Analysis On The Recent Supreme Court Ruling On Captive Generating Plants

The recent judgement of the Hon'ble Supreme Court of India (the 'Apex Court') in M/s. Dakshin Gujarat Vij Company Limited vs. M/s. Gayatri Shakti Paper and Board Limited and Another, Etc.¹ ('Judgment') is a landmark decision concerning captive generating plants. The Judgment has provided much needed clarity in relation to captive generating plants by interpreting the provisions of the Electricity Act, 2003 ("Act") and Rule 3 of the Electivity Rules, 2005("Rules"). However, there are certain ambiguities, particularly concerning the formulation of proportionality in electricity consumption and shareholding by captive users which have been discussed below.

What is a Captive Generation Plant? A Captive Generating Plant ('CGP') is a power plant set up by any person, cooperative society or an association of persons (including companies) for generating electricity primarily for their own use. A CGP is considered captive only if (i) at least 51% of the electricity