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Electricity & Energy LawSupreme Court of India

Indian Railways v. West Bengal State Electricity Distribution Company Limited & Ors.

Civil Appeal · 2026 INSC 464Decided 8 May 2026
C.A. No.-004652-004659 - 2024
Justice Dipankar Datta · Justice Satish Chandra Sharma

Background

Indian Railways sought to procure power directly from generating companies (rather than through state distribution utilities) for its traction substations across several states, using "open access" under the Electricity Act, 2003. To avoid this, it claimed it should be treated as a "deemed distribution licensee" (DDL), which would exempt it from paying the Cross-Subsidy Surcharge that ordinary consumers must pay to distribution companies when they bypass them. Most State Electricity Regulatory Commissions rejected this claim, and the Appellate Tribunal for Electricity (APTEL) also ruled against Railways, prompting this batch of appeals to the Supreme Court.

Decision Breakdown

The Supreme Court held that Indian Railways procures electricity for its own use and consumption, making it an industrial consumer rather than a distribution licensee, and that consumers availing open access are liable to pay Cross-Subsidy Surcharge and Additional Surcharge under the Electricity Act. The Court noted that a draft Electricity (Amendment) Bill, 2025 proposed specifically to exempt Railways (along with metro rail and manufacturers) from cross-subsidy surcharges within five years, and reasoned that a proposed legislative exemption itself signals that no such exemption exists under the current law, since courts cannot read into a statute an exemption that Parliament has not yet enacted. It also held that as a Central Government entity, Railways could not "approbate and reprobate" by arguing a position contrary to what the government's own proposed amendment implied. All the appeals were dismissed, APTEL's order was upheld, and the distribution companies were directed to compute and communicate the outstanding surcharge amounts to Railways, who would get a fair opportunity to respond before final figures are settled.

Lesson Learnt

Courts will not read an exemption into a law by "purposive interpretation" if the same exemption is only being proposed through a pending legislative amendment: the pending bill itself is evidence that the exemption does not currently exist; a consumer procuring power for its own use, however large or state-owned, remains liable for applicable surcharges like any other consumer availing open access.

Indian Railways v. West Bengal State Electricity Distribution Company Limited & Ors. – Legal Case Shots | LegalAware