How power ministry's view on discoms could expose them to insolvency suits

The ministry has said these entities do not fall under the category of govt companies, a view based on the argument that discoms do not perform sovereign functions

In what could open the doors for litigation against state government-owned power distribution companies (discoms), the Union power ministry has said these entities do not fall under the category of government companies as defined under section 2(45) of the Companies Act. The ministry’s view is based on the argument that discoms do not perform sovereign functions under a statute.

Section 2(45) defines a government company in which not less than 51 per cent of the paid-up share capital is held by the Central or state government or governments, or partly by the Centre and one or more state governments, or