Electricity Act | High Court Can Permit Third-Party Participation In Regulatory Proceedings If Deemed Necessary For Full Disclosure: Supreme Court

"In the peculiar facts and circumstances of the case, High Court came to the conclusion that it is necessary to bring full facts to the notice of JBVNL through a party other than the petitioners so that an appropriate decision could be reached." Supreme Court, in a ruling dated September 3, 2026, upheld an interim order of the Jharkhand High Court that allowed a third-party organization, 'Energy Watchdog,' to participate in regulatory proceedings initiated by the Jharkhand Bijli Vitran Nigam Ltd. (JBVNL).

A bench of Justices Pamidighantam Sri Narasimhan and Alok Aradhe observed that while the Electricity Act, 2003, is an exhaustive code, a High Court is not precluded from adopting interim measures to ensure the transparency and integrity of an inquiry when the peculiar facts of the case so warrant.

The dispute arose when M/s. Amalgam Steels and Power Ltd. and another entered into a captive power plant agreement with JBVNL, which was later questioned by Energy Watchdog. Following complaints regarding the unauthorized use of power and failure to meet statutory captive status conditions, JBVNL issued show-cause notices to the petitioners for alleged breach of contract and liability of cross-subsidy surcharges. The High Court, in a PIL, permitted the respondent to participate in the proceedings, which was challenged by the petitioners before the Supreme Court.

The primary question before the court was whether the High Court erred in allowing a third party, not privy to a contract, to intervene in proceedings conducted under the Electricity Act, 2003. The court also examined whether such judicial intervention improperly expanded the statutory framework of an exhaustive regulatory code.

Electricity Act as an Exhaustive Code

The bench emphasized the settled legal position that the Electricity Act functions as an exhaustive code for all matters concerning the sector. Referring to precedents like PTC India Ltd. v. Central Electricity Regulatory Commission and Southern Power Distribution Company of Andhra Pradesh Ltd. v. Green Infra Wind Solutions Ltd., the court noted that there is no unallocated regulatory residue left outside the designated regulatory bodies. The Act, through Sections 79, 86, and 94, clearly delineates the functions of the Commissions to ensure transparency and proper adjudication of disputes.

Interim Measures in Peculiar Circumstances

Despite the statutory framework, the court found that the High Court’s decision to allow the third party to participate was an interim measure based on specific factual findings. The Supreme Court observed that the material presented before the High Court suggested that the inquiry process required broader scrutiny. The bench noted that the High Court’s intervention was not a permanent expansion of the statute, but a compelling measure to ensure that all relevant facts are brought to the notice of the authorities.

"The High Court has found it compelling to adopt an interim measure in the peculiar facts of the case which in our opinion cannot be termed as perverse, warranting any interference at this stage under Article 136 of the Constitution of India."

Limitations on Third-Party Role

The Supreme Court cautioned that the participation permitted by the High Court should not be mistaken for the creation of a new adversarial forum. The court clarified that JBVNL must exercise its own judgment based on the material provided and should not allow the proceedings to transform into a court or tribunal hearing. The inclusion of the third party is strictly limited to serving as a means to collect information to enable the utility to take necessary action.

Scope of Judicial Review

The bench explicitly stated that it had not expressed any opinion on the merits of the allegations made against the petitioners. The High Court retains the liberty to examine all aspects of the case during the final hearing, including the broader legal question regarding the scope and ambit of third-party intervention in proceedings arising under the Electricity Act. With this clarification, the court disposed of the Special Leave Petition, maintaining the status quo of the High Court's interim direction.

Date of Decision: 03 September 2026