UNION OF INDIA THROUGH GENERAL MANAGER NORTHERN RAILWAYSversusCHAIRMAN, UP STATE ELECTRICITY BOARD & ORS.

                       [2012] 2 S.C.R. 416 .


A      UNION OF INDIA THROUGH GENERAL MANAGER
                  NORTHERN RAILWAYS
                                 v.
     CHAIRMAN, UP STATE ELECTRICITY BOARD & ORS.
          (Transfer Case (Civil) No. 37 of 2001 etc.)
B                      FEBRUARY 9, 2012

           [P.SATHASIVAM AND H.L. GOKHALE, JJ.]

        RAILWAYS ACT, 1989:
c
       ss. 11 (a) and (g) - Construction of electric supply lines
  by Railways - Held: Provisions of Railways Act clearly
  authorize the Railways to construct necessary transmission
  lines, dedicated for their own purpose - NTPC, i.e. the
0 generating company, does have the necessary authority to
  enter into a power purchasing agreement u/s 43A of Electric
  (Supply) Act, 1948 - Thus, the action of Railways of
  constructing transmission lines and drawing power from
  thermal power plants of NTPC was perfectly legal - Electricity
E (Supply) Act, 1948 - ss. 26A (1) and 43A - Electricity Act,
  2003 - s. 10(2)

      In the instant transferred cases the issue for
  consideration before the court was the legality of
  construction of the transmission lines by Central
F Railways to draw power from the power plant of the
  National Thermal Power Corporation Limited.

        Disposing of the Transferred cases, the Court:

       HELD: 1.1. In the case of Railways, the transmission
G of electricity is ·governed by the provisions of a special
  enactment, i.e. the Railways Act, 1989 and not by the
  enactments governing electricity. [Para 15] [425-A-B] '

        1.2. Sections 11 (a) and (g) of the Railways Act, 1989
H                              416
 UNION OF INDIA THROUGH GEN. MANAGER NORTHERN          417
           RAILWAYS v. CHAIRMAN, U.P.S.E.B.

clearly authorize the Railways to construct necessary A
transmission lines, dedicated for their own purpose. It is
not possible to read this Section in a restricted manner.
The principal part of .s.11 authorizes the Railway
administration to execute all necessary works .for the
purpose of constructing or maintaining railways. Sub-s B
(a) of this Section authorizes Railways to make or
construct in or upon, across, under or over any lands
electric supply lines. Sub-s. (g), thereof, cleawrly
empowers the Railways to erect any electric traction
equipment, and power supply and distribution c
 installation which is in connection with the work of the
 Railways. This will certainly include construction of
 transmission lines. [para 15 (ii)] [425-C-E]

    3. Besides, s.26A (1) of the Electricity (Supply) Act,
1948 exempts the generating company from the                   D
requirement of taking a license under Electricity Act, 1910.
[Para 15 (iii)] [425-F]

    4. NTPC the generating company does have the
necessary authority to enter into a power purchasing E'
agreement u/s 43A of the Electricity (Supply) Act, 1948. /
NTPC has been permitted by the Central Government to '
enter into an agreement. Railways and NTPC both have .·
obtained the permission from the concerned ministries'
prior to entering into this agreement. In the instant cas,: F
the Railways found the tariff of UPSEB to be excessive
and therefore, they decided to construct their o~n
transmission lines. This being so, the action on th~ part
of the Railways of constructing transmission lines, and
drawing power from thermal power plants of NTPC, was G
perfectly legal. Even under the Electricity Act, 2003, a
direct sale of power by a generating company to a
consumer is specifically permitted u/s 10 (2) thereof. [Para
15] [426-A-D]
                                                               H
             418       SUPREME COURT REPORTS                [2012] 2 S.C.R.


         A       1.5. In the circumstances, the notice dated 7.9.1999
             given by the UPSEB was totally uncalled for, and is
             quashed and ·set-aside. [Para 16] [426-D-E]

               CIVIL APPELLATE JURISDICTION : Transfef Case (Civil)
         B No. 37 of 2001.

                   Under Article 139 of the Constitution of India.

                                           WITH

         C Transfer Case (Civil) No. 38 of 2001.

                   P.P. Malhotra, ASG, Pradeep Misra, Suraj Singh, Manoj
              Kr. Sharma, Sunita Sharma, Shailendra Sharma, M.P.S. Tomar,
              A.K. Sharma, N.D.B. Raju, Bharathi Raju, Guntur Prabhakar,
          ··: Rachana Joshi lssar, Nidhi Tiwari for the appearing parties.
         D
                   The Judgment of the Court was delivered by

                H.L. GOKHALE J. 1. Both. the~e transferred cases are
           concerning the legality of construction of the transmission lines
           by Northern Railways to draw power from the power plants of
'
    J
         E the National Thermal Power Corporation Ltd. ('NTPC' for short),
           and no more from the transmission lines of Uttar Pradesh State
           Electricity Board ('UPSEB' for short), through which they were
           drawing power earlier.

         F   Facts leading to these transferred cases are as follows:-

                 2. UPSEB was purchasing power from the power plants
            of NTPC, and supplying the same to Northern Railways through
            transmission lines of the UPSEB. Railways found the tariff of
          G UPSEB to be excessive, and therefore, decided to enter into
            a power purchasing agreement with NTPC, and to construct
            their own transmission lines to carry the supply. The Railways
            moved the Central Govt. for permission in this behalf, and
            obtained approval from the cabinet committee on 6.6.1990.
            This was recorded in the then Railway Minister's letter
        ' H addressed to the then Minister of Energy dated 24.8.1990.
  UNION OF INDIA THROUGH GEN. MANAGER NORTHERN              419
   RAILWAYS v. CHAIRMAN, U.PS.E.8. [H.L. GOKHALE, J.]

Later, it was decided that 100 MW power will be allocated to        A
the Railways from Dadri Gas Station of NTPC. In case of a
shortfall, the requirement would be met ·from the Auraria Gas
Station of NTPC. The above allocation to Railways was to be
subject to entering into a power purchasing agreement with
NTPC. This is recorded in the letter dated 10.2.1998 from           B
Deputy Secretary to the Ministry of Power addressed to the
Chairman, Central Regulatory Electricity Authority. Accordingly,
Railways entered into the necessary power purchasing
agreement with NTPC in March 1998.

     3. Thereafter, Railways 'started constructing transmission
                                                                    c
lines from Dadri Gas Power Plant and Auraria Gas Power Plant
of NTPC upto the sub-station of Railways at Qadri, District
Ghaziabad, U.P. This led to UPSEB to issue a threat to
demolish the said transmission lines, and a notice was is5ued
to the Railways on 7.9.1999. The notice was issued by the           D
Superintendent Engineer, Electricity Transmission Circle, U.P.
State Electricity Board, Ghaziabad, U.P. to the Chief Electrical
Engineer (Construction), Northern Railways, Tilak Bridge, New
Delhi, calling upon the Railways to immediately stop the activity
of construction of distribution/service lines. The notice further   E
stated that if the Railways did not stop or refrain from these
activities inspite of receipt of the notice, UPSEB will be
constrained to take steps of its own for demolition of the said
lines and will also sue for damages suffered or to be suffered
by UPSEB consequent upon this construction.                         F

     4. This notice led the Railways to file Writ Petition
No.6802/1999 in the High Court of Delhi to challenge the said
notice. The High Court vide its order dated 9.11.1999 stayed
operation of this notice/order. The High Court subsequently         G
passed another order on 12.5.2000 allowing the Railways to
carry on their work of construction.

   5. After the construction of transmission lines was
completed, the Railways started drawing power from the NTPC
power plants through those lines. That led UPSEB to file Writ       H
    420      SUPREME COURT REPORTS               [2012] 2 S.C.R.


A   Petition No.3588/2001 in Allahabad High Court to challenge the
    act of Railways of drawing electrical energy from NTPC through
    Railway's own service lines.

       6. Since, two petitions were filed in two different High
  Courts arising out of the same cause of action, the Railways
8
  sought transfer of these two writ petitions to the Supreme Court
  of India, in order to avoid the multiplicity of proceedings and
  conflicting decisions. The same having been allowed, W.P.
  No.6802/1999 in Delhi High Court has been numbered as
  Transferred Case No.37/2001 and W.P. 3588/2001 in
C Allarabad High Court has become Transferred Case No.38/
  2001 in this Court.

       7. Union of India through General Manager, Northern
  Railways is the petitioner in Transferred Case No.37/2001.
D Railway Board, General Manager Northern Railways and Dy.
  Chief Engineer/Electrical (Construction) of Northern Railways
  are respondent No.1 to 3 in Transferred Case No.38/2001.
  UPSEB is the first respondent in Transferred Case No.37/2001
  and petitioner in Transferred Case No.38/2001. NTPC and its
E officer are respondents No.4 to 6 in Transferred Case No.38/
  2001. The parties are referred to as Railways, UPSEB and
  NTPC for convenience. Shri P.P. Malhotra, learned Additional
  Solicitor General has appeared for Railways, Smt. Rachna
  Joshi lssar has appeared for NTPC, and Shri Pradeep Misra
F has appeared for UPSEB.

    The submissions of the rival parties:-

      8. It was submitted on behalf of the Railways by Shri
  Malhotra that the action of the Railways to erect, operate,
G maintain or repair any electric traction equipment was very
  much within the jurisdiction of the Railways, inasmuch as
  Sections 11 (a) and (g) of the Railways Act, 1989 empower
  them to carry out such activity and all such necessary works for
  the purposes of constructing or maintaining a railway. These
H Sections 11 (a) and (g) read as follows:-
UNION OF !NOIA THROUGH GEN. MANAGER NORTHERN                421
 RAILWAYS v. CHAIRMAN, U.P.S.E.B. [H.L. GOKHALE, J.]

  "11. Power of railway administrations to execute all              A
  necessary works.- Notwithstanding anything contained in
  aAy other law for the time being in force, but subject to the
  provisions of this Act and the provisions of any law for the
  acquisition of land for a public purpose or for companies,
  and subject also, in the case of a non-Government Railway,        B
  to the provisions of any contract between the non-
  Government railway and the Central Government, a railway
  administration may, for the purposes of constructing or
  maintaining a railway-

        (a) make or construct in or upon, across, under or          C
  over any lands, or: any streets, hills, valley, roads, railway,
  tramways, or any rivers, canals, brooks, streams or other
  waters, or any drains, water-pipes, gas-pipes, oil-pipes,
  sewers, electric supply lines, or telegraph lines, such
  temporary or permanent inclined-planes, bridges, tunnels,         D
  culverts, embankments, aqueducts, roads, lines of
  railways, passages, conduits, drains, pies, cuttings and
  fences, in-take wells, tube wells, dams, river training and
  protection works as it thinks proper;
                                                                    E
        (b) ................... .

        (c) ..................... .

        (d) ................. .
                                                                    F
        ·(e) ................ ..

        (f) ................ .

         (g) erect, operate, maintain or repair any electric
  traction equipment, power supply and distribution                 G
  installation in connection with the working of the railway;
  and ............ ."

                                          (emphasis supplied)
                                                                    H
    , 422          SUPREME COURT REPORTS               [2012] 2 S.C.R.


A         9. The NTPC has also the authority to sell power to
     Railways in its 'capacity as a generating company under Section
     43A of the Electricity Act, 1948 This section reads as follows:-
                       ;
                    "43A. Terms, conditions and tariff for sale of
                    electricity by Generating Company. - (1) A
B
                    Generating Company may enter into a contract for
                    the sale of electricity generated by it-

             (a)    with the Board constituted for the State or any of
                    the States in which a generating station owned or
C                   operated by the company is located;

             (b)    with the Board constituted for any other State in
                    which it is carrying on its activities in pursuance of
                    sub-section (3) of section 15A; and
D            (c)    with any other person with consent of the competent
                    government or governments.

            [(2) The tariff for the sale of electricity by a Generating
            Company to the Board shall be ·determined in accordance
E           with the norms regarding operation and the Plant Load
            Factor as may be laid down by the Authority ad in
            accordance with the rates of depreciation and reasonable
            return and such other factors as may be determined, from
            time to time, by the Central Government, by notification in
F           this Official Gazette:

                   Provide that the terms, conditions and tariff for such
            sale shall, in respect of a Generating Company, wholly or
            partly owned by the Central Government, be such as may
            be determined by the Central Government and in respect
G           of a Generating Company wholly or partly owned by one
            or more State Governments be such as may be
            determined, from time to tome, by the government or
            governments concerned.]]"

H                                                  (emphasis supplied)
  UNION OF INDIA THROUGH GEN. MANAGER NORTHERN 423
   RAILWAYS v. CHAIRMAN, U.P.S.E.8. [H.L. GOKHALE, J.]

     10. The generating company has, however, to obtain             A
necessary clearance from the competent Govt. before entering
into a contract for sale of electricity to any person other than
an Electricity Board. NTPC is a wholly owned company of the
Central Govt. It has, therefore, to obtain permission from the
Central Government, which it had. 'Competent Government' is         B
defined under Section 2 (3A) of the 1948 Act, which reads as
follows:-

     "2. Interpretation .............. .
     (3A) "competent government" means the Central                  C
     Government in respect of a Generating Company wholly
     or partly owned by it and in all other cases the Government
     of the State in which the generating station of a Generating
     Company is located or proposed to be located."
                                                                    D
     11. Railways had also obtained the necessary permission
from the Government of India and, thereafter, they had entered
into the necessary agreement with NTPC. It was pointed out
that the authority of the Railways to act as above is left
unhindered under Section 173 of the Electricity Act, 2003           E
[which Act replaced the Electricity (Supply) Act 1948]. This
Section reads as follows:-                               ·

     "173. Inconsistency in laws. - Nothing contained in this
     Act or any rule or regulation made thereunder or any
     instrument having effect by virtue of this Act, rule or        F
     regulation shall have effect in so far as it is inconsistent
     with any other provisions of the Consumer Protection Act,
     1986 (68 of 1986) or the Atomic Energy Act, 1962 (33 of
     1962) or the Railways Act, 1989 (24 of 1989)."
                                                                    G
     12. The submissions of Shri Malhotra, learned counsel for
the Railways were supported by Smt. Rachana Joshi lssar,
learned counsel for NTPC. She also stressed the fact that
NTPC was required to obtain only the consent from the Govt.
of India under Section 43A of the Electricity Supply Act, 1948,     H
and that consent had been obtained prior to entering into the
     424       SUPREME COURT REPORTS                [2012] 2 S.C.R.


A    agreement from the Ce.ntral Govt. which was the competent
     government under Section 2 (3A) of 1948 Act.

         13. The submissions on behalf of the Railways and NTPC
    were countered by Shri Pradeep Misra, learned counsel for
8 UPSEB. In his submission, Govt. of India was not competent
    to grant such permission to Railways to buy power from NTPC,
    or to construct these transmission lines. Such activity ought to
    have been sanctioned by the UP State Electricity Commission/
  · State Government under Section 270 of the 1910 Act. This
  · Section 270 reads as follows:-
C
           "27D. Grant of transmission license by the State
           Government: (1) Until the State Government Gommissien
           is established the State Government and thereafter the
           State Commission may, subject tp the provisions of sub
o          section (4), grant a transmission license to any person."

        14. With respect to the authority of the Railways under
 , Section 11 (a) and (g) of the Railways Act, 1989, Shri Misra
 . submitted that this Section can be read to authorize the
E Railways to have their electricity supply and lines only for
   working and maintenance of railways, and not for transmitting
   energy from generating stations. If transmitting lines were to be
   constructed, a license was necessary to be obtained. Section
   270 of the 191 O act cannot be ignored while reading Section
F 11 (a) and (g) of the Railways Act, 1989.

    · Consideration of the rival submissions

          15. (i) We have considered the arguments by the rival
   ,parties. As far as reliance on Section 270 of the Electricity Act,
G "1910 is concerned, it is to be noted that this Section came into
    force on 31.12.1998. The agreement between Ra_ilways and
    NTPC was signed prior thereto in March, 1998. That apart, it
    is true that in terms of Section 270 of the Indian Electricity Act,
    1910 and Sections 12 and 14 of the Electricity Act, 2003, no
H person other those authorized or otherwise exempted by an
 UNION OF INDIA THROUGH GEN. MANAGER NORTHERN                  425
  RAILWAYS v. CHAIRMAN, U.PS.E.B. [H.L. GOKHALE, J.)

Appropriate Government or the Appropriate Commission shall             A
be entitled to engage in the activities of transmission or
distribution of electricity. However, in the case of Railways, the
transmission of electricity is governed by the provisions of a
special enactment, i.e. the Railways Act, 1989 and not by the
enactments governing electricity.                                      B

     (ii) That apart, Sections 11 (a) and (g) of the Railways Act,
1989 clearly authorize the Railways to construct necessary
transmission lines, dedicated for their own purpose. It is not
possible to read this Section in a restricted manner in which it
was sought to be conveyed. This is because the principal part          C
of Section 11 authorizes the Railway administration to execute
all necessary works for the purpose of constructing or
maintaining railways. Sub-section (a) of this Section authorizes
Railways to make or construct in or upon, across, under or over
any lands electric supply lines. Under sub-Section (g), thereof,       D
the Railways are authorized to erect, operate, maintain or repair
any electric traction equipment, power supply and distribution
installations in connection with working of the railways. This
sub-section clearly empowers Railways to erect any electric
traction equipment, and power supply and distribution                  E
installation which is in connection with the work of the Railways.
This will certainly include construction of transmission lines. That
being so, there is no substance in this submission made by the
UPSEB as well.
                                                                       F
      (iii) Besides, Section 26A ( 1) of the Electricity Supply Act,
1948 exempts the generating company from the requirement
of taking a license under Electricity Act, 1910. This section 26A
( 1) reads as follows:-

      "26A. Applicability of the provisions of Act 9 of 1910           G
  · · to Generating Company - (1) Notwithstanding anything
      contained in sub-section (2), nothing in the Indian
      Electricity Act, 1910, shall be deemed to require a
      Generating Company to take out a licence under that Act,
      or to obtain sanction of the State Government for the            H
    426       SUPREME COURT REPORTS                 [2012] 2 S.C.R.


A         purpose of carrying on any of its activities."

        (iv) The generating company does have the necessary
  authority to enter into a power purchasing agreement under
  Section 43A of the Electricity Supply Act, 1948. NTPC ;has
~ been permitted by the Central Government to enter into an
  agreement. Railways and NTPC both have obtained the
  permission from the concerned ministries prior to entering· into
  this agreement. In the instant case, the Railways found the tariff
  of UPSEB to be excessive and therefore, they decided to
  construct their own transmission lines. This being so, the action
C on the part of the Railways of constructing transmission lines,
  and drawing power from thermal power plants of NTPC, was
  perfectly legal. Even under the Electricity Act, 2003, a direct sale
  of power by a generating company to a consumer is specifically
  permitted under Section 1O (2) thereof.
D
        16. In the circumstances, the notice dated 7.9.1999 given
  by the UPSEB was totally uncalled for, and is required to be
  quashed and set-aside. Accordingly, t~e Transferred Case
  No.37/2001 will have to be allowed, and Transferred Case
E No.38/2001 will have to be dismissed.

          17. In the circumstances.we pass the following order:-

    . (a) Transferred Case No.37/2001 is allowed. The
  impugned notice/order dated 7.9.1999, issued by UPSEB to
F the Northern Railways, is hereby quashed and set-aside.

          (b) Transferred Case No.38/2001 is dismissed.

          (c) There will be no order as to costs.

G R.P.                              Transferred cases disposed of.