Back

ELECTRICITY (SUPPLY) ACT, 1948

ELECTRICITY (SUPPLY) ACT, 1948

54 of 1948

10th September, 1948

An Act to provide for the rationalization of the production and supply of electricity, and

generally for taking measures conducive to 2[Electrical development].[] Whereas it is expedient to provide for the rationalization of the production and supply of electricity, for taking measures conducive to 2[electrical development] and for all matters incidental thereto ; It is hereby enacted as follows : The preamble makes it clear that the Act provides for- (i) rationalization of production and supply of electricity; (ii) taking measures conducive to electrical development; and (iii) matters incidental thereto. 'The co-ordinated development of electricity in India on a regional basis is a matter of increasingly urgent importance for postwar re-con- struction and development. The absence of co-ordinated system, in which generation is concentrated in the most efficient units and bulk supply of energy centralized under the direction and control of one authority is one of the factors that impedes the healthy and economical growth of electrical development in this country. Besides, it is becoming more and more apparent that if the benefits of electricity are to be extended to semi-urban and rural areas in the most efficient and economical manner consistent with the needs of an entire region, the area of development must transcend the geographical limits of a municipality, a cantonment board or notified area committee, as the case may be. It has therefore; become necessary that the appropriate Government should be vested with the necessary legislative powers to link together under one control electrical development in contiguous areas by the establishment of what is generally known as the 'Grid System'. In the circumstances of this country such a system need not necessarily involve inter-connection throughout the length and the breadth of a province: regional co-ordination inclusive of some measures of inter-connection may be all that is needed. An essential prerequisite is, however, the acquisition of necessary legislative power not only to facilitate the establishment of this system in newly licensed areas but also to control the operation of existing licensees so as to secure fully co-ordinate development. "Government feels that it is not possible to legislate for this purpose within the frame-work of the Indian Electricity Act, 1910, which was conceived for avery different purpose. In their view what is needed is specific legislation, on the broad lines of the Electricity (Supply) Act, 1926, in force in the United Kingdom which will enable Provincial Governments to set up suitable organizations to work out 'Grid Schemes' within the territorial limits of the Provinces. Although executive power under the proposed bill will necessarily vest in the provinces, two considerations indicate necessity for Central legislation- (i) the need for uniformity in the organization and development of the Grid System, and (ii) the necessity for the constitution of semi-autonomous bodies like Electricity Boards to administer the 'Grid System'. In the view of the Government it is bodies like these which are likely to be most suitable organizations for working the 'Grid Systems' on quasi-com- mercial lines. "Such Board can, not, however, be set up by Provincial Governments under the existing Constitution Act as they would be in the nature of trading corporation within the meaning of entry 33 of the Federal Legislative

List.1

The Indian Electricity Act, 1910, deals with the supply and use of electrical energy and the rights and obligations of the licences. The Electricity (Supply) Act, 1948 deals with the statutory powers and functions of the Central Electricity Authority. State Electricity Boards and Generating Companies. 2[ It is proposed to widen the scope of private sector

participation in power generation, supply and distribution by suitably amending the afore-

said Acts. The main amendments are as follows: (a) Section 6 of the Indian Electricity Act, 1910, which deals with the period of licence is sought to be amended to enhance the said period of licence to 30 years followed by subsequent extensions for 20 years at a time. This ensures reasonable stability in the operation of the licence. (b)Section 2of the Electricity (Supply) Act, 1948 (hereinafter referred to as the said Act), which defines various expressions, is proposed to be amended to give effect to certain changes in the definitions and also to define certain new expressions. Clause (4-A) is proposed to be substituted to remove the exclusion of private sector from the definition of "Generating Company", as it permits only the companies formed by the Central Government or by any State Government or jointly by the Central Government and one or more State

Governments. (c)Section 15Aof the said Act which deals with the formation, objects, etc., of Generating Companies is proposed to be amended so as to provide for a establishment of Generating Companies in the private sector as well as in the joint sector. (d)Section 20of the said Act which deals with the submission of schemes involving capital expenditure exceeding rupees five crores to the Central Electricity Authority is proposed to be amended in the interest of flexibility, keeping in view the escalation in the cost of projects and to provide for revision from time to time of the prescribed limit of project cost requiring such clearance.(e) A new Sec. 43Ais proposed to be inserted to the said Act to provide for the terms and conditions and tariff for sale of electricity by the Generating Companies. (f) Section 55of the said Act which provides for licences' compa- nies with the Board's directions is proposed to be amended to ensure that the licensees as well as Generating Companies shall comply with the directions issued by the designated co-ordinating agencies in the matter of generation and supply of power. (g) Paragraph 17 (10) (b) of Sch. 6to the said Act is proposed to be amended to raise the standard rate from the existing level of 2 per cent over the Reserve Bank of India rate to 5 per cent. over the Reserve Bank of India rate to motivate investment in the power projects set up by licences companies. 3. The bill seeks to achieve the above objects.

SECTION 01: SHORT TITLE, EXTENT AND COMMENCEMENT

State Amendments

SECTION 03: CONSTITUTION OF THE CENTRAL ELECTRICITY AUTHORITY

4[(7) The Chairman of the authority may, by order, appoint any two or more members of the Authority to act on behalf of the Authority in relation to any matter referred to in Cl. (ii) of sub-section (1). (8) No act or proceeding of the Authority shall be invalid merely on the ground of the existence of any vacancy in, or any defect in the constitution of, the Authority.]

SECTION 04: POWER TO REQUIRE ACCOUNTS, STATISTICS AND RETURNS

It shall be the duty of each 5[State Electricity Board, Generating Company,] State Government Electricity Department or other licensee or person supplying electricity for public or private purposes, or generating electricity for its or his own use6[or consuming electricity] to furnish to the Authority such accounts, statistics,7[returns or other information] relating to the generation, supply and use of electricity as it may require and at such time and in such form and manner as it may direct.

SECTION 04A: DIRECTIONS BY CENTRAL GOVERNMENT TO THE AUTHORITY 8[

(1)In the discharge of its functions, the Authority shall be guided by such directions in matters of policy involving public interest, as the Central Government may give to it in writing.

(2) If any question arises as to whether any such direction relates to a matter of policy involving public interest, the decision of the Central Government thereon shall be final.

SECTION 04B: POWER OF CENTRAL GOVERNMENT TO MAKE RULES

(1) The Central Government may, by notification in the Official Gazette, make rules for carrying out the purposes of this Chapter.

(2) In particular and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, namely:

(a) the functions and duties of the Authority and the manner in which such functions and duties shall be exercised and performed, under sub-section (1) of Sec. 3;

(b) the terms and conditions of service of the Chairman and other members of the Authority (including the allowances and fees payable to members, but not including the salaries and allowances payable to the Chairman and other full-time members, of the Authority) under sub-section (4-A) and sub-section (4-B) of Sec. 3:

(3) Every rule made by the Central Government under this Chapter shall be laid, as soon as may be after it is made, before each House of Parliament while it is in session for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both .Houses agree in making any modification in rule or both Houses agree that the rule should not be made, the rule shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule.]

SECTION 04C: POWER OF AUTHORITY TO MAKE REGULATIONS 2

[(1)] The Authority may3[by notification in the Official Gazette] make regulations, not inconsistent with the provisions of this Act and the rules made by the Central Government there under, to provide for all or any of the following matters, namely:

(a) summoning and holding of meetings of the Authority, the times and places at which such meetings shall be held, the conduct of business thereat and the number of members required to constitute a quorum;

(b) any other matter arising out of the functions of the Authority under this Act for which it is necessary or expedient to make regulations.]

1[(2) The Central Government shall cause every regulation made under this section to be laid, as soon as may be after it is made, before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the regulation, or both Houses agree that the regulation should not be made, the regulation shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that regulation.]

SECTION 05: CONSTITUTION AND COMPOSITION OF STATE ELECTRICITY BOARDS

The State Government shall, as soon as may be after the issue of the notification under sub-section (4) of Sec. 1, constitute by notification in the Official Gazette, a State Electricity Board under such name as shall be specified in the notification.

(2) The Board shall consist of not less than three and not more than seven members appointed by the State Government. 4[* * * * *] 5[(4) Of the Members-

(a) one shall be a person who has experience of, and has shown capacity in, commercial matters and administration;

(b) one shall be an electrical engineer with wide experience : and

(c) one shall be a person who has experience of accounting and financial matters in a public utility undertaking, preferably an electricity supply undertaking.]

(5) One of the members possessing any of the qualifications specified in sub-section (4) shall be appointed by the State Government to be the Chairman of the Board .

(6) A person shall be disqualified from being appointed or being a member of the Board if he is 6[* * *] a Member of7[Parliament] or of any State Legislature or any local authority.

(7) No act done by the Board shall be called in question on the ground only of the existence of any vacancy in, or any defect in the constitution of the Board.

SECTION 06: INTER INTER-STATE AGREEMENT TO EXTEND BOARD'S JURISDICTION TO ANOTHER STATE

SECTION 07: EFFECT OF INTER INTER-STATE AGREEMENT

Where an agreement is entered into under Sec. 6, the participating State Governments shall, by notification in the Official Gazettes, declare a date on which the agreement shall come into force, and on and after that date-

(a) the Board constituted for the one State shall have all the powers and duties of a Board under this Act in respect of both States as if they constituted a single State;

3[(b) references in this Act to- .

(i) the State,

(ii) the State Electricity Consultative Council, and

(iii) the State Legislature shall, unless the context otherwise requires, be construed as references respectively to-

(a) both States,

(b) where more than one State Electricity Consultative Council has been constituted under Sec. 16, to all such Councils, and

(d) the provisions of Sec. 60 in relation to the assumption by the Board of the rights and liabilities of the State Government arising before the first constitution of the Board shall apply to the assumption by the Board of the rights and liabilities of the Government of the State to which the exercise of its functions under this Act is extended under the agreement, as if in that section for the words "before the first constitution of the Board" there were substituted the words and figure "before the date on which the agreement under Sec. 6 came into force". State Amendments

SECTION 08: TERM OF OFFICE AND CONDITIONS FOR RE-APPOINTMENT OF MEMBERS OF THE BOARD

The Chairman and other members of the Board shall hold office for such period, and shall be eligible for reappointment under such conditions, as may be prescribed.]State Amendments

SECTION 09: MEMBERS NOT TO HOLD INTEREST IN CERTAIN CONCERNS

(1) A member of the Board shall, prior to his appointment, give to the State Government intimation of, and shall, before taking charge of his office, sell or divest himself of, any interest which he may have for his own benefit whether in his own name or otherwise in any firm or company carrying on the business of supplying electricity or any fuel for the generation of electricity, or of the manufacture, sale or hire of machinery, plant, equipment, apparatus or fitting for the generation, transmission, distribution or use of electricity, or any interest in the managing agency or shares or securities of any such

company; and it shall not be lawful for a member of the Board, so long as he holds office, to acquire or purchase any such interest in any such firm or company and if he, under any will or by succession or gift becomes entitled for his own benefit to any such interest, he shall sell the same within three months after becoming so entitled thereto; and he shall also, within three months, sever any connection he may have and cease to have any interest, direct or indirect, in any such concern.

(2) Nothing contained in sub-section (1) shall prevent a member from acquiring or holding any share

or interest in any firm or company other than a firm or company mentioned in sub-section (1) Provided that if the Board has entered into, or is about to enter into any contract or agreement with any such firm or company in which a member holds any share or interest, he shall disclose the fact and nature of such interest and he shall not be entitled to vote on any decision of the Board relating to such contract or agreement.

(3) A disclosure referred to in the proviso to sub-section (2) shall forthwith be recorded in the minutes of the Board and communicated to the State Government and the State Government may thereupon give such directions as it may deem proper.

SECTION 10: REMOVAL OR SUSPENSION OF MEMBERS 2

[(1)] The State Government may suspend from office for such period as it thinks fit or remove from office any member of the Board who,-

(a) is found to be a lunatic or becomes of unsound mind; or

(b) is adjudged insolvent; or

(d) becomes or seeks to become a Member of1[Parliament] or any State Legislature or any local authority -, or

2[(e) in the opinion of the State Government-

(i) has refused to act ; or

(ii) has become incapable of acting: or

(iii) has so abused his position as a member as to render his continuance on the Board detrimental to the interest of the general public; or

(iv) is otherwise unfit to continue as a member ; or]

(f) is convicted of an offence involving moral turpitude.

3[(2) The State Government may suspend any member pending an inquiry against him.

(3) No order of removal shall be made under this section unless the member concerned has been given an opportunity to submit his explanation to the State Government, and when such order is passed, the seat of the member removed shall become vacant and another member may be appointed under Sec. 5 to fill up the vacancy.

(4) A member who has been removed shall not be eligible for re-appointment as member or in any other capacity to the Board.

(5) If the Board fails to carry out its functions or refuses or fails to follow the directions issued by the State Government under this Act, the State Government may remove the Chairman and the members of the Board and appoint a Chairman and members in their places.]

SECTION 10A: POWER OF STATE GOVERNMENT TO DECLARE CERTAIN TRANSACTIONS VOID 4[

(1) The State Government may declare void any transaction in connection with which a member has been removed under sub-clause (iii) of Cl. (e) of sub-section (1) of Sec. 10 after considering the report on the facts of the case made to it by a District Judge nominated by it in this behalf.

(2) A District Judge nominated under sub-section (1) shall, before making his report under that subsection, to the State Government in relation to any transaction, give all parties interested in the transaction a reasonable opportunity of being heard.

(3) Where a transaction is declared void under this section, it shall not be enforceable by any party to the transaction but the provisions of Sec. 65 of the Indian Contract Act, 1872 (9 of 1872), shall, so far as may be, apply to such transaction as they apply to an agreement which is discovered to be void or a contract which becomes void.

(4) The decision of the State Government declaring any transaction void under this section shall be final and shall not be called in question in any Court.]

SECTION 11: TEMPORARY ABSENCE OF MEMBERS

If the Chairman or any other member of the Board is by infirmity or otherwise rendered temporarily incapable of carrying out his duties or is absent on leave or otherwise in circumstances not involving the vacation of this appointment the State Government may appoint another person to officiate for him and carry out his functions under this Act or any rule or regulation made there under.

SECTION 12: INCORPORATION OF BOARD

The Board shall be a body corporate by the name notified under sub-section (1) of Sec. 5, having perpetual succession and a common seal with power to acquire and hold property both moveable and immoveable, and shall by the said name sue and be sued.

SECTION 12A: BOARD MAY HAVE CAPITAL STRUCTURE 1[

(1) The State Government may, if it considers expedient so to do, by notification in the Official Gazette, direct that the Board shall, with effect from such date as may be specified in the notification, be a body corporate with such capital, not exceeding ten crores of rupees, as the State Government may specify from time to time.

(2) The State Government may. from time to time, with the approval of the State Legislature, increase the maximum limit of the capital referred to in sub-section (1) to such extent as that Government may deem fit, so, however, that the increased maximum limit of capital aforesaid shall not exceed the amount representing the aggregate of the outstanding loans of the Board.

(3) Such capital may be provided by the State Government, from time to time, after due appropriation made by the State Legislature by law for the purpose and subject to such terms and conditions as may be deter- mined by the Government. ]

SECTION 13: AUTHENTICATION OF ORDERS AND OTHER INSTRUMENTS OF THE BOARD

All orders and decisions of the Board shall be authenticated by the signature of the Chairman or any other member authorized by the Board in this behalf, and all other instruments issued by the Board shall be authenticated by the signature of such member or officer of the Board as may in like manner be authorized in this behalf.

SECTION 14: MEETING OF THE BOARD

(1) The Board shall hold ordinary meetings at such intervals as may be provided in the regulations; and a meeting may be convened by the Chairman at any other time for the transaction of urgent business.

(2) The number of members necessary to constitute a quorum at a meeting shall be such as may be provided in the regulations.

SECTION 15: APPOINTMENT OF STAFF

The Board may appoint a Secretary and such other officers and 2[employees] as may be required to enable the Board to carry out its functions under this Act :1[Provided that the appointment of the Secretary shall be subject to the approval of the State Government).State Amendments.

SECTION 15A: OBJECTS, JURISDICTION, ETC. OF GENERATING COMPANIES

The Central Government or any State Government, or the Central Government and one or more State Governments or two or more State Governments, jointly may form a generating Company with such name as may be specified in the memorandum of association of the company.

7[(2) The objects of a Generating Company shall include-

(a) establishment, operation and maintenance of generating stations and tie-lines, sub-stations, and main transmission lines connected therewith;

(b) operation and maintenance of such generating stations, tie- lines, sub-stations and main transmission lines as are assigned to it by the competent government or governments.

(3) The Generating Company shall canny on its activities within such areas as the competent Government or Governments, as the case may be, may, from time to time, specify in this behalf.] 8(4) [* * *]

(5) A full-time member of the Board of Directors of a Generating Company shall be a person who has experience of, and has shown capacity in,-

(a) design, construction, operation and maintenance of generating stations;

(b) transmission and supply of electricity;

(d) organising workers;

(e) industrial, commercial or financial matters : or

(f) administration in a Government Department or other establishment.

1[(6) [* * *]

1[(7) [* * *]

SECTION 16: STATE ELECTRICITY CONSULTATIVE COUNCIL

(1) The State Government shall constitute a 2[State Electricity Consultative Council] for the State, and in cases to which Sees. 6 and 7 apply, the State Governments concerned shall constitute such one or more 2[State Electricity Consultative Council] or Councils and for such areas as they may by agreement determine.

(2) The 3[State Electricity Consultative Council] shall consist of4[the members of the Board and, if there are any Generating Company or Generating Companies operating in the State, one representative of the Generating Company or each of the Generating Companies, to be nominated by the Generating Company concerned,] and such other persons being not less then5[eight] and not more than fifteen as the State Government or the State Governments concerned may appoint after consultation with such representative or bodies representative of the following interests as the State Government or the State Governments concerned thinks or think fit that is to say, local self government, electricity supply industry, commerce, industry, transport, agriculture, 6[labour employed in the electricity supply industry and consumers of electricity], but so that there shall be at least one member representing each such interest in the Council.

(3) The Chairman of the Board shall be ex officio Chairman of the [State Electricity Consultative Council].

(4) The 2[State Electricity Consultative Council] shall meet at least once in every three months.

(5) The functions of the 2[State Electricity Consultative Council] shall be as follows:

(i) to advise7[the Board and the Generating Company or Generating Companies, if any, operating in the State] on major questions of policy and major schemes;

(ii) to review the progress and the work of 6[the Board and the Generating Company or Generating Companies, if any, operating in the State] from time to time;

(iii) to consider such other matters as6[the Board and the Generating Company or Generating Companies, if any, operating in the State] may place before it ;and

(iv) to consider such matters as the State Government may by rules prescribe.

1[(6) The Board shall place before the State Electricity Consultative Council the annual financial statement and supplementary statement, if any, and shall take into consideration any comments made on such statement in the said Council before submitting the same to the State Government under Sec. 61.]

SECTION 17: LOCAL ADVISORY COMMITTEE

(1) The State Government may from time to time constitute for such areas as it may determine Local Advisory Committees, consisting of such number of persons as it may think fir in each case and on such terms and conditions as may be prescribed.

(2) The Board may if it thinks fit consult the Local Advisory Committees concerned on any business coming before it, and shall so do in respect of such business as the State Government may by general or special order in this behalf specify or when required by the regulation so to do.

(3) The Chairman of the Board or such other member of the Board as he may nominate in this behalf shall be ex officio Chairman of a Local Advisory Committee.

(4) Local Advisory Committees shall meet at such internals as may be prescribed, and for the transaction of urgent business on such other occasions as the Chairman of the Board may require.

(5) The number of members necessary to constitute a quorum at a meeting of a Local Advisory Committee shall be such as the State government when constituting the Committee may specify.

SECTION 18: GENERAL DUTIES OF THE BOARD

Subject to the provisions of this Act, the Board shall be charged with the following general duties, namely:

(a) to arrange, in co-ordination with the Generating Company or Generating Companies, if any, operating in the State, for the supply of electricity that may be required within the State and for the transmission and distribution of the same in the most efficient and economical manner with particular reference to those areas which are not for the time being supplied or adequately supplied with electricity;

(b) to supply electricity as soon as practicable to a licensee for other person requiring such supply if the Board is competent under this Act so to do;

(c) to exercise such control in relation to the generation, distribution and utilisation of electricity within the State as is provided for by or under this Act:

(d) to collect data on the demand for, and the use of, electricity and to formulate perspective plans in co-ordination with the Generating Company or Generating Companies, if any, operating in the State for the generation, transmission and supply of electricity within the State:

(e) to prepare and carry out schemes for transmission, distribution and generally for promoting the use of electricity within the State; and

(f) to operate the generating stations under its control in coordination with the Generating Company or Generating Companies, if any, operating in the State and with the Government or any other Board or agency having control over a power system.

SECTION 18A: DUTIES OF GENERATING COMPANY

(1) Subject to the provisions of the Act, a Generating Company shall be charged with the following duties namely:

(a) to establish, operate and maintain such generating stations and the lines, sub-stations and main transmission lines connected therewith, as may be required to be established by the4[competent Government or governments] in relation to the Generating Company;

(b) to operate and maintain in the most efficient and economical manner the generating stations, tie-lines, sub-stations and main transmission lines, assigned to it by the1[competent Government or Governments] in co-ordination with the Board or Boards, as the case may be, and the Government or agency having control over the power system, if any connected therewith ; and

(c) to carry out subject to the provisions of Sec. 21, detailed investigations and prepare schemes, in coordination with the Board or Boards, as the case may be, for establishing generating stations and tie-lines, sub-stations and transmission lines connected therewith, in such manner as may be specified by the Authority.

(2) Without prejudice to the generality of its duties under Sec. 18. the Board shall, until a generating Company begins to operate in any State, perform the duties of a Generating Company under this section in that State.]

SECTION 19: POWERS OF THE BOARD TO SUPPLY ELECTRICITY

(1) The Board may, subject to the provisions of this Act, supply electricity to any licensee or person requiring such supply in any area in which a scheme sanctioned under Chapter V is in force : Provided that the Board shall not,-

(a) supply electricity for any purpose directly to any licensee to use in any part of the area of supply of a bulk-licensee without the consent of the bulk-licensee, unless the licensee to be supplied has an absolute right of veto on any right of the bulk-licensee to supply electricity for such purpose in the said part of such area, or unless the bulk-licensee is unable or unwilling to supply electricity for such purpose in the said part of such area, on reasonable terms and conditions and within a reasonable time, or

(b) supply electricity for any purpose to any person, not being a licensee for use in any part of the area of supply of a licensee without the consent of the licensee, unless,-

+Clients Back

+Lawyers

+Law Students

+Law Schools

Central Act

ELECTRICITY (SUPPLY) ACT, 1948

Lawyers Network

Users

Cities Serving

Law Schools Network

Law Students Network