In a significant ruling with wide implications for power management during crises, the Karnataka High Court has affirmed the state government's authority to direct electricity generators to supply power to the grid under extraordinary circumstances. The judgment clarifies a key provision of the Electricity Act, 2003, settling a dispute between the state and private power companies.
Bench Overturns Single-Judge Order, Backs State
A division bench comprising Justices Anu Sivaraman and Rajesh Rai delivered this pivotal order on December 19, 2025. The bench was hearing the state's appeal against a single-judge order that had previously favored private companies. These companies had challenged a government directive issued during the 2023 hydroelectric shortage, which mandated that all electricity generated by them be supplied to the state grid at a tariff of Rs 4.86 per unit.
Defining "Appropriate Government" and "Extraordinary Circumstance"
During the proceedings, Advocate-General Shashikiran Shetty, representing the Karnataka government, argued that the directive was lawfully issued under Section 11 of the Electricity Act. This section empowers the "appropriate Government" to issue directions to generators in extraordinary situations. Shetty cited previous judicial interpretations, stating that factors like failed monsoons and severe reservoir depletion constitute such extraordinary circumstances.
The counsel for the private generators contested this on two fronts. Firstly, they argued that since electricity sales often involve inter-state transactions, the Central Government should be considered the "appropriate Government" in this context. Secondly, they claimed that a mere shortage of electricity does not qualify as an "extraordinary circumstance" under the law.
Court's Contextual Interpretation Prevails
The High Court bench rejected both contentions put forth by the private companies. In its reasoned order, the bench emphasized a contextual interpretation of the law. "We are of the view that 'appropriate government', as defined in Section 11 of the Act, must be interpreted contextually to mean the State Government for embedded generators facing State-specific extraordinary circumstances, rather than rigidly applying the definition...", the court stated.
The judges recognized the severe situation that prompted the state's action. They noted that the directive was issued due to an extraordinary circumstance arising from natural calamities, including a failed monsoon, reservoir depletion, a recorded peak demand of 16,950 Mega Watt, and energy consumption of 294 Mega Units in August 2023 alone. The bench concluded that the state government's decision was a remedial and protective measure taken in the public interest.
Implications for Future Power Crisis Management
This ruling strengthens the hand of state governments across India in managing acute power deficits triggered by environmental or logistical crises. It establishes a clear precedent that state-specific emergencies allow state governments to invoke Section 11 powers to ensure grid stability and public supply, overriding commercial power purchase agreements if necessary. The judgment balances the operational freedom of private generators with the state's overriding responsibility to maintain public order and essential services during a dire shortage.
