Supreme Court Holds That The Indian Railways Is Not A Deemed Distribution Licensee And Is Liable To Pay Cross-Subsidy Surcharge And Additional Surcharge For Procurement Of Electricity.

Supreme Court through its judgement dated 08.05.2026 in the matter of Indian Railways v West Bengal State Electricity Distribution Company Limited & Others¹ held that Indian Railways (“IR”) is not a Deemed Distribution Licensee (“DDL”) under Section 14 of the EA Act and is liable to pay Cross-Subsidy Surcharge (“CSS”) and Additional Surcharge (“AS”) as stipulated in Section 42 of the EA Act.

The Court observed that IR cannot be granted open access for the power which it procures from the generating stations through the Inter-State Transmission System without paying CSS and AS as firstly IR is a consumer in terms of Section 2(15) of the EA Act. Secondly, IR uses electricity for its own operations and neither does the Railways Act, 1989 nor does the EA Act extend any authority to IR to undertake a commercial distribution/ supply of electricity beyond IR’s internal domain. The Court also observed that the distribution or electric infrastructure authorized to be set up by IR to ensure power supply for railway operations cannot be considered akin to a distribution system. Based on the fact that IR qualifies as a consumer within the meaning of Section 2(15) of the EA Act and utilizes the procured electricity entirely for its own internal consumption, the Court further observed that IR is liable to pay CSS and AS as contemplated under Section 42 of the EA Act.

Footnotes

^{1 2026 INSC 464.}

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