SEZ Developer Must Apply and Be Scrutinized for 'Deemed Distribution Licensee' Status, Not Automatically Granted: Supreme Court
In the case of M/s Sundew Properties Limited v. Telangana State Electricity Regulatory Commission & Anr, the Supreme Court ruled that SEZ developers, although granted "deemed distribution licensee" status under the Electricity Act, must still apply and be scrutinized according to applicable regulations. The Court differentiated between regular and deemed distribution licensees, setting aside a pre-condition imposed by TSERC requiring additional capital infusion for recognition as a deemed distribution licensee.
The appellant, an SEZ developer, applied for deemed distribution licensee status under the Electricity Act, following a 2010 notification. This application, initially submitted to the Andhra Pradesh Electricity Regulatory Commission, was transferred to TSERC after the state's reorganization. In 2016, TSERC granted the status but required compliance with Rule 3 of the 2005 Rules, directing the appellant to infuse an additional Rs. 26.90 crore as equity share capital.
The appellant contested this directive, arguing that SEZ developers automatically receive deemed distribution licensee status without additional applications or conditions. However, both APTEL and the Supreme Court disagreed, asserting the need for scrutiny and application as per the 2013 Regulations.
The Court concluded that while SEZ developers must apply for the deemed status, the imposed capital infusion requirement was unjustified. Thus, the Supreme Court set aside the orders of APTEL and TSERC, modifying the grant of deemed distribution licensee status to exclude the additional capital condition.