Supreme Court: No SC Article 136 Interim Order Interference Unless Perverse or Patently Illegal

• The Supreme Court upheld a Jharkhand High Court interim order allowing Energy Watchdog to participate in an inquiry into alleged unauthorized electricity supply.
• The High Court's decision was based on prima facie evidence and the need to ensure all facts were presented to JBVNL, the utility involved in the dispute.
• The Supreme Court ruled that it would not interfere with interim orders unless they are deemed perverse or patently illegal, citing its Article 136 powers.
• The dispute originated from Energy Watchdog's complaint in 2024 regarding Amalgam Steels' alleged non-compliance with 'captive user' status under Electricity Rules, 2005.
• JBVNL had issued demand notices for cross-subsidy surcharges totaling over Rs 284 crore to the petitioners involved in the power supply agreements.

The Supreme Court's ruling underscores a significant principle regarding its Article 136 powers: it will not interfere with Jharkhand High Court interim orders unless they are deemed perverse or patently illegal.

The Supreme Court recently affirmed an interim directive issued by the Jharkhand High Court, which permitted a third party, Energy Watchdog, to participate in an ongoing inquiry concerning alleged unauthorized electricity supply. This decision came in a case involving M/s Amalgam Steels and Power Ltd and Jharkhand Bijli Vitran Nigam Ltd (JBVNL), where Energy Watchdog was not an original party to the power supply agreement. The Supreme Court's ruling underscores a significant principle regarding its Article 136 powers: it will not interfere with Jharkhand High Court interim orders unless they are deemed perverse or patently illegal.

The underlying dispute originated from an agreement between Amalgam Steels and JBVNL, first established in 2012 and subsequently renewed in 2017 and 2023, for the supply of surplus power from Amalgam Steels' captive plant. In 2024, Energy Watchdog lodged a complaint with the Additional Chief Secretary, Department of Energy, Government of Jharkhand. The complaint alleged that power generated from the captive unit was being utilized without maintaining a valid 'captive user' status, a requirement under Rule 3 of the Electricity Rules, 2005. Energy Watchdog sought action against the petitioners under Section 135 of the Electricity Act, 2003, prompting the Jharkhand government and JBVNL to initiate a fact-finding inquiry.

Following the complaint, Energy Watchdog filed a Public Interest Litigation (PIL) before the Jharkhand High Court. The PIL sought a declaration that electricity supply without Open Access Approval and without fulfilling statutory captive status conditions under the Electricity Act and Rules was illegal. It also requested directions for state authorities to conduct a detailed investigation into the alleged unauthorized power supply and recover losses purportedly caused to the state utility due to illegal electricity sales. During these proceedings, JBVNL issued demand notices to the petitioners, seeking cross-subsidy surcharges totaling Rs 176.74 crore from one petitioner and Rs 108.17 crore from another.

On February 5, 2026, the Jharkhand High Court issued an interim order rejecting objections to the PIL's maintainability. The court observed that JBVNL's affidavit indicated prima facie substance in the allegations and that the PIL's averments were sufficient to dismiss the objection. Crucially, the high court found it necessary to ensure that complete facts were brought to JBVNL's attention through a party other than the petitioners, facilitating an appropriate decision. This decision was influenced by an impression that "all is not well" with JBVNL's own inquiry, particularly given the delay in taking action despite the complaint's long-standing nature.

Justices P. S. Narasimha and Alok Aradhe, presiding over the Supreme Court bench, concluded that the Jharkhand High Court's interim measure could not be characterized as perverse or patently illegal. The Supreme Court acknowledged that Energy Watchdog was not a party to the original agreement between Amalgam Steels and JBVNL, and that JBVNL had already initiated its own proceedings against the petitioners for alleged violations of the Captive Power Plant Agreement. However, the apex court recognized the high court's rationale, noting that the measure was adopted due to the peculiar facts of the case to ensure all relevant information was presented to JBVNL before a final decision was made.

This ruling reinforces the high threshold for SC Article 136 interim order interference. The Supreme Court emphasized that its extraordinary powers under Article 136 of the Constitution should not be invoked to overturn interim orders unless they demonstrate a clear perversity or patent illegality. The bench found that the Jharkhand High Court's decision, in this specific context, was a justified step to ensure transparency and thoroughness in the inquiry, rather than an arbitrary or unlawful exercise of judicial discretion.

The case highlights the interplay between the Supreme Court Article 136 powers and the discretion of High Courts in managing complex disputes, particularly those involving public interest and regulatory compliance under the Electricity Act 2003 Rule 3. The Supreme Court's refusal to intervene sets a precedent that Jharkhand High Court interim orders, even those allowing third-party participation in internal inquiries, will be respected unless they cross a very high bar of legal infirmity. This approach ensures judicial restraint while allowing lower courts the flexibility to craft remedies that serve justice in unique circumstances.

The Energy Watchdog JBVNL dispute, therefore, serves as a critical example of how the judiciary balances procedural fairness with the need for effective oversight in regulatory matters. By allowing Energy Watchdog to participate, the High Court aimed to ensure a comprehensive fact-finding process, a decision the Supreme Court ultimately endorsed, reinforcing the principle that interim judicial directives are generally immune from higher court intervention unless they are fundamentally flawed.

Source: Reporting based on recent court proceedings.