Constitution of India was enacted on 26th November, 1949 and envisages a federal form of
government. A federal government, unlike unitary system, has a written constitution and
demarcation of authority between the Union (Government of India) and the state
governments. Schedule VII of the Constitution of India provides for the demarcation of
Legislative and executive authority, applicable and enforceable in India through Independent
and unified judicial system.
There are three parts in VII Schedule. The Parliament has the exclusive authority to legislate in the matters enumerated in List I (Union List). The State Legislature has the exclusive authority to legislate on the entries enumerated in List II (State List). Barring certain exceptional circumstances, List III (Concurrent List) contains multi-jurisdictional matters where both Parliament and the State Legislatures have the joint responsibility to legislate. Entry 38 of the Concurrent List (List III) contains “electricity”. Therefore, it is the joint responsibility of the Union as well as State Government to legislate on the matters concerning electricity and allied matters of power industry. We have to jointly apply the Central Act and State Act using the doctrine of harmonious construction. However, by virtue of Part XI of the Constitution, in case of overlapping of the laws enacted by the State and Union Legislation, the Union Legislation shall prevail. The state law shall be inoperative only to the extent of inconsistency with the Union Law. All other parts of the state laws shall be applicable by the virtue of Doctrine of Eclipse.
The parliament has the exclusive power to legislate with respect to atomic energy and mineral resources for its production. This is provided in Entry 6 of the Union List. To exercise the above power, the parliament enacted the Atomic Energy Act, 1962. All nuclear power stations in India are governed accordingly. Further the civil liability 1 for Nuclear Damage Act, 2010 came into force as an Act to provide for civil liability for nuclear damage and prompt compensation to the victims of nuclear incidents through a no-fault liability regime channelling liability to the operator.
By virtue of entry 53 of the list II i.e., the state list, the state legislature has exclusive power to impose taxes on the consumption and sale of electricity. Various State Governments have enacted electricity duty Acts in exercise of the said power. In the case of ONGC Tripura Power co. ltd., v. Government of Tripura, 2021, the hon’ble High Court of Tripura held that government cannot levy duty on power producers for inter- state sale of electricity. The said clause of the Tripura Electricity Act, 2019 is illegal and unconstitutional.
In terms of Entry 38 of List III of Schedule VII of the Constitution of India, electricity is the
joint responsibility of Central and State Governments. Central Government has enacted
Electricity Act, 2003 thereby repealing multiple earlier legislations. On the other hand, nine
State Governments have enacted Electricity Reforms Act between 1995-2003, for reforming
the power sector in their respective states.
As per Article 254 (1) of the Constitution of India, in case of inconsistency between State electricity laws and Central Electricity law, the latter shall prevail to the extent of inconsistency with the state Act. All remaining provisions of the state law will be fully operational in their respective states. Some of the State Acts legislated after 2003 with respect to power sector are:
- Himachal Pradesh State Electricity Distribution Management Responsibility Act, 2014
- Rajasthan State Electricity Distribution Management Responsibility Act, 2016
On the other hand, there are certain Central Government laws that will have overriding effect on State Laws. Some of these laws are as follows:
- Damodar Valley Corporation Act, 1948: which established Damodar Valley Corp. (DVC) by taking inspiration from Tennessee Valley Authority Act, 1933 of USA wherein Tennessee Valley Authority was established.
- Punjab Reorganisation Act, 1966: Wherein Bhakra Beas Management Board (BBMB) which manages Bhakra-Nangal dam and Beas projects, was established. It was instrumental in bringing green revolution in India by making Punjab and Haryana a granary of the nation.
Article 254(2) of the Constitution of India provides that law made by state legislations, when ascended by the President of India, shall prevail in that particular State, irrespective of Article 254(1). Some states have amended the Electricity Act, 2003 and have obtained the assent of the President of India. Hence, those amendments are operational in those respective States. Some of these examples are as follows:
- The Electricity (Maharashtra Amendment) Act, 2007- the Maharashtra Act has amended inter alia Section 151 and 153 of the Act which provides for cognizance of offence in case of electricity theft and establishment of special courts for electricity.
- The Electricity (Karnataka Amendment) Act, 2013
In terms of Article 243G of the Constitution of India, the State legislature can endow the panchayats with certain powers. In this regard, Schedule XI provides for the power of panchayats. Entry 14 and 15 of the said Schedule reads as ‘rural electrification including distribution electricity and non-conventional energy sources respectively.’ Any policy on rural electrification would, at some time, need to delegate substantial amount of power and responsibility to the Panchayati Raj Institution.