A) ABSTRACT / HEADNOTE

The Municipal Corporation of Delhi v. Gagan Narang & Ors. (Civil Appeal Nos. 7463–7464 of 2023)1 examines whether a local authority (here, the Municipal Corporation of Delhi — MCD) could invoke Section 63 of the Electricity Act, 2003 to seek adoption of a tariff arrived at through a competitive bidding process for a Waste-to-Energy (WTE) project. The dispute arose after MCD, acting pursuant to duties under the Solid Waste Management Rules, 2016 (Rule 15), conducted a tariff-based RfP for a 28 MW WTE plant at Narela-Bawana; after evaluation, a lowest bidder emerged (levelised tariff Rs. 7.380/KWh).

DERC approved the bidding process and adopted the tariff, but APTEL set aside DERC’s orders on the narrow ground that Section 63 could be invoked only by distribution licensees or generating companies. The Supreme Court, allowing MCD’s appeals, held that Section 63’s plain language does not restrict invocation to Discoms or generators; Section 63 must be read harmoniously with Section 86(1)(b) (State Commission’s duty to regulate procurement and price) and other provisions (including Section 86(1)(e) and the Tariff Policy).

The Court emphasised literal construction, rejected judicial addition of words to Section 63, and recognised that Rule 15 SWM Rules imposes statutory duties on local authorities to set up WTE facilities obligations which coexist with the Electricity Act (Sections 174, 175). DERC’s approval given after evaluating transparency, conformity certificates, financial evaluation and public interest was affirmed and APTEL’s hyper-technical reversal was set aside.

Keywords: Municipal Corporation of Delhi, Section 63, DERC, Waste-to-Energy, SWM Rules 2016, tariff by bidding, Section 86(1)(b), Tariff Policy, APTEL, transparent bidding.

B) CASE DETAILS

C) INTRODUCTION AND BACKGROUND OF JUDGEMENT

The dispute arises at the interface of municipal statutory duties to manage solid waste and the regulatory framework for electricity procurement. MCD, obliged by Rule 15 of the SWM Rules, 2016 to facilitate construction, operation and maintenance of waste processing facilities (including waste-to-energy technologies), initiated a transparent, tariff-based competitive tender (NIT/RfP dated 15 July 2022, re-issued 21 Oct 2022) for a 28 MW WTE plant at Narela-Bawana to process approx. 3000 (+/–20%) TPD MSW. Distribution licensees in Delhi authorised MCD to conduct bidding under Section 63 of the Electricity Act; DERC directed MCD to file petitions for adoption of tariff and approval of PPA.

Following evaluation, a lowest bidder (JITF) quoted Rs. 7.380/KWh (levelised). DERC, satisfied on transparency and conformity, approved the tariff and directed Discoms to negotiate the PPA. WTERT challenged MCD’s authority before DERC; DERC dismissed WTERT’s petition but APTEL reversed DERC on the narrow legal point that only Discoms/generators could invoke Section 63. The Supreme Court reviewed whether the statutory scheme permits a local authority to seek adoption of tariff determined via transparent bidding, and whether APTEL’s restrictive reading accords with legislative intent and harmonious construction with Section 86(1)(b) and relevant policy/rules.

The Court emphasised literal interpretation, the duty of harmonious construction, and the primacy of public interest in facilitating WTE projects to dispose municipal waste, ultimately affirming DERC.

D) FACTS OF THE CASE

The following facts are material and were accepted by the Court:

• MCD convened stakeholders on 14 May 2022; Discoms agreed a tariff-based bidding model and authorised MCD to conduct the RfP under Section 63. Minutes of Meeting dated 30 May 2022 recorded approvals.

• MCD issued NIT/RfP (15 July 2022; re-issued 21 Oct 2022) seeking bids for a DBFO WTE facility to be transferred to MCD after 25 years. Documents were forwarded to DERC (letter 24 Aug 2022).

• Bids opened 14 Nov 2022; RCUES computed levelised tariffs; financial evaluation by Evaluation Committee produced a recommendation (26 Nov 2022) declaring JITF lowest at Rs. 7.380/KWh (JBM higher at 9.909). Committee certified transparency and conformity; no benefit accrued to MCD as Discoms were mandated to procure power.

• MCD filed Petition No. 72/2022 (adoption of tariff & PPA approval) before DERC. WTERT filed Petition No. 65/2022 challenging MCD’s locus to issue tariff-based tender. DERC dismissed WTERT (6 Mar 2023) and approved tariff (7 Mar 2023), directing Discoms to negotiate PPA.

• APTEL allowed WTERT’s appeals (31 Aug 2023), holding MCD could not file under Section 63 because it was neither Discom nor generator. MCD appealed to this Court under Section 125. The Supreme Court framed the narrow legal question: may a local authority invoke Section 63 to have an Appropriate Commission adopt a tariff determined by transparent competitive bidding?

E) LEGAL ISSUES RAISED

i. Whether Section 63 of the Electricity Act, 2003 restricts invocation for tariff-adoption to distribution licensees or generating companies only?
ii. Whether MCD, as a local authority under Section 2(41) and under Rule 15 SWM Rules 2016, could issue a tariff-based RfP and seek adoption of the resultant tariff by DERC?
iii. Whether Section 63 must be read harmoniously with Section 86(1)(b) and Tariff Policy provisions, and whether APTEL’s restrictive interpretation undermines State Commission duties?
iv. Whether there is any repugnancy between the Electricity Act (Sections 63/86/174/175) and SWM Rules 2016 requiring MCD to undertake WTE projects?

F) PETITIONER / APPELLANT’S ARGUMENTS

i. The MCD argued APTEL erred by adding words to Section 63 — the plain language does not limit invocation to Discoms/generators; literal interpretation governs.
ii. Rule 15 SWM Rules 2016 imposes statutory duty on local authorities to facilitate WTE projects; Sections 174/175 preserve non-derogation and the Act’s overriding effect where applicable.
iii. Tariff Policy (6.4) contemplates compulsory procurement by Discoms of WTE power and permits procurement via Section 63; DERC’s approval was within its regulatory remit under Section 86(1)(b).
iv. The bidding process here was transparent, evaluated, and in public interest to address Delhi’s waste management exigency; hyper-technical denial frustrates statutory purpose.

G) RESPONDENT’S ARGUMENTS

i. APTEL’s view: only distribution licensees or generating companies can invoke Section 63 for adoption of tariff — this prevents strangers from invoking regulatory machinery.
ii. Tariff Policy (Rule 6.4(2)) contemplates Ministry of Power to prescribe specific mechanism for WTE tariff adoption; therefore State Commission cannot be approached by a non-Discom party absent central guidelines.
iii. Upholding APTEL protects regulatory domain and ensures that procurement-related petitions originate from obligated entities (Discoms/generators), not third parties.

H) JUDGEMENT

The Supreme Court allowed the appeals and quashed APTEL’s order, affirming DERC. Key strands of reasoning:

1. Literal construction of Section 63: Section 63 states that “the Appropriate Commission shall adopt the tariff if such tariff has been determined through transparent process of bidding in accordance with guidelines issued by the Central Government.” The Court held literal reading suffices; nothing in the text confines invocation to Discoms or generators. Judicially adding limiting words would transgress the rule against rewriting statutes. Reliance placed on precedents emphasising plain meaning (e.g., Punjab State Power Corporation v. Emta Coal Ltd.).

2. Harmonious reading with Section 86(1)(b): Section 86(1)(b) imposes on State Commissions a duty to regulate electricity purchase/procurement and prices. Reading Section 63 in isolation to exclude local authorities would unduly restrict State Commissions and render parts of Section 86 ineffective. The Court invoked principles of harmonious construction to avoid making one provision a “dead letter”.

3. Statutory interface with SWM Rules & Tariff Policy: Rule 15 SWM Rules 2016 imposes proactive duties on local authorities to facilitate WTE facilities. Tariff Policy Rule 6.4 mandates Discoms to procure WTE power and contemplates procurement modalities; SWM Rule 9 assigns tariff/compulsory purchase duties to Ministry of Power. The Court found no repugnancy: the Electricity Act provisions operate in addition to environmental rules (Sections 174/175). Where central guidelines are absent, regulatory commissions may exercise powers consistent with Energy Watchdog precedent.

4. Assessment of MCD’s locus and public interest: APTEL’s fear that any stranger might invoke Section 63 was misplaced — facts showed MCD was owner/implementor (DBFO, reverting after 25 years) discharging statutory function; thus MCD was not a mere stranger. The WTE project served compelling public interest (municipal waste disposal), strengthening the permissibility of DERC’s approval.

5. Procedural and substantive evaluation by DERC: DERC’s adoption of tariff followed examination of evaluation committee’s financial report, conformity certificates and assurance of transparent bidding. The Court emphasised that Section 63 empowers the Appropriate Commission to adopt tariffs determined by transparent bidding; the Commission still must balance generator/Discom interests with consumer protection while exercising regulatory oversight.

Disposition: Appeals allowed; APTEL’s order set aside; DERC orders (6 & 7 March 2023) affirmed. Pending applications disposed.

a. RATIO DECIDENDI

The decisive legal proposition is: Section 63 of the Electricity Act, 2003, by its plain language, empowers the Appropriate Commission to adopt a tariff determined through a transparent bidding process and does not, on its face, restrict the right to invoke Section 63 to distribution licensees or generating companies. Section 63 must be read harmoniously with Section 86(1)(b) (State Commission’s duty to regulate procurement and price), the Tariff Policy, and statutory duties under SWM Rules 2016; where bidding is transparent and undertaken by an entity legitimately discharging statutory obligations (here, MCD under Rule 15), the State Commission may adopt the tariff subject to its regulatory duty to balance stakeholder interests. Judicial alteration to add limiting words into Section 63 is impermissible.

b. OBITER DICTA

The Court noted, by way of observation, that:

(i) where central guidelines for bidding are absent, regulatory commissions may exercise powers akin to Energy Watchdog principles;

(ii) procedural safeguards and transparent processes remain core: adoption under Section 63 is not a mechanistic ratification the Commission must ensure transparency, fairness and consumer interest balance;

(iii) hypothetical misuses by unrelated parties are not a valid ground to deny relief where the applicant is clearly performing statutory duties;

(iv) statutory schemes (Environment laws and Electricity Act) should be read as cumulative, not conflicting, where their objectives align (waste management and renewable energy procurement).

c. GUIDELINES 

i. Appropriate Commissions must adopt tariffs under Section 63 only after being satisfied that the tariff emerged from a transparent bidding process and that mandatory central guidelines (if any) were followed.
ii. Where central bidding guidelines are absent, State Commissions may regulate procurement modalities consistent with their powers under Section 86(1)(b), keeping consumer interest central.
iii. Local authorities undertaking projects under environmental/muncipal statutes (e.g., Rule 15 SWM Rules 2016) have locus to initiate bidding and seek regulatory adoption if they are implementing statutory obligations.
iv. Commissions should harmonise Electricity Act provisions with environmental/statutory rules; Sections 174/175 counsel against reading one statute to nullify another.
v. Commissions must examine financial evaluation, conformity certificates, and ensure that adoption does not unfairly prejudice consumers; balancing of interests is required before adoption.

I) CONCLUSION & COMMENTS

The decision reinforces textualist interpretation while insisting on harmonious construction across statutes and policy. It protects regulatory discretion of State Commissions under Section 86(1)(b) and prevents narrow, formalistic readings that could frustrate statutory schemes addressing cross-sectoral public problems (municipal waste and renewable energy procurement). Practically, the judgment validates municipal agency-led competitive procurement for infrastructure projects tied to statutory duties, provided bidding is transparent and regulatory oversight is maintained.

For regulators and municipalities, the ruling clarifies locus and process: municipal authorities implementing environmental mandates may conduct tariff-based bidding and approach Appropriate Commissions for tariff adoption under Section 63; Commissions retain a gatekeeping role to test transparency and consumer interest. The judgment balances statutory fidelity, environmental governance imperatives and energy regulatory objectives, while cautioning courts against judicial accretions to plain statutory text.

J) REFERENCES

a. Important Cases Referred

1. Municipal Corporation of Delhi v. Gagan Narang & Ors., [2025] 1 S.C.R. 239 : 2025 INSC 2.

2. Pune Municipal Corporation v. Sus Road Baner Vikas Manch & Ors., [2024] 9 SCR 374 : (2024) 9 SCC 1.

3. Energy Watchdog v. Central Electricity Regulatory Commission & Ors., [2017] 3 SCR 153 : (2017) 14 SCC 80.

4. Punjab State Power Corporation Ltd. v. Emta Coal Ltd., [2021] 11 SCR 772 : (2022) 2 SCC 1.

5. Jaipur Vidyut Vitran Nigam Ltd. v. MB Power (Madhya Pradesh) Ltd. & Ors., [2024] 1 SCR 909 : (2024) 8 SCC 513.

6. Sanjay Ramdas Patil v. Sanjay & Ors., [2021] 11 SCR 640 : (2021) 10 SCC 306.

b. Important Statutes / Rules Referred

1. Electricity Act, 2003 — Sections 2(41), 62, 63, 86(1)(b), 86(1)(e), 174, 175.

2. Solid Waste Management Rules, 2016 — Rule 15 (duties of local authorities) and Rule 9 (duties of Ministry of Power).

3. Tariff Policy, 2016 — Rule 6.4 (renewable energy and WTE procurement).

4. Environment (Protection) Act, 1986.