TPCL Is ‘Authority’ Under Article 226; Electricity Distribution Companies Discharging Public Duty Amenable To Writ Jurisdiction: Orissa High Court

In the case of Surendra Kumar Sahoo v. State of Odisha (W.P.(C) No. 30107 of 2021), (W.P.(C) No. 31137 of 2021) & (W.P.(C) No. 41959 of 2021), the Orissa High Court on Monday held that the Tata Power Company Limited (“TPCL”) is an “authority” within the meaning of Article 226 of the Constitution of India.  Despite being a corporation, TPCL has distributed energy in four parts of the State under various names, according to Justice B.R. Sarangi. It was further underlined that the State, via GRIDCO, also controls its management. As a result, the Court determined that TPCL qualifies as an “authority” under Article 226 of the Indian Constitution.

Brief Facts Of The Case:  A number of writ petitions were filed in the current case against several power distribution firms, and the instant plea was then submitted to address the petitions’ maintainability. Orissa State Electricity Board, a company established by legislation and entirely governed by the State, initially handled the provision of electricity, including transmission, maintenance, and distribution. Subsequently, with the aim of restructuring the electricity industry the State Government, in exercise of the powers conferred under the Orissa Electricity Reforms Act, 1955 and after consultation with the Grid Corporation of Orissa Limited, made the transfer scheme rules.  In order to give effect to the planning and execution of a plan for the transfer of distribution undertakings from the Grid Corporation of Orissa Limited to the distribution companies, known as “Rules for the Orissa Electricity Reform (Transfer of undertakings, Assets, Liabilities, Proceedings, and Personnel of Gridco to Distribution Companies), 1998. In order to supply electricity, the entire State of Odisha was divided into four distribution zones or regions, and four distribution companies, named WESCO, NESCO, CESCO, and SOUTHCO, were established. These businesses were established in accordance with the Rules, 1998, and given the responsibility of allocating the funds provided by the centre and states for the implementation of these programmes. These four distribution businesses were in charge of collecting the government-revenue-producing electricity duty as well as the energy charges from the customers.

Judgement: The Court observed that the term “State” has not been defined under Article 12. The Court said, “It encompasses all other authorities within the territory of India or under the control of the Government of India.” “It does not say that such other authorities must be under the control of the Government of India. The word ‘or’ is disjunctive and not conjunctive”, the Court elucidated further.

It was further observed that it does not imply that every body or association which is regulated in its private functions becomes a ‘State’.  It was also stated that what is important is the standard and nature of the functions carried out by the body and the State control that results from them. “In the past thirty years, there has been a radical shift in the idea that all public sector enterprises formed under the Indian Companies Act, the Societies Registration Act, or any other Act for meeting the definition of “State” must be financed by the Central/State Government and be completely under its control. The focus now is on the tasks and activities that the body performs, not on its composition. The Court emphasised further that the key inquiry that must be asked is whether the entity in question performs “public function.” The Court then went on to cite a number of Supreme Court rulings regarding the interpretation of Article 12, concluding that TPCL is a “authority” as defined by Article 226 of the Indian Constitution. The Court concluded that writ petitions against these electrical distribution firms are therefore admissible.

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