Electricity Act • Official Statutory Text & Practice Guide
Statutory Regulation
Legal Standard
Competent Court / Tribunal
Act 2003
Section 107 of Electricity Act: Electricity Supply & Regulatory Procedure
Official Bare Act Text
Override / Mandate Mens Rea (Intent) Actus Reus (Conduct) Punishment Limitation Monetary
(1)In the discharge of its functions, the Central Commission shall be guided by such directions in the matter 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 107 of the Electricity Act, 2003 empowers the Central Government to issue directions on questions of policy to the Central Commission in the discharge of its functions, binding the Commission on broad national policy matters.
Sovereign Policy Directive Power: Authorizes the Central Government to issue binding written policy directions to the Central Commission on matters impacting national energy security.
Strict Substantive Restriction to Policy Questions: Confines government directions strictly to broad policy matters, prohibiting directives that dictate specific tariff determinations or individual dispute adjudications.
Mandatory Opportunity of Hearing for Commission: Directs that before deciding whether a question is one of policy, the Central Government shall provide a reasonable opportunity to the Central Commission to express its views.
Key Landmark Precedents:
Energy Watchdog v. CERC (2017) 14 SCC 80: Supreme Court held that policy directions issued under Section 107 cannot override statutory regulations framed under Section 178 or dictate the outcome of quasi-judicial dispute adjudications.
PTC India Ltd. v. CERC (2010) 4 SCC 603: Constitution Bench affirmed that while the Commission must be guided by policy directions on broad national goals, its regulatory and adjudicatory functions remain independent.
Tata Power Co. Ltd. v. Reliance Energy Ltd. (2009) 16 SCC 659: Supreme Court affirmed that Section 107 directions cannot be used to interfere with judicial discretion or contract enforcement.
Courtroom Practice & Strategic Litigation Guidance:
When a party relies on a Ministry of Power policy letter or advisory in a CERC dispute, argue under Energy Watchdog that executive advisories under Section 107 cannot override binding PPA covenants or CERC regulations.
Legal Commentary & Landmark Judgments: Section 107
Section 107 of the Electricity Act, 2003 empowers the Central Government to issue directions on questions of policy to the Central Commission in the discharge of its functions, binding the Commission on broad national policy matters.
When a party relies on a Ministry of Power policy letter or advisory in a CERC dispute, argue under Energy Watchdog that executive advisories under Section 107 cannot override binding PPA covenants or CERC regulations.