

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V. Whether the appellants’ right of open access is foreclosed by the Regulations of 2016?

63. The appellants argue that the Regulations of 2016 impose unreasonable restrictions on captive power generators, effectively foreclosing their right to open access as guaranteed under Section 9 of the Act of 2003. However, the respondents contend that the Regulations of 2016 do not foreclose open access but rather prescribe conditions necessary for its fair and efficient implementation. Section 42 of the Act provides for non-discriminatory open access but also subjects it to regulations framed by the State Commission to ensure grid security, operational discipline, and non-disruptive power transactions. The restrictions imposed by the Regulations of 2016 are thus regulatory safeguards rather than prohibitive barriers.

64. A careful analysis of the Regulations of 2016 indicates that they primarily aim at maintaining the reliability of the electricity grid, ensuring fair pricing, and preventing speculative misuse of open access provisions. The requirement of advance notice for short-term open access, penalties for deviations from contracted demand, and specific conditions for captive power generators are all designed to create a structured and predictable electricity market. These provisions do not prevent eligible consumers from availing open access but instead ensure that they do so within a framework that safeguards the interests of all stakeholders, including distribution licensees and other consumers. Moreover, Section 181 of the Act of 2003 empowers State Commissions to frame regulations necessary for implementing statutory provisions, thereby validating the regulatory measures introduced by RERC.

65. Furthermore, the Act of 2003, envisages a balance between the rights of open access consumers and the operational concerns of the power sector. The Regulations of 2016, while imposing certain conditions, do not outright deny open access but ensure that its implementation is equitable and does not jeopardize grid discipline. Open access remains available to consumers who comply with regulatory prerequisites, including scheduling obligations and financial commitments. Thus, the appellants’ assertion that their right to open access is foreclosed is misplaced. The Regulations of 2016 are consistent with the legislative intent of the Act of 2003, ensuring that open access is exercised in a manner that does not

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compromise system stability, fairness, or economic viability. Therefore, the regulatory framework does not foreclose open access but rather operationalizes it within reasonable constraints essential for sustaining the electricity sector.

CONCLUSION

66. The statutory scheme under the Act of 2003 mandates that regulations framed by State Commissions must serve the larger public interest. The respondents have successfully established that the impugned regulations serve this purpose by ensuring equitable treatment of all market participants while safeguarding the integrity of the power grid.

67. The RERC derives its authority from the Act of 2003, which vests in it the power to frame regulations governing open access, scheduling, and penalties. Section 86(1)(c) of the Act of 2003 specifically empowers State Commissions to facilitate intra-state transmission and wheeling of electricity. Furthermore, Section 181 empowers the Commission to make regulations consistent with the Act of 2003 and its objectives. The impugned regulations have been framed in exercise of these statutory powers. The requirement for scheduling, imposition of penalties, and limits on drawal are not arbitrary but are measures falling within the regulatory ambit of the Commission to ensure grid stability and fair competition. The Act of 2003 envisions a structured and fair mechanism for open access while ensuring that market participants do not engage in practices detrimental to the larger consumer base. Moreover, under Section 42 of the Act of 2003, the State Commission has the mandate to regulate open access in distribution and specify the charges and conditions applicable. The respondents have demonstrated that these conditions are necessary for maintaining discipline in power scheduling and ensuring that open access consumers do not gain an unfair advantage over other consumers by evading scheduling norms or penalties.

68. The Jodhpur Bench in common order dated 29.08.2016, which has been challenged before us in Civil Appeals No. 7965 of 2019 and 7966 of 2019, has rightly upheld the validity of the Regulations of 2016 holding that any inconvenience caused or even some hardship faced by the captive power generators shall not make the regulations illegal. The High Court also rightly pointed out that the appellants have failed to establish that the impugned regulations are in contravention

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of their rights protected under Part-III or any other provision of the Constitution of India or that the regulations have been enacted without having the competence to do so or they are manifestly arbitrary or unreasonable. It has been rightly held by the High Court that the Regulations of 2016 are in consonance with the objects of the Act of 2003 and have been framed as per the competence available under Section 181 read with Section 42 of the Act of 2003.

69. The Jaipur Bench in its order dated 06.09.2016, which has been challenged before us in Civil Appeal No. 7964 of 2019, has rightly held that the issues before it, were squarely covered by the order of Jodhpur Bench.

70. In light of the above discussion, the appeals are dismissed, and the orders of the High Court are upheld.

Result of the case: Appeals dismissed.