Section 49 Electricity Act: Agreements with respect to supply or purchase of electricity

Section 49 of Electricity Act: Electricity Supply & Regulatory Procedure

Official Bare Act Text

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

Where the Appropriate Commission has allowed open access to certain consumers under section 42, such consumers, notwithstanding the provisions of clause (d) of sub-section (1) of section 62, may enter into an agreement with any person for obtaining the supply of electricity on such terms and conditions (including tariff) as may be agreed upon by them.

Legal Commentary & Landmark Judgments: Section 49

Section 49 of the Electricity Act, 2003 permits distribution licensees and consumers to enter into bilateral supply agreements outside standard tariff schedules, granting commercial freedom to negotiate tariffs and supply terms for bulk and open access consumers.

Freedom of Bilateral Supply Agreements: Expressly authorizes a distribution licensee to enter into bilateral contracts with any consumer for the supply of electricity upon terms, conditions, and tariffs mutually agreed between them.
Commercial Flexibility for Non-Tariff and Bulk Consumers: Permits negotiated power pricing, flexible billing cycles, indexed energy tariffs, and customized reliability assurances for commercial and bulk industrial consumers outside standard retail tariffs.
Non-Derogation from Statutory Grid Safety and Open Access Rules: Mandates that bilateral contracts under Section 49 must conform to statutory Grid Standards, non-discriminatory open access regulations, and safety rules specified under the Act.

Key Landmark Precedents:

Tata Power Co. Ltd. v. Reliance Energy Ltd. (2009) 16 SCC 659: The Supreme Court held that Section 49 embodies the deregulatory thrust of the 2003 Act, giving market players commercial leeway to negotiate private supply terms outside rigid administrative tariff structures.
Gujarat Urja Vikas Nigam Ltd. v. Solar Semiconductor Power Co. (India) (P) Ltd. (2017) 16 SCC 498: The Supreme Court held that while parties have autonomy to contract under Section 49, regulatory commissions retain statutory jurisdiction to ensure such contracts do not cause systemic injury to other consumer classes.

Courtroom Practice & Strategic Litigation Guidance:

When drafting bilateral long-term supply agreements under Section 49, incorporate robust change-in-law, force majeure, and dispute escalation clauses specifying arbitration or Section 86(1)(f) adjudication before the SERC to prevent regulatory invalidation.

Section 49: Agreements with respect to supply or purchase of electricity

Section 49 of Electricity Act: Electricity Supply & Regulatory Procedure

Legal Commentary & Landmark Judgments: Section 49