JUDGMENT : VIBHU BAKHRU, C.J. 1. The appellant is a company incorporated under the Companies Act, 1956. It claims that it is a Special Purpose Vehicle [ SPV ], which owns, operates and maintains wind power generating stations in the State of Karnataka. 2. The appellant has filed the present appeal impugning an order dated 20.12.2024 passed by the learned Single Judge of this Court in WP.No.4344/2024 (GM-KEB), whereby the said petition was dismissed. 3. The appellant had filed the said petition, inter alia, praying that the proviso to Section 42 (2) of the Electricity Act , 2003 [ Electricity Act ] to the extent that it makes open access conditional upon payment of cross-subsidy surcharge be struck down. In the alternative, the appellant had prayed that an order be issued to read down the said proviso for ensuring continuity of open access in a fair and a competitive environment. A plain reading of the writ petition indicates that the appellant had challenged the said proviso as violative of Article 14 of the Constitution of India. The appellant contended that the cross-subsidy surcharge had become archaic/arbitrary with the passage of time and had no nexus with the object of the Electricity Act . 4. The learned Single Judge had found no merit in the challenge. The learned Single Judge rejected the contention that the proviso to Section 42 (2) of the Electricity Act was manifestly arbitrary or infringed upon any fundamental right. Further, there was no challenge to the legislative competence of the Parliament to enact the Electricity Act . Thus, the petition preferred by the appellant was rejected. 5. The learned Senior Counsel appearing for the appellant contended that the Electricity Act was enacted for introducing reforms in the electricity sector. He also referred to the decision in the case of Tata Power Co. Ltd. v. Reliance Energy Ltd : (2009) 16 SCC 659 and on the strength of the said decision contended that the Electricity Act aimed at removing licensing constraints on generation and encouraging free competition. He submitted that the cross-subsidy surcharge was only a stop gap arrangement and therefore the proviso to Section 42 (2) of the Electricity Act , which in effect recognizes continuation of cross subsidies, is contrary to the principal object of the Electricity Act . He submitted that the cross-subsidy surcharge was only a stop gap arrangement and therefore the proviso to Section 42 (2) of the Electricity Act , which in effect recognizes continuation of cross subsidies, is contrary to the principal object of the Electricity Act . He submitted that since the proviso has no nexus with the object of the Electricity Act , the same is liable to be struck down, or at any rate read down as violative of Article 14 of the Constitution of India. 6. Before proceeding further, it would be relevant to set out Section 42 of the Act, which reads as under: "42. Duties of distribution licensees and open access. - (1) It shall be the duty of a distribution licensee to develop and maintain an efficient co-ordinated and economical distribution system in his area of supply and to supply electricity in accordance with the provisions contained in this Act. Duties of distribution licensees and open access. - (1) It shall be the duty of a distribution licensee to develop and maintain an efficient co-ordinated and economical distribution system in his area of supply and to supply electricity in accordance with the provisions contained in this Act. (2) The State Commission shall introduce open access in such phases and subject to such conditions, (including the cross subsidies, and other operational constraints) as may be specified within one year of the appointed date by it and in specifying the extent of open access in successive phases and in determining the charges for wheeling, it shall have due regard to all relevant factors including such cross subsidies, and other operational constraints: Provided that ³[such open access shall be allowed on payment of a surcharge] in addition to the charges for wheeling as may be determined by the State Commission: Provided further that such surcharge shall be utilised to meet the requirements of current level of cross subsidy within the area of supply of the distribution licensee: Provided also that such surcharge and cross subsidies shall be progressively reduced 1 [***] in the manner as may be specified by the State Commission: Provided also that such surcharge shall not be leviable in case open access is provided to a person who has established a captive generating plant for carrying the electricity to the destination of his own use: 2 [Provided also that the State Commission shall, not later than five years from the date of commencement of the Electricity (Amendment) Act, 2003 (57 of 2003) by regulations, provide such open access to all consumers who require a supply of electricity where the maximum power to be made available at any time exceeds one megawatt.] (3) Where any person, whose premises are situated within the area of supply of a distribution licensee, (not being a local authority engaged in the business of distribution of electricity before the appointed date) requires a supply of electricity from a generating company or any licensee other than such distribution licensee, such person may, by notice, require the distribution licensee for wheeling such electricity in accordance with regulations made by the State Commission and the duties of the distribution licensee with respect to such supply shall be of a common carrier providing non-discriminatory open access. (4) Where the State Commission permits a consumer or class of consumers to receive supply of electricity from a person other than the distribution licensee of his area of supply, such consumer shall be liable to pay an additional surcharge on the charges of wheeling, as may be specified by the State Commission, to meet the fixed cost of such distribution licensee arising out of his obligation to supply. (5) Every distribution licensee shall, within six months from the appointed date or date of grant of licence, whichever is earlier, establish a forum for redressal of grievances of the consumers in accordance with the guidelines as may be specified by the State Commission. (6) Any consumer, who is aggrieved by non-redressal of his grievances under sub-section (5), may make a representation for the redressal of his grievance to an authority to be known as Ombudsman to be appointed or designated by the State Commission. (7) The Ombudsman shall settle the grievance of the consumer within such time and in such manner as may be specified by the State Commission. (8) The provisions of sub-sections (5), (6) and (7) shall be without prejudice to right which the consumer may have apart from the rights conferred upon him by those sub-sections." 7. A plain reading of sub-section (2) of Section 42 of the Electricity Act indicates that the State Electricity Regulatory Commission is required to introduce open access in phases. However, it is also postulated that the same would be subject to conditions including cross-subsidies and other operational constraints. The first provision to sub-section (2) of Section 42 thus provides that the open access would be available on a payment of surcharge, in addition to charges for wheeling as may be determined by the State Electricity Regulatory Commission. We find it difficult to accept that the proviso is contrary to the scheme of the Electricity Act . 8. Respondent No.2 filed statement of objections explaining that the cross-subsidies surcharge is levied with a purpose of making electricity available at affordable prices to the citizens having lower income levels as compared to groups such as industrial/commercial consumers having better paying capacity. The said subsidy surcharges is for the purpose of compensating cross subsidy existing in the retail consumer tariff, in the area of supply of the distribution company. The said subsidy surcharges is for the purpose of compensating cross subsidy existing in the retail consumer tariff, in the area of supply of the distribution company. The respondent also referred to the decision of the Supreme Court in SESA Sterlite Limited v. Orissa Electricity Regulatory Commission and others: (2014) 8 SCC 444. The relevant extract of the said decision is reproduced below. 27. The issue of open access surcharge is very crucial and implementation of the provision of open access depends on judicious determination of surcharge by the State Commissions. There are two aspects to the concept of surcharge — one, the cross-subsidy surcharge i.e. the surcharge meant to take care of the requirements of current levels of cross-subsidy, and the other, the additional surcharge to meet the fixed cost of the distribution licensee arising out of his obligation to supply. The presumption, normally is that generally the bulk consumers would avail of open access, who also pay at relatively higher rates. As such, their exit would necessarily have adverse effect on the finances of the existing licensee, primarily on two counts — one, on its ability to cross-subsidise the vulnerable sections of society and the other, in terms of recovery of the fixed cost such licensee might have incurred as part of his obligation to supply electricity to that consumer on demand (stranded costs). The mechanism of surcharge is meant to compensate the licensee for both these aspects. 28. Through this provision of open access, the law thus balances the right of the consumers to procure power from a source of his choice and the legitimate claims/interests of the existing licensees. Apart from ensuring freedom to the consumers, the provision of open access is expected to encourage competition amongst the suppliers and also to put pressure on the existing utilities to improve their performance in terms of quality and price of supply so as to ensure that the consumers do not go out of their fold to get supply from some other source. 30. Therefore, in the aforesaid circumstances though CSS is payable by the consumer to the distribution licensee of the area in question when it decides not to take supply from that company but to avail it from another distribution licensee. 30. Therefore, in the aforesaid circumstances though CSS is payable by the consumer to the distribution licensee of the area in question when it decides not to take supply from that company but to avail it from another distribution licensee. In a nutshell, CSS is a compensation to the distribution licensee irrespective of the fact whether its line is used or not, in view of the fact that, but for the open access the consumer would pay tariff applicable for supply which would include an element of cross-subsidy surcharge on certain other categories of consumers. What is important is that a consumer situated in an area is bound to contribute to subsidising a low end consumer if he falls in the category of subsidising consumer. Once a cross- subsidy surcharge is fixed for an area it is liable to be paid and such payment will be used for meeting the current levels of cross-subsidy within the area. A fortiori, even a licensee which purchases electricity for its own consumption either through a “dedicated transmission line” or through “open access” would be liable to pay cross-subsidy surcharge under the Act. Thus, cross- subsidy surcharge, broadly speaking, is the charge payable by a consumer who opt to avail power supply through open access from someone other than such distribution licensee in whose area it is situated. Such surcharge is meant to compensate such distribution licensee from the loss of cross-subsidy that such distribution licensee would suffer by reason of the consumer taking supply from someone other than such distribution licensee." 9. The distribution licensee is not only required to recover the cost of distribution, but also to be compensated for providing electricity at lower tariffs. In the aforesaid view, the charges for open access would necessarily have to include all elements of costs, which also include share of the cross subsidies. In the aforesaid circumstances, the contention that the proviso to Section 42 (2) to allow open access subject to payment of surcharge for meeting the cross subsidies costs cannot by any stretch be held to offend Article 14 of the Constitution of India. The contentions advanced on behalf of the appellant in this regard are insubstantial. 10. The learned Single Judge had explained the rationale for the surcharge on account of cross subsidies as under: "51. The contentions advanced on behalf of the appellant in this regard are insubstantial. 10. The learned Single Judge had explained the rationale for the surcharge on account of cross subsidies as under: "51. In order to ensure that a private generator could utilize the electricity that he had generated, the law mandated the grant of non-discriminatory open access to both the distribution and transmission network. This system of granting open access essentially meant that a generator could approach a transmitting utility and demand that the electricity that it had generated be transmitted through the transmission network and a generator or consumer could also approach a distribution licencee and demand that it be supplied with electricity from a particular generator. 52. However, this system of granting open access would invariably result in one consumer in one area of supply being entitled to receive the supply of electricity from a generator or from a distribution licencee whose area of supply was completely different. The purpose of open access was to fundamentally ensure that the consumer of energy of electricity could purchase the electricity from a source of his choice and at a rate which was beneficial to him. 53. Though this process was beneficial to one class of consumers, it necessarily had the effect of increasing the cost of electricity to consumers who could not afford electricity in that area of supply, as there was nobody to bear the cost of subsidy that was being granted to them. 54. To put it simply, if in one area of supply there were 100 consumers out of which 60 could not afford electricity, the distribution licencee would thereby cross- subsidize that cost by levying a higher charge on the remaining 40 consumers who could afford to pay a higher tariff. The effect of permitting open access would be that 40 consumers who were cross subsidizing the cost had the option of securing electricity from outside the area of supply at a cheaper rate. Thus, the moment these 40 consumers opted for open access, the cross- subsidy became unavailable to the distribution licencee, thereby increasing the cost of the power supply to the class of consumers who could not afford it. 55. Thus, the moment these 40 consumers opted for open access, the cross- subsidy became unavailable to the distribution licencee, thereby increasing the cost of the power supply to the class of consumers who could not afford it. 55. It is for this reason that the law has made it clear under Section 42 of the Act, the Commission would while determining the charges for wheeling have due regard to all the relevant factors including cross-subsidies and other operational constraints. The Commission would also therefore have to add a surcharge while determining the wheeling charges for offsetting the cross subsidy. 56. The law was therefore cognizant of the fact that the cross-subsidies involved under the supply of electricity was a factor which could not be ignored and the law made it clear that the cross-subsidy component should also be taken into consideration while the Regulatory Commission was determining the charges for wheeling." 11. In the aforesaid context, the learned Single Judge found no merit in the challenge. The learned Single Judge held that the petitioner did not have the right to demand that the distribution licensee recovers only the charge for wheeling by omitting one of the component of its costs. This reasoning is reflected in the following extract from the impugned order. "67. The petitioner, being a generating company, is only conferred with the statutory right of being able to have open access and this statutory right of open access has been made subject to charges for wheeling as may be determined by the Regulatory Commission. The petitioner is fundamentally seeking to utilize the distribution network of a distribution licencee by wheeling energy that it is generating through an infrastructure which is owned by another entity and in this scenario, it cannot obviously have a right to demand that it be levied only a particular charge or by omitting a particular component of that charge. 68. If it is the intent of law that one section of people who consume electricity deserve a subsidy and this subsidy has to be cross subsidized by another section of consumers, this policy which is reflected in the law that is enacted cannot be found fault with on the ground that it infringes any fundamental right." 12. We find no infirmity in the aforesaid reasoning. We find no infirmity in the aforesaid reasoning. The appellant's challenge to the constitutional vires of the proviso to Section 42 (2) as violative of Article 14 of the Constitution of India is ill-founded. 13. The learned counsel also pointed out that the learned Single Judge has issued directions for the State Electricity Regulatory Commission to ensure that regulations are framed for specifying the manner in which surcharge and cross subsidies are to be progressively reduced. He submitted that the same were to be framed within six (06) months, but the State Electricity Regulatory Commission had not done so. Since the respondents have not filed an appeal against the aforesaid direction, it is not necessary for us to examine the same. We thus refrain from doing so. We also do not think it apposite to convert the scope of the present appeal to a proceeding for implementing the directions issued by the learned Single Judge. 14. In view of the above, appeal is dismissed.