The Punjab and Haryana High Court has cleared the decks for the privatization of electricity services in the Union Territory (UT) of Chandigarh, maintaining that it is not within the judiciary’s domain to decide whether a public policy is wise or a better one can be developed.

While disposing of petitions by the UT Powermen Union and Federation of Sectors Welfare Association, the High Court rejected the contention that the union territory’s policy to privatize power distribution violates the Electricity Act, 2003.

The High Court drew upon the Supreme Court’s pronouncements in the Bharat Aluminium Company (BALCO) privatization case. The apex court had observed: “It is evident … that it is neither within the domain of the Courts nor the scope of the judicial review to embark upon an enquiry as to whether a particular public policy is wise or whether better public policy can be evolved. Nor are our Courts inclined to strike down a policy at the behest of a petitioner merely because it has been urged that a different policy would have been fairer or wiser or more scientific or more logical.”

The High Court said the scope for judicial review was extremely narrow in a policy decision.

In November 2020, the Chandigarh UT administration invited bids to purchase 100% shares in the UT’s power distribution company. This was challenged in writ petitions, contending that the transfer arrangement was neither finalized nor approved before the bids were invited. The petitioners also argued that the electricity department was profitable and that selling 100% of the stakes in favor of a private entity was inappropriate.

Eminent Electricity Distribution, a Calcutta Electricity Supply Corporation subsidiary, had emerged as the highest bidder to acquire a 100% stake in Chandigarh’s DISCOM in August 2021.

In 2020, the Union government proposed privatizing the distribution companies (DISCOMs) in the UTs, including Chandigarh. The policy decision was met with legal challenges, with petitions filed in various courts.

The Ministry of Power recently issued the Electricity Distribution (Accounts and Additional Disclosure) Rules, 2024, to enhance transparency in financial disclosure and bolster DISCOMs’ regulatory compliance. The rules aim to ensure they are financially safeguarded against long-term defaults by mandating provisions for receivables and enforcing the reporting of trade receivable days.