The Karnataka High Court has clarified that a State Transmission Utility cannot unilaterally revise supervision charges for self-execution works beyond the ceiling prescribed by the regulatory commission. This judgment reinforces the principle that regulatory powers under the Electricity Act, 2003 are exclusively vested in the Karnataka Electricity Regulatory Commission (KERC), and any attempt by KPTCL to impose higher charges without formal regulation is ultra vires.
Background & Facts
The Dispute
The petitioner, M/s Anushka Realty Inc., a real estate developer, was undertaking a multi-storied residential project at Kyalasanahalli village, KR Puram Hobli, Bengaluru East Taluk. To facilitate power supply for the project, the petitioner applied for an electricity connection of 8,459 KW. The Bangalore Electricity Supply Company Limited (BESCOM), Respondent No. 4, approved the application on 15.04.2018 (Annexure-D), subject to payment of supervision charges at 10% of the estimated cost of Rs. 4,35,82,608, with a ceiling of Rs. 15,00,000, as per the Karnataka Electricity Regulatory Commission (Electric Supply and Distribution) Code, 2004.
Key Facts
- The petitioner opted for self-execution of electrical infrastructure works, meaning it would undertake the construction of transmission lines and substations itself, subject to supervision by KPTCL.
- The estimated cost of the electrical infrastructure was Rs. 4,35,82,608.
- Under the existing regulatory framework, supervision charges were capped at 10% of estimated cost or Rs. 15,00,000, whichever was lower.
- On 30.04.2018, KPTCL wrote to KERC (Annexure-R1) seeking approval to revise supervision charges from 10% to 15% of estimated cost, citing increased administrative and technical costs.
- On 13.06.2018, KERC replied (Annexure-R2), stating it had not determined supervision charges and directed KPTCL to take a suitable decision based on rules or regulations in its internal Account Manuals.
- On 27.06.2018, KPTCL issued Annexure-A, prescribing slab-wise supervision charges for self-execution works, with rates escalating up to 15% of estimated cost, and demanded Rs. 1,20,49,000 from the petitioner.
- On 04.08.2018, KPTCL issued Annexure-B, a formal demand notice for Rs. 1,20,49,000 as supervision charges.
- The petitioner was not permitted to proceed with self-execution until payment of the demanded amount.
Procedural History
- 15.04.2018: BESCOM approved power supply application (Annexure-D) with supervision charges capped at Rs. 15,00,000.
- 30.04.2018: KPTCL wrote to KERC seeking revision of supervision charges.
- 13.06.2018: KERC replied, directing KPTCL to take a suitable decision based on internal manuals.
- 27.06.2018: KPTCL issued Annexure-A, imposing slab-wise supervision charges.
- 04.08.2018: KPTCL issued Annexure-B, demanding Rs. 1,20,49,000.
- 21.12.2018: Writ Petition No. 43712 of 2018 filed before the Karnataka High Court.
- 21.02.2026: Petition heard and reserved for orders.
- 01.06.2026: Judgment delivered by Justice Ravi V Hosmani.
The Parties' Positions
Petitioner (Anushka Realty Inc.) contended that KPTCL, as a State Transmission Utility, had no statutory authority to revise supervision charges. It argued that only KERC could frame or amend regulations under Section 181 of the Electricity Act, 2003, and that KPTCL’s unilateral revision was arbitrary, ultra vires, and violative of the principle of delegatus non potest delegare.
Respondents (KPTCL, KERC, BESCOM, State of Karnataka) argued that KPTCL’s action was an administrative measure to recover actual costs of supervision, which had increased significantly since 2005. They claimed the Code did not apply to KPTCL, as it governed only distribution licensees, and that KERC’s reply in Annexure-R2 permitted KPTCL to act independently.
Relief Sought
The petitioner sought:
- Quashing of KPTCL’s order dated 27.06.2018 (Annexure-A) prescribing slab-wise supervision charges.
- Quashing of the demand notice dated 04.08.2018 (Annexure-B).
- Direction to permit continuation of self-execution works upon payment of supervision charges as per Annexure-D (i.e., Rs. 15,00,000).
- Refund of any excess amount collected.
The Legal Issue
Can a State Transmission Utility like KPTCL unilaterally revise supervision charges for self-execution works beyond the ceiling prescribed by KERC under the Electricity Act, 2003, without a formal regulation or notification issued by KERC?
Arguments Presented
For the Petitioner
The petitioner relied on Section 181 of the Electricity Act, 2003, which vests exclusive regulatory power to frame rules and regulations in KERC. It argued that KPTCL, as a transmission licensee under Section 39, has no legislative or regulatory authority to fix or revise charges. The petitioner cited Joint Action Committee of Air Line Pilots’ Association of India v. Director General of Civil Aviation (2011) 5 SCC 435, emphasizing that statutory powers cannot be exercised by any authority other than the one to whom they are conferred. It further relied on Sahni Silk Mills (P) Ltd. v. ESI Corporation (1994) 5 SCC 346 to argue that even if delegation were implied, sub-delegation without express statutory authority is void. The petitioner also pointed to KPTCL’s own letter to KERC (Annexure-R1), which acknowledged the need for KERC’s approval, thereby admitting its lack of independent authority.
For the Respondent
The respondents contended that KPTCL’s action was an administrative cost-recovery measure, not a regulatory exercise. They argued that the Code of 2004 applied only to distribution licensees (ESCOMs), not to KPTCL, and that KERC’s reply in Annexure-R2 constituted implicit authorization for KPTCL to revise charges. They relied on U.P. Avas Evam Vikas Parishad v. U.P. Power Corpn. Ltd. (2011) 10 SCC 223, asserting that supervision charges are necessary for grid safety and that consumers who opt for self-execution must bear the cost of supervision. They also claimed that the ceiling of Rs. 15,00,000 had become obsolete and that the revised slab-wise structure was reasonable and proportionate to the scale of modern infrastructure projects.
The Court's Analysis
The Court began by acknowledging that there was no dispute over the petitioner’s liability to pay supervision charges. The core issue was whether KPTCL had the legal authority to revise those charges beyond the KERC-prescribed ceiling.
The Court noted that Section 181 of the Electricity Act, 2003, explicitly vests the power to make regulations in KERC alone. Section 39 of the Act defines the functions of a transmission licensee, which include planning, coordination, and ensuring the efficient transmission of electricity - but does not include fixing or revising consumer charges.
"It is now well settled that there cannot be imposition of tax, fee or charge etc., without statutory authorization."
The Court emphasized that even if KPTCL’s intent was administrative - to recover actual costs - the imposition of a monetary liability on consumers falls squarely within the domain of regulation, not mere administration. The Court rejected the argument that KERC’s observation in Annexure-R2 - that KPTCL may "take a suitable decision" - amounted to delegation of regulatory power. Such an observation, the Court held, is neither a formal approval nor a statutory authorization.
The Court further observed that KPTCL’s own conduct - seeking KERC’s approval in Annexure-R1 - contradicted its claim of independent authority. The Court also noted that the Code of 2004, though repealed for distribution licensees under Regulation 47 of the Conditions of Supply, 2006, remained the only existing regulatory framework applicable to supervision charges for self-execution works, and KPTCL had not issued any new regulation.
The Court distinguished U.P. Avas Evam Vikas Parishad, noting that in that case, the revision was done by the regulatory authority itself, not by a utility acting unilaterally. Here, KPTCL had no statutory basis to alter the ceiling. The Court also rejected the argument that the Uniform Schedule of Rates for 2023-24 was irrelevant, as the challenge pertained to the 2018 revision, which lacked any legal foundation.
The Court concluded that KPTCL’s action was an exercise of regulatory power without statutory mandate, rendering Annexure-A and Annexure-B void ab initio.
The Verdict
The writ petition succeeded. The Karnataka High Court quashed KPTCL’s order dated 27.06.2018 (Annexure-A) and the demand notice dated 04.08.2018 (Annexure-B). The Court directed KPTCL and BESCOM to permit the petitioner to resume and complete its self-execution works upon payment of supervision charges as per Annexure-D - i.e., Rs. 15,00,000. Any excess amount already paid by the petitioner shall be refunded within eight weeks. If not refunded within that period, the amount shall carry interest at 8% per annum from the date of deposit.
What This Means For Similar Cases
Regulatory Power Cannot Be Assumed by Utilities
- Practitioners must challenge any demand by transmission or distribution utilities that exceeds regulatory ceilings unless backed by a formal regulation issued by the respective Electricity Regulatory Commission.
- Administrative justifications such as "cost recovery" or "modernization" cannot substitute for statutory authorization under Section 181 of the Electricity Act, 2003.
KERC’s Silence Is Not Authorization
- A regulatory body’s non-committal response - such as "take a suitable decision" - cannot be construed as delegation of power. Only explicit, formal orders or notifications qualify as legal authorization.
- Utilities must seek and obtain formal regulatory approval before revising any consumer charges.
Self-Execution Does Not Waive Regulatory Protections
- Consumers opting for self-execution remain entitled to the protections of the regulatory framework. They cannot be subjected to arbitrary or unilateral fee hikes by utilities.
- Any revision of supervision charges must follow the procedure under Section 181, with public consultation and formal notification by the Commission.
