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5. Learned senior counsel for the appellants contended that the impugned Regulations are ultra vires to Sections 7, 9, 86(1)(a) and (e) and 181 of the Act of 2003, and also the fundamental rights guaranteed to the appellants under Articles 14, 19(1)(g) and it is in violation of Article 265 of the Constitution of India, the National Electricity Policy, 2005 and the Tariff Policy, 2006. They have contended that the Act of 2003 has been enacted by the Parliament with a view to encourage participation of private sectors involved in generation of electricity and with that objective, generation of electricity was de-licensed and captive generation was freely promoted and in this manner the impugned Regulations are violative of the basic object and intendment with which the Act was enacted. Further, it has been asserted that the National Electricity Policy, 2005 as well as the Tariff Policy, 2006 were framed to promote production of energy and utilization thereof to the maximum extent in respect of the captive generation plants and not to compulsorily force them to lower down their production of energy by making them purchase renewable energy as per the newly framed the impugned Regulation No.9 of Regulations 2010. It was also contended by them that the Act of 2003 has totally liberalized the establishment of captive power plants and kept them out of any licensing and regulatory regime, neither any licence nor any approval from any authority is required to install a captive power plant and thus, the RERC had no jurisdiction to impose any obligation for compulsory purchase of electricity from a renewable energy source; the renewable energy source and captive generating plant are both alternative sources of energy which have to be promoted, one cannot be placed on higher or lower footing. The RERC by imposing a compulsory obligation to purchase electricity from renewable source and to pay surcharge in case of shortfall in meeting out the RE obligation as per the Regulation referred to supra has acted beyond the object sought to be achieved under the National Electricity Policy, 2005 as well as the Act of 2003.

9. The learned senior counsel on behalf of the appellants has further placed strong reliance upon the Preamble of the Act of 2003, which inter alia provides for the promotion of efficient and environmentally benign policies and also placed strong reliance upon the definitions under provisions of the Act of 2003, namely, Section 2 (3) - 'area of supply', Section 2(17)

-'distribution licensee' and Section 9 -'captive generation'. Strong reliance has been placed upon the said provisions of the Act to substantiate the legal position. Section 9 of the Act of 2003 provides that notwithstanding anything contained in the Act of 2003, a person may construct, maintain or operate a captive generating plant and dedicated transmission lines provided that supply of electricity from the Captive Generating Plant through the grid shall be regulated in the same manner as the generating station of a generating company. Second proviso to Section 9 further provides that no license shall be required under the Act for supply of electricity generated from a captive generating plant to any licensee in accordance with the provisions of the Act and the Rules and Regulations made there under subject to regulations made under sub-section (2) of Section 42 of the Act of 2003, which enables the owner of captive generating plant, who maintains and operates such plants shall have the right to open access for the purposes of carrying electricity from his captive generating plant to the destination of his use. Learned senior counsel sought to justify the impugned Regulation 9 placing strong reliance upon Section 61(h) of the Act of 2003, which provides that the appropriate Commission should promote generation and co-generation of electricity from renewable sources at the time of framing of tariff.

“Captive Generation-

5.2.2. The Government of India has initiated several reform measures to create a favourable environment for addition of new generating  capacity in the country. The Electricity Act 2003 has put in place a highly liberal framework for generation. There is no requirement of licensing for generation. The requirement of techno-economic clearance of CEA for thermal generation project is no longer there. For hydroelectric generation also, the limit of capital expenditure, above which concurrence of CEA is required, would be raised suitable from the present level. Captive generation has been freed from all controls.

46. In this regard, Mr. S. B. Upadhyay, the senior learned counsel on behalf of the fourth respondent in SLP No. 39969 of 2012, contended that Regulation 5 of the impugned Regulations, 2010 which repealed the earlier 2007 Regulations, contains a mechanism of purchase of Renewable Energy Certificate, which certificates can be bought from energy exchanges by the consumers who have opted for a third party electricity source, including Open Access or captive generation. Thus, for the said consumers, instead of buying physical renewable energy for fulfilling the minimum energy percentage targets as per the impugned regulation, the renewable energy can be purchased through buying of the said certificates. In this manner there is no need to lower captive electricity generation by a captive consumer for fulfilling the minimum percentage target as provided in the impugned Regulation. Further, Para 6.4 of the Tariff Policy framed under Section 3 of the Act of 2003, was amended vide Resolution dated 31.3.2008 of the Ministry of Power and published in the Gazette of India, Extraordinary on 22.1.2011.