Captive Electricity Generating Plant and Captive User – Interpretation of important issues by the Supreme Court

Civil Appeal Nos.8527-8528 of 2009 M/s. Dakshin Gujarat Vij Company Limited Vs. M/s. Gayatri Shakti Paper and Board Limited and another, etc with connected appeals.

Important three issues decided by the Supreme Court in its judgment dated 9.10.2023 on classification of Captive Generating Plan and Captive user in terms of Sections 2, 3 and 9 of the Electricity Act, 2003 and Rule 3 of the Electricity Rules, 2005.

Eligibility Criteria for a CGP / captive user under Rule 3(1)(a) of the Rules.

Application of second proviso to Rule 3(1)(a) of the Rules in case of captive users are “association of persons”.

Special Purpose Vehicle company established for generating electricity is an “association of persons” which must meet the proportionality requirements of second proviso to Rule 3(1) of the Rules.