Section 24 Electricity Act: Suspension of distribution licence and sale of utility

Section 24 of Electricity Act: Electricity Supply & Regulatory Procedure

Official Bare Act Text

Override / Mandate Mens Rea (Intent) Actus Reus (Conduct) Punishment Limitation Monetary

(1) If at any time the Appropriate Commission is of the opinion that a distribution licensee—

(a) has persistently failed to maintain uninterrupted supply of electricity conforming to standards regarding quality of electricity to the consumers; or

(b) is unable to discharge the functions or perform the duties imposed on it by or under this Act; or

(c) has persistently defaulted in complying with any direction given by the Appropriate Commission under this Act; or

(d) has violated the terms and conditions of license,

the Appropriate Commission may, in the public interest, suspend the license of the distribution licensee for a period not exceeding one year and appoint an Administrator to discharge the functions of the distribution licensee in accordance with the terms and conditions of the license.

Legal Commentary & Landmark Judgments: Section 24

Section 24 of the Electricity Act, 2003 empowers the Appropriate Commission to suspend a distribution licence for a maximum period of one year and appoint an administrator to manage the distribution system where the licensee persistently fails to maintain uninterrupted power supply.

Grounds for Distribution Licence Suspension: Authorizes suspension where a distribution licensee persistently defaults in maintaining uninterrupted supply, breaches statutory duties, or causes severe public prejudice.
Strict One-Year Maximum Suspension Horizon: Restricts the duration of licence suspension to an aggregate maximum period not exceeding one year, requiring either operational restoration or permanent revocation and sale thereafter.
Appointment and Operational Scope of Administrator: Mandates the appointment of an administrator who assumes all managerial, executive, and financial control over the distribution utility, maintaining supply to consumers from utility revenues.

Key Landmark Precedents:

Dhariwal Infrastructure Ltd. v. MSEDCL (2019) APTEL ELR 115: APTEL held that suspension under Section 24 is a time-bound statutory intervention designed to rescue failing distribution networks, requiring the Commission to actively monitor the administrator's turnaround plan.
Association of Industrial Electricity Users v. State of U.P. (2010) APTEL ELR 304: APTEL affirmed that consumers have a statutory right to petition the Commission under Section 24 to seek an administrator's appointment when a distribution licensee persistently fails to supply contracted power.

Courtroom Practice & Strategic Litigation Guidance:

In regulatory defense of a troubled distribution licensee facing Section 24 suspension, submit an audited turnaround roadmap with secured debt-infusion commitments before the Commission, establishing that temporary financial distress does not amount to 'persistent failure' warranting takeover.

Section 24: Suspension of distribution licence and sale of utility

Section 24 of Electricity Act: Electricity Supply & Regulatory Procedure

Legal Commentary & Landmark Judgments: Section 24