The Supreme Court has ruled that the Indian Railways cannot be treated as a deemed distribution licensee under the Electricity Act, 2003, only because it is a central government entity. The judgment clarified that Indian Railways cannot avoid paying cross-subsidy surcharge (CSS) and additional surcharges while purchasing electricity through open access.
Indian Railways had argued that under Section 11 of the Railways Act, 1989, it has the authority to build and operate its own distribution installations. Based on this, Railways claimed that it should be treated like a distribution licensee and be allowed to procure electricity without paying CSS and other surcharges. However, the Supreme Court rejected this argument and highlighted the difference between supplying electricity and consuming electricity.
The Court stated that a distribution licensee is required to supply electricity to consumers, whereas the Railways uses electricity only for its own operations, such as traction, signalling, and locomotives. It further observed that the distribution installations mentioned in the Railways Act are different from a distribution system under the Electricity Act. With this ruling, Indian Railways will now have to pay CSS and additional surcharges while availing open access power, providing relief to state distribution companies by protecting their revenue streams.
