Supreme Court Upholds State’s Power to Grant Deviations in Electricity Safety Regulations: Muhammed A.A. vs. State of Kerala (2022)

Introduction

Date of the Judgment: 18 February 2022
Citation: 2022 INSC 140
Judges: L. Nageswara Rao, J., B.R. Gavai, J.

Can a State Government permit deviations from the safety qualification standards set by the Central Electricity Authority? The Supreme Court of India recently addressed this critical question in a case involving the Kerala State Electricity Board Limited (KSEBL). The core issue revolved around whether the State of Kerala could grant exemptions to its employees from the mandatory educational qualifications prescribed by the Central Electricity Authority (CEA) for personnel working in the electricity sector. This judgment clarifies the extent of the State’s power to make such deviations while balancing safety concerns and employee rights. The bench comprised Justices L. Nageswara Rao and B.R. Gavai, with the majority opinion authored by Justice L. Nageswara Rao.

Case Background

The case originated from a writ petition filed in the High Court of Kerala challenging Regulation 116 of the Central Electricity Authority (Measures relating to Safety and Electric Supply) Regulations, 2010 (Safety Regulations). The petitioner argued that this regulation, which allows for deviations from safety standards, was beyond the powers of the Central Electricity Authority under the Electricity Act, 2003. The dispute arose after the Kerala State Electricity Board (KSEB) was restructured into the Kerala State Electricity Board Limited (KSEBL). A transfer scheme was implemented, and a tripartite agreement was signed to protect the service conditions of the employees. However, the implementation of the Safety Regulations, which prescribed specific educational qualifications for engineers, supervisors, and technicians, created a conflict. The State of Kerala issued an order on 13.02.2019, allowing deviations from these qualification requirements for existing employees of KSEBL. This order was challenged by employees who possessed the requisite qualifications, leading to the present appeals before the Supreme Court.

Timeline

Course of Proceedings

A learned Single Judge of the High Court of Kerala declared Regulation 116 of the Safety Regulations as beyond the powers conferred on the Central Electricity Authority under the Electricity Act. The Single Judge also held that the order dated 13.02.2019, which granted exemptions to employees from acquiring the prescribed qualifications, was unsustainable. The Kerala State Electricity Board Limited (KSEBL) challenged this judgment by filing an appeal. The Division Bench of the High Court reversed the decision of the Single Judge, holding that Regulation 116 was not ultra vires the Electricity Act and that it was within the scope of the rule-making power of the Central Electricity Authority. However, the Division Bench partly set aside the Government Order dated 13.02.2019, limiting the exemption to employees who were in service before 31.10.2013. The appeals before the Supreme Court were filed against this judgment of the Division Bench.

Legal Framework

The core of this case involves the interpretation of the Electricity Act, 2003 and the Central Electricity Authority (Measures relating to Safety and Electric Supply) Regulations, 2010. Key provisions include:

• Section 53 of the Electricity Act, 2003: This section empowers the Central Electricity Authority to take measures for safety and electricity supply, including protecting the public from dangers arising from electricity generation, transmission, or distribution. It also allows for specifying safety standards.
• Section 70 of the Electricity Act, 2003: This section constitutes the Central Electricity Authority.
• Section 73 of the Electricity Act, 2003: This section outlines the functions of the Central Electricity Authority, including specifying safety requirements for the construction, operation, and maintenance of electrical plants and electric lines.
• Section 131 of the Electricity Act, 2003: This section deals with the vesting of the properties of the State Electricity Board in the State Government and the subsequent re-vesting of these properties in a government company or other company as per a transfer scheme.
• Section 133 of the Electricity Act, 2003: This section provides for the transfer of officers and employees to the transferee company, ensuring that their terms and conditions of service are not less favorable than before the transfer. “Upon such transfer under the transfer scheme, the personnel shall hold office or service under the transferee on such terms and conditions as may be determined in accordance with the transfer scheme: Provided that such terms and conditions on the transfer shall not in any way be less favourable than those which would have been applicable to them if there had been no such transfer under the transfer scheme”
• Section 177 of the Electricity Act, 2003: This section empowers the Central Electricity Authority to make regulations on matters such as safety and electricity supply.
• Regulation 6 of the Central Electricity Authority (Measures relating to Safety and Electric Supply) Regulations, 2010: This regulation specifies the qualifications required for engineers, supervisors, and technicians engaged in the operation and maintenance of electric plants.
  “Engineers and supervisors appointed to operate or under take maintenance of any part or whole of a thermal power generating station and a hydro power plant together with the associated sub-station shall hold diploma in Engineering from a recognized institute, or a degree in Engineering from a university.”
• Regulation 7 of the Central Electricity Authority (Measures relating to Safety and Electric Supply) Regulations, 2010: This regulation specifies the qualifications required for engineers, supervisors, and technicians engaged in the operation and maintenance of transmission and distribution systems.
  “Engineers or supervisors engaged in operation and maintenance of transmission and distribution systems shall hold diploma in electrical, mechanical, electronics and instrumentation engineering from a recognized institute or university.”
• Regulation 116 of the Central Electricity Authority (Measures relating to Safety and Electric Supply) Regulations, 2010: This regulation allows the Central Government or the State Government to permit deviations from the regulations.

These provisions are crucial for understanding the powers and limitations of both the Central Electricity Authority and the State Governments in regulating the electricity sector, particularly concerning safety standards and employee service conditions.

Arguments

Appellants’ Arguments:

• The appellants argued that Regulations 6 and 7 of the Safety Regulations prescribe necessary qualifications for engineers, supervisors, and technicians to ensure safety in the operation of power plants and transmission lines.
• They contended that Regulation 116 of the Safety Regulations, which permits “deviation” from the regulations, does not grant the power to the government to grant “exemption” from the qualification requirements.
• They submitted that the Division Bench of the High Court erred in exempting all employees who were working in the Board prior to 31.10.2013 from the qualifications as it compromises the safety of people and operations.
• They relied on the judgments of the Supreme Court in R.B.I. v. Peerless General Finance & Investment Co. Ltd. [(1987) 1 SCC 424], M/s. Dhanrajamal Gobindram v. M/s. Shamji Kalidas & Co. [(1961) 3 SCR 1020] and Glynn v. Margetson & Co. [(1893) A.C. 351] to support their argument that “deviation” cannot be interpreted to mean “exemption.”
• The appellants asserted that the transfer scheme was framed in 2013 after the Safety Regulations came into force in 2010 and that clause 2(c) of the tripartite agreement is ultra vires the Electricity Act.

Respondents’ Arguments:

• The State of Kerala argued that Section 133 of the Electricity Act enables the State Government to formulate a scheme for the transfer of officers and employees.
• They contended that Section 133(2) provides for the terms and conditions of transferred personnel to be in accordance with the transfer scheme, and the proviso ensures that these terms are not less favorable than before the transfer.
• The State of Kerala argued that Regulation 116 of the Safety Regulations permits deviation, which includes exemption, and that the decision to exempt employees from acquiring qualifications was based on their long experience.
• The KSEBL argued that the relief granted to the employees falls within the scope of Regulation 116 and that the benefit given to the employees cannot be termed as a wholesale exemption.
• They contended that Section 133 of the Electricity Act protects all conditions of service, including promotions, of the erstwhile employees.
• They argued that the appellants failed to substantiate their safety concerns and that qualified personnel are appointed to crucial posts.
• The employees argued that reversing the judgment of the Division Bench would adversely affect the interests of 17,367 employees and that they are efficient and their services are utilized by neighbouring states.
• They argued that Regulations 6 and 7 pertain only to the safety of the officers and employees and do not concern their service conditions.
• They also stated that the Appellants are bound by the Tripartite Agreement.

Central Electricity Authority’s Argument:

• The Central Electricity Authority contended that it has no role in these appeals, especially when the Appellants have not made any submissions relating to the vires of Regulation 116.
• They submitted that deviation is permissible under Regulation 116 of the Safety Regulations and that such deviation can be made by the State Government as ‘Electricity’ falls in List III-Concurrent List, Seventh Schedule of the Constitution of India, 1950.
• However, they also contended that a lump sum exemption cannot be granted.

Table of Submissions:

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame the issues in a separate section. However, the issues can be inferred from the judgment:

1. Whether the term “deviation” in Regulation 116 of the Safety Regulations includes the power to grant exemptions from the qualification requirements prescribed in Regulations 6 and 7.
2. Whether the State Government’s order dated 13.02.2019, granting exemptions to existing employees from the qualification requirements, is a valid exercise of power under Regulation 116.
3. Whether the protection of service conditions under Section 133 of the Electricity Act, 2003, extends to employees who were engaged by KSEBL after 31.10.2013.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues:

Authorities

The Supreme Court considered several authorities in reaching its decision:

Cases:

• R.B.I. v. Peerless General Finance & Investment Co. Ltd. [(1987) 1 SCC 424] (Supreme Court of India): The Court referred to this case to emphasize that interpretation must depend on the text and the context. It was used to highlight that the interpretation of a word must be done by considering the entire statute and the purpose for which it was enacted.
• M/s. Dhanrajamal Gobindram v. M/s. Shamji Kalidas & Co. [(1961) 3 SCR 1020] (Supreme Court of India): This case was cited by the appellants to distinguish between “exemption” and “permission.” The Court, however, found that the ratio of this judgment was not applicable to the case at hand.
• Glynn v. Margetson & Co. [(1893) A.C. 351] (House of Lords): This case was cited by the appellants to interpret the term “deviation.” The Court found that the judgment was not helpful as the House of Lords had interpreted the term in the context of the bill of lading.

Legal Provisions:

• Section 53 of the Electricity Act, 2003: The Court considered this section to understand the powers of the Central Electricity Authority regarding safety measures and electricity supply.
• Section 73 of the Electricity Act, 2003: The Court considered this section to understand the functions of the Central Electricity Authority, including specifying safety requirements.
• Section 131 of the Electricity Act, 2003: The Court considered this section to understand the process of vesting and re-vesting of the properties of the State Electricity Board.
• Section 133 of the Electricity Act, 2003: The Court considered this section to understand the provisions related to officers and employees upon transfer and to determine the extent of protection of their service conditions.
• Section 177 of the Electricity Act, 2003: The Court considered this section to understand the power of the Central Electricity Authority to make regulations.
• Regulation 6 and 7 of the Central Electricity Authority (Measures relating to Safety and Electric Supply) Regulations, 2010: The Court considered these regulations to understand the qualification requirements for engineers, supervisors, and technicians.
• Regulation 116 of the Central Electricity Authority (Measures relating to Safety and Electric Supply) Regulations, 2010: The Court considered this regulation to understand the power of the Central Government or the State Government to allow deviations.

Table of Authorities:

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• The Court relied on RBI v. Peerless General Finance & Investment Co. Ltd. [(1987) 1 SCC 424]* for the principle that the interpretation of a statute must depend on the text and the context. The Court used this principle to interpret the word “deviation” in Regulation 116.
• The Court distinguished M/s. Dhanrajamal Gobindram v. M/s. Shamji Kalidas & Co. [(1961) 3 SCR 1020]* stating that the interpretation of the word “exemption” in that case was in a different context and cannot be applied to the current case.
• The Court distinguished Glynn v. Margetson & Co. [(1893) A.C. 351]*, stating that the interpretation of the word “deviation” in that case was in the context of bill of lading and cannot be applied to the current case.

What weighed in the mind of the Court?

The Supreme Court’s decision was influenced by several factors:

• Interpretation of “Deviation”: The Court interpreted the term “deviation” in Regulation 116 broadly, holding that it encompasses both “exemption” and “relaxation.” This interpretation was based on the context of the regulations and the need for flexibility in their application.
• Protection of Transferred Employees: The Court recognized the need to protect the service conditions of employees who were transferred from KSEB to KSEBL. This was in line with the proviso to Section 133(2) of the Electricity Act, which ensures that transferred employees are not disadvantaged.
• Safety Concerns: While acknowledging the importance of safety, the Court also recognized the experience and track record of the existing employees. The Court noted that the State Government’s decision to grant exemptions was based on the long experience of these employees.
• Limitation of Exemption: The Court was careful to limit the exemption to employees who were transferred before 31.10.2013. This was to ensure that the protection under Section 133 of the Electricity Act was not extended to employees who joined after the transfer scheme was implemented.

Fact:Law Ratio

The Court’s reasoning was primarily based on the interpretation of legal provisions and regulations, with some consideration for the factual context of the case.

Logical Reasoning:

Majority Opinion:

The majority opinion, authored by Justice L. Nageswara Rao, held that the term “deviation” in Regulation 116 of the Safety Regulations includes the power to grant exemptions. The Court upheld the State Government’s power to grant exemptions to employees who were transferred from KSEB to KSEBL before 31.10.2013. However, the Court struck down the extension of the exemption to employees who joined after this date. The majority opinion emphasized the importance of protecting the service conditions of transferred employees while also acknowledging the need for safety in the electricity sector.

The Court quoted the following from the judgment:

• “Interpretation must depend on the text and the context. They are the bases of interpretation. One may well say if the text is the texture, context is what gives the colour. Neither can be ignored. Both are important.”
• “‘Deviation’ from the Regulations would amount to either exemption or relaxation.”
• “By no stretch of imagination can this protection be extended to the employees who were engaged by KSEBL after 31.10.2013.”

Key Takeaways

• State Government’s Power: The judgment clarifies that State Governments have the power to grant deviations, including exemptions, from the Central Electricity Authority’s Safety Regulations under Regulation 116.
• Protection of Transferred Employees: The service conditions of employees who were transferred from State Electricity Boards to successor companies are protected under Section 133 of the Electricity Act, 2003.
• Limitation of Exemptions: Exemptions from qualification requirements can only be granted to employees who were part of the Board on the date of the transfer scheme.
• Balancing Safety and Employee Rights: The judgment balances the need for safety in the electricity sector with the need to protect the service conditions of existing employees.
• Interpretation of “Deviation”: The term “deviation” in regulatory contexts can be interpreted broadly to include “exemption” or “relaxation,” depending on the context and purpose of the regulations.

Conclusion

The Supreme Court’s judgment in Muhammed A.A. vs. State of Kerala (2022) provides significant clarity on the power of State Governments to grant deviations from the Central Electricity Authority’s Safety Regulations. The Court held that the term “deviation” in Regulation 116 is wide enough to include both “exemption” and “relaxation.” It upheld the State Government’s power to grant exemptions to employees who were transferred from KSEB to KSEBL before 31.10.2013, but struck down the extension of the exemption to employees who joined after this date. The judgment underscores the importance of balancing safety concerns with the need to protect the service conditions of transferred employees. It also highlights the need for flexibility in the application of regulations, while ensuring that such flexibility does not compromise safety standards. The ruling has significant implications for the electricity sector, particularly regarding the implementation of safety regulations and the protection of employee rights during organizational restructuring. The judgment clarifies the scope of state government’s power to grant deviations while ensuring that such power is exercised judiciously.