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i 

Contents 

Arrangement of Cases 

[Alphabetical] 

BSES Rajdhani Power Ltd. v. DERC and Ors. 31.03.2010 0404 ... APTEL 

CESC Ltd. v. CERC 04.03.2010 0463 ... APTEL 

Chhattisgarh State Electricity Board v. CERC 

and Ors. 15.04.2010 0313 ........ SC 

Chhattisgarh State Power Distribution Co. 

Ltd. v. Aryan Coal Benefications Pvt. Ltd. and 

Chhattisgarh State Electricity Regulatory 

Commission 09.02.2010 0476 ... APTEL 

Delhi Transco Limited v. CERC and Northern 

Regional Load Despatch Centre 11.02.2010 0339 ... APTEL 

GRIDCO Limited v. Global Energy Ltd. and Anr. 08.02.2010 0337 ... APTEL 

Gujarat Energy Transmission Corporation 

Ltd. v. Gujarat Electricity Regulatory 

Commission and Ors. 31.03.2010 0421 ... APTEL 

Gujarat Urja Vikas Nigam Ltd. v. Essar 

Power Ltd. 22.02.2010 0359 ... APTEL 

Himachal Pradesh State Electricity 

Board v. CERC and Ors. 23.03.2010 0351 ... APTEL 

Maharashtra Jeevan Pradhikaran v. Maharashtra 

State Electricity Distribution Co. Ltd. and Anr. 18.02.2010 0350 ... APTEL 

Maharashtra State Electricity Distribution 

Co. Ltd. v. Maharashtra Electricity Regulatory 


NTPC Ltd. v. CERC and Ors. 31.03.2010 0400 ... APTEL 


PTC India Ltd. v. Central Electricity Regulatory 

Commission, thr. Secy. 15.03.2010 0269 ........ SC 

Shrishrimal Plantation Ltd. v. Chhattisgarh 

State Power Distribution Co. Ltd. and Anr. 18.01.2010 0418 ... APTEL 

Tamil Nadu Electricity Board v. CERC and 

NTPC Ltd. 25.02.2010 0450 ... APTEL 


5

ii Energy Law Reports (ELR) [Vol. 1, Part 2, 2010] 

Torrent Power Limited v. Gujarat Electricity 

Regulatory Commission 23.03.2010 0378 ... APTEL 

Velagapudi Power Generation Limited v. Southern 

Power Distribution Co. of A.P., Transmission 

Corporation of A.P. Ltd. and A.P. Electricity 


VS Lignite Power Private Ltd. v. Kadodara Power 

Pvt. Ltd. and Ors. 19.03.2010 0435 ... APTEL 

West Bengal Electricity Regulatory Comm. v. 

Hindalco Industries Ltd. and Ors. 22.04.2010 0332 ........ SC 

Arrangement of Cases 

[Chronological] 

West Bengal Electricity Regulatory Comm. v. 

Hindalco Industries Ltd. and Ors. 22.04.2010 0332 ........ SC 

Velagapudi Power Generation Limited v. Southern 

Power Distribution Co. of A.P., Transmission 

Corporation of A.P. Ltd. and A.P. Electricity 


Maharashtra State Electricity Distribution 

Co. Ltd. v. Maharashtra Electricity Regulatory 


Chhattisgarh State Electricity Board v. CERC 

and Ors. 15.04.2010 0313 ........ SC 

BSES Rajdhani Power Ltd. v. DERC and Ors. 31.03.2010 0404 ... APTEL 

Gujarat Energy Transmission Corporation 

Ltd. v. Gujarat Electricity Regulatory Comm. 

and Ors. 31.03.2010 0421 ... APTEL 



Himachal Pradesh State Electricity 

Board v. CERC and Ors. 23.03.2010 0351 ... APTEL 

Torrent Power Limited v. Gujarat Electricity 


VS Lignite Power Private Ltd. v. Kadodara Power 

Pvt. Ltd. and Ors. 19.03.2010 0435 ... APTEL 


Commission, thr. Secy. 15.03.2010 0269 ........ SC 

CESC Ltd. v. CERC 04.03.2010 0463 ... APTEL 

Tamil Nadu Electricity Board v. CERC and 

NTPC Ltd. 25.02.2010 0450 ... APTEL 

Gujarat Urja Vikas Nigam Ltd. v. Essar 

Power Ltd. 22.02.2010 0359 ... APTEL 

6 

March - April, 2010

Notifications and Circulars 

iii 

Maharashtra Jeevan Pradhikaran v. Maharashtra 

State Electricity Distribution Co. Ltd. and Anr. 18.02.2010 0350 ... APTEL 

Delhi Transco Limited v. CERC and Northern 

Regional Load Despatch Centre 11.02.2010 0339 ... APTEL 

Chhattisgarh State Power Distribution Co. 

Ltd. v. Aryan Coal Benefications Pvt. Ltd. and 

Chhattisgarh State Electricity Regulatory 

Commission 09.02.2010 0476 ... APTEL 

GRIDCO Limited v. Global Energy Ltd. and Anr. 08.02.2010 0337 ... APTEL 

Shrishrimal Plantation Ltd. v. Chhattisgarh 

State Power Distribution Co. Ltd. and Anr. 18.01.2010 0418 ... APTEL 

Section B 

Notifications and Circulars 

Ministry of Power 

Notification — Central Electricity Regulatory Commission Corrigendum for 

Measures to Relieve Congestion in Real Time Operation — Notification No. L-7/ 

139(159)/2008-CERC Dated 04.02.2010 ..................................................... B-3 

Notification — The Joint Electricity Regulatory Commission for the State of 

Goa and Union Territories notifies Open Access in Transmission and Distribution 

— Notification No. JERC-9/2009 ............................................................... B-3 

Notification — This notification notifies Government approval to the Jawaharlal 

Nehru National Solar Mission for the National Action Plan on Climate Change 

— Notification No. 5/14/2008-P&C Dated 11.02.2010 ............................... B-3 

Notification — The Appropriate Government hereby notifies Appointment of Shri 

R. K. Roy, CEE, Banglore Metro Rail Corporation Ltd.(BMRCL) as Electrical 

Inspector — Notification No. GSR104(E) Dated 26.02.2010 ........................ B-3 

Notification — Central Electricity Regulatory Commission notifies Terms and 

Conditions for Tariff determination from Renewable Energy Sources — 

Notification No. L-7/186(201)/2009-CERC Dated 25.02.2010 .................... B-3 

Notification — Central Electricity Regulatory Commission notifies Salary, 

Allowances and other Conditions of Service of Chairperson and Members — 

Notification No. GSR196(E) Dated 19.03.2010 ........................................... B-3 

Notification — In pursuance of Clause 5.6 (vi) of Ministry of Power (MOP) 

Notification dated 19-1-2005 on Guidelines for Determination of Tariff by Bidding 

Process for Procurement of Power by Distribution Licensees, the Central Electricity 

Regulatory Commission notifies the following rates and other parameters for 

the purpose of bid evaluation and payment — Notification No. Eco 1/2010- 

CERC Dated 31.03.2010 ............................................................................ B-3 

Notification — Central Electricity Regulatory Commission notifies Regulations 

for Procedures for calculating the expected revenue from tariffs and charge — 

Notification No. L-1/9/2009/CERC Dated 12.04.2010 ............................... B-4 

Notification — Central Electricity Regulatory Commission notifies following 

regulations to amend the Unscheduled Interchange charges and related matters 

— Notification No. L-1(1)/2009-CERC Dated 28.04.2010 ........................... B-4 


7

iv Energy Law Reports (ELR) [Vol. 1, Part 2, 2010] 

Ministry of Coal 

Notification — The Government by this notification specifies the following Power 

Units as an end user for the supply of surplus quantity of coal — Notification 

No. SO397(E) Dated 17.02.2010 ................................................................. B-4 

Notification — Corrigendum to Notification No. S.O.2596 (E) dated the 

13 th October, 2009 published at pages 1 to 3 in the Gazette of India, Extraordinary 

Part II, Section 3, Sub-section (ii), dated 13 th October, 2009 at page 3, against 

serial number 18, for “Shri Rajendra Prasad Sinha” read “Shri Rajendro Prasad 

Singha” — Notification No. SO537(E) Dated: 04.03.2010 ........................... B-4 

8 

March - April, 2010

v 

Subject Index 

Acceptance of Power Price under Coercion—Whether, in the facts and 

circumstances of the case, the 1 st and 2 nd Respondents were acting in 

concert and in combination to coerce the Appellant to accept a power 

price for the energy generated by it and whether the same was not an 

unlawful combination and whether the Commission was not required to 

pass the appropriate Orders in terms of Section 60 of the Electricity Act 

and whether in such circumstances the Appellant is not entitled to the 

reliefs prayed for — Held, Reading of Section 26 of the Specific Relief Act 

makes it clear that the Appellant has not sought for rectification after 

satisfying the requirement of Section 26. As a matter of fact, the Appellant 

has failed to disclose that the clause 2.2 of the PPA dated 12 th November, 

2006 is the same as PPA dated 25 th September, 2006. That apart, the 

Appellant has never claimed that the PPA dated 25 th September, 2006 

has been signed under duress or coercion. Respondent, both the State 

Commission as well this Tribunal cannot declare that the actions of R-1 

and R-2 would amount to coercion without holding detailed enquiry and 

examining the facts. Further, the Appellant is seeking rectification of 

the PPA which cannot be adjudicated by the State Commission under 

Section 86(1)(f).In the present case, the Appellant never followed 

procedure prescribed under Section 64 of the Act, including filing of an 

application under Sub-section (1) and the publication of the application 

under Sub-section (2), etc. Therefore, the Appellant cannot seek for its 

Tariff to be determined by the State Commission under Section 62 of the 

Electricity Act. State Commission has taken into consideration all facts 

and circumstances alleged by the Appellant and has come to the correct 

conclusion after assigning elaborate and correct reasons. 

Velagapudi Power Generation Limited v. Southern Power Distribution 

Co. of A.P., Transmission Corporation of A.P. Ltd. and A.P. 

Electricity Regulatory Commission 

Appeal No. 47 of 2009, Decided on 19.04.2010 

p. 0440 APTEL 

MANU/ET/0022/2010 

Allocation of Annual Capacity Charges—Whether Central Commission 

was right in holding that basic methodology for allocation of the annual 

Capacity Charges among different beneficiaries under Regulation 48 

applicable in present case, while applicable capacity to beneficiaries 

varies during a calendar year and not uniform throughout the year — 

Held, Regulation 48 provided that each of beneficiaries should have 

contributed to Capacity Charges to the extent of their entitlement in the 

electricity generated and supplied from the project on annual basis. This 

methodology of capacity charge based on sound principles. Regulation 48 

unambiguous and made applicable to all hydro generating stations 

regulated by Central Commission. Object of this provision was that fixed 

charges comprises capacity charges and energy charges of a generating 

station covered under ABT would be determined on annual basis for each 

financial year. In order to ensure continuous cash flow to generating 

companies, method of recovering charges on cumulative basis have been 


9

vi Energy Law Reports (ELR) [Vol. 1, Part 2, 2010] 

provided Tariff Regulation. The procedure of computation of capacity 

charges as provided under Regulation 48 can not be changed . 

Himachal Pradesh State Electricity Board v. CERC and Ors. 

Appeal No. 87 of 2009, Decided on 23.03.2010, p. 0351 APTEL 

MANU/ET/0014/2010 

Applicability of Section 63—Whether Section 63 of the Electricity Act is 

the exception to Section 62 and the guidelines framed by the Central 

Government will operate only when Tariff is being determined by the 

competitive bidding process — Held, Clause 5.1 of the NTP which relates to 

the power under Section 63 of the Act cannot be read to debar the State 

Commission from exercising its statutory power for determination of Tariff 

under Section 62(1) of the Act for all future procurement of power. 

BSES Rajdhani Power Ltd. v. DERC and Ors. 

Appeal Nos. 106 and 107 of 2009, 

Decided on 31.03.2010, p. 0404 APTEL 

MANU/ET/0017/2010 

Breach of PPA Terms—Whether the Appellant, which failed to declare the 

entire capacity of its generating station to the Electricity Board made the 

supply of electricity to its sister concern Essar Steels Ltd. in excess of the 

said ratio is liable to be held responsible for the breach of the terms of PPA 

and consequently the Appellant is liable to compensate the Electricity 

Board (R-l) — Held, Article 5.2 of the PPA-1 obligates the Electricity Board to 

pay to the Appellant its Annual Fixed Charges including the cost of the project 

on the level of generation achieved up to the allocated capacity and not on 

the allocated capacity itself. The Electricity Board has accordingly paid the 

Annual Fixed Charges on monthly basis on the level of generation achieved 

up to the allocated capacity. Annual Fixed Charges are not refundable for 

the surrendered portion of the electricity to the person in whose favour such 

electricity is surrendered. Hence, in regard to the issue relating to the liability 

to pay compensation we hold that, in Electricity Board is not entitled to get 

the compensation as claimed and as such the Appellant EPL succeeds in 

this issue 

Gujarat Urja Vikas Nigam Ltd. v. Essar Power Ltd. 

Appeal No. 77 of 2009 and Appeal No. 86 of 2009, 


MANU/ET/0013/2010 

Capping of Trading Margins—Whether capping of trading margins could be 

done by the Central Electricity Regulatory Commission (CERC) by making a 

Regulation in that regard under Section 178 of the 2003 Act or it can only be 

done by an Order under Section 79(1)(j) — Held, Scheme of 2003 Act shows 

Central Commission is a decision-making as well as regulation making 

authority. Such decision making under Section 79(1) is not dependant upon 

making of regulations under Section 178 by the Central Commission. 

Therefore, functions of Central Commission enumerated in Section 79 are 

separate and distinct from function of Central Commission under Section 178. 

Former is administrative/adjudicatory function whereas the latter is 

legislative. Applying the principle of “generality versus enumeration”, it would 

be open to the Central Commission to make a regulation on any residuary 

item under Section 178(1) read with Section 178(2)(ze). Thus, the CERC was 

10 

March - April, 2010

Subject Index 

vii 

empowered to cap the trading margin under the authority of delegated 

legislation under Section 178 vide the impugned notification dated 

23 rd January, 2006. 


Commission, thr. Secy. 

Civil Appeal No. 3902 of 2006, 

Decided on 15.03.2010, p. 0269 SC 

MANU/SC/0164/2010 

Committed Liabilities in relation to Capital Assets—Whether the Central 

Commission was right in excluding the committed liabilities in relation to 

capital assets established, commissioned and put to use to the extent of 

amount which has not been paid and has been retained by NTPC by way of 

Retention Money, Security Deposit or similar such things to ensure 

performance of the work undertaken by the contractors and others in 

accordance with the contract and is to be released in due course — Held, 

The words “actual expenditure incurred” contained in Regulation 17 of the 

Act would refer to the liabilities incurred and the same would not refer to the 

actual cash outflow. Since, the wordings in Regulation 17 are very clear, the 

only rational interpretation would be that the Appellant would be entitled to 

recover the actual capital expenditure incurred without reference to the actual 

cash outflow. Therefore, the entire value of the capital asset, as soon as the 

same is put into operation is recoverable by way of capital cost under 

Regulation 17 itself, notwithstanding the fact that the part of the payment 

for the capital asset has been retained. Claim made by the Appellant in respect 

of undischarged liabilities is to be allowed. 

NTPC Ltd. v. CERC and Ors. 

Appeal No. 46 of 2009, Decided on 31.03.2010, 

p. 0400 APTEL 

MANU/ET/0016/2010 

Competitive Bidding Process—Whether the compliance with the Competitive 

Bidding Process as envisaged in Clause 5.1 in the NTP, 2006 is mandatory 

for the procurement of power by a distribution company — Held, On going 

through the relevant provisions of the Act, it is evident that the legislature 

carved out 2 distinct fields for (i) Tariff determination and (ii) PPA approval. 

The domain of Tariff determination is governed under Part-VII of the Act. It 

contains Sections 61 to 65 of the Act. There are two routes and options 

provided: (a) Tariff determination under Section 62(l)(a) by the Appropriate 

Commission in terms of Section 79 and Section 86 of the Act and (b) Tariff 

discovery in terms of the Competitive Bidding Process in accordance with 

the guidelines issued by the Government of India, which shall be binding 

on the Appropriate Commission in terms of Section 63 of the Act. Clause 5.1 

of NTP provides that the power procurement for future should be through a 

transparent Competitive Bidding Process using the guidelines issued by the 

Central Government on 19 th January, 2005. Further, giving a clarification, 

Ministry of Power issued a circular dated, 28 th August, 2006 clarifying the 

above position. 




MANU/ET/0017/2010 


11

viii Energy Law Reports (ELR) [Vol. 1, Part 2, 2010] 

Cost of Maintenance Spares—Whether the Central Commission is justified 

in not allowing the cost of Maintenance Spares in the capital cost after taking 

into account the additional capitalisation incurred by the Appellant while 

computing the interest on working capital — Held, The Central Commission 

did not allow the additional capital cost in regard to the maintenance spares 

corresponding to the additional capitalisation while computing the historical 

capital cost. The Central Commission has permitted the cost of spares as per 

the capital cost frozen on the date of commercial operation without considering 

the additional capitalisation undertaken from the date of the commercial 

operation as allowable under the Tariff Regulations, 2004. The cost of 

maintenance spares needs to be calculated on the total capital cost inclusive 

of additional capitalisation. Therefore, it has to be held, that the Appellant is 

entitled to include the cost of maintenance spares also into capital cost. 



p. 0400 APTEL 

MANU/ET/0016/2010 

Cross Subsidy Charges—Whether the State Commission is correct in holding 

that the Aryan Plant liable to pay cross subsidy charges for past use of the 

electricity generated by it for supply to its own coal washeries — Held, No 

provision of Act of 2003 restricts supply through dedicated line on ground 

that such supply have not been availed through open access facility. 

Clause 11(6)(b)(ii) of Regulations of 2005 read with Section 181 of Act of 2003 

shows provision for payment of cross subsidy charges. Dedicated transmission 

can be used on payment of cross subsidy charges. 

Chhattisgarh State Power Distribution Co. Ltd. v. Aryan Coal 

Benefications Pvt. Ltd. and Chhattisgarh State 




MANU/ET/0010/2010 

Date of Communication—What is the date of communication of the decision or 

Order of the Tribunal for the purpose of Section 125 of the Electricity Act and 

whether the Appellant is communicated in the present case — Held, The word 

“communication” not been defined in the Act and the Rules and thus it has to 

be interpreted by applying the rule of contextual interpretation and the relevant 

provisions. Rule 94(2) provides that once the factum of pronouncement of Order 

by the Tribunal is made known to the parties and they are given opportunity 

to obtain a copy thereof through e-mail etc., the Order will be deemed to have 

been communicated to the parties and the period of 60 days specified in the 

main part of Section 125 will commence from that date. In the present case, 

the date on which the impugned order was pronounced by the Tribunal, the 

factum of pronouncement was conveyed to the parties including the Appellant. 

The preparation of appeal is a clinching evidence of the fact that the Appellant 

had not only become aware of the order of the Tribunal, but had obtained copy 

thereof. No tangible explanation was offered by Appellant for not filing Appeal 

for more than three and half months after its preparation. 

Chhattisgarh State Electricity Board v. CERC and Ors. 

Civil Appeal D. No. 37598 of 2007, 

Decided on 15.04.2010, p. 0313 SC 

MANU/SC/0252/2010 

12 

March - April, 2010

Subject Index 

ix 

Determination of IT Liability—Disallowance of Income Tax to earn ROE as 

post tax — Held, A conjoint reading of the Regulation 7, Regulation 66 of the 

State Commission and Section 195(A) of the Income Tax Act, 1961 leaves no 

doubt that the recovery of income tax paid as an expense from the beneficiaries 

requires to be grossed up in such a manner as to ensure that the actual tax 

paid is fully recovered through Tariff. Grossing up of the return would ensure 

that after paying the tax, the admissible post tax return is assured to the 

Appellant. In this way the Appellant would neither benefit nor loose on account 

of tax payable which is a pass through in the Tariff. This would ensure that 

the Appellant earns permissible return of 14 per cent stipulated in 

Regulation 66 of the Regulations and mandate of Section 195A of the Income 

Tax Act is also complied with. The above provisions of Regulations, 2004 also 

make it clear that income tax payable on the income from the core business 

of the company is to be treated as an expense and recovered from the Tariff 

payable by beneficiaries. The income earned by the licensee is net of tax and 

the tax payable is treated as a separate expenditure recoverable from the 

beneficiaries. 

Torrent Power Limited v. Gujarat Electricity Regulatory Commission 


MANU/ET/0015/2010 

Determination of Wheeling Charges—The controversy between the parties 

revolves around the Methodology, criteria/formula to be applied in 

determining the wheeling charges in accordance with the applicable 

Regulations framed under the Electricity Act, 2003 — Held, Appellants claimed 

that the formula/methodology/criteria for determining wheeling charges has 

to be in terms of form 1.27 attached to the Tariff Regulations, 2005 and in 

spite of the clear and categorical statutory provisions contained in the 

applicable regulations; the Appellants were wrongly directed by the Tribunal 

to re-determine the wheeling charges. A combined reading of all the applicable 

regulations, according to the Appellants, leads to the irresistible conclusion 

that for determining wheeling charges total distribution cost of the network 

and not the voltage-wise cost would be the determining factor. 

The interpretation made by the Tribunal, if accepted, would render the 

regulation framed by the Appellant otiose. The Tribunal incorrectly 

understood and interpreted the expressions applicable distribution network 

as the distribution network cost which is to be determined at the relevant 

voltage level. The appeals have to be allowed on the short ground that the 

Tribunal has failed to consider the objection raised by the Appellants with 

regard to the maintainability of the appeal filed by Respondent No. 1, before 

the Tribunal. The specific submission made by the Appellant with regard to 

the maintainability of the appeal was an important issue, which needed 

consideration by the Tribunal. Numerous issues, which have been raised 

in these appeals on merits, were also raised before the Tribunal, which 

seem to have escaped the notice of the Tribunal rendering its decision 

vulnerable. 

It would be in the interest of justice to remand the matter back to the Tribunal 

for fresh consideration of all the issues after taking into consideration the 

factual and legal submissions made by the appellant. In view of the above 

both the appeals succeed and are allowed. The Order passed by the Tribunal 

is set aside. The appeals are remanded back to the Tribunal to be decided 


13

x Energy Law Reports (ELR) [Vol. 1, Part 2, 2010] 

afresh on merits, in accordance with law preferably within a period of three 

months of the receipt of a certified copy of this Order. 

West Bengal Electricity Regulatory Commission v. Hindalco 

Industries Ltd. and Ors. 

Civil Appeal Nos. 805 of 2008, 3341 of 2008, 

Decided on 22.04.2010, p. 0332 SC 

MANU/SC/0284/2010 

Disallowance of Double Counting of Additional Supply Charges—Whether 

Sate Commission justified in disallowing double counting of Additional Supply 

Charges (ASC) revenue in respect of Financial Year 2007-08 — Held, State 

Commission had taken a recent decision considering the same in respect 

of Financial Year 2007-08 in final truing up process. The State commission, 

in the final truing up process for financial year 2007-08 audited accounts 

for financial year 2007-08 after prudence check have been taken into 

consideration and in the latest Tariff Order for MSEDCL for financial 

year 2009-10 vide Order dated, 17 th August, 2009 the State Commission 

has redressed the grievance of the Appellant. This statement has not 

disputed by the Appellants, so appeal has become infructuous. 

Maharashtra State Electricity Distribution Co. Ltd. v. Maharashtra 

Electricity Regulatory Commission and Ors. 


MANU/ET/0021/2010 

Distribution Loss—Lack of uniformity in principles adopted by the 

Commission by not incentivising the Appellant for achieving better 

distribution loss target but penalising for not being able to achieve the target 

transit loss — Held, The Regulations incentivise performance better than 

the norms and disincentivise performance below norms of AT&C loss level. 

Therefore, we are not in agreement with the plea of the State Commission 

that the gains of efficiency accrue from the capital expenditure made by 

licensee and therefore, must be passed on to the consumers. Capital 

expenditure is anyway made in the entire supply chain. Commission should 

decide sharing of the gains of efficiency between the Appellant and the 

Consumers as provided for in Regulation 66 of the State Commission. 



p. 0378 APTEL 

MANU/ET/0015/2010 

Energy Purchase Obligations—Specifying Renewable Energy Purchase 

Obligations discriminately — Held, The Regulations provide 2 per cent as 

minimum quantum of purchase from renewable sources, the State 

Commission has added the backlog for the years 2006-07 and 2007-08 by 

relying on Regulation 3.2 of the power procurement from renewable sources 

regulations. Clause 3.2 of the Notification (supra) stipulates that if due to 

increased sale of power in the current year from that of the previous year, 

there may be shortfall of the targeted quantum from the quantum that would 

arise from the increased sale, such amount resulted due to increased sale 

would be added to the targeted quantum of Renewable Purchase Obligation 

for the next year. The Appellant has not been able to fulfill its obligations for 

the years 2006-07 and 2007-08 despite efforts made by it by inviting expression 

of interest from the renewable generators. This backlog of 2006-07 and 

2007-08 cannot be added to the year 2008-09 as per Regulation 3.2 because 

14 

March - April, 2010

Subject Index 

xi 

the short fall has not been caused due to increased sales in the area of the 

licensee. State Commission may review the targets for the years 2008-09, 

2009-10 and 2010-11 depending upon the availability of the power from 

renewable sources. 



p. 0378 APTEL 

MANU/ET/0015/2010 

Exemption—Whether the State Commission has erred by ignoring the fact 

that the Central Commission had rejected the petition of MPL (R-3) for 

exemption from NTP and that the NDPL (R-2) was seeking to bypass the 

provisions of the NTP by seeking the approval of the State Commission to the 

PPA entered into with MPL (R-3) even though he same was entered into in 

contravention of the provisions of NTP — Held, The MPL (R-3) has merely 

approached the Central Commission to seek a clarification for the question 

as to whether it will fall within the exempted category from Clause 5.1 of 

NTP as it is state owned by virtue of the nature of control exercised by the 

Damodar Valley Corporation, a Central Government company. In the said 

petition the Central Commission did not give any findings with regard to the 

issues concerning the determination of Tariff of MPL (R-3). It is clear from the 

Order dated, 17 th January, 2007 passed by the Central Commission that the 

Central Commission carefully refrained from finding any issue relating to 

Clause 5.1 of NTP and instead the Central Commission directed the MPL 

(R-3) to approach the Central Government to seek such clarification as it felt 

that it does not have the jurisdiction in adjudication of such matters. This 

Order cannot be treated as one relating to Tariff determination. As a matter 

of fact, the Central Government has clearly observed in its Order dated, 

28 th August, 2006 that it is for the Central Government to interpret its policy 

to determine whether a particular utility falls outside the scope of Clause 5.1 

of the NTP. 


Appeal Nos. 106 and 107 of 2009, Decided on 31.03.2010, 

p. 0404 APTEL 

MANU/ET/0017/2010 

Grant of Licence—Whether notice issued under Section 15(5) (b) Act of 2003 

inviting public opinion in matter of issuance of license in favour of Respondent 

justified — Held, The Order challenged in this Appeal is only an interim Order, 

which was passed on 6 th May, 2008 directing issuance of notice inviting the 

public opinion and suggestions, and therefore the Appellant could not claim 

as an aggrieved party. 

In both the Orders dated 6 th May, 2008 and 1 st October, 2009, the State 

Commission observed specifically that there is a prima facie case to show 

that Respondent No. 1 is competent enough to claim for licence, but the final 

decision with reference to grant of licence in favour of Respondent No. 1 

would be considered only after considering all the objections raised by the 

Appellant as well as the Objections to be raised by the public. 

GRIDCO Limited v. Global Energy Limited and Anr. 

Appeal No. 26 of 2010 & I.A. Nos. 32, 33 and 34 of 2010, 


MANU/ET/0009/2010 


15

xii Energy Law Reports (ELR) [Vol. 1, Part 2, 2010] 

Judicial Review—Whether Parliament has conferred power of judicial review 

on the Appellate Tribunal for Electricity under Section 121 of the 2003 Act — 

Held, Section 121 of the 2003 Act does not confer power of judicial review on 

the Appellate Tribunal. Words “orders”, “instructions” or “directions” in 

Section 121 do not confer power of judicial review in the Appellate Tribunal 

for Electricity. Appellate Tribunal cannot go into the validity of the impugned 

Regulations 2006. Validity of the Regulations to be challenged by seeking 

judicial review under Article 226 of the Constitution of India. 




Decided on 15.03.2010, p. 0269 SC 

MANU/SC/0164/2010 

Jurisdiction to Approve PPA—Whether the State Commission has the 

jurisdiction to approve the PPA entered into between NDPL (R-2) and MPL (R-3) 

prior to Tariff determination for the PPA by the Central Commission — Held, 

Subject to the incorporation of the said rule in the PPA for procurement of 300 MW 

of power from MPL (R-3) is approved for a period of 29 years, commencing 

from 2012. The Tariff for supply of this power shall be fixed by the Appropriate 

Commission. It is clear that the State Commission has not fixed the Tariff at all. 

On the other hand, it has observed that exercise has to be done by the Central 

Commission which alone can determine Tariff under Section 79(l)(b) in respect 

of the inter-State transmission of electricity by the generating company. In this 

case, the State Commission has adopted a normative Tariff only for the limited 

purpose of examining and scrutinising the PPA. 


Appeal Nos. 106 and 107 of 2009, Decided on 31.03.2010, 

p. 0404 APTEL 

MANU/ET/0017/2010 

Jurisdiction—Whether in terms of Section 62(1)(a) proviso or any other 

provisions under the Act the Central Commission has got any jurisdiction 

to fix minimum and maximum ceiling of price for inter-state sale or purchase 

of electricity on the ground that there exists scarcity of electricity supply 

with reference to the transaction of power exchanges or inter-state 

transactions — Held, It is not correct to contend that the proviso to 

Section 62(1)(a) shall be limited to the supply of electricity by generating 

company to a Distribution Licensee alone. The perusal of the above section, 

as is evident from the terms of the proviso, it is clear that it does not limit 

itself to the Tariff for supply of electricity by generating company to a 

Distribution Licensee alone. On the contrary it refers to supply of electricity 

in pursuance of an agreement entered into between the generating 

company and the licensee or between licensees. Under Section 14 of the 

Act, the licensees include Transmission Licensee, Distribution Licensees 

and traders. Under Section 79(1)(k), the Central Commission can exercise 

its powers under Section 62(1)(a) proviso on the basis of the prevailing 

circumstances which reflected shortage of electricity as well as escalation 

of prices, to fix the minimum and maximum ceiling of prices. The Central 

Commission imposes a price cap only for day ahead inter-State 

transactions and that too for a short period of 45 days. This cannot be 

done by the State Commission under the powers under Section 64(5) of 

the Act. Further it is noticed that this period of 45 days had already expired. 

16 

March - April, 2010

Subject Index 

xiii 

Rule 8 would apply to determination of Tariff and power procurement 

process. Rule 8 cannot prevent the Central Commission from exercising 

the power of fixing minimum and maximum prices of power in the abnormal 

situation of shortage. The Central Commission has got the jurisdiction to 

fix the minimum and maximum prices to deal with the abnormal situation 

of shortage of electricity and the escalation of the price rise, under 

Section 62(1)(a) proviso the power of which is available to Central 

Commission as conferred under Section 79(1)(k) of the Act. 

CESC Ltd. v. CERC 

Appeal No. 166 and 168 of 2009, 


MANU/ET/0024/2010 

License for Supply of Power—Whether the Aryan Plant liable to apply for 

open access or to obtain the license for supply of power to its own coal 

washeries for the future use through its own dedicated line — Held, Order 

directing Appellant to apply for license or to get open access for future use 

suffers from infirmity and said portion of order set aside. Appellant entitled 

to use its own dedicated transmission line to supply electricity to its own 

coal washeries on payment of cross subsidy surcharge to Distribution 

Company as compensatory charge for future period. Appellant not bound 

either to avail open access or to obtain license under Act of 2003. 

Chhattisgarh State Power Distribution Co. Ltd. v. Aryan 

Coal Benefications Pvt. Ltd. and Chhattisgarh State 


Appeal No. 119 of 2009 and Appeal No. 125 of 2009, Decided on 

09.02.2010, p. 0476 APTEL 

MANU/ET/0010/2010 

Limitation—Application for condonation of delay of 222 days in filing an 

appeal without furnishing any explanation of such delay — Held, Affidavit 

filed by Appellants did not show proper reasons for actual delay. Appellant 

again sought time to file the second better affidavit. Impugned Tariff Order 

in this Appeal passed in the year 2006. Tribunal not satisfied with reasons 

given in affidavit to condone the delay as they were not bona fide. 

Maharashtra Jeevan Pradhikaran v. Maharashtra State Electricity 

Distribution Co. Ltd. and Anr. 

Appeal No. 55 of 2008 & I.A. Nos. 164, 165 and 166 of 2007, 


MANU/ET/0012/2010 

Limitation—Whether Section 5 of the Limitation Act, 1963 can be invoked 

by this Court for allowing the aggrieved person to file an appeal under 

Section 125 of the Electricity Act, 2003 after more than 120 days from the 

date of communication of the decision or order of the Appellate Tribunal for 

Electricity — Held, Electricity Act, a special legislation within the meaning of 

Section 29(2) of the Limitation Act, which provides that where any special or 

local law prescribes for any suit, appeal or application a period of limitation 

different from the one prescribed by the Schedule, then such period prescribed 

by special or local law were the period prescribed by the Schedule. 

The expression “within a further period of not exceeding 60 days” in Proviso 

to Section 125 of Electricity Act makes it clear that the outer limit for filing 

an appeal is 120 days. No provision in the Act under which this Court can 

entertain an appeal filed against the decision or Order of the Tribunal filed 


17

xiv Energy Law Reports (ELR) [Vol. 1, Part 2, 2010] 

after more than 120 days. Any interpretation of Section 125 of the Electricity 

Act which may attract applicability of Section 5 of the Limitation Act read 

with Section 29(2) thereof will defeat the object of the legislation providing 

special limitation for filing an appeal against the decision or order of the 

Tribunal and proviso to Section 125 will become nugatory. Thus, Section 5 of 

the Limitation Act cannot be invoked by the present Court for entertaining 

an appeal filed against the decision or order of the Tribunal beyond the period 

of 120 days specified in Section 125 of the Electricity Act and its proviso. 



Decided on 15.04.2010, p. 0313 SC 

MANU/SC/0252/2010 

Limitation—Whether State Commission right in dismissing the review Petition 

against the main tariff Order, dated, 15 th June, 2005 filed after a delay of over 

3 years, with application for condonation of delay — Held, While entertaining 

the application for condonation of delay, the Courts should take a liberal view 

in considering the explanation. The Supreme Court in a number of Judgments 

would observe that even the long delay could be considered for condonation 

only when there is no lack of bona fide, no inaction or no negligence on the 

part of Applicant. The only explanation given by the Appellant was that they 

have been wrongly advised by their lawyers. This explanation is preposterous. 

If the Appellant felt that they were wrongly advised by the lawyers, they should 

have approached the Bar Council for legal action to be taken against the said 

Counsel. The explanation lacks bona fide. 

Shrishrimal Plantation Ltd. v. Chhattisgarh State 

Power Distribution Co. Ltd. and Anr. 


p. 0418 APTEL 

MANU/ET/0007/2010 

Limitation—Whether the Appeal is barred in terms of the provision of 

Order 47, Rule 7 of the Code of Civil Procedure when the Order impugned 

was said to be passed by the Central Commission rejecting the Review Petition 

on the ground that it is time barred under Section 94(1) of the Electricity Act 

— Held, Section 94(1)(f) has been incorporated in the Electricity Act by 

bringing into force all the provisions relating to it. Therefore, all the provisions 

as a whole will have to be read as it is a registration by incorporation. In view 

of this it would also include Order 47, Rule 7 containing prohibition 

against the Appeal from an Order rejecting the review. In that context, 

Section 111 cannot be incorporated to provide that an appeal would lie against 

an Order rejecting the Review. Similarly, even in respect of the decision of 

the Provincial Insolvency Act, 1920, it is to be noted hat Section 5 of the said 

Act starts with “subject to” the said Act, provides that the Court, shall have 

the same powers as it follows in the exercise of the original jurisdiction. There is 

no such qualification prescribed under Section 94 of the Act. Appeal is as 

against the Order rejecting the Review petition by the Central Commission 

on the ground of long and unexplained delay under Section 94 of the Act and 

as such this Appeal is barred under Order 47, Rule 7. 

Tamil Nadu Electricity Board v. CERC and NTPC Ltd. 


p. 0450 APTEL 

MANU/ET/0023/2010 

18 

March - April, 2010

Subject Index 

xv 

Limitation—Whether the Appellate Tribunal constituted under the Electricity 

Act, 2003 has jurisdiction under Section 111 to examine the validity of Central 

Electricity Regulatory Commission (Fixation of Trading Margin) 

Regulations, 2006 framed in exercise of power conferred under Section 178 

of the Electricity Act, 2003 — Held, The scheme of Electricity Act, 2003 makes 

it clear that Section 178 is wider than Section 79(1) of the 2003 Act. Making 

of a regulation under Section 178 is not a pre-condition to the Central 

Commission taking any steps/measures under Section 79(1). Regulation 

under Section 178, as a part of regulatory framework, intervenes and even 

overrides the existing contracts between the regulated entities. An Appeal 

would certainly lie before the Appellate Tribunal under Section 111 if a dispute 

arises in adjudication on interpretation of a regulation made under 

Section 178. But no appeal shall lie to the Appellate Tribunal on the validity 

of regulation made under Section 178. Validity of Regulations framed by the 

Central Electricity Regulatory Commission under Section 178 of the Electricity 

Act cannot be challenged before the Appellate Tribunal constituted under 

the Electricity Act, 2003. Appellate Tribunal empowered to adjudicate only 

on the interpretation of a Regulation and not the validity of Regulation. 

Such validity to be challenged by seeking judicial review under Article 226 of 

the Constitution of India. 

PTC India Ltd. v. Central Electricity Regulatory Comm., thr. Secy. 


Decided on 15.03.2010, p. 0269 SC 

MANU/SC/0164/2010 

Limitation—Whether the State Commission was right in holding that 

the claim of the Appellant with reference to the deemed generation 

incentive as well as wrongful allocation of the capacity for the period prior to 

14 th September, 2002 could be said to be barred by limitation — 

Held, Article 55 of the Limitation Act is relevant. Article 55 provides for filing 

of the suit for compensation for the breach of any contract, express or implied. 

According to this Article the period of limitation is 3 years. This Article further 

says that when the contract is broken or where there are successive 

breaches, then the breach in respect of which suit is instituted occurs. 

It is clear that the cause of action for compensation on account of alleged 

diversion of power arose in July 1996 itself and at any rate it arose when the 

Demand Notice dated 29 th October, 2003 was issued and the same was refuted 

on 1 st November, 2003 and 1 st December, 2003. Under those circumstances, 

the State Commission in our view rightly held that the claims of the Appellant 

for the said compensation and for the refund of the said deemed generation 

incentive pertaining to any period prior to 3 years from the date of the filing 

of the petition before the State Commission i.e. on 14 th September, 2005 are 

clearly barred by limitation. 




MANU/ET/0013/2010 

Meaning of Association of Person—Whether Captive Generation Company 

(CGP) owned Petitioner/Company being Special Purpose Vehicle (SPV) 

“association of person” or not — Held, Reading the entire Rule 3 as a whole it 

does appear to us that a CGP owned by a special purpose vehicle has to be 

treated as an association of person and liable to consume 51 per cent of his 


19

xvi Energy Law Reports (ELR) [Vol. 1, Part 2, 2010] 

generation in proportion to the ownership of the plant. Every legal entity is 

the person. Therefore, the special purpose vehicle which has to be a legal 

entity shall be a person in itself. Any generating company or a captive 

generating company is also a person. The Rules specially deals with 

co-operative society. In an association of persons it has to be a “person” 

because without being a person it cannot set up a captive generating plant. 

Therefore, it will be wrong to say that since the special purpose vehicle is a 

“person” in itself it cannot be covered by a definition of “association of persons” 

and has to be covered by the main provision which requires the owner to 

consume 51 per cent or more of the generation of the plant. In our view the 

definition is somewhat strange in as much as the term “person” is said to 

include an “association of persons”. Captive Generating Company (CGP) owned 

by SPV to be treated as ‘association of person’. SPV has to be legal entity 

shall be ‘person’ in itself along with any generating company or CGP. SPV 

‘association of persons’. Other issues raised in review petition already dealt 

with by Tribunal in said decision and conclusions arrived at based on valid 

reasoning. 

VS Lignite Power Private Ltd. v. Kadodara Power Pvt. Ltd. and Ors. 

Review Petition No. 02 of 2010 in Appeal Nos. 171 of 2008, 172 of 

2008 and IA Nos. 233/08 and 234/08, Appeal Nos. 10 of 2008 

and 117 of 2009, Decided on 19.03.2010, p. 0435 APTEL 

MANU/ET/0020/2010 

Meaning of Person aggrieved—Whether the Appellants are the aggrieved 

person as provided under Section 111 of the Electricity Act — Held, The words 

“person aggrieved” did not mean a man who merely disappointed of a benefit 

which he might have received. A person aggrieved means a person who has 

suffered a legal grievance, a person against whom a decision pronounced which 

have wrongly deprived him of something or wrongfully refused him something 

or wrongly affected his title to something. When a person not been deprived of 

a legal right or subject to legal wrong or not suffered any legal grievance, he 

would not be a person aggrieved. In present case, Appellants simply said that 

if a competitive bidding process would have been allowed, it might had access 

to get the power by becoming successful bidder. Real intention of Appellants 

appeared to be secure indirectly portion of power procured by R-2 from R-3 

under the PPA . As such Appellant failed to establish that they had suffered 

any legal grievance or legal injury or have been unjustifiably deprived and 

denied of something which it would have been entitled to obtain in usual course. 

Therefore, Appellants not a person aggrieved. 




MANU/ET/0017/2010 

Open Access Regulations—Whether the new locations which Open Access 

was sought would amount to relinquishment which requires ONGC (R-2) to 

file a fresh Open Access application in accordance with the Open Access 

Regulations along with the requisite details for the change of locations — 

Held, Section 2(47) which defines Open Access as meaning 

non-discriminatory provision for the use of transmission lines or the 

distribution system or associated facilities with such lines or system by any 

licensee or consumer or a person engaged in generation. Section 2(72) defines 

transmission lines. It means, high pressure cable and overhead lines 

20 

March - April, 2010

Subject Index 

xvii 

transmitting electricity from (a) a generating station to another generating 

station and (b) a generating station to a substation. According to this 

definition, a transmission line is a point to point line to a generating station 

or to a sub-station. Thus, it is clear the Open Access is point to point in the 

transmission system, i.e., for a transmission line and not for the entire 

transmission system. ONGC(R-2) is entitled to claim open access from the 

period from 1 st April, 2006 to the above six identified places and not to any 

other place. Any change or rationalisation of the above open access including 

any addition or deletion of the locations can be only with the prior direction 

of the State Commission in accordance with the open access regulations. 

Gujarat Energy Transmission Corporation Ltd. v. Gujarat 


Appeal No. 104 of 2009, 


MANU/ET/0018/2010 

Open Access Regulations—Whether the State Commission was justified in 

holding that the Appellant was entitled to change its points of drawl for various 

transmission lines for open access within the State of Gujarat without having 

to follow any procedure under the Open Access Regulation — Held, Regulation 

9 contemplates that the Applicant in the application shall specify the point 

of injection and point of drawl. This is not an empty formality. The entire 

process deciding to grant Open Access is based on the point of injection and 

point of drawl. Even before the Electricity Act, 2003, the open access to the 

transmission lines and distribution lines were provided in the point of injection 

and point of drawl. This would be clear from the approval letter dated, 

27 th November, 2000 which was granted by the Board only in respect of 6 

transmission lines on which wheeling was allowed. This approval granted to 

ONGC(R-2) was on 6 specific lines with the point of injection, points of drawl 

and the capacity for which open access is sought. 

Gujarat Energy Transmission Corp. Ltd. v. Gujarat 



p. 0421 APTEL 

MANU/ET/0018/2010 

Power Purchase Adjustment—Not considering mix variance in Fuel Price 

and Power Purchase Adjustment (FPPPA) Charges — Held, Appellant has 

mainly challenged the formula so as to claim difference in Power Purchase 

Cost on account of change in the purchase from the approved sources. In its 

petition before the State Commission the Appellant had pleaded that the 

then existing FPPPA formula be modified in view of the segregation of business 

activities and costs into generation business and distribution business so 

as to account for the Fuel Price Adjustment (FPA) in the generation business 

and Power Purchase Adjustment (PPA) in the distribution business separately. 

There is rationale in the statement of the Appellant that after segregation 

into generation and distribution business the formula may need adjustment. 

Accordingly, we direct the State Commission may de novo reconsider the 

proposal of the Appellant and ensure that its concerns are addressed. 



p. 0378 APTEL 

MANU/ET/0015/2010 


21

xviii Energy Law Reports (ELR) [Vol. 1, Part 2, 2010] 

Refund of Deemed Generation Incentive—Whether the Electricity Board 

(R-l) is entitled to get the refund from the Appellant for the deemed generation 

incentive paid to the Appellant in view of the amended Notification dated 

6 th November, 1995 — Held, The Notification dated 6 th November, 1995 is 

statutory in nature issued under Section 43A(2) of the Electricity (Supply) 

Act, 1948. Any PPA entered into has to be consistent with the statutory 

notification. It is a settled law that rights and obligation of the parties under 

the PPA have to be read subject to the statutory provisions. The provisions of 

the PPA which are contrary to the statutory provision cannot be given effect 

to. This is a well established law as held in (2000) 3 SCC 379 India-Thermal 

Power Ltd. v. State of Madhya Pradesh. 


Appeal No. 77 of 2009 and Appeal No. 86 of 2009, Decided on 

22.02.2010, p. 0359 APTEL 

MANU/ET/0013/2010 

Repayment of Loan—Whether the Central Commission has implemented 

the Order dated, 14 th November, 2006 passed by the Tribunal in computation 

of the accumulative repayment of loan up to the previous year — Held, The 

previous appeal filed before this Tribunal would show that Appellant only 

challenged criteria adopted by Central Commission. Appellant had not 

challenged the cumulative repayment of loan up to the previous year. 

Tribunal merely came to the conclusion and gave directions to Central 

Commission. Question of repayment of loan was never raised before Tribunal. 

Cumulative repayment of loan was neither the issue before the Tribunal nor 

the same has been decided. 



MANU/ET/0019/2010 

Supply of Electrical Output—Whether under the PPA I and II the supply of 

electrical output to be made by the Appellant shall be in the ratio of 300:215 

MW, the allocated capacity of the Electricity Board (R-l) and Essar Steels 

Ltd. Respectively — Held, Schedule-VI to the PPA-1 contained provision in 

regard to Dispatch Procedures. As per Article 6.1, as indicated above, the EPL 

is required to submit to the Board Load Dispatch Centre Weekly Schedules. 

There is nothing in this article to suggest that the declaration of capacity is to 

be on a proportionate basis to the Electricity Board as well as to the Essar 

Steel Ltd. After the EPL submitted its Weekly Schedule, the Electricity Board 

shall issue to the EPL a Schedule of its requirement vide Article 6.2. On a 

combined reading of Articles 1 and 3 and Schedule-VI of the PPA-1, it is clear 

that EPL has to declare available capacity up to the allocated capacity to both 

the Electricity Board as well as to Essar Steels Ltd. and not on proportionate 

theory basis. 




MANU/ET/0013/2010 

Truing up—Identification of variables as controllable and uncontrollable in 

the impugned Order and timing of their adjustments — Held, Necessary for 

the Commission to expeditiously carry out the truing up exercise both for 

controllable and uncontrollable items as soon as the audited data as per 

22 

March - April, 2010

Subject Index 

xix 

actuals is available and give effect to the approved gains/losses to be passed 

through Tariff following the Annual Performance Review as stipulated in 

clause 12.1(b) of the MYT Regulations. This exercise need not wait for the next 

control period. State Commission directed to undertake the truing up at the 

earliest once the actual audited data is available. 



MANU/ET/0015/2010 

Violation of Directions under Grid Code—Whether Appellant guilty of the 

violation of the directions issued regarding the overdrawl when the frequency 

fell below 49 Hz by the Northern Regional Load Despatch Centre under the 

Indian Electricity Grid Code — Held, Under Indian Electricity Grid code state 

utilities would endeavour to restrict their drawl from grid whenever grid 

frequency falls below 49.5 Hz. When grid frequency falls below 49 Hz, requisite 

load shedding should be carried out by Appellant (SLDC) to curtail overdrawal. 

Regional Load Despatch Centre gave intimation to Appellant (SLDC) regarding 

overdrawal when frequency fell below 49 Hz. Facts suggest that Appellant 

did not take any action to stop overdrawing of electricity by state utilities. 

Factual finding by Central commission found that no concrete step taken to 

stop over drawing when frequency fall below 49 Hz. Appellant actions found 

insufficient. Order of State Commission justified. 

Delhi Transco Limited v. CERC and Northern Regional Load 

Despatch Centre Appeal No. 124 of 2009, 


MANU/ET/0011/2010 

Wheeling Charges—Determination of Wheeling Charges — Held, The system 

peak demand of TPL-D for the year FY 2008-09 is 1494 MW. The contract 

demand for all the HT consumers is about 444 MW. Assuming that total 

contact demand of HT contributes to the system peak demand, the total 

demand of LT contributing to the system peak is computed as 1050 MW. 

The ratio of HT and LT voltage contribution to the peak, i.e., 30:70. 

The apportionment charges need to be reviewed to take into account the fact 

that the consumers at LT level also utilise the HT system whereas HT 

consumers do not use the LT system. State Commission directed to 

re-determine the open access charges in terms of the capacity reserved as 

per its own Regulations as also review the apportionment of wheeling charges 

with respect of HT and LT system. 



MANU/ET/0015/2010 

Ratio Decidendi 

Limitation—Limitation Act cannot override a special or local law which 

prescribes a different period of limitation for any suit, appeal or application. 



Decided on 15.04.2010, p. 0313 SC 

MANU/SC/0252/2010 


23

xx Energy Law Reports (ELR) [Vol. 1, Part 2, 2010] 

Judicial—Under the statutory provision of the Electricity Act, 2003, power of 

judicial review is not conferred on the Appellate Tribunal for Electricity by 

the parliament. 




Decided on 15.03.2010, p. 0269 SC 

MANU/SC/0164/2010 

Jurisdiction—Appellate Tribunal empowered to adjudicate on the issue of 

interpretation of a Regulation framed by the Central Electricity Regulatory 

Commission under Section 178 of the Electricity Act, but cannot go into the 

validity or the vires of the Regulation 




Decided on 15.03.2010, p. 0269 SC 

MANU/SC/0164/2010 

24 

March - April, 2010

0269 

a 

b 

2010 ELR (SC) 0269* 

IN THE SUPREME COURT OF INDIA 

PTC India Ltd. 

v. 

Central Electricity Regulatory Commission, thr. Secy. 

[Alongwith Civil Appeal Nos. 4354/06, 4355/06, 2875/07, 7437/05, 7438/ 

05, 2073/07, 1471/07, 2166/07, Civil Appeal No. 2412/2010 (D 9870/07) 

and Civil Appeal No. 2413/2010 arising out of S.L.P. (C) No. 22080/05] 

CIVIL APPEAL NO. 3902 OF 2006 

DECIDED ON: 15.03.2010 

c 

d 

e 

f 

g 

h 

i 

Judges 

K.G. Balakrishnan, C.J.I., S.H. Kapadia, R.V. Raveendran, B. Sudershan 

Reddy and P. Sathasivam, JJ. 

ISSUES AND FINDINGS 

Whether the Appellate Tribunal constituted under the Electricity Act, 2003 

has jurisdiction under Section 111 to examine the validity of Central 

Electricity Regulatory Commission (Fixation of Trading Margin) 

Regulations, 2006 framed in exercise of power conferred under 

Section 178 of the Electricity Act, 2003? 

The scheme of Electricity Act, 2003 makes it clear that Section 178 is wider 

than Section 79(1) of the 2003 Act. Making of a regulation under Section 178 

is not a pre-condition to the Central Commission taking any steps/measures 

under Section 79(1). Regulation under Section 178, as a part of regulatory 

framework, intervenes and even overrides the existing contracts between 

the regulated entities. An Appeal would certainly lie before the Appellate 

Tribunal under Section 111 if a dispute arises in adjudication on 

interpretation of a regulation made under Section 178. But no appeal shall 

lie to the Appellate Tribunal on the validity of regulation made under 

Section 178. Validity of Regulations framed by the Central Electricity 

Regulatory Commission under Section 178 of the Electricity Act cannot be 

challenged before the Appellate Tribunal constituted under the Electricity 

Act, 2003. Appellate Tribunal empowered to adjudicate only on the 

interpretation of a Regulation and not the validity of Regulation. Such validity 

to be challenged by seeking judicial review under Article 226 of the 

Constitution of India. 

Whether Parliament has conferred power of judicial review on the Appellate 

Tribunal for Electricity under Section 121 of the 2003 Act? 

Section 121 of the 2003 Act does not confer power of judicial review on the 

Appellate Tribunal. Words “orders”, “instructions” or “directions” in Section 

121 do not confer power of judicial review in the Appellate Tribunal for 

Electricity. Appellate Tribunal cannot go into the validity of the impugned 

Regulations 2006. Validity of the Regulations to be challenged by seeking 

judicial review under Article 226 of the Constitution of India. 

* MANU/SC/0164/2010 


25

0270 Energy Law Reports (ELR) [Vol. 1, Part 2, 2010] 

Whether capping of trading margins could be done by the Central 

Electricity Regulatory Commission (CERC) by making a Regulation in 

that regard under Section 178 of the 2003 Act or it can only be done 

by an Order under Section 79(1)(j)? 

Scheme of 2003 Act shows Central Commission is a decision-making as well 

as regulation making authority. Such decision making under Section 79(1) 

is not dependant upon making of regulations under Section 178 by the 

Central Commission. Therefore, functions of Central Commission enumerated 

in Section 79 are separate and distinct from function of Central Commission 

under Section 178. Former is administrative/adjudicatory function whereas 

the latter is legislative. Applying the principle of “generality versus enumeration”, 

it would be open to the Central Commission to make a regulation on any 

residuary item under Section 178(1) read with Section 178(2)(ze). Thus, the 

CERC was empowered to cap the trading margin under the authority of 

delegated legislation under Section 178 vide the impugned notification dated 


Appeal Dismissed 

Authority referred to 

G.P. Singh, “Principles of Statutory Interpretation” 11 th Edn., p. 638 

[p. 0311, para 58 d] 

Cases referred to 

City Board, Mussoorie v. State Electricity Board and Ors. MANU/UP/0048/ 

1971: AIR (58) 1971 Allahabad 219 (discussed) [p. 0305, para 45 c] 

Hindustan Zinc Ltd. etc. v. Andhra Pradesh State Electricity Board and Ors. MANU/ 

SC/0340/1991: (1991) 3 SCC 299: AIR 1991 SC 1473: JT 1991 (2) SC 403: 

1991 (1) SCALE 869: [1991] 2 SCR 643 (discussed) [p. 0305, para 48 h] 

Indian Express Newspapers (Bombay) Pvt. Ltd. and Ors. v. Union of India and 

Ors. (1985) 1 SCC 641(discussed) [p. 0301, para 38 a] 

Jagdamba Paper Industries (Pvt.) Ltd. and Ors. v. Haryana State Electricity 

Board and Ors. MANU/SC/0220/1983: AIR 1983 SC 1296: 1983 (2) SCALE 

1008: (1983) 4 SCC 508: [1984] 1 SCR 165: 1984 (16) UJ 126 (SC) (discussed) 

[p. 0305, para 46 g] 

Kerala State Electricity Board v. S.N. Govinda Prabhu and Bros. and Ors. MANU/ 


1986 (2) SCALE 313: [1986] 3 SCR 628 (discussed) [p. 0306, para 47 d] 

Narinder Chand Hem Raj and Ors. v. Lt. Governor, Administrator, Union Territory, 

Himachal Pradesh and Ors. MANU/SC/0620/1971: (1971) 2 SCC 747: AIR 

1971 SC 2399: [1972] 1 SCR 940: [1972] 29 STC 169 (SC) (discussed) 

[p. 0300, para 38 g] 

National Hydroelectric Power Corporation Ltd. v. CIT MANU/SC/0002/2010: 

2010 (1) SCALE 5: (2010) 228 CTR (SC) 492: [2010] 321 ITR 374 (SC): JT 

2010 (1) SC 21: [2010] 187 TAXMAN 193 (SC): 2010 (1) UJ 288 (SC) 

(discussed) [p. 0303, para 41 b] 

Raman and Raman Ltd. v. State of Madras and Ors. MANU/SC/0151/1959: AIR 

1959 SC 694: [1959] Supp 2 SCR 227 (discussed) [p. 0308, para 53 d] 

Shri Sitaram Sugar Co. Ltd. v. Union of India and Ors. MANU/SC/0249/1990: 

(1990) 3 SCC 223: AIR 1990 SC 1277: (1990) 2 CompLJ 18 (SC): JT 1990 

(1) SC 462: 1990 (1) SCALE 475: [1990] 1 SCR 909 (discussed) 

[p. 0300, para 37 e] 

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c 

d 

e 

f 

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h 

i 

PTC India Ltd. v. CERC, thr. Secy. 

(S.H. Kapadia, J.) 

0271 

Southern Technologies Ltd. v. Joint Commissioner of Income Tax, Coimbatore 

MANU/SC/0023/2010: 2010 (1) SCALE 329: [2010] 153 CompCas 674 

(SC): (2010) 228 CTR (SC) 440: [2010] 320 ITR 577 (SC): JT 2010 (1) SC 14: 

[2010] 187 TAXMAN 346 (SC): 2010 (1) UJ 387 (SC) (mentioned) 

[p. 0304, para 42 e] 

U.P. State Electricity Board, Lucknow v. City Board, Mussoorie MANU/SC/ 

0179/1985: (1985) 2 SCC 16: AIR 1985 SC 883: 1985 (1) SCALE 196: 

[1985] 2 SCR 815: 1985 (17) UJ 633 (SC) (mentioned) 

[p. 0305, para 45 c] 

Union of India and Anr. v. Cynamide India Ltd. and Anr. MANU/SC/0076/ 

1987: (1987) 2 SCC 720: AIR 1987 SC 1802: (1987) 2 CompLJ 10 (SC): 1987 

(12) ECR 199 (SC): JT 1987 (2) SC 107: 1987 (1) SCALE 728: [1987] 2 SCR 

841: 1987 (2) UJ 198 (SC) (discussed) [p. 0296, para 21 b] 

Legislations referred to 

Companies Act, 1956 [p. 0279, para 7 h] 

Constitution of India, 1950 

Article 14 [p. 0307, para 48 d] 

Article 226 [p. 0312, para 60 f] 

Electricity Act, 2003 

Section 1 [p. 0275, para 7 h] 

Section 1(3) [p. 0309, para 55 i] 

Section 2 [p. 0276, para 7 a] 



Section 2(32) [p. 0309, para 54 c] 

Section 2(33) [p. 0294, para 10 a] 





Section 2(62) [p. 0294, para 11 b] 



Section 3(4) [p. 0276, para 7 d] 

Section 7 [p. 0277, para 7 e] 

Section 8 [p. 0294, para 12 c] 

Section 9 [p. 0277, para 7 f] 

Section 9(2) [p. 0295, para 21 h] 


Section 12 [p. 0278, para 7 d] 

Section 12 Clause (c) [p. 0281, para 7 d] 

Section 13 and 14 [p. 0278, para 7 e] 

Section 14(1) [p. 0278, para 7 g] 

Section 15 [p. 0278, para 7 g] 

Section 15(1) [p. 0290, para 7 e] 

Section 15(2) [p. 0290, para 7 f] 




27




Section 18(2) Clause (a) [p. 0290, para 7 f] 

Section 18(2) Clause (c) [p. 0290, para 7 g] 


Section 20 [p. 0295, para 21 i] 









Section 38(2) Clause (d)(ii) [p. 0289, para 7 a] 

Section 40 Clause (c)(ii) [p. 0289, para 7 b] 






















Section 53(1)(a) [p. 0299, para 32 d] 





Section 61 Clause (g) [p. 0291, para 7 f] 


Section 62 [p. 0282, para 7 b] 



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0273 









Section 73 Clause (b) [p. 0288, para 7 d] 

Section 73(d) [p. 0294, para 11 a] 







Section 79(1)(g) [p. 0302, para 40 c] 

Section 79(1)(h) [p. 0276, para 7 c] 

Section 79(1)(j) [p. 0302, para 21 f] 





Section 86(1)(j) [p. 0296, para 21 e] 





















Section 178(2)(d), (o), (p) and (y) [p. 0299, para 32 d] 

Section 178(2)(s) [p. 0296, para 22 g] 

Section 178(2)(ze) [p. 0304, para 43 g] 


29









Electricity (Amendment) Act, 2003 

Sections 1 and 4 [p. 0310, para 56 e] 



Electricity (Supply) Act, 1948 






Electricity Regulatory Commissions Act, 1998 [p. 0282, para 7 a] 

Income Tax Act, 1961 [p. 0303, para 41 g] 

Indian Electricity Act, 1910 [p. 0293, para 9 c] 

Motor Vehicles (Amendment) Act, 1948 [p. 0308, para 53 d] 

Motor Vehicles Act, 1939 

Section 43A [p. 0308, para 53 d] 


RBI Act, 1934 

Section 45JA [p. 0304, para 42 c] 

Securities and Exchange Board of India Act, 1992 [p. 0312, para 60 g] 

Telecom Regulatory Authority of India Act, 1997 [p. 0312, para 60 h] 

Subsidiary Legislations referred to 

Central Electricity Regulatory Commission (Fixation of Trading Margin) 

Regulations, 2006 [p. 0275, para 4 c] 

Central Electricity Regulatory Commission (Terms and Conditions of Tariff) 

Regulations, 2004 [p. 0303, para 41 a] 

RBI Regulations 




Trading Margin Regulations, 2006 [p. 0399, para 32 c] 

Rationes Decidendi 

“Appellate Tribunal empowered to adjudicate on the issue of 

interpretation of a Regulation framed by the Central Electricity Regulatory 

Commission under Section 178 of the Electricity Act, but cannot go into 

the validity or the vires of the Regulation” 

“Under the statutory provision of the Electricity Act, 2003, power of 

judicial review is not conferred on the Appellate Tribunal for Electricity 

by the parliament.” 

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0275 

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JUDGMENT 

S.H. Kapadia, J. 

1. Delay condoned. 

2. Leave granted. 

3. In this batch of Civil Appeals, we are basically concerned with the doctrine 

and jurisprudence of delegated legislation. 

Questions of Law 

4. The crucial points that arise for determination are: 

(i) Whether the Appellate Tribunal constituted under the Electricity 

Act, 2003 (“2003 Act”) has jurisdiction under Section 111 to examine 

the validity of Central Electricity Regulatory Commission (Fixation of 

Trading Margin) Regulations, 2006 framed in exercise of power conferred 

under Section 178 of the 2003 Act? 

(ii) Whether Parliament has conferred power of judicial review on the 

Appellate Tribunal for Electricity under Section 121 of the 2003 Act? 

(iii) Whether capping of trading margins could be done by the CERC 

(“Central Commission”) by making a Regulation in that regard under 

Section 178 of the 2003 Act? 

Facts 

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f 

g 

5. In this batch of Civil Appeals, Appellants had challenged the vires of the 

Central Electricity Regulatory Commission (Fixation of Trading Margin) 

Regulations, 2006 as null and void before the Appellate Tribunal for Electricity 

and had prayed for quashing of the said Regulations. The Tribunal; however, 

dismissed the appeals holding that its jurisdiction was restricted by the 

limits imposed by the parent Statute, i.e. the Electricity Act, 2003. By the 

impugned Judgment, the Tribunal held that the appropriate course of 

action for the Appellants is to proceed by way of judicial review under the 

Constitution. 

6. In view of the importance of the question, the matter was referred by a 

three-Judges Bench of this Court to the Constitution Bench. While making 

reference to the Constitution Bench, the question formulated was–”whether 

the Tribunal has jurisdiction to decide the question as to the validity of the 

Regulations framed by the Central Commission?” Basically, the matters 

involve interpretation of Sections 111 and 121 of the 2003 Act. 

7. Relevant Provisions of The 2003 Act 

h 

i 

Part I 

Preliminary 

Section 1. Short title, extent and commencement. 

(3) It shall come into force on such date as the Central Government 

may, by notification, appoint: 

Provided that different dates may be appointed for different provisions 

of this Act and any reference in any such provision to the 

commencement of this Act shall be construed as a reference to the 

coming into force of that provision. 


31


Section 2. Definitions.–In this Act, unless the context otherwise requires: 

(9) “Central Commission” means the Central Electricity Regulatory 

Commission referred to in Sub-section (1) of Section 76; 

(23) “electricity” means electrical energy: 

(a) generated, transmitted, supplied or traded for any purpose; or 

(b) used for any purpose except the transmission of a message; 

(26) “electricity trader” means a person who has been granted a 

licence to undertake trading in electricity under Section 12; 

(32) “grid” means the high voltage backbone system of 

inter-connected transmission lines, sub-station and generating 

plants; 

(33) “Grid Code” means the Grid Code specified by the Central 

Commission under Clause (h) of Sub-section (1) of Section 79; 

(34) “Grid Standards” means the Grid Standards specified under 

Clause (d) of Section 73 by the Authority; 

(39) “Licencee” means a person who has been granted a licence 

under Section 14; 

(44) “National Electricity Plan” means the National Electricity Plan 

notified under Sub-section (4) of Section 3; 

(45) “National Load Despatch Centre” means the Centre established 

under Sub-section (1) of Section 26; 

(46) “notification” means notification published in the Official Gazette 

and the expression “notify” shall be construed accordingly; 

(47) “open access” means the non-discriminatory provision for the 

use of transmission lines or distribution system or associated 

facilities with such lines or system by any Licencee or consumer 

or a person engaged in generation in accordance with the Regulations 

specified by the Appropriate Commission; 

(52) “prescribed” means prescribed by Rules made by the Appropriate 

Government under this Act; 

(57) “Regulations” means Regulations made under this Act; 

(59) “Rules” means Rules made under this Act; 

(62) “specified” means specified by Regulations made by the 

Appropriate Commission or the Authority, as the case may be, 

under this Act; 

(64) “State Commission” means the State Electricity Regulatory 

Commission constituted under Sub-section (1) of Section 82 and 

includes a Joint Commission constituted under Sub-section (1) of 

Section 83; 

(71) “trading” means purchase of electricity for resale thereof and 

the expression “trade” shall be construed accordingly; 

(76) “wheeling” means the operation whereby the distribution system 

and associated facilities of a transmission Licencee or distribution 

Licencee, as the case may be, are used by another person for the 

conveyance of electricity on payment of charges to be determined 

under Section 62; 

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0277 

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Part II 

National Electricity Policy And Plan 

Section 3.–National Electricity Policy and Plan 

(1) The Central Government shall, from time-to-time, prepare the 

National Electricity Policy and Tariff policy, in consultation with the 

State Governments and the Authority for development of the power system 

based on optimal utilisation of resources such as coal, natural gas, 

nuclear substances or materials, hydro and renewable sources of energy. 

(4) The Authority shall prepare a National Electricity Plan in accordance 

with the National Electricity Policy and notify such plan once in five years: 

Provided that the Authority while preparing the National Electricity 

Plan shall publish the draft National Electricity Plan and invite 

suggestions and objections thereon from Licencees, generating 

companies and the public within such time as may be prescribed: 

Provided further that the Authority shall: 

(a) notify the plan after obtaining the approval of the Central 

Government; 

(b) revise the plan incorporating therein the directions, if 

any, given by the Central Government while granting approval 

under Clause (a). 

Part III 

Generation of Electricity 

Section 7. Generating company and requirement for setting up of generating 

station.–Any generating company may establish, operate and maintain 

a generating station without obtaining a licence under this Act if it 

complies with the technical standards relating to connectivity with the 

grid referred to in Clause (b) of Section 73. 

Section 9. Captive generation.–(1) Notwithstanding anything contained 

in this Act, a person may construct, maintain or operate a captive 

generating plant and dedicated transmission lines: 

Provided that the 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. 

Provided further that no licence shall be required under this 

Act for supply of electricity generated from a captive generating 

plant to any Licencee in accordance with the provisions of this 

Act and the Rules and Regulations made thereunder and to any 

consumer subject to the Regulations made under Sub-section (2) 

of Section 42. 

(2) Every person, who has constructed a captive generating plant and 

maintains and operates such plant, shall have the right to open access 

for the purposes of carrying electricity from his captive generating plant 

to the destination of his use: 

Provided that such open access shall be subject to availability of 

adequate transmission facility and such availability of transmission 

facility shall be determined by the Central Transmission Utility or 

the State Transmission Utility, as the case may be: 


33


Provided further that any dispute regarding the availability of 

transmission facility shall be adjudicated upon by the Appropriate 

Commission. 

Section 11. Directions to generating companies.–(1) The Appropriate 

Government may specify that a generating company shall, in extraordinary 

circumstances operate and maintain any generating station in accordance 

with the directions of that Government. 

Explanation–For the purposes of this Section, the expression 

“extraordinary circumstances” means circumstances arising out 

of threat to security of the State, public Order or a natural calamity 

or such other circumstances arising in the public interest. 

(2) The Appropriate Commission may offset the adverse financial impact 

of the directions referred to in Sub-section (1) on any generating company 

in such manner as it considers appropriate. 

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Part IV 

Licensing 

Section 12. Authorised persons to transmit, supply etc. electricity.–No 

person shall: 

(a) transmit electricity; or 

(b) distribute electricity; or 

(c) undertake trading in electricity, 

unless he is authorised to do so by a licence issued under Section 14, 

or is exempt under Section 13. 

Section 14. Grant of licence. 

The Appropriate Commission may, on an application made to it under 

Section 15, grant a licence to any person: 

(a) to transmit electricity as a transmission Licencee; or 

(b) to distribute electricity as a distribution Licencee; or 

(c) to undertake trading in electricity as an electricity trader, in 

any area as may be specified in the licence: 

Section 15. Procedure for grant of licence. 

(1) Every application under Section 14 shall be made in such form and 

in such manner as may be specified by the Appropriate Commission 

and shall be accompanied by such fee as may be prescribed. 

(6) Where a person makes an application under Sub-section (1) of Section 

14 to act as a Licencee, the Appropriate Commission shall, as far as 

practicable, within 90 days after receipt of such application: 

(a) issue a licence subject to the provisions of this Act and the 

Rules and Regulations made thereunder; or 

(b) reject the application for reasons to be recorded in writing if 

such application does not conform to the provisions of this Act or 

the Rules and Regulations made thereunder or the provisions of 

any other law for the time being in force: 

Provided that no application shall be rejected unless the 

Applicant has been given an opportunity of being heard. 

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Section 16. Conditions of licence. 

The Appropriate Commission may specify any general or specific 

conditions which shall apply either to a Licencee or class of Licencees 

and such conditions shall be deemed to be conditions of such licence: 

Provided that the Appropriate Commission shall, within one year 

from the appointed date, specify any general or specific conditions 

of licence applicable to the Licencees referred to in the first, second, 

third, fourth and fifth provisos to Section 14 after the expiry of one 

year from the commencement of this Act. 

Part V 

Transmission of Electricity 

Section 26. National Load Despatch Centre. 

(1) The Central Government may establish a Centre at the national 

level, to be known as the National Load Despatch Centre for optimum 

scheduling and despatch of electricity among the Regional Load Despatch 

Centres. 

(2) The constitution and functions of the National Load Despatch Centre 

shall be such as may be prescribed by the Central Government: 

Provided that the National Load Despatch Centre shall not engage 

in the business of trading in electricity. 

Section 34. Grid Standards. 

Every transmission Licencee shall comply with such technical standards, 

of operation and maintenance of transmission lines, in accordance 

with the Grid Standards, as may be specified by the Authority. 

Section 37. Directions by Appropriate Government. 

The Appropriate Government may issue directions to the Regional Load 

Despatch Centres or State Load Despatch Centres, as the case may be, 

to take such measures as may be necessary for maintaining smooth 

and stable transmission and supply of electricity to any region or State. 

Section 38. Central Transmission Utility and functions. 

(1) The Central Government may notify any Government company as 

the Central Transmission Utility: 

Provided that the Central Transmission Utility shall not engage in 

the business of generating of electricity or trading in electricity: 

Provided further that the Central Government may transfer, and 

vest any property, interest in property, rights and liabilities connected 

with, and personnel involved in transmission of electricity of such 

Central Transmission Utility, to a company or companies to be 

incorporated under the Companies Act, 1956 (1 of 1956) to function 

as a transmission Licencee, through a transfer scheme to be effected 

in the manner specified under Part XIII and such company or 

companies shall be deemed to be transmission Licencees under 

this Act. 

(2) The functions of the Central Transmission Utility shall be: 

(a) to undertake transmission of electricity through inter-State 

transmission system; 


35


(b) to discharge all functions of planning and co-ordination relating 

to inter-State transmission system with: 

(i) State Transmission Utilities; 

(ii) Central Government; 

(iii) State Governments; 

(iv) generating companies; 

(v) Regional Power Committees; 

(vi) Authority; 

(vii) Licencees; 

(viii) any other person notified by the Central Government in 

this behalf; 

(c) to ensure development of an efficient, co-ordinated and economical 

system of inter-State transmission lines for smooth flow of electricity 

from generating stations to the load centres; 

(d) to provide non-discriminatory open access to its transmission 

system for use by: 

(i) any Licencee or generating company on payment of the 

transmission charges; or 

(ii) any consumer as and when such open access is provided 

by the State Commission under Sub-section (2) of Section 42, 

on payment of the transmission charges and a surcharge 

thereon as may be specified by the Central Commission: 

Provided that such surcharge shall be utilised for the purpose 

of meeting the requirement of current level cross-subsidy: 

Provided further that such surcharge and cross subsidies 

shall be progressively reduced in the manner as may be 

specified by the Central Commission: 

Provided also that the manner of payment and utilisation 

of the surcharge shall be specified by the Central 

Commission: 

Provided also that such surcharge shall not be leviable 

in case open access is provided to a person who has 

established a captive generating plant for carrying the 

electricity to the destination of his own use. 

Part VI 

Distribution of Electricity 

Section 42. Duties of distribution Licencees and open access. 

(2) The State Commission shall introduce open access in such phases 

and subject to such conditions, (including the cross-subsidies and 

other operational constraints) as may be specified within one year of 

the appointed date by it and in specifying the extent of open access in 

successive phases and in determining the charges for wheeling, it shall 

have due regard to all relevant factors including such cross-subsidies, 

and other operational constraints: 

Provided that such open access shall be allowed on payment of a 

surcharge in addition to the charges for wheeling as may be 

determined by the State Commission: 

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0281 

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Provided further that such surcharge shall be utilised to meet the 

requirements of current level of cross subsidy within the area of 

supply of the distribution Licencee: 

Provided also that such surcharge and cross subsidies shall be 

progressively reduced in the manner as may be specified by the 

State Commission: 

Provided also that such surcharge shall not be leviable in case 

open access is provided to a person who has established a captive 

generating plant for carrying the electricity to the destination of 

his own use: 

Provided also that the State Government shall, not later than five 

years from the date of commencement of the Electricity (Amendment) 

Act, 2003 (57 of 2003) by Regulations, provide such open access 

to all consumers who require a supply of electricity where the 

maximum power to be made available at any time exceeds one 

megawatt. 

Section 52. Provisions with Respect to Electricity Trader. 

(1) Without prejudice to the provisions contained in Clause (c) of Section 

12, the Appropriate Commission may, specify the technical requirement, 

capital adequacy requirement and credit worthiness for being an electricity 

trader. 

(2) Every electricity trader shall discharge such duties, in relation to 

supply and trading in electricity, as may be specified by the Appropriate 

Commission. 

Part VII 

Tariff 

Section 61. Tariff Regulations. 

The Appropriate Commission shall, subject to the provisions of this Act, 

specify the terms and conditions for the determination of Tariff, and in 

doing so, shall be guided by the following, namely: 

(a) the principles and methodologies specified by the Central 

Commission for determination of the Tariff applicable to generating 

companies and transmission Licencees; 

(b) the generation, transmission, distribution and supply of electricity 

are conducted on commercial principles; 

(c) the factors which would encourage competition, efficiency, 

economical use of the resources, good performance and optimum 

investments; 

(d) safeguarding of consumers’ interest and at the same time, 

recovery of the cost of electricity in a reasonable manner; 

(e) the principles rewarding efficiency in performance; 

(f) multi-year Tariff principles; 

(g) that the Tariff progressively reflects the cost of supply of electricity 

and also reduces cross-subsidies in the manner specified by the 

Appropriate Commission; 

(h) the promotion of co-generation and generation of electricity 

from renewable sources of energy; 


37


(i) the National Electricity Policy and Tariff policy: 

Provided that the terms and conditions for determination of 

Tariff under the Electricity (Supply) Act, 1948, the Electricity 

Regulatory Commissions Act, 1998, and the enactments 

specified in the Schedule as they stood immediately before 

the appointed date, shall continue to apply for a period of one 

year or until the terms and conditions for Tariff are specified 

under this Section, whichever is earlier. 

Section 62. Determination of Tariff. 

(1) The Appropriate Commission shall determine the Tariff in accordance 

with the provisions of this Act for: 

(a) supply of electricity by a generating company to a distribution 

Licencee: 

Provided that the Appropriate Commission may, in case of 

shortage of supply of electricity, fix the minimum and maximum 

ceiling of Tariff for sale or purchase of electricity in pursuance 

of an agreement, entered into between a generating company 

and a Licencee or between Licencees, for a period not exceeding 

one year to ensure reasonable prices of electricity; 

(b) transmission of electricity; 

(c) wheeling of electricity; 

(d) retail sale of electricity: 

Provided that in case of distribution of electricity in the same area 

by two or more distribution Licencees, the Appropriate Commission 

may, for the promoting competition among distribution Licencees, 

fix only maximum ceiling of Tariff for retail sale of electricity. 

(2) The Appropriate Commission may require a Licencee or a generating 

company to furnish separate details, as may be specified in respect of 

generation, transmission and distribution for determination of Tariff. 

(3) The Appropriate Commission shall not, while determining the Tariff 

under this Act, show undue preference to any consumer of electricity 

but may differentiate according to the consumer’s load factor, power 

factor, voltage, total consumption of electricity during any specified 

period or the time at which the supply is required or the geographical 

position of any area, the nature of supply and the purpose for which the 

supply is required. 

(4) No Tariff or part of any Tariff may ordinarily be amended, more 

frequently than once in any financial year, except in respect of any 

changes expressly permitted under the terms of any fuel surcharge 

formula as may be specified. 

(5) The Commission may require a Licencee or a generating company 

to comply with such procedure as may be specified for calculating the 

expected Revenues from the Tariff and charges which he or it is permitted 

to recover. 

(6) If any Licencee or a generating company recovers a price or charge 

exceeding the Tariff determined under this Section, the excess amount 

shall be recoverable by the person who has paid such price or charge 

along with interest equivalent to the bank rate without prejudice to any 

other liability incurred by the Licencee. 

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Section 63. Determination of Tariff by bidding process. 

Notwithstanding anything contained in Section 62, the Appropriate 

Commission shall adopt the Tariff if such Tariff has been determined 

through transparent process of bidding in accordance with the guidelines 

issued by the Central Government. 

Section 64. Procedure for Tariff Order. 

(1) An application for determination of Tariff under Section 62 shall be 

made by a generating company or Licencee in such manner and 

accompanied by such fee, as may be determined by Regulations. 

(2) Every Applicant shall publish the application, in such abridged form 

and manner, as may be specified by the Appropriate Commission. 

(3) The Appropriate Commission shall, within one hundred and twenty 

days from receipt of an application under Sub-section (1) and after 

considering all suggestions and objections received from the public: 

(a) issue a Tariff Order accepting the application with such 

modifications or such conditions as may be specified in that Order; 

(b) reject the application for reasons to be recorded in writing if 

such application is not in accordance with the provisions of this 

Act and the Rules and Regulations made thereunder or the provisions 

of any other law for the time being in force: 

Provided that an Applicant shall be given a reasonable 

opportunity of being heard before rejecting his application. 

(4) The Appropriate Commission shall, within seven days of making the 

Order, send a copy of the Order to the Appropriate Government, the 

Authority, and the concerned Licencees and to the person concerned. 

(5) Notwithstanding anything contained in Part X, the Tariff for any 

inter-State supply, transmission or wheeling of electricity, as the case 

may be, involving the Territories of two States may, upon application 

made to it by the parties intending to undertake such supply, transmission 

or wheeling, be determined under this Section by the State Commission 

having jurisdiction in respect of the Licencee who intends to distribute 

electricity and make payment therefor. 

(6) A Tariff Order shall, unless amended or revoked, continue to be in 

force for such period as may be specified in the Tariff Order. 

Part IX 

Central Electricity Authority 

Section 73. Functions and duties of Authority. 

The Authority shall perform such functions and duties as the Central 

Government may prescribe or direct, and in particular to: 

(a) advise the Central Government on the matters relating to the 

National Electricity Policy, formulate short-term and perspective 

plans for development of the electricity system and co-ordinate the 

activities of the planning agencies for the optimal utilisation of 

resources to subserve the interests of the national economy and 

to provide reliable and affordable electricity for all consumers; 

(b) specify the technical standards for construction of electrical 

plants, electric lines and connectivity to the grid; 


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(c) specify the safety requirements for construction, operation and 

maintenance of electrical plants and electric lines; 

(d) specify the Grid Standards for operation and maintenance of 

transmission lines; 

(e) specify the conditions for installation of meters for transmission 

and supply of electricity; 

(f) promote and assist in the timely completion of schemes and 

projects for improving and augmenting the electricity system; 

(g) promote measures for advancing the skill of persons engaged 

in the electricity industry; 

(h) advise the Central Government on any matter on which its 

advice is sought or make recommendation to that Government on 

any matter if, in the opinion of the Authority, the recommendation 

would help in improving the generation, transmission, trading, 

distribution and utilisation of electricity; 

(i) collect and record the data concerning the generation, 

transmission, trading, distribution and utilisation of electricity 

and carry out studies relating to cost, efficiency, competitiveness 

and such like matters; 

(j) make public from time-to-time the information secured under 

this Act, and provide for the publication of reports and investigations; 

(k) promote research in matters affecting the generation, 

transmission, distribution and trading of electricity; 

(l) carry out, or cause to be carried out, any investigation for the 

purposes of generating or transmitting or distributing electricity; 

(m) advise any State Government, Licencees or the generating 

companies on such matters which shall enable them to operate 

and maintain the electricity system under their ownership or control 

in an improved manner and where necessary, in co-ordination 

with any other Government, Licencee or the generating company 

owning or having the control of another electricity system; 

(n) advise the Appropriate Government and the Appropriate 

Commission on all technical matters relating to generation, 

transmission and distribution of electricity; and 

(o) discharge such other functions as may be provided under this 

Act. 

Section 74. Power to require statistics and returns. 

It shall be the duty of every Licencee, generating company or person 

generating electricity for its or his own use to furnish to the Authority 

such statistics, returns or other information relating to generation, 

transmission, distribution, trading and use of electricity as it may require 

and at such times and in such form and manner as may be specified 

by the Authority. 

Section 75. Directions by Central Government to Authority. 

(1) In the discharge of its functions, the Authority shall be guided by 

such directions in matters of policy involving public interest as the 

Central Government may give to it in writing. 

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(2) If any question arises as to whether any such direction relates to a 

matter of policy involving public interest, the decision of the Central 

Government thereon shall be final. 

Part X 

Regulatory Commissions 

Section 76. Constitution of Central Commission. 

(1) There shall be a Commission to be known as the Central Electricity 

Regulatory Commission to exercise the powers conferred on, and discharge 

the functions assigned to, it under this Act. 

Section 79. Functions of Central Commission. 

(1) The Central Commission shall discharge the following functions, 

namely: 

(a) to regulate the Tariff of generating companies owned or controlled 

by the Central Government; 

(b) to regulate the Tariff of generating companies other than those 

owned or controlled by the Central Government specified in Clause 

(a), if such generating companies enter into or otherwise have a 

composite scheme for generation and sale of electricity in more 

than one State; 

(c) to regulate the inter-State transmission of electricity; 

(d) to determine Tariff for inter-State transmission of electricity; 

(e) to issue licenses to persons to function as transmission Licencee 

and electricity trader with respect to their inter-State operations; 

(f) to adjudicate upon disputes involving generating companies or 

transmission Licencee in regard to matters connected with Clauses 

(a) to (d) above and to refer any dispute for arbitration; 

(g) to levy fees for the purpose of this Act; 

(h) to specify Grid Code having regard to Grid Standards; 

(i) to specify and enforce the standards with respect to quality, 

continuity and reliability of service by Licencees; 

(j) to fix the trading margin in the inter-State trading of electricity, 

if considered, necessary; 

(k) to discharge such other functions as may be assigned under 

this Act. 

(2) The Central Commission shall advise the Central Government on all 

or any of the following matters, namely: 

(i) formulation of National Electricity Policy and Tariff policy; 

(ii) promotion of competition, efficiency and economy in activities 

of the electricity industry; 

(iii) promotion of investment in electricity industry; 

(iv) any other matter referred to the Central Commission by that 

Government. 

(3) The Central Commission shall ensure transparency while exercising 

its powers and discharging its functions. 

(4) In discharge of its functions, the Central Commission shall be guided 

by the National Electricity Policy, National Electricity Plan and Tariff 

policy published under Section 3. 


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Section 86. Functions of State Commission. 

(1) The State Commission shall discharge the following functions, namely: 

(a) determine the Tariff for generation, supply, transmission and 

wheeling of electricity, wholesale, bulk or retail, as the case may 

be, within the State: 

Provided that where open access has been permitted to a 

category of consumers under Section 42, the State Commission 

shall determine only the wheeling charges and surcharge 

thereon, if any, for the said category of consumers; 

(b) regulate electricity purchase and procurement process of 

distribution Licencees including the price at which electricity shall 

be procured from the generating companies or Licencees or from 

other sources through agreements for purchase of power for 

distribution and supply within the State; 

(c) facilitate intra-State transmission and wheeling of electricity; 

(d) issue licences to persons seeking to act as transmission Licencees, 

distribution Licencees and electricity traders with respect to their 

operations within the State; 

(e) promote cogeneration and generation of electricity from renewable 

sources of energy by providing suitable measures for connectivity 

with the grid and sale of electricity to any person, and also specify, 

for purchase of electricity from such sources, a percentage of the 

total consumption of electricity in the area of a distribution Licencee; 

(f) adjudicate upon the disputes between the Licencees and 

generating companies and to refer any dispute for arbitration; 

(g) levy fee for the purposes of this Act; 

(h) specify State Grid Code consistent with the Grid Code specified 

under Clause (h) of Sub-section (1) of Section 79; 

(i) specify or enforce standards with respect to quality, continuity 

and reliability of service by Licencees; 

(j) fix the trading margin in the intra-State trading of electricity, if 

considered, necessary; 

(k) discharge such other functions as may be assigned to it under 

this Act. 

(2) The State Commission shall advise the State Government on all or 

any of the following matters, namely: 

(i) promotion of competition, efficiency and economy in activities of 

the electricity industry; 

(ii) promotion of investment in electricity industry; 

(iii) reorganisation and restructuring of electricity industry in the 

State; 

(iv) matters concerning generation, transmission, distribution and 

trading of electricity or any other matter referred to the State 

Commission by that Government: 

(3) The State Commission shall ensure transparency while exercising 

its powers and discharging its functions. 

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(4) In discharge of its functions, the State Commission shall be guided 

by the National Electricity Policy, National Electricity Plan and Tariff 

policy published under Section 3. 

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Part XI 

Appellate Tribunal for Electricity 

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Section 111. Appeal to Appellate Tribunal. 

(1) Any person aggrieved by an Order made by an adjudicating officer 

under this Act (except under Section 127) or an Order made by the 

Appropriate Commission under this Act may prefer an appeal to the 

Appellate Tribunal for Electricity: 

Provided that any person appealing against the Order of the 

adjudicating officer levying any penalty shall, while filing the appeal, 

deposit the amount of such penalty: 

Provided further that where in any particular case, the Appellate 

Tribunal is of the opinion that the deposit of such penalty would 

cause undue hardship to such person, it may dispense with such 

deposit subject to such conditions as it may deem fit to impose so 

as to safeguard the realisation of penalty. 

(2) Every appeal under Sub-section (1) shall be filed within a period of 

45 days from the date on which a copy of the Order made by the 

adjudicating officer or the Appropriate Commission is received by the 

aggrieved person and it shall be in such form, verified in such manner 

and be accompanied by such fee as may be prescribed: 

Provided that the Appellate Tribunal may entertain an appeal 

after the expiry of the said period of 45 days if it is satisfied that 

there was sufficient cause for not filing it within that period. 

(3) On receipt of an appeal under Sub-section (1), the Appellate Tribunal 

may, after giving the parties to the appeal an opportunity of being 

heard, pass such Orders thereon as it thinks fit, confirming, modifying 

or setting aside the Order appealed against. 

(4) The Appellate Tribunal shall send a copy of every Order made by it 

to the parties to the appeal and to the concerned adjudicating officer 

or the Appropriate Commission, as the case may be. 

(5) The appeal filed before the Appellate Tribunal under Sub-section (1) 

shall be dealt with by it as expeditiously as possible and endeavour 

shall be made by it to dispose of the appeal finally within 180 days from 

the date of receipt of the appeal: 

Provided that where any appeal could not be disposed of within the 

said period of 180 days, the Appellate Tribunal shall record its 

reasons in writing for not disposing of the appeal within the said 

period. 

(6) The Appellate Tribunal may, for the purpose of examining the legality, 

propriety or correctness of any Order made by the adjudicating officer 

or the Appropriate Commission under this Act, as the case may be, in 

relation to any proceeding, on its own motion or otherwise, call for the 

records of such proceedings and make such Order in the case as it 

thinks fit. 


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Part XVIII 

Miscellaneous 

Section 177. Powers of Authority to make Regulations. 

(1) The Authority may, by notification, make Regulations consistent 

with this Act and the Rules generally to carry out the provisions of 

this Act. 

(2) In particular and without prejudice to the generality of the power 

conferred in Sub-section (1), such Regulations may provide for all or 


(a) the Grid Standards under Section 34; 

(b) suitable measures relating to safety and electric supply under 

Section 53; 

(c) the installation and operation of meters under Section 55; 

(d) the Rules of procedure for transaction of business under 

Sub-section (9) of Section 70; 

(e) the technical standards for construction of electrical plants 

and electric lines and connectivity to the grid under Clause (b) of 

Section 73; 

(f) the form and manner in which and the time at which the State 

Government and Licencees shall furnish statistics, returns or other 

information under Section 74; 

(g) any other matter which is to be, or may be, specified; 

(3) All Regulations made by the Authority under this Act shall be subject 

to the conditions of previous publication. 

Section 178. Powers of Central Commission to make Regulations. 

(1) The Central Commission may, by notification make Regulations 

consistent with this Act and the Rules generally to carry out the provisions 

of this Act. 


contained in Sub-section (1), such Regulations may provide for all or 

any of following matters, namely: 

(a) period to be specified under the first proviso to Section 14; 

(b) the form and the manner of the application under Sub-section 

(1) of Section 15; 

(c) the manner and particulars of notice under Sub-section (2) of 

Section 15; 

(d) the conditions of licence under Section 16; 

(e) the manner and particulars of notice under Clause (a) of 


(f) publication of alterations or amendments to be made in the 

licence under Clause (c) of Sub-section (2) of Section 18; 

(g) Grid Code under Sub-section (2) of Section 28; 

(h) levy and collection of fees and charge from generating companies 

or transmission utilities or Licencees under Sub-section (4) of 

Section 28; 

(i) rates, charges and terms and conditions in respect of intervening 

transmission facilities under proviso to Section 36; 

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(j) payment of transmission charges and a surcharge under 

Sub-clause (ii) of Clause (d) of Sub-section (2) of Section 38; 

(k) reduction of surcharge and cross subsidies under second 

proviso to Sub-Clause (ii) of Clause (d) of Sub-section (2) of 

Section 38; 

(l) payment of transmission charges and a surcharge under 

Sub-clause (ii) of Clause (c) of Section 40; 

(m) reduction of surcharge and cross subsidies under the second 

proviso to Sub-Clause (ii) of Clause (c) of Section 40; 

(n) proportion of Revenues from other business to be utilised for 

reducing the transmission and wheeling charges under proviso to 

Section 41; 

(o) duties of electricity trader under Sub-section (2) of Section 52; 

(p) standards of performance of a Licencee or class of Licencees 


(q) the period within which information to be furnished by the 

Licencee under Sub-section (1) of Section 59; 

(r) the manner for reduction of cross-subsidies under Clause (g) of 

Section 61; 

(s) the terms and conditions for the determination of Tariff under 

Section 61; 

(t) details to be furnished by Licencee or generating company under 


(u) the procedures for calculating the expected Revenue from Tariff 

and charges under Sub-section (5) of Section 62; 

(v) the manner of making an application before the Central 

Commission and the fee payable therefore under Sub-section (1) 

of Section 64; 

(w) the manner of publication of application under Sub-section (2) 


(x) issue of Tariff Order with modifications or conditions under 


(y) the manner by which development of market in power including 

trading specified under Section 66; 

(z) the powers and duties of the Secretary of the Central Commission 


(za) the terms and conditions of service of the Secretary, officers 

and other employees of Central Commission under Sub-section (3) 


(zb) the Rules of procedure for transaction of business under 


(zc) minimum information to be maintained by a Licencee or the 

generating company and the manner of such information to be 

maintained under Sub-section (8) of Section 128; 

(zd) the manner of service and publication of notice under 

Section 130; 

(ze) any other matter which is to be, or may be specified by Regulations. 


45


(3) All Regulations made by the Central Commission under this Act 

shall be subject to the conditions of previous publication. 

Section 179. Rules and Regulations to be laid before Parliament. 

Every Rule made by the Central Government, every Regulation made by 

the Authority, and every Regulation made by the Central Commission 

shall be laid, as soon as may be after it is made, before each House of 

the Parliament, while it is in session, for a total period of 30 days which 

may be comprised in one session or in two or more successive sessions, 

and if, before the expiry of the session immediately following the session 

or the successive sessions aforesaid, both Houses agree in making any 

modification in the Rule or Regulation or agree that the Rule or Regulation 

should not be made, the Rule or Regulation shall thereafter, have effect 

only in such modified form or be of no effect, as the case may be; so, 

however, that any such modification or annulment shall be without 

prejudice to the validity of anything previously done under that Rule or 

Regulation. 

Section 181. Powers of State Commissions to make Regulations. 

(1) The State Commissions may, by notification, make Regulations 

consistent with this Act and the Rules generally to carry out the provisions 

of this Act. 


contained in Sub-section (1), such Regulations may provide for all or 


(a) period to be specified under the first proviso to Section 14; 

(b) the form and the manner of application under Sub-section (1) 


(c) the manner and particulars of application for license to be 

published under Sub-section (2) of Section 15; 

(d) the conditions of licence under Section 16; 

(e) the manner and particulars of notice under Clause (a) of 


(f) publication of the alterations or amendments to be made in the 

licence under Clause (c) of Sub-section (2) of Section 18; 

(g) levy and collection of fees and charges from generating companies 

or Licencees under Sub-section (3) of Section 32; 

(h) rates, charges and the term and conditions in respect of 

intervening transmission facilities under proviso to Section 36; 

(i) payment of the transmission charges and a surcharge under 

Sub-Clause (ii) of Clause (d) of Sub-section (2) of Section 39; 

(j) reduction of surcharge and cross-subsidies under second proviso 

to Sub-Clause (ii) of Clause (d) of Sub-section (2) of Section 39; 

(k) manner and utilisation of payment and surcharge under the 

fourth proviso to Sub-Clause (ii) of Clause (d) of Sub-section (2) of 

Section 39; 

(l) payment of the transmission charges and a surcharge under 

Sub-clause (ii) of Clause (c) of Section 40; 

(m) reduction of surcharge and cross-subsidies under second proviso 

to Sub-Clause (ii) of Clause (c) of Section 40; 

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(n) the manner of payment of surcharge under the fourth proviso 

to Sub-clause (ii) of Clause (c) of Section 40; 

(o) proportion of Revenues from other business to be utilised for 

reducing the transmission and wheeling charges under proviso to 

Section 41; 

(p) reduction of surcharge and cross subsidies under the third 

proviso to Sub-section (2) of Section 42; 

(q) payment of additional charges on charges of wheeling under 


(r) guidelines under Sub-section (5) of Section 42; 

(s) the time and manner for settlement of grievances under 


(t) the period to be specified by the State Commission for the purposes 

specified under Sub-section (1) of Section 43; 

(u) methods and principles by which charges for electricity shall 

be fixed under Sub-section (2) of Section 45; 

(v) reasonable security payable to the distribution Licencee under 


(w) payment of interest on security under Sub-section (4) of Section 47; 

(x) electricity supply code under Section 50; 

(y) the proportion of Revenues from other business to be utilised 

for reducing wheeling charges under proviso to Section 51; 

(z) duties of electricity trader under Sub-section (2) of Section 52; 

(za) standards of performance of a Licencee or a class of Licencees 


(zb) the period within which information to be furnished by the 

Licencee under Sub-section (1) of Section 59; 

(zc) the manner of reduction of cross-subsidies under Clause (g) of 

Section 61; 

(zd) the terms and conditions for determination of Tariff under 

Section 61; 

(ze) details to be furnished by Licencee or generating company 


(zf) the methodologies and procedures for calculating the expected 

Revenue from Tariff and charges under Sub-section (5) of Section 62; 

(zg) the manner of making an application before the State 

Commission and the fee payable therefore under Sub-section (1) 


(zh) issue of Tariff Order with modifications or conditions under 


(zi) the manner by which development of market in power including 

trading specified under Section 66; 

(zj) the powers and duties of the Secretary of the State Commission 


(zk) the terms and conditions of service of the secretary, officers 

and other employees of the State Commission under Sub-section (2) 



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(zl) Rules of procedure for transaction of business under Sub-section (1) 


(zm) minimum information to be maintained by a Licencee or the 

generating company and the manner of such information to be 

maintained under Sub-section (8) of Section 128; 

(zn) the manner of service and publication of notice under 

Section 130; 

(zo) the form of and preferring the appeal and the manner in which 

such form shall be verified and the fee for preferring the appeal 


(zp) any other matter which is to be, or may be, specified. 

(3) All Regulations made by the State Commission under this Act shall 

be subject to the condition of previous publication. 

Section 182. Rules and Regulations to be laid before State Legislature. 

Every Rule made by the State Government and every Regulation made 

by the State Commission shall be laid, as soon as may be after it is 

made, before each House of the State Legislature where it consists of 

two Houses, or where such Legislature consists of one House, before 

that House. 

Section 183. Power to Remove Difficulties. 

(1) If any difficulty arises in giving effect to the provisions of this Act, 

the Central Government may, by Order published, make such provisions 

not inconsistent with the provisions of this Act, as may appear to be 

necessary for removing the difficulty: 

Provided that no Order shall be made under this Section after the 

expiry of two years from the date of commencement of this Act. 

(2) Every Order made under this Section shall be laid, as soon as may 

be after it is made, before each House of Parliament. 

8. We also quote hereinbelow the impugned Notification dated, 

23 rd January, 2006 fixing trading margin for inter-State trading of Electricity, 

which reads as follows: 

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Central Electricity Regulatory Commission 

Notification 

New Delhi, the 23 rd January, 2006 

No. L-7/25(5)/2003-CERC.–Whereas, the Central Electricity Regulatory 

Commission is of the opinion that it is necessary to fix trading margin 

for inter-state trading of electricity. 

Now therefore, in exercise of powers conferred under Section 178 of the 

Electricity Act, 2003 (36 of 2003), and all other powers enabling it in 

this behalf, and after pervious publication, the Central Electricity 

Regulatory Commission hereby makes the following Regulations, namely: 

1. Short title and commencement.–(1) These Regulations may be 

called the Central Electricity Regulatory Commission (Fixation of 

Trading Margin) Regulations, 2006. 

(2) These Regulations shall come into force from the date of their 

publication in the Official Gazette. 

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2. Trading Margin.–The Licencee shall not charge the trading margin 

exceeding four (4.0) paise/kWh on the electricity traded, including 

all charges, except the charges for scheduled energy, open access 

and transmission losses. 

Explanation–The charges for the open access include the transmission 

charge, operating charge and the application fee. 

A.K. Sachan, Secy. 

0293 

Scope and Analysis of The 2003 Act 

9. The 2003 Act is enacted as an exhaustive Code on all matters concerning 

electricity. It provides for “unbundling” of SEBs into separate utilities for 

generation, transmission and distribution. It repeals the Indian Electricity 

Act, 1910, the Electricity (Supply) Act, 1948 and the Electricity Regulatory 

Commissions Act, 1998. The 2003 Act, in furtherance of the policy envisaged 

under the Electricity Regulatory Commissions Act, 1998 (“1998 Act”), mandated 

the establishment of an independent and transparent regulatory mechanism, 

and has entrusted wide ranging responsibilities with the Regulatory 

Commissions. While the 1998 Act provided for independent Regulation in 

the area of Tariff determination; the 2003 Act has distanced the Government 

from all forms of Regulation, namely, licensing, Tariff Regulation, specifying 

Grid Code, facilitating competition through open access etc. 

10. Section 3 of the 2003 Act requires the Central Government, in consultation 

with the State Governments and the Authority, to prepare National Electricity 

Policy as well as Tariff Policy for development of the power system based on 

optimum utilisation of resources. The Central and the State Governments 

are also vested with Rule-making powers under Sections 176 and 180, 

respectively, while the “Authority” has been defined under Section 2(6) as 

Regulation-making power under Section 177. On the other hand, the Regulatory 

Commissions are vested with the power to frame policy, in the form of 

Regulations, under various provisions of the 2003 Act. However, the Regulatory 

Commissions are empowered to frame policy, in the form of Regulations, as 

guided by the general policy framed by the Central Government. They are to 

be guided by the National Electricity Policy, the Tariff Policy as well as the 

National Electricity Plan in terms of Sections 79(4) and 86(4) after the 2003 

Act (see also Section 66). In this connection, it may also be noted that the 

Central Government has also, in exercise of its powers under Section 3 of 

the 2003 Act, notified the Tariff Policy with effect from 6 th January, 2006. 

One of the primary objectives of the Tariff Policy is to ensure availability of 

electricity to consumers at reasonable and competitive rates. The Tariff 

Policy tries to balance the interests of consumers and the need for investments 

while prescribing the rate of return. It also tries to promote training in 

electricity for making the markets competitive. Under the Tariff Policy, there 

is a mandate given to the Regulatory Commissions, namely, to monitor the 

trading transactions continuously and ensure that the electricity traders do 

not indulge in profiteering in cases of market failure. The Tariff Policy directs 

the Regulatory Commissions to fix the trading margin in a manner which 

would reduce the costs of electricity to the consumers and, at the same time, 

they should endeavour to meet the requirement for investments. 

11. An “electricity trader” is defined under Section 2(26) to mean a person 

who has been given a licence to undertake trading in electricity under 

Section 12. Section 2(32) defines a “grid” as the high voltage backbone 


49


system of inter-connected transmission lines, sub-station and generating 

plants. Under Section 2(33), a “Grid Code” is defined as a code specified by 

the Central Commission under Section 79(1)(h), while under Section 2(34), 

“Grid Standards” are those specified by the Central Authority under 

Section 73(d). Under Section 2(47), “open access” is defined to mean the 

non-discriminatory provision for access to the transmission lines or distribution 

system or associated facilities given to any Licencee or consumer or a person 

engaged in generation of electricity in accordance with the Regulations specified. 

Section 2(62) defines the term “specified” to mean specified by Regulations 

made by the Appropriate Commission or the Authority under the 2003 Act. 

Under Section 2(71), the word “trading” is defined to mean purchase of 

electricity for resale thereof. 

12. Under the 2003 Act, power generation has been de-licensed and captive 

generation is freely permitted, subject to approval as indicated in Sections 7, 

8 and 9 of the Act. However, under Section 12, a licence has been provided 

as a pre-condition for engaging in transmission or distribution or trading of 

electricity. Therefore, Licencees are granted by the Appropriate Commission 

under Section 14 of the Act on applications made under Section 15. Section 16 

provides power to the Appropriate Commission to specify any general or 

specific conditions which shall apply either to a Licencee or to a class of 

Licencees. Under Section 18, the Appropriate Commission is also vested 

with the power to amend the licence as well as to revoke it in certain stipulated 

circumstances, if public interest so requires (see Section 19). Under Section 23, 

the Appropriate Commission has the power to issue directions to Licencees 

to regulate supply, distribution, consumption or use of electricity, if the 

Appropriate Commission is of the opinion that it is necessary or expedient 

so to do for maintaining the efficient supply and for securing the equitable 

distribution of electricity and promoting competition. 

13. One of the most important features of the 2003 Act is the introduction of 

open access under Section 42 of the Act. Under the open access regime, 

distribution companies and eligible consumers have the freedom to buy electricity 

directly from generating companies or trading Licencees of their choice and 

correspondingly the generating companies have the freedom to sell. 

14. Section 52 of the 2003 Act deals with trading of electricity activity. Under 

Section 52(1), the Appropriate Commission may specify the technical 

requirement, capital adequacy requirement and credit worthiness for being 

an electricity trader. Under Section 52(2), every trader is required to discharge 

its duties, in relation to supply and trading in electricity, as may be specified 

by the Appropriate Commission. 

15. The standards of performance of Licencee(s) may be specified by the 

Appropriate Commission under Section 57 of the Act. 

16. The 2003 Act contains separate provisions for the performance of the 

dual functions by the Commission. Section 61 is the enabling provision for 

framing of Regulations by the Central Commission; the determination of 

terms and conditions of Tariff has been left to the domain of the Regulatory 

Commissions under Section 61 of the Act whereas, actual Tariff determination 

by the Regulatory Commissions is covered by Section 62 of the Act. This aspect 

is very important for deciding the present case. Specifying the terms and 

conditions for determination of Tariff is an exercise which is different and 

distinct from actual Tariff determination in accordance with the provisions 

of the Act for supply of electricity by a generating company to a distribution 

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Licencee or for transmission of electricity or for wheeling of electricity or for 

retail sale of electricity. 

17. The term “Tariff” is not defined in the 2003 Act. The term “Tariff” includes 

within its ambit not only the fixation of rates but also the Rules and Regulations 

relating to it. If one reads Section 61 with Section 62 of the 2003 Act, 

it becomes clear that the Appropriate Commission shall determine the actual 

Tariff in accordance with the provisions of the Act, including the terms and 

conditions which may be specified by the Appropriate Commission under 

Section 61 of the said Act. Under the 2003 Act, if one reads Section 62 with 

Section 64, it becomes clear that although Tariff fixation like price fixation 

is legislative in character, the same under the Act is made appealable vide 

Section 111. These provisions, namely, Sections 61, 62 and 64 indicate the 

dual nature of functions performed by the Regulatory Commissions, viz. 

decision-making and specifying terms and conditions for Tariff determination. 

18. Section 66 confers substantial powers on the Appropriate Commission 

to develop the relevant market in accordance with the principles of competition, 

fair participation as well as protection of consumers’ interests. 

19. Under Sections 111(1) and 111(6), respectively, the Tribunal has appellate 

and revisional powers. In addition, there are powers given to the Tribunal 

under Section 121 of the 2003 Act to issue Orders, instructions or directions, 

as it may deem fit, to the Appropriate Commission for the performance of 

statutory functions under the 2003 Act. 

20. The 2003 Act contemplates three kinds of delegated legislation. Firstly, 

under Section 176, the Central Government is empowered to make Rules to 

carry out the provisions of the Act. Correspondingly, the State Governments 

are also given powers under Section 180 to make Rules. Secondly, under 

Section 177, the Central Authority is also empowered to make Regulations 

consistent with the Act and the Rules to carry out the provisions of the Act. 

Thirdly, under Section 178, the Central Commission can make Regulations 

consistent with the Act and the Rules to carry out the provisions of the Act. 

SERCs have a corresponding power under Section 181. The Rules and 

Regulations have to be placed before Parliament and the State Legislatures, 

as the case may be, under Sections 179 and 182. The Parliament has the 

power to modify the Rules/Regulations. This power is not conferred upon the 

State Legislatures. A holistic reading of the 2003 Act leads to the conclusion 

that Regulations can be made as long as two conditions are satisfied, namely, 

that they are consistent with the Act and that they are made for carrying 

out the provisions of the Act. 

Submissions 

On behalf of M/s Tata Power Trading Co. Ltd. 

21. On the scheme of the 2003 Act, it was submitted by Shri Harish N. Salve, 

learned Senior Counsel, that, under the said Act the Central Commission 

and SERCs have to frame Regulations as well as pass Statutory Orders. 

The Act uses the expression “fixed” in Sections 8, 19, 45 and 79; it uses the 

expression “determined” in the proviso to Section 9(2), Sections 20, 42, 47, 

57, 61 and 67(2) and the word “specified” (i.e. by way of Regulations) in 

Sections 13, 14, 15, 16, 17, 18(2), 28(4), 34, 36, 38, 41, 42, 45, 51, 52, 53, 

57, 61 and 67(2) of the 2003 Act. Under the 2003 Act, according to the 

learned Counsel, there are a series of provisions which expressly require the 

Commission to frame Regulations on specific aspects. According to learned 


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Counsel, each of the said three expressions have to be interpreted by the 

terms and in the context of the scheme of the 2003 Act and not by a priori 

notions of administrative law. For example, Section 61 posits the framing of 

Regulations by the Commission, which will subject to the provisions of the 2003 

Act, specify the terms and conditions for the determination of Tariff. It is 

possible that such Regulations may be Licencee-specific or generic. At the 

same time, under Section 62 read with Section 64 refers to determination 

of Tariff in accordance with the provisions of the Act for supply of electricity 

by Gencoms, transmission of electricity, wheeling and trading of electricity. 

Applying the Cynamide principle [1987 (2) SCC 720] 1 of administrative law, 

such Tariff Order would be characterised as delegated legislation yet under 

Section 111 of the 2003 Act, it is made appealable to the Appellate Tribunal. 

According to the learned Counsel, “price fixation” is ordinarily “legislative” 

and not “adjudicatory” in character and yet under the 2003 Act Tariff fixation 

is by Order and subject to appeal under Section 111. According to the learned 

Counsel, use of different expressions in the Act implies different meanings. 

For example, in Section 79 the expressions used are “regulate,” “determine,” 

“adjudicate,” “specify” and “fix”. Where the function of the Commission under 

Sections 79 and 86 require framing of Regulations, the Act has used the 

expression “specified” as defined. Therefore, according to the learned Counsel, 

the word “fix” in Section 79(1)(j) must mean to pass an appropriate Order 

fixing trading margin which is further qualified by the Act saying “if considered 

necessary”. In this connection, learned Counsel further submitted that fixing 

trading margin is same as price fixation and as such margin must be fixed 

by an Order and not by way of Regulation. Hence, according to the learned 

Counsel, Regulations cannot be framed under Section 79(1)(j) and under 

Section 86(1)(j) of the 2003 Act. 

22. On the interpretation of Sections 178(1) and 181(1) of the 2003 Act, 

learned Counsel submitted that where Rule-making powers are enumerated 

and there is a general delegation of power to make Rules to carry out the 

provisions of the 2003 Act, the enumeration does not detract from the generality 

of the power conferred is the principle which has to be read in the context 

of the scheme of the 2003 Act. In this connection, it was submitted that 

under the Act the power to frame subordinate legislation to carry out the 

provisions of the Act are contained in Sections 176 and 180 on Central and 

State Governments; in Sections 178 and 181 where power to frame Regulations 

is conferred on Regulatory Commissions and Section 177 where the power 

to frame Regulations is conferred on CEA. Hence, when the Central Government 

invokes the Rule-making power under Section 176(1), it cannot make Rules 

to determine Tariff since that can be done only by the appropriate Commission 

by virtue of Section 61 read with Section 178(2)(s). A perusal of the scheme 

of the 2003 Act suggests that each and every provision of the Act where 

framing of Regulations is contemplated has a counter-part in one of the 

Clauses as set out in Section 178(2). In any event, according to the learned 

Counsel, where the Act requires the discharge of a function by a specific 

Order, then a Regulation cannot be framed to achieve that very purpose 

merely because there is a power to frame Regulations. Therefore, according 

to the learned Counsel, trading margin can be fixed only by an Order under 

Section 79(1)(j) and 86(1)(j) and not by Regulations. 

1 Ed.: Union of India and Anr. v. Cynamide India Ltd. and Anr. MANU/SC/0076/1987: 

AIR 1987 SC 1802: (1987) 2 CompLJ 10 (SC): 1987 (12) ECR 199 (SC): JT 1987 (2) 

SC 107: 1987 (1) SCALE 728: [1987] 2 SCR 841: 1987 (2) UJ 198 (SC) 

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23. On the powers of the Appellate Tribunal under Sections 111 and 121 of 

the 2003 Act, learned Counsel urged, that the said Tribunal was established 

as an expert second tier Regulatory Authority to review the actions of the 

Regulatory Commissions, including Regulations framed by first tier Regulatory 

bodies even in the absence of Section 121 of the 2003 Act. In this connection, 

learned Counsel further submitted that the powers envisaged under 

Section 121 are distinct from the Appellate and Revisional powers under 

Section 111(3) and under Section 111(6). A plain reading of Section 121 

establishes that the Tribunal has the power to issue Orders, instructions 

and directions to guide the Commission in the due performance of its statutory 

function; that the said power to issue instructions, Orders and directions 

would include the power to frame or modify the Regulations made by the first 

tier Regulatory Authority, particularly in cases where the Tribunal is satisfied 

that the Regulation framed is either not consistent with the provisions of the 

Act or does not result in due performance of the duty or functions entrusted 

to the Commission under the 2003 Act. In the light of the provisions of 

Sections 111 and 121 of the 2003 Act, learned Counsel urged, that even in 

an appeal under Section 111 if the question of validity of delegated legislation 

arises, the Tribunal can consider the vires and ignore a Rule which is 

ultra-vires the Rule-making power. The fact that there is no power in the 

Tribunal to annul the Regulation cannot deny the power to Statutory Tribunal 

to ignore ultra vires subordinate legislation. Lastly, there is no need to read 

down Section 121 on a priori notion of classical administrative law that vires 

of the Rules can only be challenged in the judicial review proceedings before 

a constitutional Court. 

On behalf of PTC India Ltd. 

24. Shri Vikas Singh, learned Senior Counsel, submitted that fixation of 

trading margins under normal business conditions is intrinsically contradictory 

and harmful to power market functioning. In this connection, it was submitted 

that capping of trading margin does not in any manner whatsoever control 

the selling price of electricity sold to Discoms. Such capping of trading 

margin results in relegating the electricity traders to mere commission agents. 

The role of electricity traders is to play a dynamic role of bringing in new 

products in the market which is beneficial to the consumers as well as 

Gencoms. However, the entire object of having electricity traders stand defeated 

by impugned capping of trading margins. According to the learned Counsel, 

traders in electricity bring depth to the electricity markets. They make value 

additions and therefore, interventions in trading by Regulations should not 

be contrary to the letter and spirit of the Act (See Section 66). According to 

the learned Counsel, severe Regulatory intervention like imposition of margin 

in a voluntary market should be resorted to only in cases of market failure. 

According to the learned Counsel, on the basis of statistical data, the trading 

margin is not a return guaranteed to a trader and that the actual margin 

which the trader is getting is lower than the prescribed cap. According to the 

learned Counsel, none of the above facts have been appreciated by the 

Central Commission in capping the margin as not to exceed 4.0 paise per 

kWh on the electricity traded. 

25. On the question of law, learned Counsel submitted that the right to 

appeal under Section 111 in respect of adjudicatory/administrative Order 

cannot be defeated by colouring the decision as a Regulation. In this connection 

learned Counsel submitted that the Rules/Regulations framed by the executive 


53


under an Act are the law whereas, Regulations made by the Statutory Authority 

itself is not the Regulation under which it functions, but the Regulation 

making itself is its function. In the former case, it is possible to argue that 

the Authority which is the creature of the Statute cannot question the vires 

of the statute, in the latter case, the Authority is not the creature of the 

Regulation framed by itself, hence the sanctity given to the former is far 

greater than the sanctity to the latter. 

26. According to the learned Counsel, that the right to appeal is a substantive 

right and the same cannot be taken away by a device, i.e. by framing a 

Regulation instead of simply passing an Order as to denude the Appellant 

of its right of Appeal. In this connection, learned Counsel urged that the 

Appellate Tribunal can hear the appeal against the Regulation being the 

function of the Commission and can examine the sanctity of the Regulation 

if the same is framed beyond the power of the commission to do so. In other 

words, if the Commission is entitled to adjudicate upon a matter, it does not 

have the Authority under the Act to give its decision the colour of a Regulation 

so as to denude the Tribunal of its Authority under Section 111. According 

to the learned Counsel, since the impugned Regulation relegates the trading 

Licencee to a commission agent the same is ultra vires Section 66 of 

the 2003 Act. 

27. According to the learned Counsel, under Section 79 the Commission is 

authorized only to fix the trading margin and since the impugned Regulations 

are purportedly made under Section 79 the said Regulations are beyond the 

powers of the Central Commission and are thus, ultra vires the 2003 Act. 

28. Lastly, learned Counsel for PTC adopted all the arguments of Shri Harish 

N. Salve, learned Counsel for M/s. Tata Power Trading Company Ltd. 

29. Shri Narasimha, learned Counsel and Others broadly adopted the above 

arguments advanced on behalf of M/s. Tata Power Trading Company and 

PTC India Ltd. hence, the same need not be reproduced. 

On behalf of CERC 

30. After taking us through the provisions of the 2003 Act, the National and 

the Tariff Policies, learned Solicitor General of India submitted that the 2003 Act 

contemplates three kinds of delegated legislation: 

(i) Under Section 176, the Central Government is empowered to make 

Rules for carrying out the provisions of the Act. A corresponding power 

is given to the State Governments under Section 180. 

(ii) Under Section 177, the CEA is empowered to make Regulations 

consistent with the Act and the Rules made under Section 176. 

(iii) Under Section 178, the Central Commission may make Regulations 

consistent with the Act and the Rules generally to carry out the provisions 

of the Act. The corresponding power under Section 181 is conferred on 

SERCs. 

31. The Rules and the Regulations have to be placed before the Parliament 

and the State Legislatures, as the case may be, under Sections 179 and 182, 

respectively. According to the learned Counsel, even if the Rules have been 

laid before the Parliament and even if there is a resolution of the Parliament 

approving them, the validity of the Rules has to be declared by the Court as 

ultra vires the Act and invalid. According to the learned Counsel, there is 

no power conferred upon the Appellate Tribunal under Section 111 to declare 

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the Regulations framed by the Central Commission as null and void. According 

to the learned Counsel, Tribunals are creatures of the statute. They have no 

inherent power that exists in Civil Courts. Any power exercisable by the 

Tribunal has to be located in the statute under which it is formed. There is 

no Authority for the proposition that under the Indian law, a Statutory 

Tribunal has the jurisdiction to deal with the validity of subordinate legislation 

and pronounce it as ultra vires. Of course, according to the learned Counsel, 

it is open to the Parliament to expressly give to a Tribunal the power to 

consider the validity of subordinate legislation. However, such conferment 

has to be express and unambiguous, which is not there in this case. 

32. According to the learned Counsel, the mere fact that Section 79(1)(j) 

uses the word “fix” and the mere fact that the other provisions use the word 

“specify” does not lead to the conclusion that the Central Commission could 

not have issued the Trading Margin Regulations, 2006 as contended by the 

Appellants herein. The learned Counsel further urged that the general power 

to frame Regulations is not limited or controlled by enumeration of topics on 

which Regulations may be framed. In this connection, it was submitted that 

a holistic reading of the Act leads to the conclusion that Regulations can be 

made as long as they are consistent with the Act and that they are made for 

carrying out the provisions of the Act. The Act recognises, the need to Regulate 

trading in electricity (See Sections 52(2), 53(1)(a), 57, 60, 178(2)(d), (o), (p) and (y)). 

33. Learned Counsel further submitted that for the reasons mentioned herein 

there is no case made out by the Appellants to lift the veil over a fake 

Regulation. The Central Commission had to initiate proceedings against 14 

traders for non-compliance with licence conditions. Some traders were 

operating on high margins. Trading margin being the component of the final 

price paid by the consumers required Regulation to protect the consumers. 

Competition among traders to capture the surplus power for sale resulted 

in rising prices. Even with a trading margin of 4 paise/unit, traders can 

make handsome profits. For the above reasons, Commission thought it fit to 

make the impugned Regulations. It was further contended that the doctrine 

of colourable exercise of power was not applicable to decide the validity of 

subordinate legislation. 

34. Learned Counsel lastly submitted that the power of judicial review cannot 

be located in Section 121 of the Act. The power under Section 121 is different 

from the power under Section 111. According to the learned Counsel, 

Section 121 empowers the Tribunal to act only when the Commission is 

guilty of inaction in carrying out its statutory functions. The power to annul 

a legislative act cannot be read into Section 121. Even the High Court 

cannot direct the Legislature to enact a law and therefore, such power 

cannot be read into Section 121. In order to entertain a challenge, directly 

or collaterally, the Tribunal must have jurisdiction which must be conferred 

by the statute and since in the instant case Tribunal is not vested with such 

a jurisdiction, it is not open to the Appellants to place reliance on some of 

the English Judgments. Thus, the Appellate Tribunal is not qualified to go 

behind a Regulation as framed by CERC and to examine whether it acted 

within the bounds of the statute while framing the Regulation. 

Determinations 

35. On the above submissions, one of the questions which arises for 

determination is–whether trading margin fixation (including capping) under 


55


the 2003 Act can only be done by an Order under Section 79(1)(j) and not 

by Regulations under Section 178? According to the Appellant(s) it can only 

be done by an Order under Section 79(1)(j), particularly when under 

Section 178(2) power to make Regulations is co-relatable to the functions 

ascribed to each Authority under the said 2003 Act. 

36. In every case one needs to examine the statutory context to determine 

whether a Court or a Tribunal hearing a case has jurisdiction to Rule on a 

defence based upon arguments of invalidity of subordinate legislation or 

administrative act under it. There are situations in which Parliament may 

legislate to preclude such challenges in the interest of promoting certainty 

about the legitimacy of administrative acts on which the public may have 

to rely. 

37. On the above analysis of various Sections of the 2003 Act, we find that 

the decision-making and Regulation-making functions are both assigned to 

CERC. Law comes into existence not only through legislation but also by 

Regulation and litigation. Laws from all three sources are binding. According 

to Professor Wade, “between legislative and administrative functions we have 

regulatory functions”. A statutory instrument, such as a Rule or Regulation, 

emanates from the exercise of delegated legislative power which is a part of 

administrative process resembling enactment of law by the legislature whereas, 

a quasi-judicial Order comes from adjudication which is also part of 

administrative process resembling a judicial decision by a Court of law. 

(See Shri Sitaram Sugar Co. Ltd. v. Union of India and Ors. 2 reported in (1990) 

3 SCC 223). 

38. Applying the above test, price fixation exercise is really legislative in 

character, unless by the terms of a particular statute it is made quasi-judicial 

as in the case of Tariff fixation under Section 62 made appealable under 

Section 111 of the 2003 Act, though Section 61 is an enabling provision for 

the framing of Regulations by CERC. If one takes “Tariff” as a subject-matter, 

one finds that under Part VII of the 2003 Act actual determination/fixation 

of Tariff is done by the Appropriate Commission under Section 62 whereas, 

Section 61 is the enabling provision for framing of Regulations containing 

generic propositions in accordance with which the Appropriate Commission 

has to fix the Tariff. This basic scheme equally applies to subject-matter 

“trading margin” in a different statutory context as will be demonstrated by 

discussion hereinbelow. In the case of Narinder Chand Hem Raj and Ors. v. 

Lt. Governor, Administrator, Union Territory, Himachal Pradesh and Ors. 3 reported 

in (1971) 2 SCC 747, this Court has held that power to tax is a legislative 

power which can be exercised by the legislature directly or subject to certain 

conditions. The legislature can delegate that power to some other Authority. 

But the exercise of that power, whether by the legislature or by the delegate 

will be an exercise of legislative power. The fact that the power can be 

delegated will not make it an administrative power or adjudicatory power. In 

the said Judgment, it has been further held that no Court can direct a 

subordinate legislative body or the legislature to enact a law or to modify the 

existing law and if Courts cannot so direct, much less the Tribunal, unless 

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169 (SC) 

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power to annul or modify is expressly given to it. In the case of Indian Express 

Newspapers (Bombay) Pvt. Ltd. and Ors. v. Union of India and Ors. reported 

in (1985) 1 SCC 641, this Court held that subordinate legislation is outside 

the purview of administrative action, i.e. on the grounds of violation of Rules 

of natural justice or that it has not taken into account relevant circumstances 

or that it is not reasonable. However, a distinction must be made between 

delegation of legislative function and investment of discretion to exercise a 

particular discretionary power by a statute. In the latter case, the impugned 

exercise of discretion may be considered on all grounds on which administrative 

action may be questioned such as non-application of mind, taking irrelevant 

matters into consideration etc. The subordinate legislation is, however, beyond 

the reach of administrative law. Thus, delegated legislation—otherwise known 

as secondary, subordinate or administrative legislation—is enacted by the 

administrative branch of the government, usually under the powers conferred 

upon it by the primary legislation. Delegated legislation takes a number of 

forms and a number of terms-Rules, Regulations, by-laws etc.; however, 

instead of the said labels what is of significance is the provisions in the 

primary legislation which, in the first place, confer the power to enact 

administrative legislation. Such provisions are also called as “enabling 

provisions”. They demarcate the extent of the administrator’s legislative 

power, the decision-making power and the policy making power. However, 

any legislation enacted outside the terms of the enabling provision will be 

vulnerable to judicial review and ultra vires. 

39. Applying the abovementioned tests to the scheme of 2003 Act, we find 

that under the Act, the Central Commission is a decision-making as well as 

Regulation-making Authority, simultaneously. Section 79 delineates the 

functions of the Central Commission broadly into two categories-mandatory 

functions and advisory functions. Tariff Regulation, licencing (including 

inter-State trading licencing), adjudication upon disputes involving generating 

companies or transmission Licencees fall under the head “mandatory functions” 

whereas, advising Central Government on formulation of National Electricity 

Policy and Tariff policy would fall under the head “advisory functions”. 

In this sense, the Central Commission is the decision-making Authority. 

Such decision-making under Section 79(1) is not dependant upon making 

of Regulations under Section 178 by the Central Commission. Therefore, 

functions of Central Commission enumerated in Section 79 are separate 

and distinct from function of Central Commission under Section 178. 

The former is administrative/adjudicatory function whereas, the latter 

is legislative. 

40. As stated above, the 2003 Act has been enacted in furtherance of the 

policy envisaged under the Electricity Regulatory Commissions Act, 1998 as 

it mandates establishment of an independent and transparent Regulatory 

Commission entrusted with wide ranging responsibilities and objectives, 

inter alia, including protection of the consumers of electricity. Accordingly, 

the Central Commission is set up under Section 76(1) to exercise the powers 

conferred on, and in discharge of the functions assigned to, it under the Act. 

On reading Sections 76(1) and 79(1) one finds that Central Commission is 

empowered to take measures/steps in discharge of the functions enumerated 

in Section 79(1) like to regulate the Tariff of generating companies, to regulate 

the inter-State transmission of electricity, to determine Tariff for inter-State 

transmission of electricity, to issue licences, to adjudicate upon disputes, to 

levy fees, to specify the Grid Code, to fix the trading margin in inter-State 


57


trading of electricity, if considered necessary etc. These measures, which 

the Central Commission is empowered to take, have got to be in conformity 

with the Regulations under Section 178, wherever such Regulations are 

applicable. Measures under Section 79(1) therefore, have got to be in conformity 

with the Regulations under Section 178. To regulate is an exercise which is 

different from making of the Regulations. However, making of a Regulation 

under Section 178 is not a pre-condition to the Central Commission taking 

any steps/measures under Section 79(1). As stated, if there is a Regulation, 

then the measure under Section 79(1) has to be in conformity with such 

Regulation under Section 178. This principle flows from various Judgments 

of this Court which we have discussed hereinafter. For example, under 

Section 79(1)(g) the Central Commission is required to levy fees for the 

purpose of the 2003 Act. An Order imposing regulatory fees could be passed 

even in the absence of a Regulation under Section 178. If the levy is unreasonable, 

it could be the subject matter of challenge before the Appellate Authority 

under Section 111 as the levy is imposed by an Order/decision making 

process. Making of a Regulation under Section 178 is not a pre-condition to 

passing of an Order levying a regulatory fee under Section 79(1)(g). However, 

if there is a Regulation under Section 178 in that regard then the Order 

levying fees under Section 79(1)(g) has to be in consonance with such 

Regulation. Similarly, while exercising the power to frame the terms and 

conditions for determination of Tariff under Section 178, the Commission 

has to be guided by the factors specified in Section 61. It is open to the 

Central Commission to specify terms and conditions for determination of 

Tariff even in the absence of the Regulations under Section 178. However, 

if a Regulation is made under Section 178, then, in that event, framing of 

terms and conditions for determination of Tariff under Section 61 has to be 

in consonance with the Regulation under Section 178. One must keep in 

mind the dichotomy between the power to make a Regulation under Section 178 

on one hand and the various enumerated areas in Section 79(1) in which 

the Central Commission is mandated to take such measures as it deems fit 

to fulfil the objects of the 2003 Act. Applying this test to the present controversy, 

it becomes clear that one such area enumerated in Section 79(1) refers to 

fixation of trading margin. Making of a Regulation in that regard is not a precondition 

to the Central Commission exercising its powers to fix a trading 

margin under Section 79(1)(j); however, if the Central Commission in an 

appropriate case, as is the case herein, makes a Regulation fixing a cap on 

the trading margin under Section 178 then whatever measures a Central 

Commission takes under Section 79(1)(j) has to be in conformity with Section 

178. One must understand the reason why a Regulation has been made in 

the matter of capping the trading margin under Section 178 of the Act. 

Instead of fixing a trading margin (including capping) on a case to case 

basis, the Central Commission thought it fit to make a Regulation which has 

a general application to the entire trading activity which has been recognized, 

for the first time, under the 2003 Act. Further, it is important to bear in mind 

that making of a Regulation under Section 178 became necessary because 

a Regulation made under Section 178 has the effect of interfering and overriding 

the existing contractual relationship between the regulated entities. 

A Regulation under Section 178 is in the nature of a subordinate Legislation. 

Such subordinate Legislation can even override the existing contracts including 

Power Purchase Agreements which have got to be aligned with the Regulations 

under Section 178 and which could not have been done across the board by 

an Order of the Central Commission under Section 79(1)(j). 

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41. To elucidate, we may refer to the Central Electricity Regulatory Commission 

(Terms and Conditions of Tariff) Regulations, 2004. The said Regulations 

have been made under Section 178 of the 2003 Act. Regulation 15 deals with 

various components of Tariff. It includes Advance Against Depreciation (“AAD” 

for short). Regulations 21(1)(ii) and 38(ii) deal with computation of depreciation 

including AAD. Recently, this concept of AAD came for consideration before 

this Court in the case of National Hydroelectric Power Corporation Ltd. v. CIT 4 

reported in 2010 (1) SCALE 5. AAD was suggested by the Central Commission 

as part of the Tariff in order to overcome the cash flow problems faced by 

Central Power Sector Utilities for meeting loan repayment obligations. The 

important point to be noted is that although under Section 61 of the 2003 

Act the Central Commission is empowered to specify AAD as a condition for 

determination of the Tariff, the Central Commission in its wisdom thought 

it fit to bring in the concept of AAD by enacting a Regulation under Section 178 

giving the benefit of AAD across the board to all Central Power Sector Utilities. 

In other words, instead of giving the benefit of AAD on a case to case basis 

under Section 61, the Central Commission decided to make a specific Regulation 

giving benefit of AAD across the board to all Central Power Sector Utilities. 

There is one more reason why a Regulation under Section 178 with regard 

to AAD had to be made by CERC. Under the 2003 Act, the Central Commission 

is empowered under Section 61 to include depreciation as an item in the 

computation of Tariff. However, if the rate of depreciation envisaged by the 

Central Commission under the 2003 Act is different from the rate(s) of 

depreciation prescribed under Schedule XIV of the Companies Act, 1956 

then such differential rate can be prescribed under the 2003 Act only by way 

of Regulation under Section 178 of the 2003 Act which is in the nature of 

subordinate legislation. It is important to note that the Companies Act, 1956 

constitutes a law applicable to companies. It prescribes the format of Balance 

Sheet in Schedule VI. It prescribes the requirements as to Profit and Loss 

account vide Part II of Schedule VI. It also prescribes the rates of depreciation 

vide Schedule XIV. If a different rate is required to be prescribed under the 

2003 Act, then it could be done only by way of subordinate legislation, which 

is contemplated by Regulations framed under Section 178 of the 2003 Act. 

Similarly, profits earned by a trading company are not only required to be 

presented in the manner indicated under the Companies Act but also it is 

required to be computed under the Income Tax Act, 1961. If such profits/income 

of a trading company is required to be capped under the 2003 Act, it can 

only be done by a subordinate legislation made under Section 178 of the 

2003 Act. Accrual of income/profit under the Companies Act, 1956 or the 

Income Tax Act, 1961 can only be curbed by a Regulation made under the 

Authority of subordinate legislation or primary legislation. This is exactly 

what is sought to be achieved by the impugned Regulation. 

42. One more citation may be noticed. Reserve Bank of India is a Regulator 

under the RBI Act, 1934 (“1934 Act”). Under the 1934 Act, RBI is empowered 

not only to regulate banks but also financial institutions, NBFCs etc. 

Chapter III B of the 1934 Act deals with provisions relating to financial 

institutions and NBFCs receiving deposits from the public. Under Section 45JA 

of the 1934 Act, RBI is given the power to determine policy and issue directions 

to NBFCs and financial institutions in public interest or in order to regulate 

the financial system of the country. Section 45JA; however, is confined to 

4 Ed.: MANU/SC/0002/2010: (2010) 228 CTR (SC) 492: [2010] 321 ITR 374 (SC): JT 

2010 (1) SC 21: [2010] 187 TAXMAN 193 (SC): 2010 (1) UJ 288 (SC) 


59


Chapter III B. However, under Section 58, which falls in Chapter IV, dealing 

with general provisions, the Board of Directors of RBI are given the power to 

make Regulations consistent with the 1934 Act to provide for all matters for 

which provision is necessary. The principle of “generality versus enumeration” 

is also applicable to Section 58 of RBI Regulations because under Section 58(2) 

there is a list of topics enumerated on which Regulations could be made. In 

other words, Section 58(1), (2) of the 1934 Act is similar to Section 178(1), 

(2) of the 2003 Act. Recently, before the Division Bench of this Court, the 

question arose, inter alia, as to the accounting treatment to be given by 

NBFCs accepting deposits from the public in the context of provision to be 

made for Non Performing Assets (“NPAs”). An Order was passed by RBI under 

Section 45JA of the 1934 Act stating that although provision for doubtful 

debts is required to be reduced from the assets’ side of the balance sheet 

under the provisions of the Companies Act, 1956, for proper disclosure 

under the 1934 Act, such a provision should be shown in the balance sheet 

specifically on the liabilities’ side. It is interesting to note that the Order was 

passed under Section 45JA which, as stated above, is part of Chapter III B 

of the 1934 Act, which chapter expressly deals with provisions relating to 

NBFCs. There was no Regulation enacted under Section 58 on the topic, 

namely, NPAs. The point to be noted is that there could be an Order/decision 

of a regulator under the Act even in the absence of Regulations. RBI like 

CERC is a regulator under the 1934 Act. Under Section 45JA it is empowered 

to issue directions in contradistinction to its powers to enact Regulations 

under Section 58 of the 1934 Act. Giving directions under Section 45JA need 

not be preceded by Regulations made under Section 58; however, if in a 

given case, RBI/Board would have enacted a Regulation on making of provision 

for NPAs under Section 58 then the Order of RBI under Section 45JA of the 

1934 Act was required to be in conformity with the said Regulations. (See the 

Judgment of this Court in the case of Southern Technologies Ltd. v. Joint 

Commissioner of Income Tax, Coimbatore 5 reported in 2010 (1) SCALE 329.) 

43. The above two citations have been given by us only to demonstrate that 

under the 2003 Act, applying the test of “general application”, a Regulation 

stands on a higher pedestal vis-à-vis an Order (decision) of CERC in the 

sense that an Order has to be in conformity with the Regulations. However, that 

would not mean that a Regulation is a precondition to the Order (decision). 

Therefore, we are not in agreement with the contention of the Appellant(s) 

that under the 2003 Act, power to make Regulations under Section 178 has 

to be correlated to the functions ascribed to each Authority under the 2003 

Act and that CERC can enact Regulations only on topics enumerated in 

Section 178(2). In our view, apart from Section 178(1) which deals with 

“generality” even under Section 178(2)(ze) CERC could enact a Regulation on 

any topic which may not fall in the enumerated list provided such power 

falls within the scope of 2003 Act. Trading is an activity recognised under 

the said 2003 Act. While deciding the nature of an Order (decision) vis-à-vis, 

a Regulation under the Act, one needs to apply the test of general application. 

On the making of the impugned Regulations 2006, even the existing Power 

Purchase Agreements (“PPA”) had to be modified and aligned with the said 

Regulations. In other words, the impugned Regulation makes an inroad into 

5 Ed.: MANU/SC/0023/2010: [2010] 153 CompCas 674 (SC): (2010) 228 CTR (SC) 

440: [2010] 320 ITR 577 (SC): JT 2010 (1) SC 14: [2010] 187 TAXMAN 346 (SC): 

2010 (1) UJ 387 (SC) 

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even the existing contracts. This itself indicates the width of the power 

conferred on CERC under Section 178 of the 2003 Act. All contracts coming 

into existence after making of the impugned Regulations 2006 have also to 

factor in the capping of the trading margin. This itself indicates that the 

impugned Regulations are in the nature of subordinate legislation. Such 

regulatory intervention into the existing contracts across the board could 

have been done only by making Regulations under Section 178 and not by 

passing an Order under Section 79(1)(j) of the 2003 Act. Therefore, in our 

view, if we keep the above discussion in mind, it becomes clear that the word 

“Order” in Section 111 of the 2003 Act cannot include the impugned Regulations 

2006 made under Section 178 of the 2003 Act. 

44. We may usefully refer to some decisions relevant in the context. 

45. In the case of City Board, Mussoorie v. State Electricity Board and Ors. 6 

reported in AIR (58) 1971 Allahabad 219, the matter arose under Electricity 

(Supply) Act, 1948 (“1948 Act”). Under that Act, Grid Tariff had to be fixed 

from time to time under Section 46(1) “in accordance with any Regulations 

made in that behalf”. Under Section 79 of the 1948 Act, the Board was also 

given the power to make Regulations not inconsistent with the Act and the 

Rules made thereunder to provide for all or any of the matters enumerated 

therein. It was argued on behalf of the Appellant that the Regulations must 

exist before a Grid Tariff can be fixed. This argument was rejected by the 

High Court which held that there was nothing in the 1948 Act to suggest 

that existence of a Regulation was a pre-condition to the determination of a 

grid Tariff. It was held that under Section 46 of 1948 Act, the Board was 

given a wide discretion to frame the grid Tariff depending upon various 

factors mentioned in the Act. According to the High Court, Section 46 of the 

Act was a standalone provision therefore, the grid Tariff could be fixed even 

in the absence of the Regulations provided such fixation is not inconsistent 

with the 1948 Act. However, it was further observed that if the Board had 

made Regulations under Section 79 then Order framing the grid Tariff under 

Section 46(1) had to conform to such Regulations. This view stood affirmed 

by this Court in the case of U.P. State Electricity Board, Lucknow v. City Board, 

Mussoorie 7 reported in (1985) 2 SCC 16. 

46. A similar question arose for determination by this Court in the case of 

Jagdamba Paper Industries (Pvt.) Ltd. and Ors. v. Haryana State Electricity 

Board and Ors. 8 reported in AIR 1983 SC 1296. In that case, enhancement 

in the security for meters and for payment of energy bills came to be challenged. 

It was argued on behalf of the Appellants that the Board had not framed 

any Regulations under Section 79 of the 1948 Act for such enhancement. 

According to the Appellants, the supply of electricity was controlled under 

an agreement between the Board and the Appellants and therefore, unilateral 

escalation of security charges by passing of an Order under Section 49 

would be contrary to any acceptable notion of contract. It was contended 

that under Section 49(1) of the 1948 Act, the Board was conferred with 

statutory powers to determine the conditions on the basis of which supply 

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7 Ed.: MANU/SC/0179/1985: AIR 1985 SC 883: 1985 (1) SCALE 196: [1985] 2 SCR 

815: 1985 (17) UJ 633 (SC) 

8 Ed.: MANU/SC/0220/1983: 1983 (2) SCALE 1008: (1983) 4 SCC 508: [1984] 1 

SCR 165: 1984 (16) UJ 126 (SC) 


61


had to be made. Therefore, without determining the conditions under Section 

49(1), it was not open to the Board to unilaterally enhance the security 

charges contrary to the existing contract between the Board and the consumers. 

This argument was rejected by this Court which held that what apply to the 

Tariff fixation would equally apply to the security. Section 49(1) of the 1948 

Act clearly indicated that the Board may supply electricity to any person 

upon such terms and conditions as the Board thinks fit. It was held that 

since the contract between the consumer and the Board contemplated 

enhancement of security charges as a condition of supply of electricity, 

it was not open to the Appellants to say that such enhancement cannot take 

place without Regulations being framed under Section 79. This Judgment is 

important from another angle also. It indicates that Regulations under Section 

79 of 1948 Act were to be in the nature of subordinate legislation therefore, 

all contracts had to be in terms of such Regulations. In the present case 

also, if one examines the terms and conditions of the licences, power to fix 

trading margin is expressly contemplated by such terms. The said Judgment 

further held that the Board is a Statutory Authority and has to act within 

the framework of the 1948 Act. If the act of the Board is not in consonance 

or in breach of some statutory provisions of law, Rule or Regulation, it is 

always open to challenge in a petition under Section 226 of the Constitution. 

47. In the case of Kerala State Electricity Board v. S.N. Govinda Prabhu and 

Bros. and Ors. 9 reported in (1986) 4 SCC 198, the dispute was confined to the 

question concerning increase in the electricity Tariff by the Board under the 

1948 Act. The principal ground of challenge was that the Board had acted 

outside its Statutory Authority by formulating a price structure intended to 

yield sufficient Revenue to offset not only the actual expenditure as contemplated 

by Section 59 of the 1948 Act but also expenditure not covered by that 

Section. At this stage, we may point out that, in all these cases, the Supreme 

Court has considered Tariff fixation, price fixation, security charges fixation 

at par. In that case, one of the submissions which found favour with the 

High Court, which accepted the submissions of the consumer, while striking 

down the impugned notification, was that in the absence of specification by 

the State Government, it was not open to the Board to adjust the Tariffs. 

What was found by the Supreme Court was that although the expenditure 

did not fall strictly within Section 59 of the 1948 Act, the actual expenditure 

stood incurred to avoid the loss. Therefore, the Supreme Court gave a schematic 

interpretation to the 1948 Act and it held that the State Electricity Board 

was obliged to carry on its business economically and efficiently and 

consequently such charges were admissible even though they did not fall 

strictly within the ambit of Section 59. On the question as to absence of 

specification by the State Government, this Court further held that the 

omission of the Rule-making Authority to frame Rules cannot take away the 

right to factor in such expenses in the revised Tariff structure. This Judgment 

is one more case which indicates that making of Regulations is not a 

pre-condition to the Tariff fixation or price fixation or security charges fixation. 

48. In the case of Hindustan Zinc Ltd. etc. v. Andhra Pradesh State Electricity 

Board and Ors. 10 reported in (1991) 3 SCC 299, the main attack was to the 

9 Ed.: MANU/SC/0288/1986: AIR 1986 SC 1999: JT 1986 (1) SC 261: 1986 (2) 

SCALE 313: [1986] 3 SCR 628 


SCALE 869: [1991] 2 SCR 643 

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upward revision of the Tariffs for HT consumers in the Writ Petition before 

the High Court, inter alia, on the ground that the Board cannot generate a 

surplus in excess of the surplus specified under Section 59 of the 1948 Act. 

Section 59 of that Act gave power to the Board to lay down general principles 

for Board’s finance. It was also contended that the Tariff revision was made 

without prior consultation with the State Electricity Consultative Council as 

required by Section 16(5) of the 1948 Act. It was held by this Court that even 

in the absence of general principles being specified under Section 59 of that 

Act, it was open to the Board to generate a surplus in order to carry on the 

business in a more efficient and economic manner. Following the Judgment 

in the case of S.N. Govinda Prabhu (supra), it was held that even in the 

absence of prior consultation with the State Electricity Consultative Council 

as required by Section 16(5), it was open to the Board which was vested with 

the power of Tariff fixation to make an upward revision of Tariff. In other 

words, specification by making Rules or Regulations was not a pre-condition 

for upward revision of Tariff. It was observed that, if in a given case, it is 

found that such upward revision was arbitrary, then under the judicial 

review jurisdiction it was open to the Courts to strike down such upward 

revision as arbitrary under Article 14. It was further observed that the 

“laying down procedure” before the Legislature was meant to effectively control 

the exercise of the delegated power of the Board; however, such laying down 

procedure will not make the impugned Regulation immune from judicial 

review. (Also see the Judgment of this Court in Indian Express Newspapers 

(Bombay) Pvt. Ltd. and Ors. v. Union of India and Ors. reported in (1985) 1 

SCC 641, paragraphs 75 to 79). 

49. On the question of “generality versus enumeration” principle, it was 

further held in the case of Hindustan Zinc Ltd. (supra) that under Section 49(1) 

of the 1948 Act a general power was given to the Board to supply electricity 

to any person not being a Licencee upon such terms and conditions as the 

Board thinks fit and the Board may for the purposes of such supply frame 

uniform Tariffs under Section 49(2). The Board was required to fix uniform 

Tariffs after taking into account certain enumerated factors. It was held that 

the power of fixation of Tariffs in the Board ordinarily had to be done in the 

light of specified factors; however, such enumerated factors in Section 49(2) 

did not prevent the Board from fixing uniform Tariffs on factors other than 

those enumerated in Section 49(2) as long as they were relevant and in 

consonance with the Act. To the same effect is the Judgment of this Court 

in Shri Sitaram Sugar Co. Ltd. (supra). In that Judgment also this Court held 

that the enumerated factors/topics in a provision do not mean that the 

Authority cannot take any other matter into consideration which may be 

relevant. The words in the enumerated provision are not a fetter; they are 

not words of limitation, but they are words for general guidance. 

50. One more aspect needs to be mentioned. The Judgment of this Court in 

Shri Sitaram Sugar Co. Ltd. (supra) has laid down various tests to distinguish 

legislative from administrative functions. It further held that price fixation 

is a legislative function unless the statute provides otherwise. It also laid 

down the scope of judicial review in such cases. 

51. Applying the above Judgments to the present case, it is clear that fixation 

of the trading margin in the inter-State trading of electricity can be done by 

making of Regulations under Section 178 of 2003 Act. Power to fix the trading 

margin under Section 178 is therefore, a legislative power and the Notification 


63


issued under that Section amounts to a piece of subordinate legislation, 

which has a general application in the sense that even existing contracts 

are required to be modified in terms of the impugned Regulations. 

These Regulations make an inroad into contractual relationships between 

the parties. Such is the scope and effect of the impugned Regulations which 

could not have taken place by an Order fixing the trading margin under 

Section 79(1)(j). Consequently, the impugned Regulations cannot fall within 

the ambit of the word “Order” in Section 111 of the 2003 Act. 

52. Before concluding on this topic, we still need to examine the scope of 

Section 121 of the 2003 Act. In this case, Appellant(s) have relied on Section 121 

to locate the power of judicial review in the Tribunal. For that purpose, we 

must notice the salient features of Section 121. Under Section 121, there 

must be a failure by a Commission to perform its statutory function in which 

event the Tribunal is given Authority to issue Orders, instructions or directions 

to the Commission to perform its statutory functions. Under Section 121 the 

Commission has to be heard before such Orders, instructions or directions 

can be issued. 

53. The main issue which we have to decide is the nature of the power under 

Section 121. In the case of Raman and Raman Ltd. v. State of Madras and 

Ors. 11 reported in AIR 1959 SC 694, Section 43A of Motor Vehicles Act, 1939, 

(“1939 Act”), as amended by Madras Act 20 of 1948, came for consideration 

before the Supreme Court. Section 43A conferred power on the State 

Government to issue “Orders” and “directions”, as it may consider necessary 

in respect of any matter relating to road transport to the State Transport 

Authority or a Regional Transport Authority. The meaning of the words 

“Orders” and “directions” came for interpretation before the Supreme Court 

in the said case. It was held, on examination of the Scheme of the Act, that 

Section 43A was placed by the legislature before the Sections conferring 

quasi-judicial powers on Tribunals which clearly indicated that the Authority 

conferred under Section 43A was confined to administrative functions of the 

Government and the Tribunals rather than to their judicial functions. It was 

further held that the legislature had used two words in the Section–(i) Orders 

and (ii) directions. This Court further noticed that under the 1939 Act there 

was a separate Chapter which dealt with making of “Rules” which indicated 

that the words “Orders” and “directions” in Section 43A were meant to clothe 

the Government with the Authority to issue directions of administrative 

character. It was held that the source of power did not affect the character 

of acts done in exercise of that power. Whether it is a law or an administrative 

direction depends upon the character or nature of the Orders or directions 

authorised to be issued in exercise of the power conferred. It was, therefore, 

held that the words “Orders” and “directions” were not laws. They were 

binding only on the Authorities under the Act. Such Orders and directions 

were not required to be published. They were not kept for scrutiny by legislature. 

It was further held that such Orders and directions did not override the 

discretionary powers conferred on an Authority under Section 60 of the 

1939 Act. It was observed that non compliance of such Orders, instructions 

and directions may result in taking disciplinary action but they cannot 

affect a finding given by the Quasi-judicial Authority nor can they impinge 

upon the Rules enacted by the Rule-making Authority. It was held that such 

Orders and directions would cover only an administrative field of the officers 

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concerned and therefore, such Orders and directions do not regulate the 

rights of the parties. Such Orders and directions cannot add to the 

considerations/topics prescribed under Section 47 of the 1939 Act on the 

basis of which an Adjudicating Authority is empowered to issue or refuse 

permits, as the case may be. 

54. Applying the tests laid down in the above Judgment to the present case, 

we are of the view that, the words “Orders”, “instructions” or “directions” in 

Section 121 do not confer power of judicial review in the Tribunal. It is not 

possible to lay down any exhaustive list of cases in which there is failure in 

performance of statutory functions by Appropriate Commission. However, by 

way of illustrations, we may state that, under Section 79(1)(h) CERC is 

required to specify Grid Code having regard to Grid Standards. Section 79 

comes in Part X. Section 79 deals with functions of CERC. The word “grid” 

is defined in Section 2(32) to mean high voltage backbone system of 

interconnected transmission lines, sub-station and generating plants. Basically, 

a grid is a network. Section 2(33) defines “grid code” to mean a code specified 

by CERC under Section 79(1)(h). Section 2(34) defines “grid standards” to 

mean standards specified under Section 73(d) by the Authority. Grid Code 

is a set of Rules which governs the maintenance of the network. 

This maintenance is vital. In summer months grids tend to trip. In the 

absence of the making of the Grid Code in accordance with the Grid Standards, 

it is open to the Tribunal to direct CERC to perform its statutory functions 

of specifying the Grid Code having regard to the Grid Standards prescribed 

by the Authority under Section 73. One can multiply these illustrations 

which exercise we do not wish to undertake. Suffice it to state that, in the 

light of our analysis of the 2003 Act, hereinabove, the words Orders, instructions 

or directions in Section 121 of the 2003 Act cannot confer power of judicial 

review under Section 121 to the Tribunal, which therefore, cannot go into 

the validity of the impugned Regulations 2006, as rightly held in the 

impugned Judgment. 

55. One of the contentions raised by Shri Shanti Bhushan, learned Senior 

Counsel appearing on behalf of Calcutta Electricity Supply Company Ltd. 

needs to be considered. It was contended on behalf of CESC Ltd. that under 

Section 111 of the 2003 Act, an appeal lies only against an Order by the 

Appropriate Commission and not against Regulations framed by CERC under 

Section 178 of the 2003 Act. It was contended that Regulations under 

Section 178 are framed in exercise of delegated power in which there was an 

element of legislative function. That, the Regulations framed by CERC are 

required to be laid before the Parliament under Section 179 of the 2003 Act. 

The said Regulations could be modified by the two Houses of the Parliament. 

In the circumstances, it was therefore, contended that neither Section 111 

nor Section 121 would be deemed to have conferred any power on the Appellate 

Tribunal for Electricity to supervise or sit in Judgment over the Regulations. 

To this extent, learned Counsel supported the contentions of the learned 

Solicitor General, appearing on behalf of CERC (Respondent No. 1). Further, 

an interesting argument was advanced by the learned Counsel, namely, 

that Section 121 of the 2003 Act has not yet been brought into force. In this 

connection, reference was made to Section 1(3) of the 2003 Act as well as to 

the notification dated, 10 th June, 2003 issued under Section 1(3) of the 2003 

Act by which the Central Government had fixed 10 th June, 2003 as the date 

on which Sections 1 to 120 and Sections 122 to 185 were brought into force, 

however, Section 121 was not brought into force till Notification dated, 


65


27 th January, 2004, which brought into force Electricity (Amendment) Act, 2003 

(No. 57 of 2003) came to be issued. According to the learned Counsel, Section 

4 of the Electricity (Amendment) Act, 2003 (No. 57 of 2003) which was brought 

into force on 27 th January, 2004 merely provided for substitution of the 

original Section 121 with new Section 121, without issuance of a further 

notification under Section 1(3) of the original Electricity Act, 2003. According 

to the learned Counsel, there is a difference between substituting a dormant 

Section in an Act and in bringing a substituted Section into force which has 

not been done in this case and therefore, Section 121, although being part 

of the statute, is not brought into force, till today. To answer the above 

contention, we need to quote Section 1(3) and also Section 121 of the Original 

Electricity Act, 2003 which was not brought into force though, as stated 

above, Sections 1 to 120 and Sections 122 to 185 were brought into force 

vide notification dated, 10 th June, 2003: 

Section 1. Short title, extent and commencement. 

(3) It shall come into force on such date as the Central Government 

may, by notification, appoint: 

Provided that different dates may be appointed for different provisions 

of this Act and any reference in any such provision to the 

commencement of this Act shall be construed as a reference to the 

coming into force of that provision. 

Section 121. Power of Chairperson of Appellate Tribunal. 

The Chairperson of the Appellate Tribunal shall exercise general power 

of superintendence and control over the appropriate Commission. 

56. We also quote hereinbelow, Sections 1 and 4 of the Electricity (Amendment) 

Act, 2003 (No. 57 of 2003) which was brought into force on 27 th January, 2004: 

Section 1. (2) It shall come into force on such date as the Central 

Government may, by notification in the Official Gazette, appoint. 

Section 4. For Section 121 of the principal Act, the following Section 

shall be substituted, namely: 

121. Power of Appellate Tribunal 

The Appellate Tribunal may, after hearing the Appropriate 

Commission or other interested party, if any, from time-to-time, 

issue such Orders, instructions or directions as it may deem fit, 

to any Appropriate Commission for the performance of its statutory 

functions under this Act. 

57. As stated above, the Electricity (Amendment) Act, 2003 (No. 57 of 2003) 

was brought into force by Notification dated, 27 th January, 2004 which is 

reproduced hereinbelow: 

Ministry of Power 

Notification 

New Delhi, the 27 th January, 2004 

S.O.119(E). In exercise of the powers conferred by Sub-section (2) of 

Section 1 of the Electricity (Amendment) Act, 2003 (57 of 2003), the 

Central Government hereby, appoints the 27 th January, 2004, as the 

date on which the provisions of the said Act shall come into force. 

(F. No. 23/23/2004-R&R) 

Ajay Shankar, Jt. Secy 

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58. In our view, there is no merit in the above contention advanced on behalf 

of CESC Ltd. At the outset, we may state that material brought on record 

indicates that Section 121 of the original Electricity Act, 2003, quoted 

hereinabove, was never brought into force because some MPs expressed the 

concern that the power, under that Section, conferred upon the Chairperson 

of the Appellate Tribunal, could lead to excessive centralisation of power and 

interference with the day-to-day activities of the Commission by the Chairperson 

of the Tribunal. Therefore, Section 121 was amended by Electricity (Amendment) 

Act, 2003 (No. 57 of 2003) which is also quoted hereinabove and which 

amendment Act came into force from 27 th January, 2004. In our view, by 

necessary implication of the coming into force of the Electricity (Amendment) 

Act, 2003 (No. 57 of 2003) all provisions amended by it also came into force, 

hence there is no requirement for a further notification under Section 1(3), 

particularly when Section 121 in its amended form has come into force 

w.e.f. 27 th January, 2004. In this connection, it may be seen that Section 121 

of the original Act stood substituted by Amendment Act No. 57 of 2003. 

Substitution of a provision results in repeal of the earlier provision and its 

replacement by the new provision. Substitution is a combination of repeal 

and fresh enactment. (See: Principles of Statutory Interpretation by G.P. Singh, 

11 th Edn., p. 638). Section 121 of the original Electricity Act, 2003 was never 

brought into force. It was substituted by new Section 121 by Amendment Act 

No. 57 of 2003 which was brought into force by a Notification dated, 

27 th January, 2004. Substitution, as stated above, results in repeal of the 

old provision and replacement by a new provision. Applying these tests to 

the facts of the present case, we find that the Electricity (Amendment) Act, 2003 

(No. 57 of 2003) was brought into force by notification dated, 27 th January, 2004. 

That, notification was issued under Section 1(2) of the Electricity (Amendment) 

Act, 2003 (No. 57 of 2003). If one reads Section 1(2) of Electricity (Amendment) 

Act, 2003 (No. 57 of 2003) with Notification dated, 27 th January, 2004 issued 

under Section 1(2) of the amended Act, 2003, it becomes clear that on coming 

into force of the Electricity (Amendment) Act, 2003 (No. 57 of 2003) all provisions 

amended by it also came into force. Hence, there was no requirement for a 

further notification under Section 1(3), consequently, Section 121 in its 

amended form came into force with effect from 27 th January, 2004. 

59. Summary of Our Findings 

(i) In the hierarchy of regulatory powers and functions under the 2003 

Act, Section 178, which deals with making of Regulations by the Central 

Commission, under the Authority of subordinate legislation, is wider 

than Section 79(1) of the 2003 Act, which enumerates the regulatory 

functions of the Central Commission, in specified areas, to be discharged 

by Orders (decisions). 

(ii) A Regulation under Section 178, as a part of regulatory framework, 

intervenes and even overrides the existing contracts between the regulated 

entities in as much as it casts a statutory obligation on the regulated 

entities to align their existing and future contracts with the said 

Regulations. 

(iii) A Regulation under Section 178 is made under the Authority of 

delegated legislation and consequently its validity can be tested only in 

judicial review proceedings before the Courts and not by way of appeal 

before the Appellate Tribunal for Electricity under Section 111 of the 

said Act. 


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(iv) Section 121 of the 2003 Act does not confer power of judicial review 

on the Appellate Tribunal. The words “Orders”, “instructions” or 

“directions” in Section 121 do not confer power of judicial review in the 

Appellate Tribunal for Electricity. In this Judgment, we do not wish to 

analyse the English Authorities as we find from those Authorities that 

in certain cases in England the power of judicial review is expressly 

conferred on the Tribunals constituted under the Act. In the present 2003 

Act, the power of judicial review of the validity of the Regulations made 

under Section 178 is not conferred on the Appellate Tribunal for 

Electricity. 

(v) If a dispute arises in adjudication on interpretation of a Regulation 

made under Section 178, an appeal would certainly lie before the Appellate 

Tribunal under Section 111; however, no appeal to the Appellate Tribunal 

shall lie on the validity of a Regulation made under Section 178. 

(vi) Applying the principle of “generality versus enumeration,” it would 

be open to the Central Commission to make a Regulation on any residuary 

item under Section 178(1) read with Section 178(2)(ze). Accordingly, we 

hold that the CERC was empowered to cap the trading margin under 

the Authority of delegated legislation under Section 178 vide the impugned 

notification dated, 23 rd January, 2006. 

(vii) Section 121, as amended by Electricity (Amendment) Act 57 of 2003, 

came into force with effect from 27 th January, 2004. 

Consequently, there is no merit in the contention advanced that the 

said Section is not yet been brought into force. 

Conclusion 

60. For the aforesaid reasons, we answer the question raised in the reference 

as follows: 

The Appellate Tribunal for Electricity has no jurisdiction to decide the 

validity of the Regulations framed by the Central Electricity Regulatory 

Commission under Section 178 of the Electricity Act, 2003. The validity 

of the Regulations may; however, be challenged by seeking judicial 

review under Article 226 of the Constitution of India. 

Our summary of findings and answer to the reference are with reference to 

the provisions of the Electricity Act, 2003. They shall not be construed as a 

general principle of law to be applied to Appellate Tribunals vis-à-vis Regulatory 

Commissions under other enactments. In particular, we make it clear that 

the decision may not be taken as expression of any view in regard to the 

powers of Securities Appellate Tribunal vis-à-vis Securities and Exchange 

Board of India under the Securities and Exchange Board of India Act, 1992 

or with reference to the Telecom Disputes Settlements and Appellate Tribunal 

vis-à-vis Telecom Regulatory Authority of India under the Telecom Regulatory 

Authority of India Act, 1997. 

61. In view of our findings, we dismiss these appeals as having no merit with 

no Order as to costs. 

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2010 ELR (SC) 0313* 


Chhattisgarh State Electricity Board 

v. 

Central Electricity Regulatory Commission and Ors. 

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CIVIL APPEAL D. NO. 37598 OF 2007 

DECIDED ON: 15.04.2010 

Judges 

G.S. Singhvi and Asok Kumar Ganguly, JJ. 

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Whether Section 5 of the Limitation Act, 1963 can be invoked by this 

Court for allowing the aggrieved person to file an appeal under Section 125 

of the Electricity Act, 2003 after more than 120 days from the date of 

communication of the decision or order of the Appellate Tribunal for 

Electricity? 

Electricity Act, a special legislation within the meaning of Section 29(2) of 

the Limitation Act, which provides that where any special or local law prescribes 

for any suit, appeal or application a period of limitation different from the 

one prescribed by the Schedule, then such period prescribed by special or 

local law were the period prescribed by the Schedule. The expression “within 

a further period of not exceeding 60 days” in Proviso to Section 125 of Electricity 

Act makes it clear that the outer limit for filing an appeal is 120 days. 

No provision in the Act under which this Court can entertain an appeal filed 

against the decision or Order of the Tribunal filed after more than 120 days. 

Any interpretation of Section 125 of the Electricity Act which may attract 

applicability of Section 5 of the Limitation Act read with Section 29(2) thereof 

will defeat the object of the legislation providing special limitation for filing 

an appeal against the decision or order of the Tribunal and proviso to Section 125 

will become nugatory. Thus, Section 5 of the Limitation Act cannot be invoked 

by the present Court for entertaining an appeal filed against the decision or 

order of the Tribunal beyond the period of 120 days specified in Section 125 

of the Electricity Act and its proviso. 

What is the date of communication of the decision or Order of the 

Tribunal for the purpose of Section 125 of the Electricity Act and whether 

the Appellant is communicated in the present case? 

The word “communication” not been defined in the Act and the Rules and thus 

it has to be interpreted by applying the rule of contextual interpretation and the 

relevant provisions. Rule 94(2) provides that once the factum of pronouncement 

of Order by the Tribunal is made known to the parties and they are given 

opportunity to obtain a copy thereof through e-mail etc., the Order will be 

deemed to have been communicated to the parties and the period of 60 days 

specified in the main part of Section 125 will commence from that date. In the 

present case, the date on which the impugned order was pronounced by the 

Tribunal, the factum of pronouncement was conveyed to the parties including 

the Appellant. The preparation of appeal is a clinching evidence of the fact that 

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the Appellant had not only become aware of the order of the Tribunal, but had 

obtained copy thereof. No tangible explanation was offered by Appellant for not 

filing Appeal for more than three and half months after its preparation. 



Assistant Transport Commissioner, Lucknow v. Nand Singh MANU/SC/0380/ 

1979: (1979) 4 SCC 19: AIR 1980 SC 15: 1979 (4) ELT 510 (SC): [1980] 1 

SCR 131: 1979 (11) UJ 681 (SC) (discussed) [p. 0328, para 21 e] 

Collector of Central Excise, Madras v. M.M. Rubber and Co., Tamil Nadu MANU/ 

SC/0550/1992: 1992 Supp (1) SCC 471: AIR 1991 SC 2141: 1992 (37) ECC 

16: 1993 ECR 177 (SC): 1993 ECR 177 (SC): 1991 (55) ELT 289 (SC): JT 

1991 (3) SC 587: 1991 (2) SCALE 473: [1991] 3 SCR 862: 1991 (2) UJ 658 

(SC) (discussed) [p. 0329, para 23 f] 

Commissioner of Customs and Central Excise v. Hongo India Private Limited 

and Anr. (2009) 5 SCC 791 (discussed) [p. 0319, para 8 c] 

Commissioner of Customs, Central Excise v. Punjab Fibres Ltd. MANU/SC/ 

0835/2008: (2008) 3 SCC 73: 2008 (125) ECC 195: 2008 (151) ECR 195 

(SC): 2008 (223) ELT 337 (SC): JT 2008 (2) SC 458: 2008 (2) SCALE 469: 

[2008] 13 STT 112 (mentioned) [p. 0325, para 14 b] 

Hukumdev Narain Yadav v. L.N. Mishra MANU/SC/0247/1973: (1974) 2 SCC 

133: AIR 1974 SC 480: [1974] 3 SCR 31 (discussed) [p. 0323, para 12 g] 

Mangu Ram v. Municipal Corporation of Delhi MANU/SC/0156/1975: (1976) 

1 SCC 392: AIR 1976 SC 105: 1976 CriLJ 179: (1976) 78 PLR 274: [1976] 

2 SCR 260 (mentioned) [p. 0323, para 13 g] 

Mukri Gopalan v. Cheppilat Puthanpurayil Aboobacker MANU/SC/0453/1995: 

(1995) 5 SCC 5: AIR 1995 SC 2272: JT 1995 (5) SC 296: 1995 (4) SCALE 

438: [1995] Supp 2 SCR 1 (mentioned) [p. 0318, para 7 f] 

Muthiaha Chettiar v. I.T. Commissioner, Madras AIR 1951 Mad 2004 (discussed) 

[p. 0329, para 22 a] 

Patel Naranbhai Marghabhai v. Dhulabhai Galbabhai MANU/SC/0395/1992: 

(1992) 4 SCC 264: AIR 1992 SC 2009: 1993 (1) ALT 27 (SC): (1993) 1 GLR 

533: JT 1992 (4) SC 381: 1992 (1) SCALE 1304: [1992] 3 SCR 384: 1992 

(2) UJ 119 (SC) (mentioned) [p. 0323, para 13 g] 

Raja Harish Chandra Raj Singh v. Deputy Land Acquisition Officer MANU/SC/ 

0386/1961: AIR 1961 SC 1500: [1962] 1 SCR 676 (discussed) 

[p. 0327, para 20 f] 

Secretary of State v. Gopisetti Narayanasami, 34 Mad. 151: 8 I.C. 398 (mentioned) 

[p. 0329, para 22 c] 

Singh Enterprises v. Commissioner of Central Excise, Jamshedpur and Ors. 

MANU/SC/0015/2008: (2008) 3 SCC 70: 2008 (1) CTC 707: 2008 (124) 

ECC 1: 2008 (150) ECR 1 (SC): 2008 (221) ELT 163 (SC): 2007 (14) SCALE 

610: (2008) 12 VST 542 (SC) (discussed) [p. 0319, para 8 c] 

Swaminatha v. Lakshmanan MANU/TN/0442/1929: AIR 1930 Mad 490: 123 

Ind. Cas. 345 (discussed) [p. 0329, para 22 c] 

Union of India v. Popular Construction Company MANU/SC/0613/2001: (2001) 

8 SCC 470: 2001 VIII AD (SC) 297: AIR 2001 SC 4010: 2001 (6) ALT 30 (SC): 

2001 (3) APLJ345: (2002) 1 CompLJ 46 (SC): JT 2001 (8) SC 271: 2001 (6) 

SCALE 657: 2002 (1) UJ 4 (SC) (mentioned) [p. 0319, para 8 c] 

Vidyacharan Shukla v. Khubchand Baghel MANU/SC/0120/1963: AIR 1964 

SC 1099: [1964] 6 SCR 129 (mentioned) [p. 0323, para 13 g] 

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(G.S. Singhvi, J.) 

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Arbitration Act, 1940 [p. 0324, para 13 d] 

Arbitration and Conciliation Act, 1996 







Code of Civil Procedure, 1908 

Order XXI [p. 0320, para 9 d] 




Section 111(1) and (2) [p. 0322, para 11 d] 






Central Excise Act, 1944 



Section 35A(5) [p. 0330, para 23 a] 

Sections 35B, 35EE [p. 0325, para 15 e] 

Section 35E(3) and (4) [p. 0329, para 23 f] 

Section 35G [p. 0325, para 15 e] 

Section 35H [p. 0325, para 15 e] 

Electricity (Supply) Act, 1948 [p. 0321, para 10 a] 

Electricity Act, 2003, Section 125 [p. 0316, para 1 f] 

Electricity Regulatory Commissions Act, 1998 [p. 0321, para 10 a] 

Indian Income Tax Act, 1922 

Section 33A [p. 0329, para 22 b] 

Section 33A(1) [p. 0331, para 23 a] 

Section 33A(2) [p. 0329, para 22 b] 


Indian Contract Act, 1872 





Indian Easements Act, 1882 [p. 0320, para 9 h] 

Indian Electricity Act, 1910 [p. 0321, para 10 a] 

Kerala Rent Control Act, Section 18 [p. 0326, para 17 e] 

Land Acquisition Act, 1894 




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Limitation Act, 1963 



M.P. Reorganization Act, 2000, Section 58 [p. 0316, para 2 g] 

Madras Boundary Act, 1860, Section 25 [p. 0330, para 23 e] 

Representation of the People Act, 1951 [p. 0323, para 12 c] 

Right to Information Act, 2005 [p. 0318, para 5 a] 

Survey and Boundary Act, 1897 [p. 0330, para 23 e] 

U.P. Motor Vehicles Taxation Act, 1935, Section 15 [p. 0328, para 21 e] 

Subsidiary Legislation referred to 

Electricity (Procedure, Form, Fee and Record of Proceedings) Rules, 2007 

Rule 94(1) [p. 0326, para 18 h] 

Rule 94(2) [p. 0326, para 18 h] 

Rule 98 [p. 0319, para 8 a] 

Rule 98(1) [p. 0326, para 18 i] 

Rule 98(2) [p. 0327, para 18 a] 

Rule 106 [p. 0327, para 18 b] 

Counsel 

For Appellant/Petitioner/Plaintiff: Ram Swarup Sharma, Adv. 

For Respondent(s)/Defendant: K.V. Bharathi Upadhyaya 

Ratio Decidendi 

“Limitation Act cannot override a special or local law which prescribes 

a different period of limitation for any suit, appeal or application.” 

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JUDGMENT 

G.S. Singhvi, J. 

1. Whether Section 5 of the Limitation Act, 1963 (for short, “the Limitation 

Act”) can be invoked by this Court for allowing the aggrieved person to file 

an appeal under Section 125 of the Electricity Act, 2003 (for short, “the 

Electricity Act”) after more than 120 days from the date of communication 

of the decision or Order of the Appellate Tribunal for Electricity (for short, 

“the Tribunal”) is the question which requires determination in this appeal 

filed against Order, dated, 17 th May, 2007 passed by the Tribunal in I.A. No. 4 

of 2007 in Appeal No. 21 of 2006. 

2. Appellant, Chhattisgarh State Electricity Board was established under 

Section 58 of the M.P. Reorganization Act, 2000. In a sense, it is a successor 

of Madhya Pradesh Electricity Board insofar as the State of Chhattisgarh is 

concerned. A dispute arose between the Appellant and Respondent 

No. 3-Madhya Pradesh State Electricity Board in the matter of payment of 

FLEE charges to the beneficiaries in the Western Region under the “Frequency 

Linked Energy Exchange” scheme, which was introduced with effect from 

1 st June, 1992. The FLEE charges were payable to the beneficiaries on the 

basis of monthly advises issued by Western Regional Electricity Board (renamed 

as Western Regional Board Committee) (Respondent No. 5 herein). The matter 

was considered by Respondent No. 1-Central Electricity Regulatory Commission, 

which passed an Order dated, 8 th December, 2005 fixing the liability of the 

Appellant and Respondent No. 3 in the matter of payment of FLEE charges. 

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3. The Appellant challenged the aforementioned Order in Appeal No. 21/2006, 

which was allowed by the Tribunal vide its Order dated, 14 th November, 2006. 

Soon thereafter, Respondent No. 3 filed IA No. 4/2007 for issue of a direction 

to Respondent No. 5 to recalculate FLEE charges in accordance with the 

Tribunal’s Order in relation to post-reorganisation period. By Order dated, 

17 th May, 2007, the Tribunal allowed that application and directed Respondent 

No. 5 to recalculate FLEE charges in accordance with Order dated, 

14 th November, 2006. 

4. Feeling aggrieved by the last mentioned Order of the Tribunal, the Appellant 

filed this appeal on 24 th December, 2007. Along with the appeal, the Appellant 

filed an application for condonation of 160 days’ delay. The reasons for not 

filing appeal within the period of 60 days specified in Section 125 of the 

Electricity Act, as disclosed in the application are as under: 

(i) The impugned Order had been pronounced by the Tribunal on 

17 th May, 2007 but the Counsel for the Appellant did not receive intimation 

of the said pronouncement and as such he was not aware of the same. 

(ii) That the procedure which was being followed by the Tribunal at that 

time was that the Registry of the Tribunal used to telephonically give 

advance intimation to the Counsel of the parties regarding pronouncement 

of the Order. 

(iii) The Appellant came to know about the Order in July, 2007 when 

Respondent No. 5 sent intimation for payment of FLEE charges to the 

beneficiaries in the Western Region. Thereupon, the Appellant 

informed its Counsel about the impugned Order who then sent letter 

dated, 26 th July, 2007 to the Registrar of the Tribunal that intimation 

regarding pronouncement of the Order had not been given to him (the 

date has been wrongly typed in paragraph 3 of the application as 

26 th November, 2007). 

(iv) Respondent No. 3 had filed a review petition against Order dated, 

14 th November, 2006, which was not decided by the Tribunal along with 

I.A. No. 4 of 2007 and the same was withdrawn on 25 th October, 2007. 

(v) Thereafter, the impugned Order was considered and discussed by 

the Appellant and after obtaining legal opinion, it was decided to file an 

appeal. 

(vi) In the light of the decision taken by the Appellant, the Counsel 

proceeded to prepare the appeal but some delay was caused due to 

extensive pleadings and voluminous documents. 

5. In the reply filed on behalf of Respondent No. 3, it has been averred that 

the impugned Order was communicated by the Deputy Registrar of the Tribunal 

vide his letter dated, 11 th June, 2007; that the Appellant and the Respondents 

before the Tribunal were informed by the said letter that the matter was 

disposed of on 14 th May, 2007 and the parties may request for a copy of the 

Order in PDF format through e-mail at registrar-aptel@nic.in or apply for a 

certified copy and further that the Order would also be available in the 

Tribunal’s website (www.aptel.gov.in). It has been further averred that letter 

sent by the Deputy Registrar of the Tribunal was received by the Appellant 

on 21 st June, 2007 which was entered in its receipt register at Serial No. 2082 

and subsequently, the same was received by the office of the Chief Engineer 

(Commercial) on 29 th June, 2007. Respondent No. 3 has supported this 

assertion by placing on record photostat copies of the inward register 


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maintained in the office of Secretary of the Appellant, which were made 

available pursuant to an application filed under the Right to Information 

Act. Respondent No. 3 has then relied upon the Appellant’s assertion that 

it came to know about Order dated, 17 th May, 2007 in July, 2007 and prayed 

that in the absence of any explanation by the Appellant for remaining silent 

from July, 2007 to December, 2007, the appeal cannot be entertained. 

As regards the review application, Respondent No. 3 has averred that the 

same has no bearing on the Appellant’s grievance against Order dated, 

17 th May, 2007 and in the absence of any explanation for the delay after 

21 st June, 2007, the appeal should be dismissed as barred by time. 

6. In the rejoinder affidavit filed on behalf of the Appellant, it has been 

pleaded that in the absence of communication of Order by the Tribunal in 

accordance with the provisions contained in Chapter XVI of Appellate Tribunal 

for Electricity (Procedure, Form, Fee and Record of Proceedings) Rules, 2007 

(for short, “the Rules”), the appeal cannot be dismissed as barred by time. 

It has then been averred that letter dated, 7 th June, 2007 of the Tribunal, 

which was signed by Deputy Registrar on 11 th June, 2007 cannot be treated 

as communication of Order dated, 17 th May, 2007. It has been further averred 

that letter dated, 7 th June, 2007 was received in the secretariat of the Appellant 

on 25 th June, 2007 and the same was forwarded to the concerned department 

on 28 th June, 2007. In paragraph 6 of the affidavit, it has been averred that 

officers of the Appellant had no knowledge of the impugned Order till the 

receipt of intimation from Respondent No. 5 in July 2007 regarding payment 

to the beneficiaries in the Western Region and thereafter, steps were taken 

for filing appeal. 

7. Shri Ravi Shankar Prasad, learned Senior Counsel for the Appellant 

argued that even though the appeal was filed after more than 120 days 

counted from the date of the Tribunal’s Order and, in terms of proviso to 

Section 125 of the Electricity Act, this Court can extend the time for filing 

an appeal up to a maximum of 60 days only, power under Section 5 read with 

Section 29(2) of the Limitation Act can be exercised for condonation of delay 

beyond the period of 120 days. In support of this argument, Shri Prasad 

placed reliance on the Judgment of this Court in Mukri Gopalan v. Cheppilat 

Puthanpurayil Aboobacker 1 (1995) 5 SCC 5. Learned Senior Counsel laid 

considerable emphasis on the fact that by virtue of the impugned Order 

huge liability has been created against the Appellant and if the appeal is not 

entertained, it will suffer irreparable injury. 

8. Shri C.S. Vaidyanathan, learned Senior Counsel appearing for Respondent 

No. 3 argued that in view of the plain language of the proviso to Section 125 

of the Electricity Act, this Court has no power to extend the period for filing 

an appeal beyond 120 days and the provisions of the Limitation Act cannot 

be invoked for negating the legislative intendment to prescribe special limitation 

for filing an appeal against any decision or Order of the Tribunal. Learned 

Senior Counsel further argued that letter dated, 7 th June, 2007 sent by 

Deputy Registrar of the Tribunal informing the parties that the IA was disposed 

of on 17 th May, 2007 and they may request for a copy of the Order in PDF 

format through e-mail or apply for a certified copy amounts to communication 

of the Order within the meaning of Section 125 of the Electricity Act read 


SCALE 438: [1995] Supp 2 SCR 1 

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with Rule 98 of the Rules and the appeal filed after more than 120 days from 

the date of receipt of letter dated, 7 th June, 2007 is liable to be dismissed as 

barred by time. Learned Senior Counsel submitted that even if intimation 

given by the Deputy Registrar of the Tribunal vide letter dated, 7 th June, 2007 

is ignored, the appeal is liable to be dismissed because the Appellant had 

become aware of the Tribunal’s Order on 17 th July, 2007 i.e. the day on 

which letter dated, 6 th July, 2007 sent by Respondent No. 5 was received in 

the office of its Secretary. Learned Senior Counsel submitted that if the 

period of limitation is counted from 17 th July, 2007, the appeal could be 

filed by 15 th September, 2007 whereas, the same was actually filed on 

24 th December, 2007. Learned Senior Counsel then invited the Court’s attention 

to the memo of appeal and application filed for condonation of delay to show 

that the same had been prepared on 7 th September, 2007 but were filed on 

24 th December, 2007 i.e. after more than three and half months. In support 

of his argument that this Court cannot extend the time beyond 60 days in 

terms of proviso to Section 125 of the Electricity Act, Shri Vaidyanathan 

relied upon the Judgments of this Court in Union of India v. Popular Construction 

Company 2 (2001) 8 SCC 470, Singh Enterprises v. Commissioner of Central 

Excise, Jamshedpur and Ors. 3 (2008) 3 SCC 70 and Commissioner of Customs 

and Central Excise v. Hongo India Private Limited and Anr. (2009) 5 SCC 791. 

9. For deciding the question framed at the threshold of this Judgment, it will 

be useful to notice the relevant statutory provisions. 

Electricity Act and the Rules 

125. Appeal to Supreme Court.–Any person aggrieved by any decision 

or Order of the Appellate Tribunal, may, file an appeal to the Supreme 

Court within 60 days from the date of communication of the decision or 

Order of the Appellate Tribunal, to him, on any one or more of the 

grounds specified in Section 100 of the Code of Civil Procedure, 1908 

(5 of 1908): 

Provided that the Supreme Court may, if it is satisfied that the 

Appellant was prevented by sufficient cause from filing the appeal 

within the said period, allow it to be filed within a further period 

not exceeding 60 days. 

94. Pronouncement of Order. 

(1) The Bench shall as far as possible pronounce the Order 

immediately after the hearing is concluded. 

(2) When the Orders are reserved, the date for pronouncement of 

Order shall be notified in the cause list which shall be a valid 

notice of intimation of pronouncement”. 

(3) Reading of the operative portion of the Order in the open Court 

shall be deemed to be pronouncement of the Order. 

(4) Any Order reserved by a Circuit Bench of the Tribunal may also 

be pronounced at the principal place of sitting of the Bench in one 

of the aforesaid modes as exigencies of the situation require. 

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2 Ed.; MANU/SC/0613/2001: 2001 VIII AD (SC) 297: AIR 2001 SC 4010: 2001 (6) 

ALT 30 (SC): 2001 (3) APLJ345: (2002) 1 CompLJ 46 (SC): JT 2001 (8) SC 271: 2001 

(6) SCALE 657: 2002 (1) UJ 4 (SC) 

3 Ed.: MANU/SC/0015/2008: 2008 (1) CTC 707: 2008 (124) ECC 1: 2008 (150) ECR 

1 (SC): 2008 (221) ELT 163 (SC): 2007 (14) SCALE 610: (2008) 12 VST 542 (SC) 


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98. Transmission of Order by the Court Master. 

(1) The Court Master shall immediately on pronouncement of Order, 

transmit the Order with the case file to the Deputy Registrar. 

(2) On receipt of the Order from the Court Master, the Deputy 

Registrar shall after due scrutiny, satisfy himself that the provisions 

of these rules have been duly compiled with and in token thereof 

affix his initials with date on the outer cover of the Order. The Deputy 

Registrar shall thereafter, cause to transmit the case file and the 

Order to the Registry for taking steps to prepare copies and their 

communication to the parties. 106. Filing through electronic media. 

- The Tribunal may allow filing of appeal or petition or application 

through electronic media such as online filing and provide for 

rectification of defects by e-mail or net and in such filing, these 

rules shall be adopted as nearly as possible on and from a date to 

be notified separately and the Chairperson may issue instructions 

in this behalf from time to time. 

Limitation Act 

5. Extension of prescribed period in certain cases.–Any appeal or any 

application, other than an application under any of the provisions of 

Order XXI of the Code of Civil Procedure, 1908 (5 of 1908), may be 

admitted after the prescribed period, if the Appellant or the Applicant 

satisfies the Court that he had sufficient cause for not preferring the 

appeal or making the application within such period. 

Explanation. The fact that the Appellant or the Applicant was misled by 

any Order, practice or Judgment of the High Court in ascertaining or 

computing the prescribed period may be sufficient cause within the 

meaning of this Section. 

29. Savings. 

(1) Nothing in this Act shall affect Section 25 of the Indian Contract 

Act, 1872 (9 of 1872). 

(2) Where any special or local law prescribes for any suit, appeal 

or application a period of limitation different from the period 

prescribed by the Schedule, the provisions of Section 3 shall apply 

as if such period were the period prescribed by the Schedule and 

for the purpose of determining any period of limitation prescribed 

for any suit, appeal or application by any special or local law, the 

provisions contained in Sections 4 to 24 (inclusive) shall apply 

only in so far as, and to the extent to which, they are not expressly 

excluded by such special or local law. 

(3) Save as otherwise provided in any law for the time being in 

force with respect to marriage and divorce, nothing in this Act 

shall apply to any suit or other proceeding under any such law. 

(4) Sections 25 and 26 and the definition of “easement” in Section 

2 shall not apply to cases arising in the territories to which the 

Indian Easements Act, 1882 (5 of 1882), may for the time being 

extend. 

10. The Electricity Act was enacted in the backdrop of dismal performance 

of various state electricity boards and alarming decline in the availability 

of power necessary for domestic, agricultural and industrial sectors. 

Before enactment of the Electricity Act, the electricity supply industry was 

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0321 

governed by the Indian Electricity Act 1910, The Electricity (Supply) Act, 1948 

and the Electricity Regulatory Commissions Act, 1998. The Electricity (Supply) 

Act, 1948 mandated the creation of electricity board for every state. The State 

electricity boards had the responsibility of arranging the supply of electricity 

in the state. Over a period of time, the performance of state electricity boards 

deteriorated on account of various factors including their inability to take 

decisions on Tariffs in a professional and independent manner. In practice, 

the State Governments started determining Tariff and huge concessions 

were provided to various segments of the consumers, many of which were 

not deserving. Cross-subsidies had reached unsustainable level. To address 

this issue and to provide for independent determination of Tariffs, the Electricity 

Regulatory Commissions Act, 1998 was enacted. Under that Act, the Central 

Government created the Central Electricity Regulatory Commission and most 

of the State Governments created the State Electricity Regulatory Commissions 

either under the Central Act or under their respective state legislations with 

a view to implement the policy of encouraging private sector participation in 

generation, transmission and distribution of electricity and to harmonise 

and rationalise the provisions of the three Acts, the Electricity Act was 

enacted. Part II thereof contains provisions under which the Central Government 

is entitled to prepare the National Electricity Policy and Tariff policy, in 

consultation with the State Governments and the Central Electricity Authority 

for development of the power system based on optimal utilisation of resources 

such as coal, natural gas, nuclear substances or materials, hydro and 

renewable sources of energy. Under the same part, the Central Government 

can prepare and notify national policies, permitting stand alone systems for 

rural areas, for rural electrification and for bulk purchase of power and 

management of local distribution in rural areas through panchayat institutions, 

users’ associations, co-operative societies, non-governmental organisations 

or franchisees. Part III contains provision relating to generation of electricity. 

Part IV regulates grant of licenses for transmission of electricity, distribution 

of electricity and trading in electricity. Part V deals with transmission of 

electricity including inter-state transmission. Part VI deals with distribution 

of electricity. Part VII contains provision relating to Tariff. The provisions 

contained in Part IX provide for establishment of the Central Electricity 

Regulatory Authority and its functions and duties and those contained in 

Part X provide for establishment of the Central and State Electricity Regulatory 

Commissions and their functions. The Electricity Act also envisages 

establishment of Tribunal to hear appeals against the Orders of adjudicating 

officers or regulatory commissions (Part XI). In terms of Section 111, any 

person aggrieved by an Order made by an adjudicating officer except the one 

made under Section 127 or an Order made by an appropriate Commission 

under this Act can prefer an appeal to the Tribunal. The composition of the 

Tribunal and qualifications prescribed for appointment of Chairperson and 

Member shows that the legislature intended to create a specialised adjudicatory 

forum for deciding various disputes emanating from the operation of the Act. 

Section 125 provides for an appeal to this Court against any Order or decision 

of the Tribunal which can be filed within 60 days from the date of communication 

of the decision or Order of the Tribunal. The limitation placed on the jurisdiction 

of this Court is that the appeal can be entertained only on one or more of 

the grounds specified in Section 100 of the Code of Civil Procedure. Proviso 

to Section 125 empowers this Court to entertain the appeal within a further 

period not exceeding 60 days, if it is satisfied that the Appellant was prevented 

by sufficient cause from filing the appeal within the said period. In other 


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words, an appeal under Section 125 can be filed within a maximum period 

of 120 days if this Court is satisfied that there was sufficient cause for not 

filing the same within 60 days from the date of communication of the decision 

or Order appealed against. Part XII contains provisions relating to investigation 

leading to assessment of electricity charges payable by the consumer and 

enforcement of the Orders of assessment. It also contains provisions for 

appeal against the final Order passed under Section 126. Part XIV contains 

provisions to deal with theft of electricity, electric lines and materials, 

interference with meters and work of licensees and also provides for fiscal 

penalties and substantive punishments. Section 145 declares that no Civil 

Court shall have jurisdiction to entertain any suit or proceeding in respect 

of any matter which an assessing officer referred to in Section 126 or an 

Appellate Authority referred to in Section 127 or the adjudicating officer 

appointed under the Act is empowered by or under the Act to determine and 

no injunction shall be granted in such matters. 

11. The brief analysis of the scheme of the Electricity Act shows that it is a 

self-contained comprehensive legislation, which not only regulates generation, 

transmission and distribution of electricity by public bodies and encourages 

public sector participation in the process but also ensures creation of special 

adjudicatory mechanism to deal with the grievance of any person aggrieved 

by an Order made by an adjudicating officer under the Act except under 

Section 127 or an Order made by the appropriate commission. Section 110 

provides for establishment of a Tribunal to hear such appeals. Section 111(1) 

and (2) lays down that any person aggrieved by an Order made by an adjudicating 

officer or an appropriate commission under this Act may prefer an appeal 

to the Tribunal within a period of 45 days from the date on which a copy of 

the Order made by an adjudicating officer or the appropriate commission is 

received by him. Section 111(5) mandates that the Tribunal shall deal with 

the appeal as expeditiously as possible and endeavour to dispose of the 

same finally within 180 days from the date of receipt thereof. If the appeal 

is not disposed of within 180 days, the Tribunal is required to record reasons 

in writing for not doing so. Section 125 lays down that any person aggrieved 

by any decision or Order of the Tribunal can file an appeal to this Court 

within 60 days from the date of communication of the decision or Order of 

the Tribunal. Proviso to Section 125 empowers this Court to entertain an 

appeal filed within a further period of 60 days if it is satisfied that there was 

sufficient cause for not filing appeal within the initial period of 60 days. 

This shows that the period of limitation prescribed for filing appeals under 

Sections 111(2) and 125 is substantially different from the period prescribed 

under the Limitation Act for filing suits etc. The use of the expression “within 

a further period of not exceeding 60 days” in Proviso to Section 125 makes 

it clear that the outer limit for filing an appeal is 120 days. There is no 

provision in the Act under which this Court can entertain an appeal filed 

against the decision or Order of the Tribunal after more than 120 days. 

The object underlying establishment of a special adjudicatory forum i.e. the 

Tribunal to deal with the grievance of any person who may be aggrieved by 

an Order of an adjudicating officer or by an appropriate commission with a 

provision for further appeal to this Court and prescription of special limitation 

for filing appeals under Sections 111 and 125 is to ensure that disputes 

emanating from the operation and implementation of different provisions of 

the Electricity Act are expeditiously decided by an expert body and no Court, 

except this Court, may entertain challenge to the decision or Order of the 

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Tribunal. The exclusion of the jurisdiction of the Civil Courts (Section 145) 

qua an Order made by an adjudicating officer is also a pointer in that 

direction. It is thus evident that the Electricity Act is a special legislation 

within the meaning of Section 29(2) of the Limitation Act, which lays down 

that where any special or local law prescribes for any suit, appeal or application 

a period of limitation different from the one prescribed by the Schedule, the 

provisions of Section 3 shall apply as if such period were the period prescribed 

by the Schedule and provisions contained in Sections 4 to 24 (inclusive) 

shall apply for the purpose of determining any period of limitation prescribed 

for any suit, appeal or application unless they are not expressly excluded by 

the special or local law. 

12. In Hukumdev Narain Yadav v. L.N. Mishra 4 (1974) 2 SCC 133, this Court 

interpreted Section 29(2) of the Limitation Act in the backdrop of the plea 

that the provisions of that Act are not applicable to the proceedings under 

the Representation of the People Act, 1951. It was argued that the words 

“expressly excluded” appearing in Section 29(2) would mean that there must 

be an express reference made in the special or local law to the specific 

provisions of the Limitation Act of which the operation is to be excluded. 

While rejecting the argument, the three-Judge Bench observed: 

...what we have to see is whether the scheme of the special law, that 

is in this case the Act, and the nature of the remedy provided therein 

are such that the Legislature intended it to be a complete code by 

itself which alone should govern the several matters provided by it. 

If on an examination of the relevant provisions it is clear that the 

provisions of the Limitation Act are necessarily excluded, then the 

benefits conferred therein cannot be called in aid to supplement the 

provisions of the Act. In our view, even in a case where the special 

law does not exclude the provisions of Sections 4 to 24 of the Limitation 

Act by an express reference, it would nonetheless be open to the 

Court to examine whether and to what extent the nature of those 

provisions or the nature of the subject-matter and scheme of the 

special law exclude their operation. 

(emphasis supplied) 

13. Section 34(3) of the Arbitration and Conciliation Act, 1996, which is 

substantially similar to Section 125 of the Electricity Act came to be interpreted 

in Union of India v. Popular Construction Company (2001) 8 SCC 470. The 

precise question considered in that case was whether the provisions of 

Section 5 of the Limitation Act are applicable to an application challenging 

an award under Section 34 of the Arbitration and Conciliation Act, 1996. 

The two-Judge Bench referred to earlier decisions in Mangu Ram v. Municipal 

Corporation of Delhi 5 (1976) 1 SCC 392, Vidyacharan Shukla v. Khubchand 

Baghel 6 AIR 1964 SC 1099, Hukumdev Narain Yadav v. L.N. Mishra (supra), 

Patel Naranbhai Marghabhai v. Dhulabhai Galbabhai 7 (1992) 4 SCC 264 

and held: 

4 Ed.: MANU/SC/0247/1973: AIR 1974 SC 480: [1974] 3 SCR 31 

5 Ed.: MANU/SC/0156/1975: AIR 1976 SC 105: 1976 CriLJ 179: (1976) 78 PLR 

274: [1976] 2 SCR 260 

6 Ed.: MANU/SC/0120/1963: [1964] 6 SCR 129 

7 Ed.: MANU/SC/0395/1992: AIR 1992 SC 2009: 1993 (1) ALT 27 (SC): (1993) 1 

GLR 533: JT 1992 (4) SC 381: 1992 (1) SCALE 1304: [1992] 3 SCR 384: 1992 (2) 

UJ 119 (SC) 


79


12. As far as the language of Section 34 of the 1996 Act is concerned, 

the crucial words are “but not thereafter” used in the proviso to 

Sub-section (3). In our opinion, this phrase would amount to an express 

exclusion within the meaning of Section 29(2) of the Limitation Act, and 

would therefore, bar the application of Section 5 of that Act. Parliament 

did not need to go further. To hold that the Court could entertain an 

application to set aside the award beyond the extended period under 

the proviso, would render the phrase “but not thereafter” wholly otiose. 

No principle of interpretation would justify such a result. 

16. Furthermore, Section 34(1) itself provides that recourse to a Court 

against an arbitral award may be made only by an application for setting 

aside such award “in accordance with” Sub-section (2) and Sub-section (3). 

Sub-section (2) relates to grounds for setting aside an award and is not 

relevant for our purposes. But an application filed beyond the period 

mentioned in Section 34, Sub-section (3) would not be an application “in 

accordance with” that Sub-section. Consequently, by virtue of Section 34(1), 

recourse to the Court against an arbitral award cannot be made beyond 

the period prescribed. The importance of the period fixed under Section 34 

is emphasised by the provisions of Section 36 which provide that “where 

the time for making an application to set aside the arbitral award under 

Section 34 has expired...the award shall be enforced under the Code of 

Civil Procedure, 1908 in the same manner as if it were a decree of the 

Court”. This is a significant departure from the provisions of the Arbitration 

Act, 1940. Under the 1940 Act, after the time to set aside the award 

expired, the Court was required to “proceed to pronounce Judgment 

according to the award, and upon the Judgment so pronounced a decree 

shall follow” (Section 17). Now the consequence of the time expiring under 

Section 34 of the 1996 Act is that the award becomes immediately enforceable 

without any further act of the Court. If there were any residual doubt on 

the interpretation of the language used in Section 34, the scheme of the 

1996 Act would resolve the issue in favour of curtailment of the Court’s 

powers by the exclusion of the operation of Section 5 of the Limitation Act. 


14. In Singh Enterprises v. C.C.E., Jamshedpur and Ors. (supra), the Court 

interpreted Section 35 of Central Excise Act, 1944, which is pari materia to 

Section 125 of the Electricity Act and observed: 

The Commissioner of Central Excise (Appeals) as also the Tribunal 

being creatures of statute are vested with jurisdiction to condone the 

delay beyond the permissible period provided under the statute. The period 

up to which the prayer for condonation can be accepted is statutorily 

provided. It was submitted that the logic of Section 5 of the Limitation 

Act, 1963 (in short “the Limitation Act”) can be availed for condonation 

of delay. The first proviso to Section 35 makes the position clear that 

the appeal has to be preferred within three months from the date of 

communication to him of the decision or Order. However, if the 

Commissioner is satisfied that the Appellant was prevented by sufficient 

cause from presenting the appeal within the aforesaid period of 60 days, 

he can allow it to be presented within a further period of 30 days. 

In other words, this clearly shows that the appeal has to be filed within 

60 days but in terms of the proviso further 30 days’ time can be granted 

by the Appellate Authority to entertain the appeal. The proviso to 

Sub-section (1) of Section 35 makes the position crystal clear that the 

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Appellate Authority has no power to allow the appeal to be presented 

beyond the period of 30 days. The language used makes the position clear 

that the legislature intended the Appellate Authority to entertain the appeal 

by condoning delay only up to 30 days after the expiry of 60 days which 

is the normal period for preferring appeal. Therefore, there is complete 

exclusion of Section 5 of the Limitation Act. The Commissioner and the 

High Court were, therefore, justified in holding that there was no power to 

condone the delay after the expiry of 30 days’ period. 


The same view was reiterated in Commissioner of Customs, Central Excise v. 

Punjab Fibres Ltd. 8 (2008) 3 SCC 73. 

15. In Commissioner of Customs and Central Excise v. Hongo India Private 

Limited and Anr. (2009) 5 SCC 791, a three-Judges Bench considered the 

scheme of the Central Excise Act, 1944 and held, that High Court has no 

power to condone delay beyond the period specified in Section 35H thereof. 

The argument that Section 5 of the Limitation Act can be invoked for 

condonation of delay was rejected by the Court and observed: 

30. In the earlier part of our Order, we have adverted to Chapter VI-A 

of the Act which provides for appeals and revisions to various authorities. 

Though Parliament has specifically provided an additional period of 

30 days in the case of appeal to the Commissioner, it is silent about the 

number of days if there is sufficient cause in the case of an appeal to 

the Appellate Tribunal. Also an additional period of 90 days in the case 

of revision by the Central Government has been provided. However, in 

the case of an appeal to the High Court under Section 35G and reference 

application to the High Court under Section 35H, Parliament has provided 

only 180 days and no further period for filing an appeal and making 

reference to the High Court is mentioned in the Act. 

32. As pointed out earlier, the language used in Sections 35, 35B, 

35EE, 35G and 35H makes the position clear that an appeal and reference 

to the High Court should be made within 180 days only from the date 

of communication of the decision or Order. In other words, the language 

used in other provisions makes the position clear that the legislature 

intended the Appellate Authority to entertain the appeal by condoning 

the delay only up to 30 days after expiry of 60 days which is the preliminary 

limitation period for preferring an appeal. In the absence of any Clause 

condoning the delay by showing sufficient cause after the prescribed 

period, there is complete exclusion of Section 5 of the Limitation Act. 

The High Court was therefore, justified in holding that there was no 

power to condone the delay after expiry of the prescribed period of 

180 days. 

35. It was contended before us that the words “expressly excluded” 

would mean that there must be an express reference made in the 

special or local law to the specific provisions of the Limitation Act of 

which the operation is to be excluded. In this regard, we have to see the 

scheme of the special law which here in this case is the Central Excise 

Act. The nature of the remedy provided therein is such that the legislature 

intended it to be a complete code by itself which alone should govern 

8 Ed.: MANU/SC/0835/2008: 2008 (125) ECC 195: 2008 (151) ECR 195 (SC): 2008 

(223) ELT 337 (SC): JT 2008 (2) SC 458: 2008 (2) SCALE 469: [2008] 13 STT 112 


81


the several matters provided by it. If, on an examination of the relevant 

provisions, it is clear that the provisions of the Limitation Act are 

necessarily excluded, then the benefits conferred therein cannot be 

called in aid to supplement the provisions of the Act. In our considered 

view, that even in a case where the special law does not exclude the 

provisions of Sections 4 to 24 of the Limitation Act by an express reference, 

it would nonetheless be open to the Court to examine whether and to 

what extent, the nature of those provisions or the nature of the 

subject-matter and scheme of the special law exclude their operation. 

In other words, the applicability of the provisions of the Limitation Act, 

therefore, is to be Judged not from the terms of the Limitation Act but 

by the provisions of the Central Excise Act relating to filing of reference 

application to the High Court. 


16. In view of the above discussion, we hold that Section 5 of the Limitation Act 

cannot be invoked by this Court for entertaining an appeal filed against the 

decision or Order of the Tribunal beyond the period of 120 days specified in 

Section 125 of the Electricity Act and its proviso. Any interpretation of Section 125 

of the Electricity Act which may attract applicability of Section 5 of the Limitation 

Act read with Section 29(2) thereof will defeat the object of the legislation, 

namely, to provide special limitation for filing an appeal against the decision or 

Order of the Tribunal and proviso to Section 125 will become nugatory. 

17. The Judgment in Mukri Gopalan v. Cheppilat Puthanpurayil Aboobacker 

(supra) on which reliance has been placed by Shri Ravi Shankar Prasad has 

no bearing on this case. The issue considered in that case was whether 

Section 5 of the Limitation Act can be invoked for condoning the delay in 

filing an appeal under Section 18 of the Kerala Rent Control Act. A two-Judges 

Bench interpreted Section 18 of the Kerala Rent Control Act and held that 

even though that Section is a special provision, in the absence of any indication 

of maximum period within which the appeal can be entertained by the 

Appellate Authority, Section 5 of the Limitation Act would get attracted. It is 

significant to note that there is no provision in the Kerala Rent Control Act 

similar to the one contained in proviso to Section 125 of the Electricity Act, 

Section 34(3) of the Arbitration and Conciliation Act and Section 35(1) or 

35H of the Central Excise Act, 1944. Therefore, the ratio of Mukri Gopalan 

v. Cheppilat Puthanpurayil Aboobacker (supra) cannot be invoked for declaring 

that this Court has the power to entertain an appeal under Section 125 of 

the Electricity Act after 120 days counted from the date of communication 

of the decision or Order of the Tribunal. 

18. The next question which requires consideration is as to what is the date 

of communication of the decision or Order of the Tribunal for the purpose of 

Section 125 of the Electricity Act. The word “communication” has not been 

defined in the Act and the Rules. Therefore, the same deserves to be interpreted 

by applying the rule of contextual interpretation and keeping in view the 

language of the relevant provisions. Rule 94(1) of the Rules lays down that 

the Bench of the Tribunal which hears an application or petition shall 

pronounce the Order immediately after conclusion of the hearing. Rule 94(2) 

deals with a situation where the Order is reserved. In that event, the date 

for pronouncement of Order is required to be notified in the cause list and 

the same is treated as a notice of intimation of pronouncement. Rule 98(1) 

casts a duty upon the Court Master to immediately after pronouncement 

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transmit the Order along with the case file to the Deputy Registrar. In terms 

of Rule 98(2), the Deputy Registrar is required to scrutinise the file, satisfy 

himself that provisions of rules have been complied with and thereafter, 

send the case file to the Registry for taking steps to prepare copies of the 

Order and their communication to the parties. If Rule 98(2) is read in isolation, 

one may get an impression that the registry of the Tribunal is duty bound 

to send copies of the Order to the parties and the Order will be deemed to 

have been communicated on the date of receipt thereof, but if the same is 

read in conjunction with Section 125 of the Electricity Act, which enables 

any aggrieved party to file an appeal within 60 days from the date of 

communication of the decision or Order of the Tribunal, Rule 94(2) which 

postulates notification of the date of pronouncement of the Order in the 

cause list and Rule 106 under which the Tribunal can allow filing of an 

appeal or petition or application through electronic media and provide for 

rectification of the defects by e-mail or net, it becomes clear that once the 

factum of pronouncement of Order by the Tribunal is made known to the 

parties and they are given opportunity to obtain a copy thereof through 

e-mail etc. the Order will be deemed to have been communicated to the 

parties and the period of 60 days specified in the main part of Section 125 

will commence from that date. 

19. The issue deserves to be considered from another angle. As mentioned 

above, Rule 94(2) requires that when the Order is reserved, the date of 

pronouncement shall be notified in the cause list and that shall be a valid 

notice of pronouncement of the Order. The Counsel appearing for the parties 

are supposed to take cognizance of the cause list in which the case is shown 

for pronouncement. If title of the case and name of the Counsel is printed 

in the cause list, the same will be deemed as a notice regarding pronouncement 

of Order. Once the Order is pronounced after being shown in the cause list 

with the title of the case and name of the Counsel, the same will be deemed 

to have been communicated to the parties and they can obtain copy through 

e-mail or by filing an application for certified copy. 

20. In Raja Harish Chandra Raj Singh v. Deputy Land Acquisition Officer 9 

AIR 1961 SC 1500, this Court considered whether an award made under the 

Land Acquisition Act, 1894 can be treated to have been communicated on 

the date of its making. The application filed by the Respondent for making 

reference under Section 18 of the Land Acquisition Act was rejected by the 

Collector on the ground that the same had been made after more than six 

months from the date of award i.e. 25 th March, 1951. The High Court dismissed 

the writ petition filed by the Appellant. This Court noted that no notice of the 

award was given to the Appellant as per the requirements of Section 12(2) 

and it was only on or about January, 1953 that he received the information 

about making of the award. He then filed application on 24 th February, 1953 

for reference. This Court considered the nature of the award made by the 

Collector under Section 12(2) and held that the period of six months prescribed 

for making application would commence from the date the award was made 

known to the party. Paragraph 6 of the Judgment which contains discussion 

on the issue of communication of award reads as under: 

There is yet another point which leads to the same conclusion. If the 

award is treated as an administrative decision taken by the Collector 

9 Ed.: MANU/SC/0386/1961: [1962] 1 SCR 676 


83


in the matter of the valuation of the property sought to be acquired it 

is clear that the said decision ultimately affects the rights of the owner 

of the property and in that sense, like all decisions which affect persons, 

it is essentially fair and just that the said decision should be 

communicated to the said party. The knowledge of the party affected by 

such a decision, either actual or constructive, is an essential element 

which must be satisfied before the decision can be brought into force. 

Thus, considered the making of the award cannot consist merely in the 

physical act of writing the award or signing it or even filing it in the 

office of the Collector; it must involve the communication of the said 

award to the party concerned either actually or constructively. If the 

award is pronounced in the presence of the party whose rights are 

affected by it can be said to be made when pronounced. If the date for 

the pronouncement of the award is communicated to the party and it 

is accordingly pronounced on the date previously announced the award 

is said to be communicated to the said party even if the said party is 

not actually present on the date of its pronouncement. Similarly, if 

without notice of the date of its pronouncement, an award is pronounced 

and a party is not present the award can be said to be made when it 

is communicated to the party later. The knowledge of the party affected 

by the award, either actual or constructive, being an essential requirement 

of fairplay and natural justice the expression “the date of the award” 

used in the proviso must mean the date when the award is either 

communicated to the party or is known by him either actually or 

constructively. In our opinion, therefore, it would be unreasonable to 

construe the words “from the date of the Collector’s award” used in the 

proviso to Section 18 in a literal or mechanical way. 


21. In Assistant Transport Commissioner, Lucknow v. Nand Singh 10 (1979) 4 

SCC 19, this Court considered a somewhat similar question in the context 

of filling an appeal under Section 15 of the U.P. Motor Vehicles Taxation Act, 

1935. The Allahabad High Court held that the date of the communication of 

the Order will be the starting point for limitation of filing an appeal. While 

approving the view taken by the High Court, this Court observed as under: 

In our opinion, the Judgment of the High Court is right and cannot be 

interfered with by this Court. Apart from the reasons given by this 

Court in the earlier Judgment to the effect that the Order must be made 

known either directly or constructively to the party affected by the 

Order in order to enable him to prefer an appeal if he so likes, we may 

give one more reason in our Judgment and that is this–It is plain that 

mere writing an Order in the file kept in the office of the Taxation Officer 

is no Order in the eye of law in the sense of affecting the rights of the 

parties for whom the Order is meant. The Order must be communicated 

either directly or constructively in the sense of making it known, which 

may make it possible for the authority to say that the party affected 

must be deemed to have known the Order. In a given case, the date of 

putting the Order in communication under certain circumstances may 

be taken to be the date of the communication of the Order or the date 

of the Order but ordinarily and generally speaking, the Order would be 

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10 Ed.: MANU/SC/0380/1979: AIR 1980 SC 15: 1979 (4) ELT 510 (SC): [1980] 1 SCR 

131: 1979 (11) UJ 681 (SC) 

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effective against the person affected by it only when it comes to his 

knowledge either directly or constructively, otherwise not. On the facts 

stated in the Judgment of the High Court, it is clear that the Respondent 

had no means to know about the Order of the Taxation Officer rejecting 

his prayer until and unless he received his letter on 29 th October, 1964. 

Within the meaning of Section 15 of the UP Motor Vehicle Taxation Act 

that was the date of the Order which gave the starting point for preferring 

an appeal within 30 days of that date. 


22. In Muthiaha Chettiar v. I.T. Commissioner, Madras AIR 1951 Mad 2004, a 

two-Judge Bench of Madras High Court considered the question whether 

the limitation of one year prescribed for filing revision under Section 33A(2) 

of the Income Tax Act, 1922 is to be computed from the date when the Order 

was signed by the Income Tax Commissioner or the date on which the 

Petitioner had an opportunity of coming to know of the Order. It was argued 

on behalf of the department that other provisions of the Act have been 

amended to provide for appeal within specified time to be counted from the 

date of the receipt of the Order sought to be appealed against, but no such 

amendment was made in Section 33A and therefore, the period of limitation 

will start from the date of Order. While rejecting the argument, Rajamannar, 

C.J., referred to earlier decisions in Secretary of State v. Gopisetti Narayanasami 

34 Mad 151 and Swaminatha v. Lakshmanan 11 AIR 1930 Mad 490 and observed: 

...The only question that we have to decide is as to whether there is 

anything in the reasoning of the learned Judges in Secretary of State v. 

Gopisetti Narayanasami, 34 Mad. 151: 8 I.C. 398 and Swaminatha v. 

Lakshmanan 53 Mad. 491: AIR 1930 Mad 490 which makes the application 

of the rule laid down by them dependent on the provisions of a particular 

statute. We think there is none. On the other hand, we consider that the 

rule laid down by the learned Judges in the above two decisions—and we 

are taking the same view—is based upon a salutary and just principle, 

namely that, if a person is given a right to resort to the remedy to get rid 

of an adverse Order within a prescribed time, limitation should not be 

computed from a date earlier than that on which the party aggrieved 

actually knew of the Order or had an opportunity of knowing the Order 

and therefore, must be presumed to have had knowledge of the Order. 

23. In Collector of Central Excise, Madras v. M.M. Rubber and Co., Tamil Nadu 12 

(1992) Supp 1 SCC 471, a three-Judges Bench highlighted a distinction 

between making of an Order and communication thereof to the affected 

person in the context of Section 35E(3) and (4) of the Central Excise Act, 

1944. The Bench noted the scheme of Section 35, distinction between Subsections 

(3) and (4) thereof and held that in case where the Order is subject 

to appeal, the same is required to be communicated to the affected person. 

Relevant portions of that Judgment are extracted below: 

5. Before we discuss the arguments of the learned Counsel, it is necessary 

to set out some relevant provisions in the Act. Section 35 of the Act 

provides for an appeal by a person aggrieved by any decision or Order 

passed under the Act by a Central Excise Officer lower than a 

11 Ed.: MANU/TN/0442/1929: 123 Ind. Cas. 345 

12 Ed.: MANU/SC/0550/1992: AIR 1991 SC 2141: 1992 (37) ECC 16: 1993 ECR 177 

(SC): 1993 ECR 177 (SC): 1991 (55) ELT 289 (SC): JT 1991 (3) SC 587: 1991 (2) 

SCALE 473: [1991] 3 SCR 862: 1991 (2) UJ 658 (SC) 


85


Collector of Central Excise and that such an appeal will have to be filed 

“within three months from the date of the communication to him of 

such decision or Order”. Sub-section (5) of Section 35A requires that on 

the disposal of the appeal, the Collector (Appeals) shall communicate 

the Order passed by him to the Appellant, the Adjudicating Authority 

and the Collector of Central Excise. Section 35B provides for a right of 

appeal to any person aggrieved by, among other Orders (1) an Order 

passed by the Collector (Appeals) under Section 35A and (2) a decision 

or Order passed by the Collector of Central Excise as an Adjudicating 

Authority. Such an appeal will have to be filed “within three months 

from the date on which the Order sought to be appealed against is 

communicated to the Collector of Central Excise or as the case may be 

the other party preferring the appeal”. The Appellate Tribunal also is 

required to send a copy of the Order passed in the appeal to the Collector 

of Central Excise and the other party to the appeal.... 

8. At this stage itself we may state that Sub-section (4) of the Act provides 

that the Adjudicating Authority shall file the application before the Tribunal 

in pursuance of the Order made under Sub-section (1) or Sub-section (2) 

“within a period of three months from the date of communication of the 

Order under Sub-section (1) or Sub-section (2) to the Adjudicating Authority”. 

9. The words “from the date of decision or Order” used with reference 

to the limitation for filing an appeal or revision under certain statutory 

provisions had come up for consideration in a number of cases. We may 

state that the ratio of the decisions uniformly is that in the case of a 

person aggrieved filing the appeal or revision, it shall mean the date of 

communication of the decision or Order appealed against. However, we 

may note a few leading cases on this aspect. 

10. Under Section 25 of the Madras Boundary Act, 1860 the starting 

point of limitation for appeal by way of suit allowed by that Section was 

the passing of the Survey Officer’s decision and in two of the earliest 

cases, namely, Annamalai Chetti v. Col. J.G. Cloete and Seshama v. 

Sankara it was held that the decision was passed when it was 

communicated to the parties. 

In Secretary of State for India in Council v. Gopisetti Narayanaswami Naidu 

Garu construing a similar provision in the Survey and Boundary Act, 1897 

the same High Court held, that a decision cannot properly be said to be 

passed until it is in some way pronounced or published under such 

circumstances the parties affected by it have a reasonable opportunity 

of knowing what it contains. “Till then though it may be written out, 

signed and dated, it is nothing but a decision which the officer intends 

to pass. It is not passed so long it is open to him to tear off what he has 

written and write something else”. In Raja Harish Chandra Raj Singh v. 

Deputy Land Acquisition Officer construing the proviso to Section 18 of 

the Land Acquisition Act which prescribed for applications seeking reference 

to the Court, a time-limit of six weeks of the receipt of the notice from the 

Collector under Section 12(2) or within six months from the date of the 

Collector’s award whichever first expires, this Court held that the six 

months period will have to be calculated from the date of communication 

of the award. In Asstt. Transport Commissioner, Lucknow v. Nand Singh 

construing the provision of Section 15 of the UP Motor Vehicles Taxation 

Act, it was held that for an aggrieved party the limitation will run from 

the date when the Order was communicated to him. 

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11. The ratio of these Judgments were applied in interpreting Section 33A(2) 

of the Indian Income Tax Act, 1922 in Muthia Chettiar v. CIT with reference 

to a right of revision provided to an aggrieved Assessee. Section 33A(1) 

of the Act on the other hand authorised the Commissioner to suo moto 

call for the records of any proceedings under the Act in which an Order 

has been passed by any authority subordinate to him and pass such 

Order thereon as he thinks fit. The proviso, however, stated that the 

Commissioner shall not revise any Order under that Sub-section “if the 

Order (sought to be revised) has been made more than one year previously”. 

Construing this provision the High Court in Muthia Chettiar case held 

that the power to call for the records and pass the Order will cease with 

the lapse of one year from the date of the Order by the subordinate 

Authority and the ratio of date of the knowledge of the Order applicable 

to an aggrieved party is not applicable for the purpose of exercising suo 

moto power. Similarly, in another decision reported in Viswanathan Chettiar 

v. CIT construing the time-limit for completion of an assessment under 

Section 34(2) of the Income Tax Act, 1922, which provided that it shall 

be made “within four years from the end of the year in which the income, 

profit and gains were first assessable,” it was held that the time-limit of 

four years for exercise of the power should be calculated with reference 

to the date on which the assessment or reassessment was made and not 

the date on which such assessment or reassessment Order made under 

Section 34(2) was served on the Assessee. 

13. So far as the party who is affected by the Order or decision for 

seeking his remedies against the same, he should be made aware of 

passing of such Order. Therefore, Courts have uniformly laid down as 

a rule of law that for seeking the remedy the limitation starts from the 

date on which the Order was communicated to him or the date on 

which it was pronounced or published under such circumstances that 

the parties affected by it have a reasonable opportunity of knowing of 

passing of the Order and what it contains. The knowledge of the party 

affected by such a decision, either actual or constructive is thus, an 

essential element which must be satisfied before the decision can be 

said to have been concluded and binding on him. Otherwise the party 

affected by it will have no means of obeying the Order or acting in 

conformity with it or of appealing against it or otherwise having it set 

aside. This is based upon, as observed by Rajmannar, C.J. in Muthia 

Chettiar v. CIT “a salutary and just principle”. The application of this 

rule so far as the aggrieved party is concerned is not dependent on the 

provisions of the particular statute, but it is so under the general law. 


24. Reverting to the facts of this case, we find that even though the name of the 

Counsel for the Appellant was not shown in the cause list of 14 th May, 2007 i.e. 

the date on which the impugned Order was pronounced by the Tribunal, the 

factum of pronouncement was conveyed to the parties including the Appellant 

vide letter dated, 7 th June, 2007, which was signed by the Deputy Registrar on 

11 th June, 2007 and they were informed that they can obtain copy through 

e-mail or make an application for certified copy. Undisputedly, that letter was 

received in the secretariat of the Appellant on 21 st June, 2007. The Appellant 

had come to know about the impugned Order in July 2007 from another source 

i.e. Respondent No. 5, which had sent communication for payment of FLEE 

charges. The communication sent by Respondent No. 5 was received by the 


87


Appellant on 17 th July, 2007. It is thus, evident that on 21 st June, 2007 or at 

least on 17 th July, 2007, the Appellant had come to know through proper 

channel that the Order has been pronounced by the Tribunal in I.A. No. 4/2007. 

It is not clear from the record whether the Appellant had applied for certified 

copy or obtained the one through e-mail, but this much is evident that the 

Appellant did obtain/receive a copy of Order dated, 17 th May, 2007. If that was 

not so, the Appellant could not have filed appeal under Section 125 of the 

Electricity Act. The preparation of appeal, which bears the date 7 th September, 2007 

is a clinching evidence of the fact that the Appellant had not only become aware 

of the Order of the Tribunal, but had obtained copy thereof. However, instead 

of filing appeal within 60 days from the date of receipt of letter dated, 7 th June, 2007 

sent by the registry of the Tribunal or the communication sent by Respondent 

No. 5, the Appellant chose to file appeal only on 24 th December, 2007 and that 

too despite the fact that the same was prepared on 7 th September, 2007. 

The Appellant has not offered any tangible explanation as to why the appeal 

could not be filed for more than three and half months after its preparation. 

Thus, there is no escape from the conclusion that the appeal has been filed 

after more than 120 days from the date of communication of the Tribunal’s 

Order and, as such, the same cannot be entertained. 

25. In the result, the appeal is dismissed. However, the parties are left to 

bear their own costs. 

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2010 ELR (SC) 0332* 


West Bengal Electricity Regulatory Commission 

v. 

Hindalco Industries Ltd. and Ors. 

[Alongwith Civil Appeal No. 3341 of 2008] 

CIVIL APPEAL NOS. 805 OF 2008, 3341 OF 2008 

DECIDED ON: 22.04.2010 

Judges 

B. Sudershan Reddy and Surinder Singh Nijjar, JJ. 

Issues and Findings 

The controversy between the parties revolves around the Methodology, 

criteria/formula to be applied in determining the wheeling charges in 

accordance with the applicable Regulations framed under the Electricity 

Act, 2003. 

Appellants claimed that the formula/methodology/criteria for 

determining wheeling charges has to be in terms of form 1.27 attached 

to the Tariff Regulations, 2005 and in spite of the clear and categorical 

statutory provisions contained in the applicable regulations; the 

Appellants were wrongly directed by the Tribunal to re-determine the 

wheeling charges. 

A combined reading of all the applicable regulations, according to the Appellants, 

leads to the irresistible conclusion that for determining wheeling charges 

total distribution cost of the network and not the voltage-wise cost would be 

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* MANU/SC/0284/2010 

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March - April, 2010

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West Bengal Electricity Regulatory Comm. v. Hindalco Ind. Ltd. and Ors. 

(Surinder Singh Nijjar, J.) 

0333 

the determining factor. The interpretation made by the Tribunal, if accepted, 

would render the regulation framed by the Appellant otiose. The Tribunal 

incorrectly understood and interpreted the expressions applicable distribution 

network as the distribution network cost which is to be determined at the 

relevant voltage level. 

The appeals have to be allowed on the short ground that the Tribunal has 

failed to consider the objection raised by the Appellants with regard to the 

maintainability of the appeal filed by Respondent No. 1, before the Tribunal. 

The specific submission made by the Appellant with regard to the 

maintainability of the appeal was an important issue, which needed 

consideration by the Tribunal. Numerous issues, which have been raised in 

these appeals on merits, were also raised before the Tribunal, which seem 

to have escaped the notice of the Tribunal rendering its decision vulnerable. 

It would be in the interest of justice to remand the matter back to the 

Tribunal for fresh consideration of all the issues after taking into 

consideration the factual and legal submissions made by the appellant. 

In view of the above both the appeals succeed and are allowed. The Order 

passed by the Tribunal is set aside. The appeals are remanded back to 

the Tribunal to be decided afresh on merits, in accordance with law 

preferably within a period of three months of the receipt of a certified copy 

of this Order. 

Appeals Allowed 

Legislation referred to 

Electricity Act, 2003, Sections 9 and 42 [p. 0334, para 4 c] 


CERC (Open Access in Inter-State Transmission) Regulations, 2004 

[p. 0335, para 5 a] 

West Bengal Electricity Regulatory Commission (Terms & Conditions for 

Open Access-Schedule of Charges, Fees & Formats for Open Access) 

Regulation, 2005 

Regulation 14.3(b) and Regulation 14.5(b) [p. 0334, para 4 g] 

Counsel 

For Appellant/Petitioner/Plaintiff: Malini Poduval, Adv. 

For Respondent(s)/Defendant: Anil Kumar Tandale, Adv. 

JUDGMENT 

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Surinder Singh Nijjar, J. 

1. In these two appeals the Appellants are aggrieved by the Order passed by 

the Appellate Tribunal for Electricity (hereinafter referred to as “the Tribunal”) 

in Appeal No. 3/2007 dated, 31 st October, 2007. The present Appeal No. 805 

of 2008 is at the instance of West Bengal Electricity Regulatory Commission 

(hereinafter referred to as “the Commission”). Appeal No. 3341/2008 has 

been filed by the Calcutta Electricity and Supply Company Limited (hereinafter, 

referred to as “CESC”). 

2. We propose to decide the two appeals by this common Judgment as they 

arise out of the aforesaid Common Order passed by the Tribunal. 


89


3. The controversy between the parties revolves around the methodology, 

criteria/formula that has to be applied in determining the wheeling 

charges in accordance with the applicable Regulations framed under the 

Electricity Act, 2003. 

4. We may notice here the skeletal facts which are necessary for the purpose 

of disposal of these two appeals. HINDALCO Industries Limited, formerly 

known as Indian Aluminum Company Limited (hereinafter, referred to as 

Respondent No. 1) has an aluminum and copper products factory at Belurmath 

in West Bengal within the distribution licence area of CESC. It had an 

existing Contract Demand Agreement for 8.5 MW with CESC drawing power 

at the voltage of 33 KV through dedicated lines from the Belurmath receiving 

Sub-station of CESC. For this purpose, Respondent No. 1 has installed a 

33 KV Sub-station at its premises. It has a captive power plant at Hirakud, 

Orissa. On 31 st October, 2003, Respondents filed an application under Section 

9 and 42 of the Electricity Act, 2003 before the Commission seeking permission 

for open access to wheel surplus captive power of an approximately 9 MW 

from its power plant to its Belur factory. The distance between the captive 

power plant at Hirakud, Orissa and Belurmath plant in West Bengal is 

about 555 kilometers, out of which 550 kilometers falls within the jurisdiction 

of West Bengal State Electricity Board (for short WBSEB), OPTCL and Eastern 

Region. We may also notice here that out of these five kilometers, Respondent 

No. 1 had at its own cost put up 2 kilometers long dedicated transmission 

line, thus using only 3 kilometers of the CESC network. Respondent No. 1 

paid wheeling charges for transmission of power at the rate of 9.57 paise per unit 

for 550 kilometers. However, in respect of remaining five kilometers, which 

also fall within the State of West Bengal, Respondent No. 1 has to pay 

wheeling charges at the rate of 83.54 paise/kWh as fixed by the Appellate 

Commission by its Order, dated, 21 st November, 2005. In its Order dated, 

21 st November, 2005 the Commission had observed as follows: 

26.0 Thereafter, actual of working of open access should follow, naturally 

depending-upon availability of capacity as laid down in the Regulations 

on open access. Payments of various charges/fees should follow the 

provisions of the Regulations dealing with fees, charges and formats. 

There are still two items on which specific orders from the Commission 

will be required. The first one concerns the quantum/rate of additional 

surcharge, while the second one concerns the wheeling charge which 

will have to be determined by the Commission in terms of Regulation 

14.3(b) and Regulation 14.5(b), respectively of the West Bengal Electricity 

Regulatory Commission (Terms and Conditions for Open Access) 

Regulations, 2005. We have since determined the wheeling charges 

applicable to CESC Limited for the year 2005-06 based on factors like 

distribution network cost, units saleable by the distribution licensee to 

its consumers, units to be wheeled by the open access customer etc. 

and the same has worked out to 83.54 paise/kWh. This will be revised 

appropriately, needless to add, by the Commission every year. 

5. Aggrieved by the aforesaid Order, Respondent No. 1 challenged the same 

before the Tribunal by way of an appeal being Appeal No. 1/2006. The aforesaid 

appeal was allowed by the Tribunal by its Order dated, 11 th July, 2006. 

The impugned Order of the Commission was quashed and set aside. The matter 

was remanded back to the Commission for a fresh determination of wheeling 

charges with the following observations: 

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March - April, 2010

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West Bengal Electricity Regulatory Comm. v. Hindalco Ind. Ltd. and Ors. 

(Surinder Singh Nijjar, J.) 

0335 

35. It follows that in calculating wheeling charges for the distribution 

system or associated facilities are to be assessed on applicable distribution 

network cost, units saleable and units wheeled by all open access customers 

in the network. The learned Counsel for Appellant contends that as per 

CERC (Open Access in Inter-State Transmission) Regulations and WBERC 

(Terms and Conditions for Open Access-Schedule of Charges, Fees and 

Formats for Open Access) Regulation, the wheeling charges of the Distributing 

system should be 0.25 time for short term open access. However, we find 

from Para 26.0 of the Order appealed against, there is no detailed discussion 

in this respect except holding that 83.54 paisa/kWh shall be the wheeling 

charges. No particulars been disclosed is the main grievance and 

Regulations governing wheeling charges have not been applied correctly. 

The Second Respondent has stated in its submission that the WBERC 

determined the wheeling charges in case of WBSEB for 2005-06 at the 

rate of 56 paisa/kWh and a copy also was filed. In the circumstances 

with respect to fixation of wheeling charges the matter deserves to be 

remitted back to WBERC for fresh consideration in the light of the relevant 

Rules and affording opportunity to Appellant. The authority shall take 

note of the fact that open access within the Distribution area of CESC 

is applied to a distance of 5 KM and out of 5 KM, 2 KM distance is 

Appellant’s dedicated transmission line put up at its costs. 

6. Upon remand, the matter was again heard, and decided by the Commission 

vide Order dated, 16 th November, 2006. By this Order the Commission sought 

to demonstrate and detail the methodology for determining the wheeling 

charges payable by Respondent No. 1. The wheeling charges were re-determined 

by the Commission at 83.54 paisa per KWH. Again being aggrieved by the 

aforesaid order, Respondent No. 1 impugned the same before the Tribunal 

by way of Appeal No. 3/2007. 

7. We may notice here that in both the matters before the Tribunal, Respondent 

No. 1 had challenged the determination of wheeling charges for the year 2005- 

06. Initially, Respondent No. 1 had challenged the Order passed by the 

Commission on 21 st November, 2005 in Appeal No. 1/2006. By Order, dated, 

11 th July, 2006 Appeal No. 1/2006 was allowed and the matter was remanded 

back to the Commission for fresh determination of wheeling charges. It was 

observed that there was no detailed discussion in the Order which would 

throw light upon the manner and methodology behind determination of wheeling 

charges. The grievance made by Respondent No. 1 which was noticed by the 

Tribunal was that “no particular wheel disclosed is the main grievance and 

regulation governing wheeling charges have not been applied correctly.” 

8. Taking note of the aforesaid observations, the Commission re-determined 

the wheeling charges. It is the case of the Appellants herein that wheeling 

charges had been correctly re-determined on the basis of the total distribution 

network cost as mandated under the Commission (Terms and Conditions for 

Open Access-Schedule of Charges, Fees & Formats for Open Access) Regulations, 

2005; the West Bengal Electricity Regulatory Commission (Terms and Conditions 

for Open Access) Regulations 2005 as well as the West Bengal Electricity 

Regulatory Commissions (Terms and Conditions of Tariff) Regulations, 2005. 

9. It is claimed by the Appellants that the formula/methodology/criteria for 

determining wheeling charges has to be in terms of form 1.27 attached to the 

Tariff Regulations, 2005. In spite of the clear and categorical statutory provisions 

contained in the applicable regulations, the Appellants have been wrongly 


91


directed by the Tribunal to re-determine the wheeling charges on the basis of 

applicable network of 33 KVW distribution system on which the electricity is 

being rolled by Respondent No. 1. The Appellants had laid considerable emphasis 

on the submissions that the determination of wheeling charges based on the 

interpretation directed by the Tribunal would be ex facie contrary to the scheme 

contemplated under the applicable regulations framed under the Electricity 

Act, 2003 governing determination of wheeling charges. A combined reading of 

all the applicable regulations, according to the Appellants, leads to the irresistible 

conclusion that for determining wheeling charges total distribution cost of the 

network and not the voltage-wise cost would be the determining factor. 

The interpretation made by the Tribunal, if accepted, would render the regulation 

framed by the Appellant otiose. The Tribunal incorrectly understood and interpreted 

the expressions applicable distribution network as the distribution network 

cost which is to be determined at the relevant voltage level. 

10. At this stage we need not decide any of the issues raised by the Appellants 

as, in our opinion, the appeals have to be allowed on the short ground that 

the Tribunal has failed to consider the objection raised by the Appellants 

with regard to the maintainability of the appeal filed by Respondent No. 1, 

before the Tribunal. 

11. Both the Appellants had categorically stated before the Tribunal that 

Respondent No. 1 has sought to challenge the wheeling charges for the year 

2005-06 as determined by the Tribunal in the Order dated, 16 th November, 2006. 

During the year 2005-06 not a single unit of energy was wheeled by Respondent 

No. 1 and therefore, no wheeling charges were paid/payable. Therefore, the 

appeal filed by Respondent No. 1 herein was at best of an academic interest 

only, as at the relevant point of time when Appeal No. 03/2007 was filed the 

wheeling charges for the year 2006-07 had already been determined. It was 

also mentioned that for reasons best known to Respondent No. 1 herein, the 

wheeling charges for 2006 were not challenged in the appeal before the Tribunal. 

In any event since Respondent No. 1 had not wheeled any power during the 

period 2005-06, it did not have to pay any wheeling charges in the first place. 

Thus, the appeal ought to have been dismissed as having become infructuous. 

It is emphasised by the Counsel for the Appellant that detailed written notes 

were submitted before the Tribunal during the course of hearing in Appeal 

No. 3/2007. Thereafter, also written submissions were filed detailing the scope 

of the issues before the Tribunal. Copies of these written submissions have 

been placed before us as an annexure to the grounds of appeal. 

12. The specific submission made by the Appellant with regard to the 

maintainability of the appeal was an important issue which needed 

consideration by the Tribunal. Numerous issues, which have been raised in 

these appeals on merits, were also raised before the Tribunal which seem 

to have escaped the notice of the Tribunal rendering its decision vulnerable. 

In our opinion, it would be in the interest of justice to remand the matter 

back to the Tribunal for fresh consideration of all the issues after taking into 

consideration the factual and legal submissions made by the Appellant. 

In view of the above, both the appeals succeed and are allowed. The Order 

passed by the Tribunal is set aside. The appeals are remanded back to the 

Tribunal to be decided afresh on merits, in accordance with law preferably 

within a period of three months of the receipt of a certified copy of this Order. 

13. Appeals are allowed as indicated above with no Order as to costs. 

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March - April, 2010

0337 

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2010 ELR (APTEL) 0337* 

BEFORE THE APPELLATE TRIBUNAL FOR ELECTRICITY, NEW DELHI 

(APPELLATE JURISDICTION) 

GRIDCO Limited 

v. 

Global Energy Limited and Anr. 

APPEAL NO. 26 OF 2010 & I.A. NOS. 32, 33 AND 34 OF 2010 

DECIDED ON: 08.02.2010 

Coram 

M. Karpaga Vinayagam, J. (Chairperson) and H.L. Bajaj, Member (Technical) 


Whether notice issued under Section 15(5) (b) Act of 2003 inviting public 

opinion in matter of issuance of license in favour of Respondent justified? 

The Order challenged in this Appeal is only an interim Order, which was 

passed on 6 th May, 2008 directing issuance of notice inviting the public 

opinion and suggestions, and therefore the Appellant could not claim as an 

aggrieved party. 

In both the Orders dated 6 th May, 2008 and 1 st October, 2009, the State 


that Respondent No. 1 is competent enough to claim for licence, but the final 

decision with reference to grant of licence in favour of Respondent No. 1 

would be considered only after considering all the objections raised by the 

Appellant as well as the Objections to be raised by the public. 

Appeal dismissed. 


Electricity Act, 2003, Section 15(5)(b) [p. 0338, para 5 e] 

Counsel 

For Appellant/Petitioner/Plaintiff: R.K. Mehta and Antaryani Upadhyay, Advs. 

JUDGMENT 

M. Karpaga Vinayagam, J. (Chairperson) and 

H.L. Bajaj, Member (Technical) 

1. This Appeal has been filed by the Appellant-GRIDCO Limited challenging 

the Order dated, 6 th May, 2008 passed by the Orissa Electricity Regulatory 

Commission directing to issue notice to the public inviting opinions and 

suggestions with reference to grant of licence in favour of Respondent No. 1. 

2. It is noticed from the facts that Respondent No. 1 filed an Application 

before the State Commission for issuance of Intra-State Trading Licence and 

the same was objected to by the Appellant by raising various grounds. The State 

Commission, after considering the materials placed before it, came to the 

conclusion that prima facie, Respondent No. 1 is competent to claim for the 

licence, and therefore, it had become necessary for the State Commission to 

* MANU/ET/0009/2010 



issue notice to the public inviting opinions and suggestions with reference 

to grant of licence and accordingly, the notice was issued. This Order had 

been passed on 6 th May, 2008. 

3. Thereafter, the Appellant for the best reasons known to him, had not 

chosen to file an Appeal, straightaway before this Tribunal, but thought it 

fit to file a Review before the State Commission pointing out that there are 

some apparent errors in the Order dated, 6 th May, 2008, on the face of the 

record. However, the State Commission dismissed the Review Petition by its 

Order dated, 1 st October, 2009, holding that there is no error apparent on the 

face of the record. 

4. Now, the learned Counsel for the Appellant has chosen to file this Appeal 

challenging the main Order that has been passed on 6 th May, 2008 along 

with an Application to condone the delay showing the reason for the delay 

that Review Petition was pending before the State Commission. 

5. Mr. R.K. Mehta, the learned Counsel for the Appellant, refers to the impugned 

Order dated, 6 th May, 2008, and submits that the State Commission has 

pre-judged and decided the issue in favour of Respondent No. 1, and as 

such, there is an irregularity committed by the State Commission in issuing 

notice under Section 15(5)(b) of the Electricity Act, 2003 inviting public 

opinion in the matter of issuance of licence in favour of the Respondent 1 

and therefore, the same is liable to be set aside. 

6. In our view, the Appeal itself is not maintainable for the following two 

reasons, which are as follows: 

1. The Order challenged in this Appeal is only an interim Order, which 

was passed on 6 th May, 2008 directing issuance of notice inviting the 

public opinion and suggestions, and, therefore, the Appellant could not 

claim as an aggrieved party. 

2. In both the Orders dated, 6 th May, 2008 and 1 st October, 2009, the State 


that Respondent No. 1 is competent enough to claim for licence, but the 

final decision with reference to grant of licence in favour of Respondent No. 

1 would be considered only after considering all the objections raised by 

the Appellant as well as the Objections to be raised by the public. Therefore, 

it is clear that the State Commission, admittedly, has not come to any final 

conclusion and it has simply issued notice to the public. 

7. The learned Counsel for the Appellant would point out that the 

observations made by the Commission in some of the paragraphs of the 

Order dated, 6 th May, 2008, would indicate that already a final decision 

had been arrived at. 

8. This submission is not correct. We are of the view that those observations 

made in the Order, dated, 6 th May, 2008, by the Commission are confined to 

the question of issuance of notice under Section 15(5)(b) of the Act only, and 

not for the final decision regarding the issuance of licence. Further, the 

State Commission in Para 24 of the Review Order dated, 1 st October, 2009, 

has clearly stated that all the suggestions/objections including the objections 

raised by the Appellant and the recommendations, if any, of the Central 

Transmission Utility or the State Transmission Utility, as the case may be, 

would be considered and the final decision would be taken after giving the 

opportunity of being heard to all the parties concerned. 

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Delhi Transco Ltd. v. CERC and Northern Regional Load Despatch Centre 

(M. Karpaga Vinayagam, J. (Chairperson)) 

0339 

9. In the light of the above facts, we also further direct that uninfluenced by 

any of the observations that were made by the State Commission in the 

impugned Order dated, 6 th May, 2008, the State Commission may consider 

all the objections raised by the Appellant earlier in the form of reply and also 

the objections to be urged by the Appellant afresh before it taking into 

consideration of the suggestions and the opinions of the public as well as 

other utilities and arrive at a final decision in accordance with law. 

10. With these observations the Appeal is dismissed at the Admission stage 

itself. 

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2010 ELR (APTEL) 0339* 



Delhi Transco Limited 

v. 

Central Electricity Regulatory Commission and 

Northern Regional Load Despatch Centre 

APPEAL NO. 124 OF 2009 

DECIDED ON: 11.02.2010 

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Coram 


ISSUE AND FINDINGS 

Whether Appellant guilty of the violation of the directions issued regarding 

the overdrawl when the frequency fell below 49 Hz by the Northern 

Regional Load Despatch Centre under the Indian Electricity Grid Code? 

Under Indian Electricity Grid code state utilities would endeavour to restrict 

their drawl from grid whenever grid frequency falls below 49.5 Hz. When grid 

frequency falls below 49 Hz, requisite load shedding should be carried out 

by Appellant (SLDC) to curtail overdrawal. Regional Load Despatch Centre 

gave intimation to Appellant (SLDC) regarding overdrawal when frequency 

fell below 49 Hz. Facts suggest that Appellant did not take any action to stop 

overdrawing of electricity by state utilities. Factual finding by Central 

commission found that no concrete step taken to stop over drawing when 

frequency fall below 49 Hz. Appellant actions found insufficient. Order of 

State Commission justified. 

Appeal dismissed 







* MANU/ET/0011/2010 


95








Section 32(2)(1) [p. 0345, para 10 a] 

Section 32(2)(e) [p. 0346, para 18 d] 



Section 312(2)(e) [p. 0344, para 7 d] 


Indian Electricity Grid Code 

Clause 5 [p. 0349, para 35 e] 

Clause 5.2(M) [p. 0341, para 3 g] 

Clause 5.4.2 [p. 0341, para 3 h] 

Clause 5.4.2(a) and 6.4.4 [p. 0340, para 2 i] 

Clause 6.4.4 [p. 0345, para 15 h] 

Central Electricity Regulatory Commission (unscheduled inter-change charges 

and related matters) Regulation, 2009 [p. 0347, para 23 d] 

Counsel 

For Appellant/Petitioner/Plaintiff: M.G. Ramachandran, Anand K. Ganesan, 

Swapna Seshadri and Sumit Pushkaran, Advs. 

For Respondent(s)/Defendant: Nikhil Nayyar, Adv. for CERC 

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JUDGMENT 

M. Karpaga Vinayagam, J. (Chairperson) 

1. Delhi Transco Limited is the Appellant. Aggrieved by the Order dated, 

8 th May, 2009, passed by the Central Electricity Regulatory Commission 

(Central Commission) holding the Appellant guilty of the violation of the 

directions issued by the Northern Regional Load Despatch Centre under the 

Indian Electricity Grid Code, the Appellant has filed this appeal. 

2. The brief facts are as follows: 

(i) The Appellant is a transmission licensee for the National Capital 

Territory of Delhi. It is also designated to perform the statutory functions 

of the State Load Despatch Centre (SLDC). Under the Indian Electricity 

Grid Code, the Distribution Companies injecting and drawing electricity 

from the grid have a preliminary duty to act in a manner to protect the 

grid security. As such the Distribution Companies are required to follow 

the directions of both the Northern Regional Load Despatch Centre 

(RLDC) as well as the SLDC to ensure that the safety of the grid is 

maintained. 

(ii) Under Clauses 5.4.2(a) and 6.4.4 of the Grid Code, the State Utilities 

shall endeavour to restrict their drawl from the grid whenever the grid 

frequency falls below 49.5 Hz and when the grid frequency falls below 

49 Hz the requisite load shedding should be carried out by the SLDC 

to curtail overdrawal. 

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0341 

(iii). The Regional Load Despatch Centre gave messages and intimation 

to the Appellant (SLDC) regarding the overdrawl when the frequency 

fell below 49 Hz by giving the warning messages through B & C Notices 

on five occasions between 1 st January, 2008 and 14 th October, 2008. 

There was no response to this direction issued by the Regional Load 

Despatch Centre. Therefore, the Regional Load Despatch Centre sent 

a report on 1 st December, 2008 to the Central Electricity Regulatory 

Commission (Central Commission) under Section 29(5) of the Act to 

take suitable action against the Appellant as the Appellant did not take 

any action on its directions to curtail the overdrawl from the regional grid. 

(iv) The Central Commission thereupon by the Order dated, 

9 th January, 2009 directed the Appellant to show cause as to why penalty 

for non-compliance of the directions issued by the Regional Load Despatch 

Centre be not imposed on it under Section 29(6) of the Act. 

(v) After receipt of the said Show Cause Notice, the Appellant filed a 

reply on 10 th February, 2009 to the said Show Cause Notice mainly 

contending that on receipt of messages and intimation from the Regional 

Load Despatch Centre, it had immediately passed on the said messages 

to the Distribution Companies/licensees and also issued necessary 

advisory notices and that the Appellant straightaway could not switch 

off the entire power supply to the Distribution Companies as it would 

affect very large areas in the city where the essential and emergency 

services are established. 

(vi) On consideration of the said reply, the Central Commission appointed 

one of its member as Adjudicating officer to enquire into the matter. 

Accordingly, the Adjudicating Officer representing the Central 

Commission gave opportunities to the parties for hearing. At the end, 

the Central Commission through its Adjudicating Officer came to the 

conclusion that the Appellant was guilty of non-compliance of the 

directions of the Regional Load Despatch Centre and consequently 

imposed a penalty of Rs. 50,000 for each violation, total of Rs. 2.5 lacs. 

On being aggrieved by this Order, the Appellant has filed this Appeal 

before this Tribunal. 

3. The main arguments advanced by the Learned Counsel for the Appellant 

are as follows: 

(i) In terms of Clause 5.2(M) of the Grid Code, there is a requirement to 

provide automatic under-frequency load shedding at a particular level 

when the grid is likely to be collapsed. In accordance with the above 

provisions, automatic under-frequency load shedding was provided at 

the level as 48.8 Hz as agreed in the minutes of the meeting of the 

constituents of Northern Region Load Despatch Centre held on 

11 th August, 2006. Under Clause 5.4.2 of the Grid Code, the constituents 

shall endeavour to restrict their drawl whenever there is a frequency 

between 49.5 and 49 Hz and when the frequency falls below 49 Hz 

requisite load shedding shall be carried out by the SLDC. In accordance 

with the above, though the ideal frequency was 50 Hz, i.e. between 

50 Hz and 49 Hz, the utilities are allowed to draw power with a provision 

that the same shall be adjusted by commercial mechanism through 

Unscheduled Inter-changing charges. Therefore, there can be no question 

of coercive or unilateral action being taken by the SLDC when the 

frequency level is not below 49 Hz. The role of SLDC to take pro-active 


97


action to compel the Distribution Companies would arise only when the 

frequency falls below 49 Hz. In this case, admittedly there was no 

violation messages namely, B or C when the frequency was at 49 Hz 

and above. Each of the violation messages were issued only when the 

frequency was below 49 Hz or below. 

(ii) As per the impugned Order, as soon as the B or C messages were 

issued and received, the SLDC has no option whatsoever but to cut the 

feeder by carrying out load shedding and reduce the drawl and this has 

not been done. This finding is not correct. In the messages sent by the 

RLDC in the form of B & C messages, RLDC did not so specify that SLDC 

should proceed to cut feeders under its control. On the other hand, 

messages were sent only communicating that SLDC should act 

immediately to increase generation and/carry out the manual load 

shedding only to restrict the drawl. In terms of the above, the SLDC is 

required to act in a manner that would lead to decrease in the drawl. 

This can be affected either by increasing generation or by decreasing 

the drawl by load shedding. Therefore, the SLDC took steps immediately 

to contact the generating stations and Distribution Companies and 

ascertained the possibility of increasing the generation. If the increasing 

generation is possible, there is no need to resort to manual load shedding. 

That is what has been done by the Appellant in the present case. 

(iii) The Appellant (SLDC) could not straightaway switch off the supply 

of power to the Distribution Companies simpliciter. The moment they 

received B or C message, if it resorted to switching off the supply of 

power, it would affect very large areas where lot of sensitive and essential 

establishments like transportation network, traffic signals, hospitals, 

day-care centres, Fire Brigade Stations, Police Stations etc. are 

functioning. It is only the Distribution Companies which could know on 

which specific lines load shedding can be carried out so as to avoid the 

loss to the sensitive establishments and vital networks/institutions. 

Only for this reason, the automatic load shedding of power in the lines 

to the distribution lines is done when the frequency reached 48.5 Hz as 

agreed in the minutes of the meeting. Therefore, mere failure to resort 

to load shedding on receipt of B or C messages cannot be construed to 

be failure to follow the Grid Code. 

(iv) In this case, the first bona fide attempt which SLDC is required to 

make upon receipt of B or C messages is to persuade, threaten, force 

and make sure that the distribution utilities act and cut the requisite 

feeders instead of SLDC itself cutting the different Sections of the 

consumers. This has been done in this case. 

(v) In the light of the above situation, the Central Commission should 

not have proceeded on the basis that upon receiving a B or C message, 

the SLDC should have cut the feeders forthwith as it is contrary to the 

scheme envisaged in the Electricity Code. In fact the Central Commission 

did not consider the steps taken by the SLDC acting with due diligence 

for implementing the directions received from the NRLDC. 

(vi) The Appellant is discharging statutory functions. Therefore, it cannot 

be proceeded against for violation under Section 25(6) of the Act. 

The expression “any other person” cannot be interpreted to include 

SLDC which is a statutory body. The interpretation given by the Central 

Commission relating to the term “any other person” is wrong. 

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4. In reply to the above grounds, the learned Counsel for the Central Commission 

would make the following submissions: 

(1) According to the Appellant, the Regional Load Despatch Centre 

cannot issue any direction to the SLDC under Section 29(2) of the Act 

in view of the fact that the expression “any other person” indicate that 

the operation of power system does include SLDC, which is a statutory 

body. This contention is wrong. Under Section 29(1) of the Act, the 

RLDC may give such directions to ensure stability of the grid. 

Under Sub-section (2), every licensee connected with power system shall 

comply with the directions of the RLDC. As per Sub-section (3), all these 

directions shall be issued through SLDC to the licensee and the SLDC 

shall ensure that such directions are duly complied with by the licensee. 

Under Section 32(2), the SLDC is responsible for carrying out real time 

operations for grid control and despatch of electricity through the operation 

of such a grid, apart from being the apex body to ensure the security 

of the integrated operation of power system. So under Section 29(2), 

SLDC also is a person connected with the operation of power system 

and as such he has to comply with the directions issued by the RLDC 

under Section 29(1). 

(2) The details of the directions given by the RLDC to the Appellant 

SLDC would show that the Appellants during the five occasions between 

1 st October, 2008 and 14 th October, 2008 allowed over-drawl by the 

Distribution Companies. Over-drawl was done at the frequency below 

49 Hz. It is contended by the Appellant that on receipt of directions from 

the NRLDC, the Appellant sent fax messages to the Distribution Companies 

advising them to reduce over-drawl. This shows that without taking 

any further action, the Appellant was satisfied with a mere passing on 

the messages to the Distribution Companies. These messages were 

meant for ensuring compliance by the SLDC and not meant for mere 

passing on to the Licensees. These directions were direct command to 

the SLDC who is responsible for real time operation of the grid. 

The Appellant cannot escape from the responsibility to ensure the 

compliance of directions of RLDC by merely stating that it did not resort 

to switching off the power as it would affect large areas which would 

include the existence of emergency and essential services. As a matter 

of fact, the messages which were received by the SLDC in the form of 

B & C messages are warning notices. These messages for urgent action 

which were received by the Appellant have remained unanswered. 

Admittedly, no reply message was sent to the RLDC by SLDC regarding 

the further action taken by them and further developments taken place 

to bring it back to 49 Hz. 

(3) The Appellant failed to take prompt and preventive action to show 

that the Appellant had taken adequate steps to curtail overdrawl from 

the grid as soon as they received B & C messages communicating 

urgent and emergent situation. In fact, the Central Commission has 

found that no materials had been produced by the SLDC before the 

Central Commission to show that those messages were actually faxed 

and the same were received by the Distribution Companies and to show 

that further steps were taken by the Appellant to control the situation. 

Thus, it is clear that the Appellant did not take any substantial action 

on the messages received. Therefore, the Order impugned is well reasoned 

and well justified one. Therefore, it does not warrant any interference. 


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5. On these points, we have heard the learned Counsel for the parties 

elaborately. We have also given our anxious consideration to these rival 

contentions. The following issues arise for consideration by this Tribunal: 

(1) Whether in terms of the directions issued by the NRLDC in the form 

of B & C messages received by the Appellant, the Appellant should have 

immediately resorted to cutting of the feeders without resorting to any 

other means in an effort to reduce the over-drawl?; 

(2) Whether the Appellant being the SLDC performed his statutory 

functions in terms of Sections 31 and 32 of the Electricity Act can be 

proceeded and imposed with penalty under Section 29(6) of the Electricity 

Act?; and 

(3) Whether in the facts and circumstances of the case, the imposition 

of penalty on the Appellant is proper and justified? 

6. We will consider the issues one by one. Let us now consider the issue with 

reference to the applicability of the penalty proceedings on the Appellant 

which is said to be a statutory body. 

7. It cannot be disputed that Section 312(2)(e) mandates that the SLDC shall 

be responsible for carrying out real time operation for grid control. 

According to Section 29(3) of the Act, the RLDC may issue direction to any 

transmission licensee or any other licensee through the SLDC which may 

be required for ensuring stability of the grid operation and the SLDC shall 

ensure that such directions are duly complied with by the Distribution 

Licensee or generating companies. Under Section 29(2) the direction could 

be given to any other person connected with the operation of power system. 

The term “power system” has been defined under Sub-section 15 of Section 

2 of the Act. As per this definition, the power system means all aspects of 

generation, transmission, distribution and supply of electricity and includes 

among others the load despatch activities. Thus, it is clear that all activities 

performed by the SLDC are included in the power system. It is also mentioned 

in Sub-section 32(1) that the SLDC is apex body to ensure integrated operation 

of power system. It was contended that the SLDC cannot be construed to be 

a person within the purview of Section 29(2). This is not correct. 

8. It is mandatory for every licensee, generating company, generating station, 

sub-station and any other person connected with the operation of the power 

system to comply with the directions of RLDCs and failure to comply with 

such directions shall made them liable for a penalty not exceeding Rs. 15 lacs. 

The term “person” has been defined in Sub-section 2(49) of the Act “to 

include any company or body corporate or association or body of individuals, 

whether incorporated or not, or artificial juridical person”. Since, SLDC is 

an artificial juridical person clothed with rights and liabilities under the Act, 

it shall be construed to be a person being connected with the operation of 

power system by discharging the load despatch functions and, therefore, 

SLDC is liable for non-compliance of directions issued by RLDC. 

9. Therefore, the SLDC which was established by the State Government for 

the purpose of exercising the powers and discharging the functions for the 

Transmission of Electricity as per Section 32(1), (2) and (3) of the Act, the SLDC 

is empowered, as an apex body for operation of the power system and to levy 

and collect such fee or charges. Therefore, the SLDC being a statutory body 

would come under the purview of the definition of “any person” and as such any 

violation of a direction given to the SLDC is liable to be proceeded with. 

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10. Let us now deal with the other issues. The defence of the Appellant is 

that the moment it received messages from the RLDC, it passed on the 

same forthwith to the Distribution Companies with advisory messages. 

The question is whether this act would mean to be a satisfactory discharge 

of its obligation under Section 32(2)(1) of the Act read with various provisions 

of the Grid Code? 

11. Under Clause 5.4 of the Grid Code, the SLDC is entrusted with the 

responsibility of making provisions for effecting the demand management. 

Section 5.4.1.–This Section is concerned with the provisions to be made 

by SLDC to effect the reduction of demand in the event of insufficient 

generation capacity and transfer from external inter-connecting if not 

available to meet demand or in the event of breakdown from operating 

problems, such as frequency, frequency levels or to thermal power 

loads on any part of the grid. 

Thus, under the above provisions, burden is cast on the SLDC to take 

adequate steps in time of contingency of over-drawl. 

12. This obligation is reiterated in Paras 2.1, 2.3, and 2.3.1.1 of the Operating 

Procedure for the Northern Region preferred by the NRLDC as mandated in 

Para 5.1 (d) of the Grid Code which is reproduced below: 

Each SLDC shall regulate the load/own generation under its control so 

that it may not draw more than its net drawl schedule during low 

frequency conditions and less than its drawl schedule during high 

frequency conditions. 

13. The method of controlling the demand by SLDC in case of low/high 

frequency is elaborated at Para 3.3.3 of the Operating Procedure. The relevant 

part is reproduced below: 

3.3.3: The main control would have to be exercised under these conditions 

by the SLDC which could be done by either of the following methods or 

combination thereof: 

(a) Manual demand disconnection. 

(b) Shutting of or reconnecting the bulk power consumers having 

a special Tariff structure linked to number of interruptions in the 

day. 

(c) PC-based system for rotational load shedding with facilities for 

central programming and uploading of the disconnection schedule 

for the day from SLDC/Sub-LDC to the sub stations. 

14. Thus, under the above provisions, the onus is on the Appellant, SLDC 

to take necessary steps and to follow the procedures to ensure compliance 

with the direction of the NRLDC. This also is a statutory obligation under 

Section 33(3) of the Act. 

15. The Clause 6.4.4 of the Grid Code mandate the SLDC to endeavour to 

restrict their net drawl from the grid when the frequency was below 49.5 Hz. 

and when the grid frequency falls below 49 Hz requisite load shedding should 

be carried out by the SLDC in the concerned state to curtail over-drawl. 

Similarly, under Clause 5.4.2 the constituents shall endeavour to restrict 

their drawl when the frequency falls below 49.5 Hz and carry out the requisite 

load shedding when the frequency falls below 49 Hz. It is noticed that RLDC 

vide its letter dated, 1 st December, 2008 addressed to the SLDC reminded 

about the directions given to the Appellant under Para 5.4.2(h) of the Grid Code 


101


and 29(2). According to the RLDC the specific directions were issued to the 

Appellant to restrict over-drawl during the month of October 2008 in the 

interest of grid security when frequency was below 49 Hz. 

16. When the RLDC found that there was over-drawl when frequency was 

below 49 Hz on 1 st October, 2008, 3 rd October, 2008 and 14 th October, 2008, 

they sent B messages on two occasions and C messages on three occasions. 

Since, there was no action on the messages, the RLDC was constrained to 

send a Report to the Central Commission under Section 29(5) of the Act to 

take action against the Appellant which resulted in the issuance of the 

Show Cause Notice. 

17. It is mainly contended in the reply by the Appellant that on receipt of 

intimation, not only it had immediately passed on the messages to the 

licensee/Distribution Companies but also issued necessary advisory notes. 

It was also contended that Appellant could not straight away switch off the 

power supply to Distribution Companies as it would affect very large areas. 

It is also brought to our notice that the Appellant has also filed a petition 

before the State Commission against the Distribution Companies who violated 

the said directions. This plea of defence, in our view, would not absolve the 

Appellant from its obligations to ensure compliance with the directions given 

by the RLDC. 

18. In fact, Section 32(2)(e) of the Act clearly mandates that SLDC shall be 

responsible for carrying out real time operation under its control. Sending 

messages to the Distribution Companies or filing complaint before the State 

Commission for taking action against them cannot be construed to be the 

appropriate action for ensuring compliance of the said directions. These actions 

may at beast be in addition to what is required of the SLDC under the 

provisions of the Grid Code. Certainly, these actions cannot be said to be 

sufficient to establish the compliance of the directions. 

19. The plea that it is not possible for SLDC to effect manual load shedding 

without affecting actual feeders cannot be sustained. Para 24.1 of the Delhi 

Grid Code provides that the SLDC has to devise a procedure for load shedding. 

The Delhi Grid Code itself contains the provision for contingency when the 

frequency falls below 49 Hz as below: 

24.1 Users shall endeavour to restrict their actual drawl within their 

respective drawl schedules whenever the system frequency falling below 

49.0 Hz; 

Provided that in case of frequency falling below 49.0 Hz the SDLC 

shall direct the concerned disconnection of the Plant and/or 

Apparatus of such User or Transmission Licensee. 

20. From the reading of the provisions referred to above, it is clear that SLDC 

has to devise detailed operating procedures. In these procedures, the SLDC 

could formulate the procedures to deal with the situation as in the present 

case. SLDC could make more specified provisions for the Distribution companies 

to shed load manually or automatically and under extreme cases it may 

itself direct STU to open feeder of the Distribution Companies who have not 

complied with the SLDC directions. But admittedly the SLDC (Appellant) 

has failed to follow this procedure. 

21. This can be viewed from yet another angle. The directions and the messages 

sent by the RLDC to SLDC are a mandatory command to the SLDC who under 

Section 32 of the Act is responsible for the real time operation of the grid to 

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curtail overdrawl so as to ensure the drawl within the schedule. It is the case 

of the Respondent RLDC that despite the various kinds of messages, overdrawl 

had continued at frequency below 49 Hz against the optimum frequency of 

50 Hz. No response was given by the SLDC to RLDC to those messages which 

was expected from the SLDC within a reasonable time in intimating the action 

taken in the meantime to the RLDC. It also did not inform the RLDC about the 

status of the grid condition. Admittedly, the directions contained in those 

B messages and C messages issued by the RLDC remained unanswered. 

Since, there was no action for along time on the part of the SLDC, the RLDC 

was constrained to issue SOS. Despite that there was no response. The only 

explanation to this aspect given by the Appellant is that after receipt of these 

urgent messages it had simply passed on the directions of the RLDC to the 

Distribution companies for compliance as if it has no further role to play. 

22. Under the system of Availability Based Tariff, UI charge is a commercial 

mechanism for settlement for deviation from schedule at a rate dependent 

on system conditions. The flexibility through UI is meant for meeting the 

system contingencies and optimal utilisation of resources. 

23. In the Statement of Objects and Reasons to the Central Electricity 

Regulatory Commission (unscheduled inter-change charges and related 

matters) Regulation, 2009, the Central Commission has clarified that the 

“UI pricing mechanism is expected to serve the twin objectives of specifying 

settlement rate for deviations from schedule in normal operating range” and 

ensuring “grid discipline” on the one hand while ensuring maximisation of 

generation at optimal cost for grid participants on the other.” It is the statutory 

responsibility of the Appellant as the SLDC to issue directions to all the 

generating utilities with the State to maintain the frequency around 49.5 Hz. 

And to curtail the over-drawl/maximising injection when the frequency tends 

to fall below 49 Hz as per the provisions of Para 6.4.4 of the Grid Code. 

24. It is contended by the learned Counsel for the Appellant that the manual 

disconnection of feeders cannot be instantaneously done by the SLDC when 

frequency falls below 49.0 Hz as it would affect large areas. As per provisions 

of Section 32(2)(e) of the Act, the Appellant as the SLDC is responsible for 

ensuring Real Time Operations for grid control and dispatch of electricity 

between the State through secure and economic operation of the State grid 

in accordance with Grid Standards and the State Grid Code. 

25. Moreover, Section 32(1) of the Act, empowers the Appellant to give such 

directions and exercise such supervision and control as may be required for 

ensuring the integrated grid operations between the States. As per 

Section 33(3), the Appellant is bound to comply with the directions of the 

RLDC. The Appellant as SLDC has the facility for affecting manual disconnection 

of loads remotely from SLDC for regulation the States’ net drawal from the 

regional grid as directed by the RLDC. In this case the Appellant has miserably 

failed to discharge his statutory obligations and instead allowed over-drawal 

from the grid in the conditions of the low frequency. 

26. The Appellant neither placed any material as to what were the nature 

of directions issued by the SLDC to the Distribution Companies to ensure 

the safety of the grid and what was the response and result for those messages 

of NRLDC from the Distribution Companies. Mere statement that it has 

passed on the messages to the Distribution Companies would not amount 

to discharge of functions enjoined. It has only passed the buck to the other 

party and nothing more. 


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27. One other important aspect has to be noticed in this context which is as 

follows: 

It is the consistent stand taken by the Appellant that SLDC had through 

fax message immediately passed on the directions of the RLDC to the 

distribution licensees. Though it was stated before the Central Commission 

that the copies of the said fax messages, sent to the companies, were 

annexed along with the reply sent the Central Commission found nothing 

in the annexures. When it was pointed out to the Appellant, the Appellant 

in their affidavit reiterated the same statement without any material to 

show that the messages were really faxed to the Distribution Companies. 

28. One other sad feature which was noted by the Central Commission is, 

Central Commission found out that some of the documents filed before the 

Central Commission were not genuine. The Central Commission perused 

those documents and noticed that the message stated to have been sent by 

the SLDC to the companies contained the endorsement made by the SLDC 

on the body of the messages received from RLDC. In that fact of situation, 

the Central Commission gave finding that actually there was no material to 

show that these messages were immediately sent to the Distribution Companies 

at what time these messages were sent and at what time these were received 

at the other end. As indicated above, if it is a case of the Appellant that the 

copies of the messages were sent to the Distribution Companies, the Appellant 

must have pursued the matter further to ensure that the directions are 

complied with either by bringing the frequency back to 49 Hz or by resorting 

to load shedding. Actually there is no clear picture about this aspect. 

29. The Central Commission also found that there are some doubtful features 

in those documents. The Appellant had annexed some copies of the messages 

received from the NRLDC. The two messages both dated, 30 th September, 2008 

were sent at 22:09 hrs and 22:37 hrs, respectively each bearing endorsement 

dated, 29 th September, 2009. In their message dated, 30 th September, 2008 

sent at 09:30 hrs in the morning bearing the endorsement dated, 

1 st October, 2008 of the next day. In two other messages both dated, 

4 th October, 2008, one was sent at 16:14 hours and another was sent at 

18:14 hours. These documents would show that the date of the endorsement 

had been corrected from 5 th October, 2008 to 4 th October, 2008. In the light 

of these corrections it is all the more necessary for the Appellant to give the 

details of exact day and time at which the messages were sent to the 

Distribution Companies by the SLDC. Admittedly, these particulars have 

not been furnished to the Central Commission. 

30. As indicated above, the SLDC (Appellant) did not take any further steps 

to curtail the power drawal either by resorting to load shedding or by resorting 

to b ringing back to 49 Hz. So, in the absence of any material to show that 

some bona fide steps were taken by the SLDC (Appellant) to carry out the 

directions of the RLDC, due to which there was over-drawal it can be safely 

concluded that the factual findings rendered by the Central Commission 

that the Appellants are guilty cannot be interfered with that too in the 

absence of the valid reasons. 

31. Therefore, all the contentions of the learned Counsel for the Appellant 

urged in this Appeal would fail. 

32. Before parting with this case, we would like to express our suggestions for 

consideration by the Central Commission to maintain the grid frequency 

variations within limits. It cannot be debated that any deviations in the frequency 

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would damage the generation, transmission and load equipment. This would 

also result in degradation of quality of electricity and also in collapse of the 

power system. Therefore, it would be desirable that the grid frequency should 

be maintained as close as possible to the normal 50 Hz. However, due to 

prevailing shortages of power there may be generation and load imbalances 

which would result in frequency excursions from the normal frequency level. 

33. The main endeavour of the Central Commission, as is evident from the 

Central Electricity Regulatory Commission (Unscheduled Inter-change Charges 

and related matters) Regulation, 2009 is to encourage additional generation 

and discourage over-drawal of electricity during low frequency conditions. Similarly, 

the Central Commission is to make an endeavour to discourage over generation 

and underdrawal under high frequency conditions. These regulations provide 

for UI rates for over-drawal by the buyer and under injunction by the generating 

station or the seller at the low frequency level. It is noticed that the UI rates at 

frequency range between 50Hz and 49.5 Hz vary from 180 paise to 480 paise. 

The Tariff for new power plants is in the range of 250–350 paise per unit. The 

short-term rates for power are also prevailing in the range of Rs. 5. While 

considering these we feel that the UI rates are hardly sufficient to discourage 

overdrawal. Therefore, UI rates below 50 Hz frequency need to be so fixed so as 

to discourage over-drawls. In our view existing UI rates do not achieve this 

purpose as the frequency is likely to slide down rapidly to dangerous levels due 

to over-drawls, under low frequency levels. 

34. During low frequency conditions, the additional generation from all the 

existing plants including the diesel generation captive units will improve the 

frequency levels. Therefore, the same needs to be encouraged. We would like 

to reiterate that the prevailing UI rates may not encourage all the generating 

stations to inject additional power into grid despite additional UI charges. 

35. As per Regulation Clause 5, the Central Commission shall review the 

Unscheduled Inter-change charges including UI cap rate on six-monthly 

basis or earlier and, if necessary, through separate orders from time-to-time. 

36. Taking cue from the aforesaid Clause we would like to impress upon the 

Central Commission necessity to review the UI rates periodically as this 

would alone encourage additional generation and discourage over-drawal. 

The UI rates for over-drawal right from 49.98 downwards should be set or 

fixed so as to ensure that minimal over-drawal and under injunction occur 

to curb the slide down of frequency to dangerous levels. 

37. Under Clause 7(4) of the Regulations the Central Commission can take 

appropriate action under Section 142 of the Act despite the payment of UI 

rates and additional charges. In the light of the said provision, we would like 

to suggest Central Commission to make it clear that any over-drawal and 

deliberate under injunction of power below 49.5 Hz shall attract the provisions 

under Section 142 in case the instructions of RLDC/SLDC are not heeded 

to by any constituents of the region or state. 

38. We hope that these measures, which have been suggested in the earlier 

paragraphs, would solve the situation. 

39. With these observations we dispose of the Appeal. In the result the 

Appeal filed by the Appellant is dismissed as devoid of merits. 

40. No costs. 


105


2010 ELR (APTEL) 0350* 



Maharashtra Jeevan Pradhikaran 

v. 

Maharashtra State Electricity Distribution Co. Ltd. and Anr. 

APPEAL NO. 55 OF 2008 & I.A. NOS. 164, 165 AND 166 OF 2007 

DECIDED ON: 18.02.2010 

Coram 


Application for condonation of delay of 222 days in filing an appeal 

without furnishing any explanation of such delay. 

Affidavit filed by Appellants did not show proper reasons for actual delay. 

Appellant again sought time to file the second better affidavit. Impugned 

Tariff Order in this Appeal passed in the year 2006. Tribunal not satisfied 

with reasons given in affidavit to condone the delay as they were not 

bona fide. 

Application dismissed. 

Counsel 

For Appellant/Petitioner/Plaintiff: Satyajith Desai, Anegla S. Desai and Sotty 

Policarp, Advs. 

For Respondent(s)/Defendant: Ravi Prakash and Abshik Mitra, Advs. for 

MSEDCL and Buddy A. Ranganadhan, Adv. for MERC 

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I.A. No. 164 of 2007 

1. This is an Application to Condone the Delay of 222 days in filing the 

Appeal. 

2. As a matter of fact, when the Affidavit to condone the delay was filed along 

with the Appeal, it was pointed out by this Tribunal, that no details have 

been furnished explaining the said delay. Hence, the learned Counsel for 

the Appellant took time for filing a better affidavit and consequently the 

matter was adjourned to enable the Appellant to file the better affidavit. 

Thereafter, better affidavit had been filed, which also did not show proper 

reasons for actual delay. When it was pointed out that even the second 

better affidavit did not satisfy this Tribunal with reference to the reasons for 

the delay, the learned Counsel for the Appellant again sought time to file the 

second better affidavit. As per his request, this Tribunal again granted time 

on 6 th January, 2010, to enable him to file the second better affidavit, and 

adjourned the matter to 18 th February, 2010. 

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3. Even today, the learned Counsel for the Appellant has not chosen to file 

the said better affidavit stating that he has not received instructions from 

his client in spite of his intimation. 

4. This conduct shows that there is continued lack of diligence on the part 

of the Appellant in pursuing the Appeal. 

5. The learned Counsel for the Respondents oppose this application contending 

that the impugned Tariff Order in this Appeal was passed in the year 2006 

itself, and after a long delay, the Appellant has filed this Appeal. 

6. We are not satisfied with the reasons given in the affidavit to condone the 

delay as they are not bona fide. 

7. Hence, the Application to Condone the Delay in filing the Appeal as well 

as the Appeal are dismissed. 

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2010 ELR (APTEL) 0351* 



Himachal Pradesh State Electricity Board 

v. 



DECIDED ON: 23.03.2010 

Coram 

M.Karpaga Vinayagam, J. (Chairperson) and H.L. Bajaj, Member (Technical) 


Whether Central Commission was right in holding that basic methodology 

for allocation of the annual Capacity Charges among different 

beneficiaries under Regulation 48 applicable in present case, while 

applicable capacity to beneficiaries varies during a calendar year and 

not uniform throughout the year. 

Regulation 48 provided that each of beneficiaries should have contributed 

to Capacity Charges to the extent of their entitlement in the electricity 

generated and supplied from the project on annual basis. This methodology 

of capacity charge based on sound principles. Regulation 48 unambiguous 

and made applicable to all hydro generating stations regulated by Central 

Commission. Object of this provision was that fixed charges comprises capacity 

charges and energy charges of a generating station covered under ABT 

would be determined on annual basis for each financial year. In order to 

ensure continuous cash flow to generating companies, method of recovering 

charges on cumulative basis have been provided Tariff Regulation. The procedure 

of computation of capacity charges as provided under Regulation 48 cannot 

be changed. 


* MANU/ET/0014/2010 


107



Girnar Traders v. State of Maharashtra MANU/SC/3521/2007: AIR 2007 SC 

3180: 2007 (4) AWC 3851 (SC): 2008 (1) BomCR 454: 2007 (10) SCALE 391: 

(2007) 7 SCC 555 (mentioned) [p. 0358, para 19 e] 

K.P. Vergeshe v. Income Tax Officer MANU/SC/0300/1981: (1981) 4 SCC 173: 

AIR 1981 SC 1922: (1981) 24 CTR (SC) 358: (1981) 131 ITR 597 (SC): 1981 

(3) SCALE 1315: (1982) 1 SCR 629 (mentioned) [p. 0358, para 19 e] 

Power Trading Corporation v. Central Electricity Regulatory Commission MANU/ 

SC/0164/2010 (mentioned) [p. 0359, para 21 e] 

Surjit Singh Kalra v. Union of India MANU/SC/0529/1991: (1991) 2 SCC 87: 

JT 1991 (1) SC 417: 1991 (1) SCALE 179: (1991) 1 SCR 364: 1991 (1) UJ 

722 (SC) (mentioned) [p. 0358, para 19 e] 


Constitution of India, 1950, Article 226 [p. 0359, para 21 c] 


Tariff Regulation, 2004 

Regulation 12 [p. 0354, para 6 b] 

Regulation 13 [p. 0354, para 6 b] 

Regulation 37 [p. 0358, para 18 d] 

Regulation 37(i) [p. 0356, para 13 c] 

Regulation 48 Clause (v) [p. 0358, para 18 a] 

Regulation 48 Clause 4 [p. 0353, para 5 b] 

Regulation 48 [p. 0352, para 2 h] 

Regulation 48(1)(b) [p. 0353, para 6 i] 

Regulation 48(i) [p. 0358, para 19 f] 

Counsel 

For Appellant/Petitioner/Plaintiff: M.G. Ramachandran, Anand K. Ganesan, 

Swapna Seshadri and Sumit Pushkaran, Advs. 

For Respondent(s)/Defendant: Nikhil Nayyar for CERC, R.K. Agarwal for 

R. 2, V.K. Gupta for R. 6 and Rajesh Katpalia for R-6. 

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JUDGMENT 


1. Himachal Pradesh State Electricity Board (HPSEB/Appellant) is the 

Appellant. 

2. Aggrieved over the Order passed by the Central Commission dated, 

2 nd January, 2009 dismissing the petition filed by the Appellant praying for 

removing the difficulty which arises out of Regulation 48 and also for relaxation 

of the said Regulation, the Appellant has filed this Appeal. 

3. The short facts which are required for the disposal of this Appeal are as 

follows. 

4. Himachal Pradesh State Electricity Board is a deemed licensee constituted 

by the State of Himachal Pradesh. Satluj Jal Vidyut Nigam Limited (R-2) 

herein is a generating company engaged in the generation and supply of 

electricity to the Appellant Electricity Board and other beneficiaries. The R-2 has 

been jointly promoted both by the Government of India and the Government 

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of Himachal Pradesh. Therefore, the Tariff of R-2 is being determined by the 

Central Commission. 

5. The Central Commission notified Regulation 48, regulating the Tariff of 

the generating company such as the R-2 and others which deal with the 

billing and payment of Capacity Charges for the Hydro-electric Stations. 

The scheme of Regulation 48 is to provide for the Capacity Charges to be 

applied in a manner so as to progressively recover the charges every month, 

i.e. to separate the Capacity Charges during the financial year. It also provides 

for the methodology for recovery of the said Capacity Charges in Clause 4 of 

the Regulation 48. Accordingly, the said Capacity Charges payable by the 

beneficiaries including the Appellant were calculated on annual basis for 

the purpose of determining the Capacity Charges payable every month. 

The annual Capacity Charge is apportioned by a formula which is applied 

on cumulative basis every month. As per the calculations of the Appellant, 

the total Capacity Charges payable by the Appellant to the R-2 have been 

worked out as Rs. 1,024.88 crores and out of this the Appellant has to share 

3.31 per cent of Rs. 825.77 crores and 28.31 per cent of Rs. 199.10 crores, 

aggregating to Rs. 84 crores. Since, the Appellant has been asked to pay 

Rs. 139.88 crores, i.e. in excess of the amount liable to be paid as per 

Regulation 48, the Appellant has filed a petition before the Commission 

seeking for the removal of the said difficulty and relaxation of Regulation 48. 

This petition was dismissed by the Central Commission by the Order dated, 

2 nd January, 2009 rejecting the prayer sought for by the Appellant. Hence, 

this Appeal. 

6. The learned Counsel appearing for the Appellant has urged the following 

contentions by way of assailing the Order impugned. 

(i) The methodology as per the Regulation 48 of Regulation, 2004 provide 

for the calculation and adjustment of the annual capacity charges on 

a cumulative basis is applied for billing, payment and consequent recovery 

of the Capacity Charges in this case and the same is wrong. 

(ii) The annual Capacity Charges recoverable by the R-2, the generating 

station from the beneficiaries including the Appellant is to be related 

to the allocation of capacity. It can be applied only when the percentage 

of the capacity allocation remains constant throughout the period. If such 

allocation varies during the year the necessary adjustment has to be 

made. In other words, if there is a change in the allocation of capacity 

the period of one year cannot be considered for cumulative payment of 

the Capacity Charges. 

(iii) Regulation 48 is required to be applied in a pragmatic and purposeful 

manner and not in a mechanical manner. The application of the method 

of calculation of Capacity Charges on cumulative basis under Regulation 

48 without taking into consideration of the changes in the allocation of 

capacity during the year will lead to anomaly situation of a purchasing 

beneficiary payment much higher of Capacity Charges even during the 

non-peak situation than the purchasing beneficiary during the peak 

season getting less allocation during the said non-peak season. 

(iv) Regulation 48 envisages adjustment to be made to the formula in 

the event of the allocation of the unallocated capacity by the Central 

Government from time-to-time. Regulation 48(1)(b) provides that the 

total capacity share of non-beneficiary would be sum of its capacity 

share plus allocation out of the unallocated portion. Thus, the effect 


109


of the above significant higher capacity allocated to one beneficiary 

out of the unallocated share needs to be appropriately given and 

therefore, the formula under Regulation 48 cannot be applied in a 

mechanical manner. 

(v) The Appellant is not asking for any undue benefit on account of any 

variation in the capacity related to the hydro electric project. It is merely 

asking for equitable determination taking into account the energy 

available in any hydro project varies based on lean period and peak 

period. Such variation would not affect the charges payable if the allocation 

of capacity is firm during the entire period. Under Regulation 12, the 

Central Commission has powers to remove the difficulty. Under Regulation 

13, it has got the powers to give relaxation under Regulation 48. Even 

though the present case has depicted the appropriate situation where 

exercise of such power was called for, the Central Commission has 

failed to exercise the said power thereby creating the anomaly. 

7. On the other hand, the learned Counsel appearing for the Central 

Commission (R-1) as well as the learned Counsel appearing for R-2 in justification 

of the impugned Order would elaborately contend that the reasoning given 

by the Central Commission in rejecting the prayer of the Appellant are 

perfectly valid in law and there is no reason warranting any interference 

with the impugned Order. 

8. Both on behalf of the Appellant as well as Respondent several authorities 

of the Supreme Court have been cited in support of their respective submissions. 

9. The main questions that arise for consideration in the present case are 

as follows: 

(i) Whether the Central Commission is right in law in holding that the 

basic methodology for allocation of the annual Capacity Charges among 

the different beneficiaries under Regulation 48 is applicable in this 

case, even though the applicable capacity to the beneficiaries varies 

during the calendar year and is not uniform throughout the year? 

(ii) Whether the Central Commission was right in law in not interpreting 

the Regulation 48 in a correct perspective manner to apply the cumulative 

Capacity Charges as prescribed in the formula providing that in case 

of variation during the year the annual period will be considered in 

separate applications? 

(iii) Whether the Central Commission was right in law in constituting 

that it cannot exercise Regulation 12 dealing with the powers to remove 

difficulty and it cannot exercise Regulation 13 dealing with the powers 

to relax. Under the circumstances of the case when the Applicant is 

claiming to have established the inequality of the methodology of the 

cumulative basis and on annual basis, even when the capacity allocation 

is not uniform throughout the year? 

10. Before dealing with these questions, it would be appropriate to refer to 

the Regulation 48 which is sought to be relaxed. As mentioned earlier, the 

scheme of Regulation 48 is to provide for the Capacity Charges to be applied 

in a manner so as to progressively recover the charges during every month, 

i.e. to separate Capacity Charges during the financial year. Regulation 48 

provides as under: 

Each beneficiary shall pay the Capacity Charges in proportion to its 

percentage share in total saleable capacity of the generating station. 

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Saleable capacity shall mean total capacity minus (–) free capacity to 

home State, if any. The Capacity Charges shall be paid by the beneficiaries 

including those outside the region to the generating company every 

month in accordance with the formula and in proportion to their respective 

shares in the concerned generating stations. 

11. Thus, the above Regulation clearly shows that each of the beneficiaries 

should contribute to the Capacity Charges to the extent of their entitlement 

in the electricity generated and supplied from the project on annual basis. 

Similarly, it provides that each of the beneficiaries shall take electricity 

throughout the year at the same specific percentage share in the total 

saleable capacity of the generating station and that the allocation of the 

total capacity of the generating station as per the agreement between the 

parties shall be uniform throughout the year. In the same very Regulation, 

it is also provided for the methodology for recovery of the said charges. 

12. Accordingly, the Capacity Charges, i.e. fixed charges payable by each of 

the beneficiaries including the Appellant are calculated on annual basis. 

For the purpose of determining the Capacity Charges payable every month 

the annual capacity charges is apportioned by a formula which is applied 

on cumulative basis every month. 

13. Bearing in mind the above concept, let us now discuss the issues that 

arise for consideration in the present case. 

(i) At the outset it shall be stated that this Appeal has been filed by 

the Appellant aggrieved over the provision of the Regulation 48 of the 

Central Commission. According to the Regulation the cumulative 

Capacity Charges payable by the beneficiary like the Appellant are 

worked out up to the month of the account on the basis of the cumulative 

primary energy charges up to the said month. This cumulative charge 

is payable corresponding to the cumulative capacity index up to the 

said month. 

(ii) According to the Appellant, if the allocated capacity to the beneficiaries 

remained constant throughout the year it may be appropriate to determine 

the capacity charges payable on a cumulative basis, i.e. Weighted Average 

Basis as the beneficiaries will share the benefits and disadvantages of 

the variant saleable energy proportionately and if the capacity allocated 

is significantly different. If the beneficiary takes more quantum during 

the lean period such beneficiary will be placed in a disadvantageous 

position to suffer unfair monetary loss by application of the formulae 

contained in Clause (iv) of Regulation 48 will be arbitrary, unjust and 

irrational and therefore, Regulation 48(iv) should interpreted in a 

purposeful manner and not to be interpreted in narrow and literal 

manner. 

(iii) The grievance of the Appellant is that it has drawn 363.31 MUs 

during 2004-05 out of the total saleable energy of 4468 MUs but it is 

required to pay Rs. 165.37 crores towards capacity charges, primary 

energy charges and incentive which works out to Rs. 4.55/kwh which 

is higher than the average Tariff of Rs. 2.99/kwh for the year. Under 

those circumstances, he has sought the relief for not calculating the 

capacity charges in a cumulative manner. 

(iv) The Second Respondent is a hydro generating station. By virtue of 

use of hydro power for power generation it consists of only the fixed cost 


111


elements and no variable cost element. Therefore, generators would be 

only interested in the recovery of the fixed cost inclusive of cost of 

investment, return on investment and running cost. On the other hand, 

the beneficiaries would like that there should be maximum utilisation 

of hydro power during monsoon season. Therefore, the Tariff structure 

should be such that it ensures and encourages generators to operate 

the station in such a manner that the above objectives are fulfilled. 

At the same time the generator should be able to recover its full fixed 

cost in case of hydrology failures in a particular year. The Central 

Commission has adopted a two part Tariff for the recovery of annual 

fixed cost of a hydro electric power station consisting of Primary Energy 

charges and balance as capacity charges. This is intended to achieve 

the objective. Accordingly, the Central Commission framed Regulation 37(i). 

This Regulation provides as under: 

(i) Capacity Charges–The capacity charges shall be computed in 

accordance with the following formula: 

Capacity Charges=(Annual Fixed Charges–Primary Energy 

Charges) 

Note: Recovery through primary energy charges shall not be 

more than Annual Fixed Charges. 

(v) Primary energy charge is linked to the lowest energy charges. This is 

to ensure that hydro power station get must-run-status, i.e. priority in 

the merit Order dispatch on availability of the water obviating any 

undue spillage of water and maximising its utilisation. The secondary 

energy charge is an incentive which encourages generator to make use 

of available water to the maximum extent. 

(vi) The recovery of capacity charge is linked to the capacity index 

which ensures and encourages higher availability of machines to maximise 

generation with the available water and avoid any water spillage. It also 

takes care of the risk of generator on hydrology failures. 

(vii) In this context the learned Counsel appearing for the Central 

Commission has quoted the relevant observation made by the Central 

Commission in its ABT Order dated, 8 th December, 2000 in which norms 

for hydro electric stations were decided in the following principles: 

19. The Commission has decided to implement the concept of Capacity 

index in place of “Availability”. The basic criteria for capacity index 

are: 

(a) Water spillage must be minimised. 

(b) As far as possible, the peak capacity of each plant must 

be available when most required by the system. 

20. Availability of a hydro station for any period shall be based on 

the Capacity Index (CI) declared for the day. The annual capacity 

index is the average of the daily capacity indices over a full year. 

21. The various aspects of capacity index during monsoon and dry 

season are: 

(i) During the monsoon, full capacity of each type of station 

is required for the full day. 

(ii) For the dry season, run-of-river plant (without pondage) is 

required to the extent that no water is spilled. This means 

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that provided turbine/generators are available for all the water 

in the river, the plant is considered 100 per cent available. 

22. To summarise, during the monsoon period all machines are required 

to be available 24 hours per day for all types of plants. Apart from the 

run-of-river plant, during the dry season all machines are required 

to provide maximum capacity for at least 3 hours per day 

14. Regulation 48 “on billing and payment of capacity charges” is result of 

above principles of hydro Tariff recovery on month to month basis on cumulative 

principle of recovery of capacity charges. Since, the recovery of primary 

energy charges on month to month basis would depend upon the primary 

energy scheduled in a month, hence during the peak seasons it would be 

higher and correspondingly the capacity charge recovery would be less. 

On the other hand, during lean seasons, the primary energy charge would 

be lower as compared to the peak seasons. This methodology of capacity 

charge is based on sound principles and has been in force since 

1 st April, 2001which is applicable during the Tariff period 2004-09. 

15. The Regulation 48 of the 2004 Tariff Regulations and analogous provisions 

in 2001 Tariff regulations have been governing the billing and payment of 

capacity charges since the introduction of ABT. The object of the provision 

is that the fixed charges comprises capacity charges and energy charges of 

a generating station covered under the ABT are determined on annual basis 

for each financial year. In Order to ensure continuous cash flow to the 

generating company, the system of recovery of annual capacity charges on 

monthly basis and to avoid year-end adjustment in the billing, the 

method of recovering charges on cumulative basis have been provided in 

the 2004 Tariff Regulation. 

16. Even according to the Appellant, the State Government had a share of 

34 per cent consisting of 12 per cent as free power and 22 per cent in lieu 

of equity participation in the project. The State Government has been selling 

its share of 34 per cent of power in the project through the SJVNL, Respondent 

No. 2. Excluding the free power, the State Government is liable for payment 

of the capacity charges for its share of 22 per cent unless allocation is 

transferred in favour of other beneficiaries. In such an event, Regulation 48 

provides for sharing of charges by the beneficiaries who have been re-allocated 

the share of State Government. 

17. Having fully known about the contents of the Regulation 48, the 

Appellant had approached the State Government through the letter dated, 

26 th March, 2004 for diversion of allocation of their 34 per cent share in its 

favour during the period November 2004 to March 2005. As a matter of fact, 

the Appellant had refused to take the power from the State Government from 

April 2005 to October 2005. The Appellant ought to have assessed the 

implications of Regulation 48 in a matter of billing while it was contracted 

the power from the State Government from 1 st November, 2004 to 

31 st March, 2005. This was not done by the Appellant. Having failed to assess 

the capacity charges as a result of the application of Regulation 48 before 

seeking allocation, the Appellant could not use this as a basis to make an 

argument that the Regulation 48 is arbitrary and unjust. As a matter of fact, 

the Appellant has virtually waived its rights to question the operation of 

Regulation 48. 

18. According to the Appellant, Clause (v) of the Regulation 48 can be applied 

only in two conditions (i) there is a firm allocation of the capacity by the 


113


Central Government or under the agreement in favour of different purchasers 

(ii) the firm allocation of capacity is uniform throughout the year. It is submitted 

on behalf of the Appellant that no such conditions can be read into Regulation 

48(v) which provides for the procedure for calculation of the capacity charges. 

This contention is baseless. Note 2 under Clause (1) provides for the surrender 

and re-allocation of allocated shares by the beneficiaries. Under this provision 

re-allocation of power can be made for a specific period which may be one 

year or more or less than one year. It is incumbent upon the beneficiary who 

has been reallocated the share to pay the capacity charges for the reallocated 

capacity. Its failure to weigh the liability to pay a higher capacity charges 

during lean seasons under Regulation 48 can not be a ground for challenging 

the Regulation 48. Further the Applicant could have very well negotiated 

with the State Government for the transaction for utilisation of its share at 

favourable terms and in that situation the liability to pay the charges would 

have been fastened on the State Government. But this was not done. 

The Appellant has suggested that the most appropriate way to deal with the 

determination of capacity charges payable is to consider the two periods 

separately. In other words, the Appellant suggests that the capacity charges 

should be linked to the generation of power by the hydro generating station. 

This suggestion virtually hits at the very root of the two part Tariff introduced 

through ABT and the concept of Annual Fixed Charges. The prayer of this 

sort made by the Appellant would amount to rewriting the Regulation 37 and 

48 which is not permissible under law. 

19. The Appellant has cited various Judgments Girnar Traders v. State of 

Maharashtra 1 , K.P. Vergeshe v. Income Tax Officer 2 (1981) 4 SCC 173 and Surjit 

Singh Kalra v. Union of India 3 (1991) 2 SCC 87 to establish that the Regulation 

has to be interpreted in a purposeful manner having regard to the intention 

behind the said Regulation. This Regulation of purposeful construction and 

the method of interpretation can not be pressed into aid where the language 

of the statute itself is clear. Note 1 to Regulation 48(i) clearly contemplates 

allocations from “time to time”, thus signifying variable allocations in a given 

year. With the introduction of two part Tariff under the ABT, the concept of 

capacity index was introduced for hydro generating stations and recovery of 

capacity charge was linked to the capacity index which sought to ensure 

higher availability of machines to maximise generation with available water. 

Accordingly, the Regulation 37 of the Tariff Regulation 2004 has been framed 

for computation of annual charges as comprising of annual capacity charge 

and primary energy charge. Regulation 48 provides for the formula for billing 

and recovery of annual capacity charges. According to the learned Counsel 

for the Central Commission the provision of these Regulations have worked 

satisfactorily in respect of all the Hydro electric projects and in variation of 

the allocation. 

20. As correctly pointed out by the learned Counsel for the Central Commission 

the Regulation 48 is unambiguous and made applicable to all hydro generating 

stations being regulated by the Central Commission. As such the procedure 

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1 Ed. MANU/SC/3521/2007: AIR 2007 SC 3180: 2007 (4) AWC 3851 (SC): 2008 (1) 

BomCR 454: 2007 (10) SCALE 391: (2007) 7 SCC 555 

2 Ed. MANU/SC/0300/1981: AIR 1981 SC 1922: (1981) 24 CTR (SC) 358: (1981) 131 

ITR 597 (SC): 1981 (3) SCALE 1315: (1982) 1 SCR 629 

3 Ed. MANU/SC/0529/1991: JT 1991 (1) SC 417: 1991 (1) SCALE 179: (1991) 1 SCR 

364: 1991 (1) UJ 722 (SC) 

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0359 

of computation of capacity charges as provided under Regulation 48 can not 

be changed. Virtually the Appellant seeks for the relief in change of procedure 

of computation of capacity charge which would amount to amendment to the 

Regulation as well as to distortion of ABT mechanism apart from having wide 

ranging impact on the billing and recovery of capacity charges of all ISGS 

in the country. In other words, it will unsettle the settled issue and reopen 

billing of all generators during the Tariff period 2004-09. As referred to 

earlier the Appellant has already willingly and consciously sought allocation 

of power from the State Government during the lean season and got the 

relief and acted according to Regulation 48. Therefore, the Appellant has no 

case on merit and as such he is liable to make payment of capacity charges 

as per Regulation 48 which flows out of its decision to seek reallocation 

during the lean season. 

21. Appellant instead of challenging the Regulation in appropriate forum 

namely High Court under Article 226 of the Constitution has approached 

the Tribunal virtually asking for the quashing of the Regulation. This is not 

permissible as laid down by the recent Judgment of Constitution Bench of 

the Hon’ble Supreme Court in Power Trading Corporation v. Central Electricity 

Regulatory Commission 4 Civil Appeal No. 3902 of 2006 dated, 15 th March, 2010. 

22. In view of the above discussion there is no merit in this Appeal. The Appeal 

is dismissed. No costs. 

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2010 ELR (APTEL) 0359* 



Gujarat Urja Vikas Nigam Ltd. 

v. 

Essar Power Ltd. (vice-versa) 

APPEAL NO. 77 OF 2009 AND APPEAL NO. 86 OF 2009 

DECIDED ON: 22.02.2010 

Coram 


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Appeal No. 77 of 2009 


Whether the State Commission was right in holding that the claim of 

the Appellant with reference to the deemed generation incentive as well 

as wrongful allocation of the capacity for the period prior to 

14 th September, 2002 could be said to be barred by limitation? 

Article 55 of the Limitation Act is relevant. Article 55 provides for filing of the 

suit for compensation for the breach of any contract, express or implied. 

According to this Article the period of limitation is 3 years. This Article 

further says that when the contract is broken or where there are successive 

breaches, then the breach in respect of which suit is instituted occurs. 

4 Ed. MANU/SC/0164/2010 

* MANU/ET/0013/2010 


115


It is clear that the cause of action for compensation on account of alleged 

diversion of power arose in July 1996 itself and at any rate it arose when the 

Demand Notice dated 29 th October, 2003 was issued and the same was 

refuted on 1 st November, 2003 and 1 st December, 2003. Under those 

circumstances, the State Commission in our view rightly held that the claims 

of the Appellant for the said compensation and for the refund of the said 

deemed generation incentive pertaining to any period prior to 3 years from 

the date of the filing of the petition before the State Commission i.e. on 

14 th September, 2005 are clearly barred by limitation. 



Whether under the PPA I and II the supply of electrical output to be 

made by the Appellant shall be in the ratio of 300:215 MW, the allocated 

capacity of the Electricity Board (R-l) and Essar Steels Ltd. Respectively? 

Schedule-VI to the PPA-1 contained provision in regard to Dispatch 

Procedures. As per Article 6.1, as indicated above, the EPL is required to 

submit to the Board Load Dispatch Centre Weekly Schedules. There is 

nothing in this article to suggest that the declaration of capacity is to be 

on a proportionate basis to the Electricity Board as well as to the Essar 

Steel Ltd. After the EPL submitted its Weekly Schedule, the Electricity 

Board shall issue to the EPL a Schedule of its requirement vide Article 6.2. 

On a combined reading of Articles 1 and 3 and Schedule-VI of the PPA-1, 

it is clear that EPL has to declare available capacity up to the allocated 

capacity to both the Electricity Board as well as to Essar Steels Ltd. and 

not on proportionate theory basis. 

Whether the Appellant, which failed to declare the entire capacity of 

its generating station to the Electricity Board made the supply of 

electricity to its sister concern Essar Steels Ltd. in excess of the said 

ratio is liable to be held responsible for the breach of the terms of PPA 

and consequently the Appellant is liable to compensate the Electricity 

Board (R-l)? 

Article 5.2 of the PPA-1 obligates the Electricity Board to pay to the Appellant 

its Annual Fixed Charges including the cost of the project on the level of 

generation achieved up to the allocated capacity and not on the allocated 

capacity itself. The Electricity Board has accordingly paid the Annual Fixed 

Charges on monthly basis on the level of generation achieved up to the 

allocated capacity. Annual Fixed Charges are not refundable for the 

surrendered portion of the electricity to the person in whose favour such 

electricity is surrendered. Hence, in regard to the issue relating to the liability 

to pay compensation we hold that, in Electricity Board is not entitled to get 

the compensation as claimed and as such the Appellant EPL succeeds in 

this issue 

Whether the Electricity Board (R-l) is entitled to get the refund from the 

Appellant for the deemed generation incentive paid to the Appellant in 

view of the amended Notification dated 6 th November, 1995? 

The Notification dated 6 th November, 1995 is statutory in nature issued 

under Section 43A(2) of the Electricity (Supply) Act, 1948. Any PPA entered 

into has to be consistent with the statutory notification. It is a settled law 

that rights and obligation of the parties under the PPA have to be read 

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e 

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subject to the statutory provisions. The provisions of the PPA which are 

contrary to the statutory provision cannot be given effect to. This is a well 

established law as held in (2000) 3 SCC 379 India-Thermal Power Ltd. v. State 

of Madhya Pradesh. 

Appeal No. 77 dismissed and the Appeal No. 86 partly allowed. 


Dhulipudi Namayya v. Union of India AIR 1958 (AP) 533 (mentioned) 

[p. 0374, para 67 f] 

Hari Shanker Singhania v. Gaur Hari Singhania MANU/SC/1686/2006: (2006) 

4 SCC 658: AIR 2006 SC 2488: 2006 (2) Arb LR 1 (SC): 2006 (3) Bom CR 

10: 2006 (2) CTC 597: JT 2006 (4) SC 251: (2006) 3 MLJ 243 (SC): 2006 

(4) SCALE 74: 2006 (1) UJ 423 (SC) (mentioned) [p. 0367, para 24 a] 

India-Thermal Power Ltd. v. State of Madhya Pradesh MANU/SC/0102/2000: 

(2000) 3 SCC 379: AIR 2000 SC 1005: JT 2000 (1) SC 171: RLW 2000 (2) 

SC 193: 2000 (1) SCALE 612: [2000] 1 SCR 925 (mentioned) 

[p. 0377, para 84 e] 

M. Maniappa Pillai v. I. Anthanisami Mudaliar and Ors. MANU/TN/0127/ 

1950: AIR (1950) Madras 289 (mentioned) [p. 0374, para 69 h] 

Murlidhar Chiranjilal v. Harishchandra Dwarkadas MANU/SC/0113/1961: 

(1962) 1 SCR 653: AIR 1962 SC 366 (mentioned) [p. 0375, para 70 b] 

Raman Foundry v. Union of India MANU/SC/0005/1974: (1974) 2 SCC 231: 

AIR 1974 SC 1265: [1974] 3 SCR 556 (mentioned) [p. 0373, para 56 c] 

Raman Iron Foundry v. Union of India 1974 (2) SCC 231 (mentioned) 

[p. 0375, para 71 d] 

Shree Ram Mills v. Utility Premises Ltd. (2007) 4 SCC 599 (mentioned) 

[p. 0367, para 24 a] 

State of Madras v. Venkataraman MANU/TN/0297/1963: AIR (1964) Madras 

508 (discussed) [p. 0374, para 66 b] 

Timblo Irmaos Ltd., Margo v. Jorge Anibal Matos Sequeira and Anr. MANU/ 

SC/0513/1976: (1977) 3 SCC 474: AIR 1977 SC 734: [1977] 2 SCR 451 

(discussed) [p. 0374, para 64 b] 

Tsn Ah Boon v. State of Johore MANU/PR/0018/1936: AIR 1936 Privy Council 

236 (discussed) [p. 0374, para 65 c] 


Electricity (Supply) Act, 1948, Section 43A(2) [p. 0377, para 83 d] 

Indian Contract Act, 1872, Section 73 [p. 0373, para 60 h] 

Limitation Act, 1963 

Article 55 [p. 0366, para 21 c] 

Article 137 [p. 0367, para 25 c] 

Sale of Goods Act, 1920, Section 35 [p. 0361, para 59 g] 

Counsel 

For Appellant/Petitioner/Plaintiff: M.G. Ramachandran, Anand K. Ganesan 

and Swapna Seshadri, Advs. for Appeal No. 77 of 2009 and C.S. Vaidyanathan, 

Sr. Adv., Shikha Sarin and Mahesh Aggawal, Advs. for Appeal No. 86 of 2009 

For Respondent(s)/Defendant: C.S. Vaidyanathan Sr. Adv., Shikha Sarin 

and Mahesh Aggawal, Advs. for Appeal No. 77 of 2009 and 

M.G. Ramachandran, Anand K. Ganesan and Swapna Seshadri, Advs. for 



117


JUDGMENT 


1. Both these Appeals No. 77 of 2009 and 86 of 2009 have been heard 

together and Common Judgment is being rendered as both the Appeals 

would arise out of the Common Order passed by the Gujarat Electricity 

Regulatory Commission (State Commission) on 18 th February, 2009. 

2. Gujarat Urja Vikas Nigam Ltd., the erstwhile Electricity Board, is the 

Appellant in Appeal No. 77 of 2009 and Essar Power Ltd. is the Appellant in 

Appeal No. 86 of 2009. The short facts are as under. 

3. Gujarat Urja Vikas Nigam Limited is the successor of the Electricity Board 

of Gujarat (Electricity Board). The erstwhile Electricity Board had entered 

into a Power Purchase Agreement (PPA) dated, 30 th May, 1996 with the Essar 

Power Limited (EPL) for the purchase of power for a period of 20 years. In the 

same year, on 29 th June, 1996, the Essar Power Limited entered into another 

PPA with its sister concern Essar Group of Companies. Under the PPA which 

was entered with the Electricity Board, the Essar Power Limited as generating 

company was required to declare availability of electricity to the Electricity 

Board to the extent of 300 MW. Under the other PPA which was entered with 

the Essar Group of Companies, the EPL was required to declare availability 

of electricity to the extent of 215 MW to Essar Group of Companies. 

4. As per the original notification which was issued by Government of India 

on 30 th March, 1992, the generating company was entitled to deemed generation 

incentive. However, the Central Government, on 6 th November, 1995, issued 

a notification with the modification canceling the deemed generation incentives 

to the generating company which was using Neptha as a fuel. 

5. As indicated above, the EPL has to declare availability of electricity to the 

extent of 300 MW to the Electricity Board and 215 MW to its sister concern, 

Essar Steel. The Electricity Board felt that instead of showing the availability 

of 300 MW to the Electricity Board, the EPL had been supplying more power 

to its sister concern, i.e. Essar Group of Companies in contravention of the 

PPA entered with the Electricity Board. In view of the said situation with 

regard to the contravention of the PPA and with the issue of the fresh 

notification issued on 6 th November, 1995 by the Central Government, the 

Electricity Board held a meeting with the EPL in respect of both the issues, 

i.e. in respect of the diversion of power as well as in respect of the payment 

towards the deemed generation incentives. In the said meeting, the Electricity 

Board claimed both compensations from EPL on account of such wrongful 

diversion of more power to its sister concern and also claimed for the return 

of the deemed generation incentive which was not payable to the Essar 

Power Limited which is Naptha-based power plant. The Electricity Board 

sought adjustment of the said deemed generation incentive already paid by 

it to the EPL. However, there were no fruitful results. Under those circumstances, 

the Electricity Board on the advice of the State Government approached the 

State Commission and filed a petition before the State Commission for the 

required reliefs. 

6. After hearing the parties, the State Commission ultimately 

allowed the Application filed by the Electricity Board by the Order dated, 

18 th February, 2009, and granted the reliefs in respect of both the prayers, 

sought for by the Electricity Board. However, the claim in respect of the 

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compensation and return of the deemed generation incentive in respect of 

the period prior to three years from the date of filing of the application was 

rejected on the ground of limitation. But, it allowed the said claim for three 

years for the subsequent periods, i.e. three years period, i.e. prior to the date 

of filing of the petition before the State Commission. 

7. Aggrieved by the rejection of the claim in respect of the earlier period prior 

to three years from the date of filing of the petition, the Electricity Board, i.e. at 

present Gujarat Urja Vikas Nigam Limited has filed the Appeal No. 77 of 2009. 

Aggrieved by the very same Order, the EPL, with regard to the claim of the 

Electricity Board in respect of compensation and to the adjustment of the 

incentive for three years, has filed the Appeal No. 86 of 2009 before this Tribunal. 

8. Let us now first take the Appeal No. 77 of 2009 which has been filed by 

the Gujarat Urja Vikas Nigam Limited (GUVNL) The Gujarat Urja Vikas 

Nigam has challenged the following findings rendered by the State Commission 

as against the erstwhile Electricity Board. 

(i) The State Commission on the ground of limitation did not allow the 

claims of the Electricity Board consequent to the decision taken with 

regard to the compensation and the adjustment of deemed generation 

incentive in respect of the period prior to 14 th September, 2002. 

(ii) The State Commission held that the settlement by the payment of 

Rs. 64 crores made by the EPL to the Electricity Board in November 

2004 would amount to full and final settlement of the claims of the 

Electricity Board in respect of diversion. 

9. These two findings have been challenged in this Appeal No. 77 of 2009 by 

the Electricity Board. The Appellant would urge the following contentions. 

(i) The EPL is a generating company. The Electricity Board is a deemed 

licensee. The PPA between the EPL and the Electricity Board relates to 

the generation station of EPL with an installed capacity totaling 515 MW. 

The two PPAs; the first between the EPL and Electricity Board at 

30 th May, 1996 and the second between the EPL and its sister concern, 

Essar Steel dated, 29 th June, 1996 cover those entire 515 MW capacity. 

Both the PPAs specifically provide not only the capacity allocated to the 

Electricity Board but also the capacity allocated to its sister concern. 

Both the PPAs are in identical terms, i.e. 300 MW of electricity to the 

Electricity Board and 215 MW of power to Essar Steel in the combined 

cycle operation. In terms of the PPA between the EPL and the Electricity 

Board, the EPL would recover full fixed charges including Return on 

Equity proportionate to 58 per cent from the Electricity Board on annual 

basis at 70 per cent Plant Load Factor (PLF) As per PPA dated, 

30 th May, 1996 and dated, 29 th June, 1996 entered into with both the 

parties, the EPL was required to make available electricity generated or 

proposed to be generated to the Electricity Board as well as to its sister 

concern in the proportion of 58:42 per cent, i.e. 300 MW and 215 MW, 

respectively. In this case, the EPL in contravention of the PPAs declared 

the availability of electricity to the Electricity Board less than 300 MW 

and on the other hand declared the availability of electricity to its sister 

concern Essar Steels Ltd. more than the permitted limit of 215 MW and 

supplied the same. This is the finding of the State Commission. Having 

found so, the State Commission ought to have imposed compensation 

for the entire period. This was not done on the ground of limitation. 

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(ii) There was no full and final settlement when the letter dated, 

19 th December, 2003 was written by the Electricity Board to the EPL 

settling the claims. A supplemental agreement was signed in 

December 2003. Again another supplemental agreement was signed in 

October with the Electricity Board. These supplemental agreements 

dealt only with the issues which required amendment of the PPA. It did 

not deal with the issues which required any other amendments. 

The amount of Rs. 64 crore settled in October 2004 was limited to 

quantum of electricity declared available by EPL in favour of the Essar 

Steels Ltd. in excess of the 215 MW in absolute terms and not for any 

other claims. In fact, through their letter dated, 22 nd October, 2003, the 

Electricity Board wrote to EPL raising a claim of Rs. 537 crores after fuel 

adjustments for deemed generation incentive and deemed non-generation 

relating to the power from 1996-97 to 1998-99 involving 165 million units 

diverted in favour of Essar Steels Ltd.. Through its letter dated, 

29 th July, 2004, the Electricity Board claimed from the EPL Rs. 64 crores 

only in regard to the supply made by the EPL to the Essar Steels Ltd. 

more than 215 MW during the three months. Again the Electricity 

Board wrote another letter dated, 13 th October, 2004 claiming Rs. 64 crores 

from the EPL for the energy diverted to the Essar Steels Limited by the 

EPL in excess of the 215 MW. Thus, it is clear that this would not relate 

to the entire settlement of overall package, and as such there is no 

question of settlement of Rs. 64 crores being treated as full and final 

settlement of all claims of the Electricity Board. Therefore, the findings 

by the State Commission are wrong. 

10. These contentions urged by the learned Counsel for the Appellant, i.e. 

the Electricity Board are strongly refuted by the learned Senior Counsel of 

the Respondent (Essar Power Limited) in justification of the findings rendered 

by the State Commission in favour of EPL, by showing the reasoning given 

in the impugned Order. 

11. We have heard the Counsel for the parties and we have given our anxious 

consideration to their rival contentions. 

12. As mentioned above, the State Commission by the impugned Order 

dated, 18 th February, 2009 had accepted the contention of the Appellant on 

merits with reference to the claim on both the issues namely in regard to the 

entitlement of Electricity Board to get proportionate share of 300 MW of 

power out of the total 515 MW capacity and on the issue of inadmissibility 

of deemed generation incentive to the EPL which is Neptha plant. However, 

the State Commission has held against the Appellant, the Electricity Board 

on the following issues. 

(i) the claim for alleged wrongful diversion of power for the period prior 

to 14 th September, 2002 is barred by limitation; 

(ii) The claim of inadmissibility of deemed generation incentive for the 

period prior to 14 th September, 2002 was barred by limitation; 

(iii) The Appellant had fully and finally settled all its claims in regard 

to wrongful diversion of power in excess of 215 MW by the EPL to its 

sister concern Essar Group Companies up to the year 2004. 

13. These findings are being challenged in this Appeal. 

14. In the light of the respective contentions urged by the learned Counsel for 

the parties, the following questions may arise for consideration in this Appeal: 

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(i) Whether the State Commission was right in holding that the claim 

of the Appellant with reference to the deemed generation incentive as 

well as wrongful allocation of the capacity for the period prior to 

14 th September, 2002 could be said to be barred by limitation; 

(ii) Whether the State Commission was right in considering the letters 

dated, 30 th October, 2004, 11 th November, 2004 and 30 th November, 2004 

as amounting to full and final settlement in respect of wrongful allocation 

of capacity by the EPL in favour of its sister concern Essar Group 

Companies for the period till September 2004 in excess of 215 MW was 

settled by the parties against Rs. 64 crores as claimed by the EPL? 

15. The short and simple point urged by the Appellant in the present Appeal 

is that the State Commission has erred in disallowing the claims of the 

Appellant with respect to the deemed generation incentive and wrong allocation 

of power for the period prior to 14 th September, 2002 on the ground that the 

same are barred by limitation even though it was held that the Appellant 

would be entitled to claim as against the EPL (R-2). 

16. It is not in dispute that there was a PPA dated, 30 th May, 1996 made 

between the erstwhile Electricity Board, the predecessor of the Appellant 

and the Essar Power Limited, Respondent herein. Under this PPA, the EPL 

agreed to sell electricity to the Electricity Board up to allocated capacity of 

300 MW on the terms and conditions contained in the PPA. In the same very 

year, i.e. on 29 th June, 1996 the EPL entered into another PPA with its sister 

concern, i.e. Essar Steel Limited. Under this PPA, the EPL agreed to sell to 

Essar Steel Limited, its sister concern up to the allocated capacity of 215 MW 

on the terms and conditions contained in the said PPA. 

17. It is the case of the Appellant, that EPL is liable to declare and supply 

power in the ratio of 300:215 MW to the Appellant and to the Essar Steel 

Limited, respectively. It is the further case of the Appellant that the EPL has 

not declared and supplied power in the said ratio to the Appellant, but on 

the other hand, the EPL has supplied more power to its sister concern Essar 

Steel Limited than its entitlement under the PPA by diverting the power 

meant for supply to the Appellant and thereby, caused loss to the Appellant 

for which the Appellant would be entitled to compensation. It is the further 

case of the Appellant that as per notification dated, 6 th September, 1995, the 

demands made by the Appellant to the EPL towards deemed generation 

incentive during the eligibility period of 10 years, i.e. from 1 st July, 1996 to 

30 th May, 2006 is refundable to the Appellant by the EPL as the EPL was a 

Neptha-based plant. 

18. Let us now discuss these issues. 

19. It is not in dispute that when the claim towards compensation for wrong 

allocation of power as well as the claims for refund of deemed generation 

incentive were made by the Electricity Board through the letter dated, 

29 th October, 2003 the EPL refuted the same immediately through, the letters 

dated, 1 st November, 2003 and 1 st December, 2003. Despite that, the 

Appellant approached the State Commission and filed a petition only on 

14 th September, 2005 for recovery of the said amounts due on account of the 

two claims. In those circumstances, the question arises as to whether the 

said claims by the Appellant against EPL was barred by the limitation? 

Though EPL submitted before the State Commission that all the claims of 

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itself to the question of limitation only to the claims of the Appellant in 

respect of the period prior to 14 th September, 2002, i.e. before three years 

prior to the date of petition, i.e. 14 th September, 2005. This contention urged 

by the Respondent EPL was upheld by the State Commission holding that 

the Appellant would be entitled to get the amount refunded only to its claim 

for the three years period prior to the date of filing of the petition and not for 

the earlier period. 

20. Admittedly, the petition had been filed by the Appellant before the State 

Commission seeking compensation on account of alleged breach of contract. 

According to the Appellant the terms of the contract contained in PPA have 

been broken from the date of the alleged failure on the part of EPL to declare 

and supply power in the ratio of 300:215 MW to the Appellant as well as to 

its sister company. Even according to the Appellant such a breach had not 

taken place once but several times. It is thus a case in which contract has 

been breached successively. 

21. It cannot be disputed that the provisions of Limitation Act 1963 applies 

to the present case. Article 55 of the Limitation Act is relevant. Article 55 

provides for filing of the suit for compensation for the breach of any contract, 

express or implied. According to this Article the period of limitation is three 

years. This Article further says that when the contract is broken or where 

there are successive breaches, then the breach in respect of which suit is 

instituted occurs. Under these circumstances, the above Article applies to 

the present case and as per the same, the period of limitation for compensation 

for breach of contract is three years from the date when the contract is 

broken or where there are successive breaches. It is a settled law that once 

a period of limitation prescribed for suit begins to run, it is not stopped. 

22. The claim made by the Appellant (Electricity Board) for the payment of 

Rs. 537 crores from EPL for the period from 1 st July, 1996 to 31 st March, 1999 

through their letter dated, 29 th October, 2003 was specifically denied by the 

EPL through their letters dated, 1 st November, 2003 and 1 st December, 2003. 

Thus, it is clear that the cause of action for compensation on account of 

alleged diversion of power arose in July 1996 itself and at any rate it arose 

when the Demand Notice dated, 29 th October, 2003 was issued and the same 

was refuted on 1 st November, 2003 and 1 st December, 2003. Under those 

circumstances, the State Commission in our view rightly held that the claims 

of the Appellant for the said compensation and for the refund of the said 

deemed generation incentive pertaining to any period prior to three years 

from the date of the filing of the petition before the State Commission, i.e. on 

14 th September, 2005 are clearly barred by limitation. 

23. It is a settled law that mere correspondence with the parties would not 

extend the cause of action or suspend the period of limitation. The discussions 

and negotiations held between the parties for a possible settlement even 

by way of conciliation as a prelude to arbitration will not stop the cause of 

action accruing to the party by the reason of denial of a claim, nor such 

cause of action once accrued gets extended or suspended by the period 

during which the efforts for an amicable settlement were in progress. 

The State Commission held so in the light of the facts admitted by the 

parties and also in view of the well-settled legal principle on computation 

of compensation. 

24. It is contended by the Appellant that the State Commission has erred in 

distinguishing the principle laid down by the Supreme Court in the case of 

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Hari Shanker Singhania v. Gaur Hari Singhania 1 (2006) 4 SCC 658 and Shree 

Ram Mills v. Utility Premises Ltd. (2007) 4 SCC 599 wherein, it was held that 

where the negotiations were still on there would be no question of starting 

of the limitation period. These decisions relied upon by the Appellant do no 

deal with the case in which a cause of action to suit had already accrued 

to a person before the negotiations were helearned As mentioned above, the 

limitation once commences to run, it does not stop. The cause of action once 

accrued is neither extended nor suspended due to such negotiations or 

conciliations. Such cause of action occurs when a claim made by one party 

against another and the same is denied or refuted by the other. Therefore, 

it cannot be contended that the cause of action for the Appellant for approaching 

the State Commission continued till the Order was passed by the Government 

of Gujarat on 27 th July, 2007 advising the Appellant to resolve this dispute 

through the State Commission. 

25. Further, the decisions cited by the learned Counsel for the Appellant 

under Article 137 of the Limitation Act would apply only to the Application 

and not to the suit. The petition in question filed before the State Commission 

being one in the nature of a suit would attract Article 55 and as per the 

same, the petition is barred by time with respect to the claims made by the 

Appellant, with regard to the period prior to three years prior to the filing of 

the petition on the alleged wrong allocation of power and deemed generation 

incentive. 

26. In view of the discussions made in the foregoing paragraphs we feel that 

there is no merit in this Appeal. In our considered opinion, the State Commission 

has given a clear and categorical finding with reference to the period of 

limitation and has rightly held that the Appellant’s claim against the EPL 

for any period up to 14 th September, 2002, i.e. three years period prior to 

filing of the petition are barred by time except to the extent of Rs. 64 crores 

paid by the EPL to the Appellant pursuant to the full and final settlement 

of 11 claims for the period from 1998 up to September 2004. In this context, 

we would like to mention that in regard to the full and final settlement, we 

would make further discussion in the other Appeal. 

27. Therefore, there is no merit in this Appeal and as such the Appeal No. 77 

of 2009 filed by Gujarat Urja Vikas Nigam Ltd. is dismissed as devoid of 

merits. 

No costs. 


28. Let us now deal with the other Appeal No. 86 of 2009. This Appeal has 

been filed by Essar Power Limited, as Appellant, as against the impugned 

Order dated, 18 th February, 2009 holding in favour of the erstwhile Electricity 

Board (R-l) in respect of two issues. It is better to again recall and reiterate 

the minimal facts which are required for understanding the issues that 

arise in this Appeal. 

29. Essar Power Limited, the Appellant, is a generating company. As mentioned 

above on 30 th May, 1996, the Appellant entered into a Power Purchase 

1 Ed. MANU/SC/1686/2006: AIR 2006 SC 2488: 2006 (2) Arb LR 1 (SC): 2006 (3) 

Bom CR 10: 2006 (2) CTC 597: JT 2006 (4) SC 251: (2006) 3 MLJ 243 (SC): 2006 (4) 

SCALE 74: 2006 (1) UJ 423 (SC) 


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Agreement (PPA) with the erstwhile Gujarat Electricity Board (Electricity 

Board) (R-l). It also entered into a separate PPA on 29 th June, 1996 with its 

sister concern, Essar Steels Ltd. The terms of these PPAs meant that the 

Appellant, out of the total generating capacity of 515 MW would allocate 

300 MW to the Electricity Board (R-l) and 215 MW to the Essar Steel Limited, 

its sister concern. The said Electricity Board felt aggrieved that the Appellant 

did not maintain the ratio of 300:215 to be allocated to the Electricity Board 

(R-l) and its sister concern and on the other hand the Appellant supplied 

less than the allocated ratio to the Electricity Board but supplied electricity 

more than its allocated ratio to its sister concern. The Electricity Board (R-l) 

claimed compensation on that account. It also demanded for return of the 

deemed generation incentive which was earlier paid to the Appellant since 

the Appellant was not entitled to get the incentive, as per the Notification 

dated, 6 th November, 1995. On these issues, the Electricity Board (R-l) filed 

a petition before the State Commission. The State Commission, after hearing 

the parties, gave the following findings in favour of the Electricity Board (R-l) 

(i) The total capacity of the Appellant is 515 MW. The Appellant is liable 

to make allocation of available power in the ratio of 300 MW and 215 MW 

to the Electricity Board (R-l) and Essar Steel Ltd., respectively. This has 

not been done. On the contrary the Appellant supplied more than the 

allocated ratio to its sister concern and supplied less than the allocated 

ratio to the Electricity Board. Hence, the Appellant is liable to pay 

compensation for a period of three years prior to the date of filing of the 

petition before the State Commission. 

(ii) On the issue of inadmissibility of deemed generation incentive, the 

State Commission held, that the Notification dated, 6 th November, 1995 

issued by the Government of India would apply to the Appellant’s company 

as this is based on the use of Naptha as fuel and as such they are not 

entitled to the deemed generation incentive and the same is liable to be 

returned. 

30. Assailing these grounds, the learned Senior Counsel for the Appellant 

EPL would make the following contentions: 

(i) There is no specific provision in the PPA dated, 30 th May, 1996 entered 

into between the EPL and the Electricity Board (R-l) which obligates the 

Appellant to declare and supply electricity in the ratio of 300 MW to the 

Electricity Board and 215 MW to its sister concern. 

(ii) The PPA signed between the Appellant and the Electricity Board (R-l) 

is independent of the PPA signed between the Appellant and its sister 

concern, Essar Steels Ltd. Therefore, the supply of electricity under 

these two PPAs needs to be considered separately. The PPA signed 

between the EPL and the Electricity Board has to be interpreted, construed 

and implemented as per its own terms. 

(iii) The only obligation of the Appellant under the PPA in question is to 

supply up to 300 MW of electricity to the Electricity Board (R-l) when 

called upon to do so. The Electricity Board had always given Dispatch 

Instructions for the supply of electricity less than the capacity declared 

as available with the Appellant. 

(iv) The Appellant is only under obligation to supply electricity to the 

Electricity Board (R-l) up to the allocated capacity of 300 MW as and 

when called upon to do so. The reference to the allocated capacity to the 

Electricity Board in the PPA dated, 30 th May, 1995 does not mean that 

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the Appellant is bound and liable to declare and supply electricity in 

the said ratio to the Electricity Board. 

(v) The Appellant had declared the capacity available to the Electricity 

Board and further supplied electricity to the Electricity Board in accordance 

with the Dispatch Instructions given by the Electricity Board to the 

Appellant. Whenever the Appellant had supplied less quantum of 

electricity than what was demanded by the Electricity Board, the Appellant 

had compensated the Electricity Board by making payment of non-deemed 

generation charges as stipulated in the PPA. This is the only penalty 

livable under the PPA and no other charges or damages or compensation 

are payable for the same. 

(vi) The Electricity Board (R-l) had already accepted the amount of 

Rs. 64 crores on 30 th November, 2004 as a full and final settlement of 

its claim and thereby waived all its claims made against the Appellant 

for compensation of alleged breach of contract. 

(vii) The Notification dated, 6 th November, 1995 prohibiting the payment 

of deemed generation incentive to the company which uses Napatha as 

a fuel has no application to the Appellant’s case for the reason that the 

PPA was entered into between the Appellant and the Electricity Board 

(R-l) on 30 th May, 1996 and even on that date the Notification dated, 

6 th November, 1995 was in force and even then, there was no reference 

made in the PPA about the applicability of the said Notification. 

(viii) For the deviations from norms, the approval of the Government of 

India is required and the Electricity Board (R-l) was to apply for and 

obtain approval of deviation from the Government of India on payment 

of deemed generation incentive contained in the Notification. Admittedly, 

the said approval had not been obtained. 

31. In reply to the above contentions, the learned Counsel for the Electricity 

Board (R-l) in justification of the impugned Order would make the following 

submissions: 

(i) The State Commission by its impugned Order has given clear and 

categorical findings that in terms of the PPA dated, 30 th May, 1996 

entered into by the Electricity Board (R-l) and PPA dated, 29 th June, 1996 

entered into with the Essar Power Ltd., the Appellant was required to 

make available electricity generated or proposed to be generated in the 

proportion of 300:215 MW and as such there is no ambiguity in this 

finding especially when the combined reading of both the PPAs would 

clarify the above position. 

(ii) By the letter dated, 11 th January, 1995, the Central Electricity Authority 

sought a clarification on the status of the EPL as to whether it is a 

generating company or a captive plant. In its reply dated, 

19 th January, 1995, the EPL sent intimation to the CEA stating that it is 

a generating company and not a captive power plant. On this basis, the 

Government of Gujarat by its letter dated, 5 th June, 1995 accepted the 

status of EPL as a generating company and confirmed the same to the 

CEA as well as to the Electricity Board. Only on this basis the EPL agreed 

to supply to the Electricity Board (R-l) 60 per cent of Power and 40 per cent 

to its sister concern. Thereafter, the PPA on 30 th May, 1996 was entered 

into with the Electricity Board and the PPA dated, 29 th June, 1996 was 

entered into with its sister concern Essar Steel Ltd. with a 

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Steels Ltd. in the proportion of 300:215 MW. Therefore, the Appellant 

cannot go back from its commitment made in the PPA in pursuance of 

the various consultations which both the parties had with the Government 

as well as with the CEA. 

(iii) As regards the deemed generation incentive claims, the parties had 

already agreed on the inadmissibility of the same as per the minutes 

of the meeting dated, 30 th March, 2000. Further, the EPL established 

the generating station principally based on Naptha as a fuel and not 

gas as a primary fuel. This is clear from the communication dated, 

31 st August, 1994. Therefore, the findings rendered by the Stat 

Commission. We have heard the learned Counsel for the parties and 

carefully considered their rival contentions. 

32. In the light of the above pleas made by the respective parties, the following 

questions may arise for consideration: 

(i) Whether under the PPA I and II the supply of electrical output to be 

made by the Appellant shall be in the ratio of 300:215 MW, the allocated 

capacity of the Electricity Board (R-l) and Essar Steels Ltd., respectively? 

(ii) Whether the Appellant, which failed to declare the entire capacity 

of its generating station to the Electricity Board made the supply of 

electricity to its sister concern Essar Steels Ltd. in excess of the said 

ratio is liable to be held responsible for the breach of the terms of PPA 

and consequently, the Appellant is liable to compensate the Electricity 

Board (R-l) 

(iii) Whether the Electricity Board (R-l) is entitled to get the refund from 

the Appellant for the deemed generation incentive paid to the Appellant 

in view of the amended Notification dated, 6 th November, 1995? 

33. Let us now deal with these issues. 

34. To resolve this dispute, it would be necessary to refer to the various 

Articles in the PPA dated, 30 th May, 1996 (PPA-1) entered into between the 

Appellant (EPL) and the Electricity Board (R-l). 

35. Under Article 3.2, a positive obligation has been imposed on the Appellant 

(EPL) to deliver power to the Electricity Board at the delivery point in accordance 

with its dispatch instructions issued by the Electricity Board under the 

dispatch procedures as specified under Schedule-VI. 

36. Article 3.3 deals with the Electricity power availability. It provides that 

the EPL shall submit to the Electricity Board from time to time Declared 

Available Generation Capacity as per the procedures set forth in Schedule-VI. 

37. Article 6.1 of Schedule-VI states that the EPL will submit to the Board 

Load Dispatch Centre a Weekly Schedule indicating the time and capacity 

which will be available from the generating station, and if not available, it 

shall mention the reason for the same. 

38. It is significant to point out the words “corresponding to the allocated 

capacity” as found in Article 3.1 are not appearing in this Article. In such 

circumstances, the question would arise as to whether the EPL is obliged to 

declare available capacity in the said ratio to the Electricity Board 300 MW 

and Essar Steels Ltd. 215 MW, in the absence of these words in this Article? 

39. “Declaring available generating capacity” has been defined in Article 1 

of PPA. It means the generating capacity expressed in MW at the Delivery 

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Point as declared by the company, i.e. EPL pursuant to Schedule VI to be 

made available to the Electricity Board up to the allocated capacity. 

40. Schedule-VI to the PPA-1 contained provision in regard to Dispatch 

Procedures. As per Article 6.1, as indicated above, the EPL is required to 

submit to the Board Load Dispatch Centre Weekly Schedules. There is nothing 

in this Article to suggest that the declaration of capacity is to be on a 

proportionate basis to the Electricity Board as well as to the Essar Steel Ltd. 

After the EPL submitted its Weekly Schedule, the Electricity Board shall 

issue to the EPL a Schedule of its requirement vide Article 6.2. 

41. Thereafter, as per Article 6.3 the Board may issue Dispatch Instructions 

at any time after the issue of Schedule of its requirement. 

42. Article 6.4 provides that the EPL shall operate the generating station in 

accordance with the relevant Dispatch Instructions given by the Board from 

time-to-time subject to Article 3.3. 

43. As aforesaid Article 3.3 deals with the availability of declared capacity 

which also does not oblige the EPL to declare on proportionate basis. 

44. From these provisions of Schedule-VI, it is clear that there is no provision, 

express or implied, to suggest that the EPL is liable to declare the available 

capacity in the said ratio to the Board and the Essar Steels Ltd. All these 

provisions would only say that the EPL has to first give Weekly Schedules to 

the Electricity Board indicating the time and capacity which would be available 

and the Electricity Board shall thereafter, issue its requirement schedule 

through Dispatch Instructions and thereupon EPL is liable to operate generating 

station in accordance with the Dispatch Instructions given by the Electricity 

Board and supply. 

45. On a combined reading of Articles 1 and 3 and Schedule-VI of the PPA-1, 

it is clear that EPL has to declare available capacity up to the allocated 

capacity to both the Electricity Board as well as to Essar Steels Ltd. and not 

on proportionate theory basis. 

46. As a matter of fact, Article 5.2 of the PPA-1 obligates the Electricity Board 

to pay to the Appellant its Annual Fixed Charges including the cost of the 

project on the level of generation achieved up to the allocated capacity and 

not on the allocated capacity itself. The Electricity Board has accordingly 

paid the Annual Fixed Charges on monthly basis on the level of generation 

achieved up to the allocated capacity. 

47. It is pointed out by the learned Senior Counsel for the Appellant that so 

far as the payment towards cost of the project is concerned, the Electricity 

Board had agreed to pay Rs. 945 crores out of the total cost of the project 

amounting to Rs. 2,061 crores which only comes to approximately 46 per cent, 

i.e. less than 58 per cent of the total project cost. 

48. In such circumstances, the Electricity Board (R-l) cannot claim that by 

reasons of it’s making payment for the Annual Fixed Charges up to the 

allocated capacity, it was always obligatory on the part of the EPL to supply 

power to the extent of 58 per cent to the Electricity Board and that since EPL 

has sold a part of Electricity Board’s share in the power generated by the 

EPL to its sister concern, EPL is liable to compensate the Electricity Board 

for the same by treating such power which sold by EPL to Essar Steel Ltd. 

as if it was sold by the Electricity Board itself to Essar Steel Ltd. after 

purchasing the same from the EPL. 


127


49. On the basis of letters dated, 17 th February, 2000 and 4 th October, 2001, 

it is contended on behalf of the Electricity Board (R-l) that EPL has conceded 

to its proportionate theory basis and as such it cannot go back. This contention 

is not tenable. EPL in those letters merely expressed its willingness to agree 

to the proportionate theory basis subject to the condition that Electricity 

Board should commit default in making the payment of dues payable under 

the PPA-1 to EPL and also subject to the condition that the Electricity Board 

shall comply with other conditions of the PPA-1. 

50. Admittedly, the stipulated conditions in those letters were neither accepted 

nor complied with by the Electricity Board. Hence, the offer made by the EPL 

to the Electricity Board for agreeing to the proportionate theory basis would 

not be construed to be conceding and as such it is binding on it. 

51. In the second letter dated, 4 th October, 2001 also, EPL stipulated the 

condition of making prompt payments by the Electricity Board to EPL and for 

establishment of Letter of Credit to secure payments under PPA-1. Even this 

condition, the Electricity Board was not ready to comply with. As such the 

proposal made by the EPL to the Electricity Board regarding proportionate 

theory subject to the conditions is not binding on the Appellant. 

52. Furthermore, when there is an amendment to the PPA-1 on 

18 th December, 2003, there is no reference about these amendments for 

declaration of supply of power in the ratio of 58:42 to the Electricity Board 

as well as to the Essar Steels Ltd., respectively. The preamble of the said 

Supplemental Agreement dated, 18 th December, 2003 clearly establishes 

that EPL is only obliged to generate the electricity up to 300 MW allocated to 

the Electricity Board and nothing more. In other words, there is no amendment 

with regard to the declaration of electricity generated on proportionate basis 

in the said Supplemental Agreement dated, 18 th December, 2003. 

53. Under such circumstances, it is not open to the Electricity Board to rely 

upon the aforesaid letters dated, 17 th February, 2000 and 4 th October, 2001 

to advance the plea of its proportionate theory. 

54. It is an admitted fact that the Electricity Board through its letter dated, 

29 th October, 2003 demanded from EPL the payment of an aggregate amount 

of Rs. 537 crores on account of alleged diversion of power by EPL to Essar 

Steels Ltd. for the period commencing from 1 st July, 1996 to 31 st March 1999. 

It is also an admitted fact that the parties thereafter, held several rounds of 

discussions and as a result of those discussions, a settlement was actually 

arrived at by the parties in October 2004. Pursuant to the said settlement, 

the Electricity Board recalculated the amount, due on the basis of power 

supplied by the EPL to Essar Steels Ltd. in excess of the allocated capacity 

of 215 MW shall alone be treated as sold and supplied by the Electricity 

Board. On this basis, the Electricity Board itself furnished a statement to 

the Appellant, EPL showing that a sum of Rs. 64 crores is payable for the 

aforesaid period and on the aforesaid basis, the EPL accepted the same as 

a part of overall package and authorized the Electricity Board to recover the 

same on a condition that the same methodology would be adopted in future 

also. Thereafter, through their letter dated, 13 th October, 2006, the Electricity 

Board accepted to receive Rs. 64 crores for diverting the electricity to the 

Essar Steels Ltd. 

55. Under those circumstances, it is clear that the claim of the Electricity 

Board against the EPL with respect to the alleged diversion of power by the 

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EPL to Essar Steels Ltd. for the period from 1 st July, 1996 had already been 

settled by the payment and this settlement is final, conclusive and binding 

on the parties. As correctly observed by the State Commission, the same is 

not liable to be reopened at this stage. 

56. Admittedly, it is not established that there is any breach of the contract 

as the part of the Appellant under PPA-1 on account of non-declaration of 

available capacity to the Electricity Board on proportionate basis. The 

compensation can be claimed only when there is a breach and due to the 

same there was a loss or damage caused by the said breach of contract. This 

has to be pleaded and proved. Unless this is done, no compensation can be 

claimed. This is a settled law as held by the Supreme Court in (1974) 2 SCC 

231 Raman Foundry v. Union of India. 2 

57. In the present case, the Electricity Board has not pleaded and proved the 

actual loss or damage caused to it due to the alleged breach of contract. The 

principle enshrined in Section 73 of the Contract Act has been incorporated 

in Article 10.1 of the PPA-1 which reads as follows: 

neither Party shall be liable to the other Party in contract, trot, warranty, 

strict liability or any other any other legal theory for any indirect, 

consequential, incidental, punitive or exemplary damages. Neither Party 

shall have any liability to the other Party except pursuant to, or for 

breach of this Agreement, provided; however, that this provision is not 

intended to constitute a waiver of any rights of one Party against the 

other with regard to matters related to this Agreement or any activity 

contemplated by this Agreement. 

58. Similarly, the explanation to Section 73 of the Indian Contract Act provides 

that in estimating the loss or damage arising from breach of contract, the 

means which existed of remedying the inconvenience caused by the 

non-performance of the contract must be taken into account. It is the duty 

of the Court to take into account whether the party affected by breach of 

contract has performed its duty to mitigate the loss while estimating the loss 

or damage arising from the breach of contract. In the present case, the 

Electricity Board merely pleads that EPL has failed to declare and supply the 

available capacity of electricity on proportionate basis to the Electricity Board 

and nothing more. 

59. As indicated above, as per Article 3.2 of PPA-1, the EPL becomes liable 

to deliver the capacity to the Electricity Board at the delivery point in accordance 

with the Dispatch Instructions. The Dispatch Instructions are instructions 

for delivery of electricity. The principle contained in Article 3.2 of PPA-1 is 

in terms of the provisions of Section 35 of the Sale of Goods Act, 1920. 

Section 35 of the Sale of Goods Act declares that the seller of goods is not 

bound to deliver until the buyer applies for the delivery. 

60. As mentioned above, the explanation of Section 73 casts a duty to mitigate 

loss on the person affected by breach of contract committed by another. 

61. In other words, assuming that the EPL has committed a breach of contract, 

the Electricity Board as the purchaser of electricity was under duty-bound 

to mitigate the loss arising from such a breach. 

62. It is the case of the Electricity Board that it was aware of the breach 

of the contract by EPL from inception of the PPA-1. Such being the position, 

2 Ed. MANU/SC/0005/1974: AIR 1974 SC 1265: [1974] 3 SCR 556 


129


the Electricity Board was obliged to apply to the Appellant for delivery of 

electricity calculated on the proportionate theory basis so as to mitigate 

the loss. The Electricity Board has not even attempted to establish that it 

had done so. 

a 

63. Let us now refer to some of the decisions on this aspect cited by the 

learned Senior Counsel for the Appellant. 

64. Hon’ble Supreme Court has held in (1977) 3 SCC 474 Timblo Irmaos Ltd., 

Margo v. Jorge Anibal Matos Sequeira and Anr. 3 as follows: 

When the Appellant itself had committed breaches of its obligations, it 

is difficult to see how the Respondents could be made responsible for 

the delay in loading. We think that the Judicial Commissioner had 

rightly disallowed this part of the claim. 

65. In AIR 1936 Privy Council 236 Tsn Ah Boon v. State of Johore. 4 The Privy 

Council has held as under: 

The Plaintiff claiming damage for breach of an alleged contract cannot 

maintain the action unless he can aver and prove that he has performed 

or has at all times been ready to perform his part of the contract. 

Where certain land granted to the Plaintiff by the State on condition of 

his paying rent is sold by the State by reason of his failure to pay rent, 

and the Plaintiff brings a suit for breach of contract, he is not entitled 

to any damages owing to his default in payment of rent. 

66. In AIR (1964) Madras 508 State of Madras v. Venkataraman 5 the Court has 

held as follows: 

This apart, even assuming that there was a valid contract, it will be 

seen that the Defendant himself was in breach, not having paid for the 

price of the good within the stipulated time. In fact, he was in arrears 

to a considerable extent. A purchaser of goods like the Defendant who 

commits default in his obligation to pay for the good within 15 days of 

the delivery thereof cannot be heard to complain that the Plaintiff 

committed breach in withholding supply. 

67. The learned Counsel for the Appellant cited another decision AIR 1958 

(AP) 533 Dhulipudi Namayya v. Union of India to show that no compensation 

claim for any remedy or indirect loss. The relevant portion is as follows: 

The Plaintiff is entitled to recover from the Defendant in the words of 

Section 73 of the Contract Act, compensation for any loss or damage 

caused to him by the breach, which naturally arose in usual course of 

things from such a breach or which the parties knew, when they made 

the contract, to be likely to result from the breach of it, but not for any 

remote and indirect loss of damage sustained by reasons of the breach. 

68. The Appellant cited two more decisions to substantiate the plea that measure 

of damages cannot be the profit which the Defendant might have made. 

69. AIR (1950) Madras 289 M. Maniappa Pillai v. I. Anthanisami Mudaliar and 

Ors. 6 The relevant observation of Madras High Court is as follows: 

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3 Ed. MANU/SC/0513/1976: AIR 1977 SC 734: [1977] 2 SCR 451 

4 Ed. MANU/PR/0018/1936 

5 Ed. MANU/TN/0297/1963 

6 Ed. MANU/TN/0127/1950 

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What then is the relief that the Plaintiff is entitled to? He is entitled to 

damages for breach of contract. The measures of such damages cannot 

be the profit which Defendant might have made by trading with the 

goods he obtained as the quota for the firm. Damages for breach of 

contract are intended to recompense the Plaintiff to the pecuniary loss 

that he has sustained and do not depend upon the gain that the other 

party might have made. There is no material furnished by the parties 

to the Court to assess damages for this standpoint, namely, the loss 

sustained by the Plaintiff. 

70. In (1962) 1 SCR 653 Murlidhar Chiranjilal v. Harishchandra Dwarkadas, 7 

the Supreme Court has held as follows: 

The two principles on which damages in such cases are calculated are 

well-settled. The first is that, as far as possible, he who has proved a 

breach of a bargain to supply what he contracted to get is to be placed, 

as far as money can do it, in as good a situation as if the contract had 

been performed; but this principle is qualified by a second, which imposes 

on a Plaintiff the duty of taking all reasonable steps to mitigate the loss 

consequent on the breach and debars him from claiming any part of 

the damages which is due to his neglect to take such steps. 

71. Another decision cited is in AIR 1974 (2) SCC 231 Raman Iron Foundry 

v. Union of India to show the claim for unliquidated damages does not give 

rise to a debt until liability adjudicated. The relevant portion of the decision 

is as follows; 

It, therefore, makes no difference in the present case that the claim of 

the Appellant is for liquidated damages. It stands on the same footing 

as a claim for unliquidated damages. Now the law is well-settled that 

a claim for unliquidated damages not give rise to a debt until the 

liability is adjudicated and damages assessed by a decree or Order of 

a Court or other Adjudicatory Authority. 

72. The ratio propounded in these decisions, in our view, would squarely 

apply to the present fact of the case, in the light of the fact that Electricity 

Board has failed to satisfy the Mandatory requirements to claim compensation. 

73. One more aspect needs to be mentioned. The arrangement in relation to 

supply of electricity up to the allocated capacity of 300 MW between the 

Appellant EPL and the Electricity Board under the PPA-1 and between the 

EPL and its sister concern Essar Steels Ltd. under PPA-2 read with Fuel 

Management Agreement dated, 18 th October, 1996 are materially different. 

The Essar Steels Ltd supplies fuel to EPL for conversion into electricity, 

whereas the Electricity Board is under no obligation to supply fuel to EPL. 

Admittedly, the EPL has to procure fuel from outside and use it for generating 

electricity for sale to the Electricity Board. 

74. The PPA-1 is a contract between the EPL and the Electricity Board 

containing reciprocal promises. In consideration of EPL supplying electricity 

to the Electricity Board up to the allocated capacity in accordance with the 

Dispatch Instructions, the Electricity Board had agreed and undertaken to 

pay the EPL the tariff as mentioned in the PPA-1. It is an admitted fact that 

the Electricity Board has committed default in making payment when due 

to be made to the EPL under the PPA-1. In fact, the EPL, the Appellant has 

7 Ed. MANU/SC/0113/1961: AIR 1962 SC 366 


131


produced materials to show that at one point of time in March 2008, the 

aggregate amount due to EPL was to the tune of Rs. 519 crores. EPL has 

produced documents to show that the Electricity Board is a defaulter in 

making payment of its due under the PPA-1 right from the inception of it. 

75. It is also an admitted fact that EPL had written several letters to the 

Electricity Board to establish Letter of Credit to secure the payment of the 

amount payable under PPA-1 and also pay the amounts when due. But the 

Electricity Board did not heed to the request made by the EPL in this behalf 

and as a result of it the ability of EPL to purchase the fuel for generating 

electricity meant for sale to the Electricity Board got impaired. 

76. As mentioned above, the claim for compensation made by the Electricity 

Board against EPL in the present case is due to the alleged breach of contract 

by EPL in declaring and supplying the power to the Electricity Board in the 

proportion of 300MW out of the total capacity 515 MW. The grievance is that 

EPL has supplied less power than what is due to the Electricity Board under 

the PPA-1. As aforesaid, Article 3.2 of the PPA-1 obliges the Appellant to 

supply electricity to the Electricity Board only in accordance with the Dispatch 

Instructions given by the Electricity Board from time to time. As a matter of 

fact, there is no provision in the PPA-1 which restricts the right of the 

Electricity Board to demand for supply of electricity only up to the declared 

available capacity of the EPL. Admittedly, many a times the Electricity Board 

asked for supply of more quantum of electricity than what was declared as 

available to it by the EPL by revising its Dispatch Instructions and immediately 

thereafter, the EPL met this demand. 

77. Whenever EPL was not able to meet such revised demand, the EPL 

compensated the Electricity Board by paying Deemed non-Generation Charges. 

78. Under PPA-1, the liability of the Appellant is only to pay penalty by way 

of Deemed Non-Generation Charges for the non-supply of the quantum of 

the demand. No other penalty or charges or compensation is livable for any 

shortfall in the supply of electricity under the provision of PPA-1. The claim 

for compensation made in the petition is not for the recovery of the unpaid 

Deemed Non-Generation Charges. 

79. It is also to be pointed out in this context that admittedly, there is no 

tripartite agreement between these three parties which binds all these parties. 

As such, there is no restriction on the EPL for supply of power to the Essar 

Steels Ltd. in excess of the maximum allocated capacity of 215 MW. In fact, 

Article 6.10.2 provides a right to EPL to sell electrical output to other 

utility/utilities in the event the Electricity Board does not cure its Event of 

Default before the expiry of the Cure Period. 

80. In the light of the above position, the direction given by the State Commission 

with reference to reimbursement of Annual Fixed Charges to the Electricity 

Board when the Electricity Board has not secured energy to the extent 

allocated under the proportionate principle is not correct as the same is 

misconceived. In this case we are of the view that the Annual Fixed Charges 

are not refundable for the surrendered portion of the electricity to the person 

in whose favour such electricity is surrendered. Hence, in regard to the 

issue relating to the liability to pay compensation we hold that, in Electricity 

Board is not entitled to get the compensation as claimed and as such the 

Appellant EPL succeeds in this issue. Consequently, the findings given by 

the State Commission on this issue are set aside. 

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0377 

81. Now, we will deal with the question whether the Electricity Board has a 

right to demand refund of the Deemed Generation Incentive as per Notification 

dated, 6 th November, 1995. 

82. The argument advanced by the Appellant is that the Notification applies 

only to a Naptha based generating station and not to a gas based generating 

station and as such the Notification dated, 6 th November, 1995 will not apply 

to a generating station like the Appellant station where Naptha is used only 

as an alternative fuel. We are unable to accept this contentions. Admittedly, the 

EPL had established its generating station principally based on the gas and 

Naptha as fuel. This is clear from the communication dated, 31 st August, 1998, 

9 th February, 1998 and 21 st March, 1998. The main contention urged by the 

learned Senior Counsel for the Appellant is that Notification was issued on 

6 th November, 1995 and Agreement was entered into between the parties 

only thereafter on 30 th May, 1996 and despite the same, the said PPA-1 did 

not refer to the prohibition of payment for the Deemed Generation Incentive 

on Naptha as referred to in Notification dated, 6 th November, 1995. 

This contention also does not merit acceptance for the following reasons. 

83. The Notification dated, 6 th November, 1995 is statutory in nature issued 

under Section 43A(2) of the Electricity (Supply) Act, 1948. Any PPA entered 

into has to be consistent with the statutory notification. 

84. It is a settled law that rights and obligation of the parties under the PPA 

have to be read subject to the statutory provisions. The provisions of the PPA 

which are contrary to the statutory provision cannot be given effect to. This 

is a well-established law as held in (2000) 3 SCC 379 India-Thermal Power 

Ltd. v. State of Madhya Pradesh. 8 

85. One more contention raised by the Appellant is that by virtue of the 

Supplemental Agreement dated, 18 th December, 2003, the EPL agreed to 

reduce incentive and therefore, on an overall basis Electricity Board had 

been benefited and the same is consistent with the Notification dated, 

30 th March, 1992. This contention also is wrong because the prohibition 

contained in the Notification dated, 6 th November, 1995 cannot be construed 

to be a norm. There is a valid public interest involved in prohibiting the 

Deemed Generation Incentive under the statutory notification. What has 

been prohibited directly cannot be permitted indirectly based on the 

Supplemental Agreement dated, 18 th December, 2003. 

86. Therefore, with reference to the issue of the refund of the Deemed Generation 

incentive we confirm the Order of the State Commission. As such the contention 

of the Appellant in regard to this issue would fail. However, as indicated in 

earlier paragraphs, we accept the contention of the Appellant with regard to 

the first issue and as such the finding given by the State Commission in 

regard to the liability to pay the compensation is liable to be set aside. 

Accordingly, the same is set aside. 

87. In the result, the Appeal No. 77 of 2009 filed by Gujarat Urja Vikash 

Nigam Ltd. is dismissed and the Appeal No. 86 of 2009 filed by Essar Power 

Ltd. is partly allowed. No costs. 

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8 Ed. MANU/SC/0102/2000: AIR 2000 SC 1005: JT 2000 (1) SC 171: RLW 2000 (2) 

SC 193: 2000 (1) SCALE 612: [2000] 1 SCR 925 


133


2010 ELR (APTEL) 0378* 




DECIDED ON: 23.03.2010 

Torrent Power Limited 

v. 

Gujarat Electricity Regulatory Commission 

Members 



Identification of variables as controllable and uncontrollable in the 

impugned Order and timing of their adjustments. 

Necessary for the Commission to expeditiously carry out the truing up 

exercise both for controllable and uncontrollable items as soon as the 

audited data as per actuals is available and give effect to the approved 

gains/losses to be passed through Tariff following the Annual Performance 

Review as stipulated in clause 12.1(b) of the MYT Regulations. This exercise 

need not wait for the next control period. It was accordingly directy to the 

State Commission directed to undertake the truing up at the earliest once 

the actual audited data is available. 

Not considering mix variance in Fuel Price and Power Purchase Adjustment 

(FPPPA) Charges. 

Appellant has mainly challenged the formula so as to claim difference in 

Power Purchase Cost on account of change in the purchase from the approved 

sources. In its petition before the State Commission the Appellant had pleaded 

that the then existing FPPPA formula be modified in view of the segregation 

of business activities and costs into generation business and distribution 

business so as to account for the Fuel Price Adjustment (FPA) in the generation 

business and Power Purchase Adjustment (PPA) in the distribution 

business separately. There is rationale in the statement of the Appellant 

that after segregation into generation and distribution business the formula 

may need adjustment. Accordingly, we direct the State Commission may 

de novo reconsider the proposal of the Appellant and ensure that its concerns 

are addressed. 

Determination of Wheeling Charges. 

The system peak demand of TPL-D for the year FY 2008-09 is 1494 MW. 

The contract demand for all the HT consumers is about 444 MW. Assuming 

that total contact demand of HT contributes to the system peak demand, the 

total demand of LT contributing to the system peak is computed as 1050 MW. 

The ratio of HT and LT voltage contribution to the peak, i.e., 30:70. 

The apportionment charges need to be reviewed to take into account the fact 

that the consumers at LT level also utilise the HT system whereas HT consumers 

do not use the LT system. State Commission directed to re-determine the 

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* MANU/ET/0015/2010 

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March - April, 2010

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Torrent Power Ltd. v. Gujarat Electricity Regulatory Commission 

(H.L. Bajaj, Member (Technical) ) 

0379 

open access charges in terms of the capacity reserved as per its own Regulations 

as also review the apportionment of wheeling charges with respect of HT and 

LT system. 

Specifying Renewable Energy Purchase Obligations discriminately. 

The Regulations provide 2 per cent as minimum quantum of purchase from 

renewable sources, the State Commission has added the backlog for the 

years 2006-07 and 2007-08 by relying on Regulation 3.2 of the power 

procurement from renewable sources regulations. Clause 3.2 of the Notification 

(supra) stipulates that if due to increased sale of power in the current year 

from that of the previous year, there may be shortfall of the targeted quantum 

from the quantum that would arise from the increased sale, such amount 

resulted due to increased sale would be added to the targeted quantum of 

Renewable Purchase Obligation for the next year. The Appellant has not 

been able to fulfill its obligations for the years 2006-07 and 2007-08 despite 

efforts made by it by inviting expression of interest from the renewable 

generators. This backlog of 2006-07 and 2007-08 cannot be added to the 

year 2008-09 as per Regulation 3.2 because the short fall has not been 

caused due to increased sales in the area of the licensee. State Commission 

may review the targets for the years 2008-09, 2009-10 and 2010-11 depending 

upon the availability of the power from renewable sources. 

Lack of uniformity in principles adopted by the Commission by not 

incentivising the Appellant for achieving better distribution loss target 

but penalising for not being able to achieve the target transit loss. 

The Regulations incentivise performance better than the norms and 

disincentivise performance below norms of AT&C loss level. Therefore, we 

are not in agreement with the plea of the State Commission that the gains 

of efficiency accrue from the capital expenditure made by licensee and therefore, 

must be passed on to the consumers. Capital expenditure is anyway made 

in the entire supply chain. Commission should decide sharing of the gains 

of efficiency between the Appellant and the Consumers as provided for in 

Regulation 66 of the State Commission. 

Disallowance of Income Tax to earn ROE as post tax. 

A conjoint reading of the Regulation 7, Regulation 66 of the State Commission 

and Section 195(A) of the Income Tax Act, 1961 leaves no doubt that the 

recovery of income tax paid as an expense from the beneficiaries requires 

to be grossed up in such a manner as to ensure that the actual tax paid 

is fully recovered through Tariff. Grossing up of the return would ensure 


Appellant. In this way the Appellant would neither benefit nor loose on 

account of tax payable which is a pass through in the Tariff. This would 

ensure that the Appellant earns permissible return of 14 per cent stipulated 

in Regulation 66 of the Regulations and mandate of Section 195A of the 

Income Tax Act is also complied with. The above provisions of 

Regulations, 2004 also make it clear that income tax payable on the income 

from the core business of the company is to be treated as an expense and 

recovered from the Tariff payable by beneficiaries. The income earned by 

the licensee is net of tax and the tax payable is treated as a separate 

expenditure recoverable from the beneficiaries. 

Appeal Allowed in Part 


135



A.P. Transco Ltd. v. NTPC Ltd. MANU/ET/0047/2009: 2009 ELR (APTEL) 445 

(discussed) [p. 0388, para 18 f] 

Delhi Transco Ltd. v. DERC and Ors. MANU/ET/0002/2009: 2009 ELR (APTEL) 

0086 (discussed) p. 0388, para 18 e] 

Mohd. Azim Ala v. Union of India MANU/SC/2309/2000: 2001 (10) SCC 93: 

JT 2000 (10) SC 447 (mentioned) [p. 0388, para 18 g] 



Section 42(2)(3) [p. 0392, para 28 c] 



Section 61(c) and 61(d) [p. 0390, para 22 f] 

Section 192(1A) [p. 0398, para 51 i] 

Income Tax Act, 1961, Section 195(A) [p. 0399, para 52 a] 


Central Commission Regulations, 2009 [p. 0398, para 48 a] 

CERC Regulations, 2009 [p. 0399, para 53 d] 

CERC Tariff Regulations, 2004 [p. 0399, para 53 d] 

Gujarat Electricity Regulatory Commission (Open Access in Intra State 

Transmission and Distribution) Regulations, 2005 

Regulation 3.1 [p. 0393, para 32 a] 

Regulation 14(i) [p. 0391, para 27 h] 

Gujarat Electricity Regulatory Commission (Power Procurement from Renewable 

Sources) Regulations, 2005 


Regulation 3.2 [p. 0393, para 33 f] 

Regulation 3.7 [p. 0393, para 33 e] 

Gujarat Electricity Regulatory Commission (Terms and Conditions of Tariff) 

Regulations, 2005 

Regulation 7 [p. 0397, para 47 f] 

Regulation 7.1 [p. 0398, para 50 f] 


Regulation 66(20) [p. 0397, para 47 e] 

Gujarat Electricity Regulatory Commission, Multi Year Tariff Framework 

Regulations, 2007 

Regulation 7.6 [p. 0383, para 9 g] 

Regulation 7.7 [p. 0381, para 3 i] 


Regulation 9 [p. 0383, para 9 g] 


Regulation 9.5 [p. 0384, para 9 d] 


Regulation 9.6.1 [p. 0384, para 10 g] 

Regulation 9.6.1 Clause (b) [p. 0385, para 9 d] 

Regulation 9.6.2 [p. 0386, para 10 i] 


Regulation 9.7(a) [p. 0382, para 4 d] 

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March - April, 2010



0381 

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Regulation 9.7(b) [p. 0382, para 5 f] 

Regulation 9.7.2(e)(ii) [p. 0382, para 6 h] 



Regulation 11.2 Clause (b) [p. 0386, para 9 d] 

Regulation 12.1(b) [p. 0387, para 11 a] 

Counsel 

For Appellant/Petitioner/Plaintiff: Deepa Chauhan, Alok Shukla, Navin Raheja, 

H.S. Jaggi and Chetan Bundela, Advs. 

For Respondent(s)/Defendant: Achintya Dwivedi, Mandakini Ghosh, E.S.R. 

Pandey, Legal Officer (GERC), Shikha Ohri and Sanjay Sen, Advs. 

JUDGMENT 


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1. The Appellant Torrent Power Ltd. is in the business of power generation and 

distribution. The Appellant has challenged the Order dated, 17 th January, 2009 

passed by Gujarat Electricity Regulatory Commission (GERC or the State 

Commission or the Commission in short) in case No. 939 of 2008 whereby, the 

Commission has determined Annual Revenue Requirement, Wheeling Charges 

and Retail Supply Tariff for the control period FY 2008-09 to FY 2010-2011 and 

truing up for the year FY 2007-08. The impugned Order dated, 17 th January, 2009 

came into effect from 1 st February, 2009. 

2. The Appellant has challenged the Impugned Tariff Order relating to the 

following issues: 

(a) Identification of variables as controllable and uncontrollable in the 

impugned Order and timing of their adjustments. 

(b) Not considering mix variance in Fuel Price and Power Purchase 

Adjustment (FPPPA) Charges. 

(c) Determination of Wheeling Charges 

(d) Specifying Renewable Energy Purchase Obligations discriminately. 

(e) Lack of uniformity in principles adopted by the Commission by not 



(f) Disallowance of Income Tax so as to earn Return on Equity as post tax. 

(a) Identification of variables as controllable and uncontrollable in the 

impugned Order and timing of their adjustments 

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3. Learned Counsel for the Appellant, Ms. Deepa Chauhan, has submitted 

before us that as per Gujarat Electricity Regulatory Commission, Multi Year 

Tariff Framework Regulations, 2007, (In short MYT Regulations) the Commission 

is required to identify various ARR items as “controllable” or “uncontrollable”. 

It has been contended that the classification of ARR items in the impugned 

Order is contrary to the MYT Regulations. The Commission is required to 

specify variables comprised in the ARR and thereafter review the specific 

variables as part of Annual Performance Review (APR) in terms of 

MYT Regulation 7.7. The Commission is required to identify the variables in 

respect of each ARR item and then attribute the variations to the controllable 

and uncontrollable factors at the time of Annual Performance Review and 


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not while passing the MYT Order. She urged that Regulations 9.3, 9.6 and 

9.7 have been negated by the Commission. These Regulations deal with 

Annual Performance Review and contemplate that the Commission would 

consider various factors for variation in the ARR items and only thereafter 

these items have to be categorised as uncontrollable factors and controllable 

factors. The Commission is required to look into the factors which constitute 

the variations and ascertain whether the factors are beyond the control of 

the Appellant and could not be mitigated. As an example she illustrated 

that any variation say in an item like the “employee cost” due to change 

in law have to be considered as additional expenses towards employee cost 

on account of change in law as an uncontrollable factor. She contended 

that the Commission has classified employee cost in its entirety as 

controllable although the categorisation of ARR items as controllable and 

uncontrollable before analysing these factors for variations is not permitted 

as per Regulations. 

4. Learned Counsel stated that as per the impugned Order “True up will be 

permitted only in the case of the uncontrollable items on availability of data 

as per actuals”. She contended that this limits the scope of performance 

review of uncontrollable items to the availability of data as per actuals, 

which is contrary to Regulation 9.3 read with Regulation 9.7(a) and 

Regulation 10. Regulation 9.3 clearly sets out that the scope of review is to 

be undertaken as: 

(a) comparison of audited performance of the Appellant for previous 

year with the approved forecast for the previous year; 

(b) comparison of performance of first half of the current year with 

approved forecast for the current Financial Year. 

5. Learned Counsel for the Appellant submitted that the impugned Order 

stipulates that “a statement of gains and losses for each controllable item 

will be presented in the filing for the next control period”. She contended 

that as per this the adjustment of gains/losses due to controllable factors 

will have to await the filing for the next control period, i.e. after three years 

and that this is contrary to Regulation 9.7(b) and Regulation 11 which 

clearly specify annual review. 

6. Per contra the learned Counsel Mr. Sanjay Sen appearing for the Commission 

submits that the Commission in its Order has referred to MYT Regulations 

including mechanism of sharing of gain and losses on account of controllable 

and uncontrollable factors in Regulations 9.6, 10 and 11 and that the 

Commission has summarised the classification of ARR items. The Performance 

Review, true up will be permitted only in case of uncontrollable items on 

availability of actual data and that regarding controllable items, the Commission 

will review the gains and losses on each item and make appropriate adjustments 

whenever required. Regulation 9.7.2(e)(ii) of MYT Regulations specify employee 

cost as “controllable”. He stated that if there is any cost which accrues as 

a result of change of law the same will fall under Regulation 9.6 and will be 

considered as an uncontrollable factor. The occasion to classify employee 

cost as uncontrollable will arise only if the Appellant can demonstrate that 

the variation of employee cost is due to change of law. Under Regulation 

employee cost is generally recognised as controllable factor and the change 

in law is a special circumstance and will be considered, if necessary, at an 

appropriate time. This is not the stage and, therefore, apprehension of the 

Appellant is misplaced. He stated that the Commission is fully competent to 

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apply Regulations and that the classifications of various ARR items are as 

per Regulation. 

7. Learned Counsel for the Commission further contended that the 

truing up of uncontrollable items will be permitted only in case of 

uncontrollable items on availability of data as per actual and duly audited. 

The Commission will review such actual data and satisfy itself before 

allowing the true up. 

8. It is the contention of the Commission that the Regulations do not specify 

the timing of adjustment and that it is left to the wisdom of the Commission 

to specify the timing in the Annual Performance Review and that purpose of 

MYT will be lost if there is a year on year adjustment of Tariff. The Commission 

holds that the finding of the Commission that statements of gains and losses 

for each controllable item will be presented in the filing for the next control 

period is in line with Regulation 9.7 and Regulation 11. Learned Counsel for 

the Commission asserted that the Commission has the ability to pass an 

Order recording the manner and mechanism in which the aggregate gains 

and losses will be apportioned. 

Analysis and Decision 

9. Before we proceed to analyse and decide this issue it will be expedient to 

set out the various Regulations of the State Commission referred by the 

Counsel for the parties. 

Chapter 7: Forecast 

7.6 Upon studying the application, the Commission shall either: 

(a) pass an Order approving the forecast of aggregate Revenue 

requirement and expected Revenue from Tariff and charges for the 

control period, subject to such modifications and conditions as it 

may specify in the said Order; or 

(b) reject the application for reasons to be recorded in writing, if it 

is not in accordance with the principles contained in Section 61 

of the Act or these Regulations and direct the Applicant to submit 

a revised forecast taking into consideration such factors as the 

Commission may deem appropriate. 

7.7 The Commission shall, in its Order passed under Regulation 7.6 

above, specify the variables comprised in the aggregate Revenue 

requirement and expected Revenue from Tariff and charges of the 

Applicant that shall be reviewed by the Commission as part of the 

annual performance review in accordance with Regulation 9 below: 

Provided that such variables shall be limited to the major items of 

cost and Revenue forecast of the Applicant that, in the Commission’s 

opinion, could have a material impact on the cost of supply of 

electricity to consumers in the State over the control period: 

Provided further that the variables, as may be stipulated by the 

Commission under Regulation 8 below, shall form part of the annual 

performance review, unless exempted by the Commission from 

such review in its Order. 

Chapter 9: Annual review of performance 

9.1 Where the aggregate Revenue requirement and expected Revenue 

from Tariff and charges of a Generating Company or Licensee is covered 


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under a multi-year Tariff framework, then such Generating Company 

or Licensee, as the case may be, shall be subject to an annual performance 

review during the control period in accordance with this Regulation. 

9.3 The scope of the annual performance review shall be a comparison 

of the performance of the Generating Company or Licensee with the 

approved forecast of aggregate Revenue requirement and expected Revenue 

from Tariff and charges and shall comprise the following: 

(a) A comparison of the audited performance of the Applicant for 

the previous financial year with the approved forecast for such 

previous financial year; and 

(b) A comparison of the performance of the Applicant for the first 

half of the current financial year with the approved forecast for the 

current financial year and 

(c) Any other relevant details, if any 

9.4 The Applicant shall submit the information required for the annual 

performance review in such form as may be stipulated by the Commission 

from time-o-ime. 

9.5 For the variables stipulated by the Commission under Regulation 

7.7, the Commission shall carry out a detailed review of performance of 

the Applicant vis-à-vis the approved forecast, as part of the annual 

performance review. 

9.6 Upon completion of the review under Regulation 9.5 above, the 

Commission shall attribute any variations or expected variations in 

performance, for variables stipulated under Regulation 7.7 above, to 

factors within the control of the Applicant (controllable factors) or to 

factors beyond the control of the Applicant (uncontrollable factors): 

Explanation–For the purpose of these Regulations, the term 

uncontrollable factors shall include the following factors which 

were beyond the control of, and could not be mitigated by, the 

Applicant, as determined by the Commission: 

(a) Force Majeure Events; 

(b) Changes in law, judicial pronouncements and Orders of 

the Central Government, State Government or Commission; 

(c) Economy wide influences, such as unforeseen changes in 

inflation rate, market-interest rates, taxes and statutory levies. 

9.6.1 Some illustrative variations or expected variations in the performance 

of the Applicant which may be attributed by the Commission to 

uncontrollable factors include, but are not limited to, the following: 

(a) Variation in the price of fuel and/ or price of power purchase 

according to the FCA/FPPPA formula approved by the Commission 

from time-to-time; 

(b) Variation in the number or mix of consumers or quantities of 

electricity supplied to consumers; 

(c) Expenses on account of Inflation; 

(d) Taxes on Income. 

Provided that where there is more than one Distribution Licensee 

within the area of supply of the Applicant, then any variation 

in the number or mix of consumers or in the quantities of 

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electricity supplied to consumers within the area served by 

two or more such Distribution Licensees shall be attributable 

to controllable factors: 

Provided further that where any consumer or category of 

consumers within the area of supply of the Applicant is eligible 

for open access under Sub-section (3) of Section 42 of the Act, 

then any variation in the number or mix of such consumers 

or quantities of electricity supplied to such eligible consumers 

shall be attributable to controllable factors; 

9.6.2 Some illustrative variations or expected variations in the performance 

of the Applicant which may be attributed by the Commission to controllable 

factors include, but are not limited to, the following: 

(a) Variations in capital expenditure on account of time and/or cost 

overruns/ efficiencies in the implementation of a capital expenditure 

project not attributable to an approved change in scope of such 

project, change in statutory levies or force majeure events; 

(b) Variations in technical and commercial losses, including bad 

debts; 

(c) Variations in the number or mix of consumers or quantities of 

electricity supplied to consumers as specified in the first and second 

proviso to Clause (b) of Regulation 9.6.1; 

(d) Variations in working capital requirements; 

(e) Variation in expenses like–(i) Operation and Maintenance 

expanses, (ii) Employee Cost, (iii) Admn. and General expenses, (iv) 

Interest and Finance Charges, (v) Return on Equity, Depreciation, 

(vi) Non-Tariff income. However, expenses at (i), (ii) and (iii) are 

relatable to relevant 

Inflation Indices and/or any pay revision agreement in the economy 

and expenses like (iv) & (v) are relatable to applicable interest rates; 

(f) Failure to meet the standards specified in the Standards of 

Performance Regulations, except where exempted in accordance 

with those Regulations; 

(g) Variations in labour productivity; 

(h) Variations in any variable other than those stipulated by the 

Commission under Regulation 9.6 above. 

9.7 Upon completion of the annual performance review, the Commission 

shall pass an Order recording: 

(a) the approved aggregate gain or loss to the Generating Company 

or Licensee on account of uncontrollable factors and the mechanism 

by 15 which the Generating Company or Licensee shall pass through 

such gains or losses in accordance with Regulation 10; 

(b) the approved aggregate gain or loss to the Generating Company 

or Licensee on account of controllable factors and the amount of 

such gains or such losses that may be shared in accordance with 

Regulation 11; 

(c) the approved modifications to the forecast of the Generating 

Company or Licensee for the remainder of the control period, if 

any, under Regulation 9.5. 

Chapter 10: Mechanism for pass through of gains or losses on account 

of uncontrollable factors 


141


10.1 The approved aggregate gain or loss to the Generating Company 

or Licensee on account of uncontrollable factors shall be passed through 

as an adjustment in the Tariff of the Generating Company or Licensee 

over such period as may be specified in the Order of the Commission 

passed under Regulation 9.7(a). 

10.2 Nothing contained in this Regulation 10 shall apply in respect of 

any gain or loss arising out of variations in the price of fuel and power 

purchase which shall be dealt with as specified by the Commission 

from time-to-time. 

Chapter 11: Mechanism for sharing of gains or losses on account of 

controllable factors 

11.1 The approved aggregate gain to the Generating Company or Licensee 

on account of controllable factors shall be dealt with in the following 

manner: 

(a) One-third of the amount of such gain shall be passed on as a 

rebate in Tariffs over such period as may be specified in the Order 

of the Commission under Regulation 9.7; 

(b) One-third of the amount of such gain shall be retained in a 

special reserve by the Generating Company or Licensee for the 

purpose of absorbing the impact of any future losses on account 

of controllable factors under Clause (b) of Regulation 11.2; and 

(c) The balance amount of gain may be utilised at the discretion 

of the Generating Company or Licensee. 

11.2 The approved aggregate loss to the Generating Company or Licensee 

on account of controllable factors shall be dealt with in the following 

manner: 

(a) One-third of the amount of such loss may be passed on as an 

additional charge in Tariffs over such period as may be specified 

in the Order of the Commission under Regulation 9.7; and 

(b) The balance amount of loss shall be absorbed by the Generating 

Company or Licensee. 

Chapter 12: Annual determination of Tariff. 

12.1 The Commission shall determine the Tariff of a Generating Company 

or Licensee covered under a multi-year Tariff framework for each financial 

year during the control period, at the commencement of such financial 

year, having regard to the following: 

(a) The approved forecast of aggregate Revenue requirement including 

the incentive available for the Generating Company or Licensee 

and expected Revenue from Tariff and charges for such financial 

year, including approved modifications to such forecast; and 

(b) Approved gains and losses to be passed through in Tariffs, 

following the annual performance review. 

10. We note that the classification of various ARR items summarised in para 

4.6.2 of the impugned Order into controllable or uncontrollable items is in 

line with the MYT Regulations. It has been rightly admitted by the Commission 

that if there are any variations in various factors even in the controllable 

category of ARR items due to the factors enumerated in Regulations 9.6.1 

and 9.6.2 (supra) the same will be considered as an uncontrollable factor. 

The Regulations, by way of explanation do detail out various factors which 

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fall beyond the control of the licensee and the same could be considered for 

allowing variations in the controllable items also. In view of this we do not 

wish to interfere with this decision of the Commission. 

11. As far as the timing of truing up is concerned, the Regulation 12.1(b) 

(supra) clearly stipulates that approved gains and losses are to be passed 

through in Tariff following the Annual Performance Review. In view of this 

we are not able to agree with the contention of the Commission that the 

truing up can wait till the next control period. Control period being three 

years, it cannot be the case of the State Commission that burden/benefits 

of the past years be passed on to the consumers of the future. It has to be 

kept in mind that postponement will entail carrying cost to the consumers 

as also cash flow problems for the licensee. National Tariff Policy also requires 

that “uncontrollable costs should be recovered speedily to ensure that future 

consumers are not burdened with past costs……….” (Clause 5.3(h)(4) extracted 

in para 15. 

12. We consider that it is necessary for the Commission to expeditiously 

carry out the truing up exercise both for controllable and uncontrollable 

items as soon as the audited data as per actuals is available and give effect 

to the approved gains/losses to be passed through Tariff following the Annual 

Performance Review as stipulated in Clause 12.1(b) of the MYT Regulations. 

This exercise need not wait for the next control period. We decide accordingly 

and direct the State Commission to undertake the truing up at the earliest 

once the actual audited data is available. 

(b) Not considering mix variance in Fuel Price and Power Purchase 

Adjustment Charges (FPPPA). 

13. Grievance of the Appellant is that the State Commission has not allowed 

the Fuel Price and Power Purchase Adjustment Charges (FPPPA) formula as 

modified and proposed by the Appellant in its ARR petition. Appellant contends 

that it had suggested the modified FPPPA formula and the design principles 

in support of it as the earlier formula evolved by the State Commission do 

not take into consideration the variations in costs due to changes/variations 

in the mix of approved power purchase sources. The earlier formula did not 

take it into consideration the impact on the actual power purchase cost of 

a distribution licensee, due to variation in the quantum of power supply by 

various approved sources vis-à-vis the mix estimated by the State Commission 

in its computation of the approved power purchase cost for the Appellant. 

The formula proposed by the Appellant in its petition takes into consideration 

any difference in the power purchase cost on account of variations in the 

approved sources of power procurement. 

14. Learned Counsel Ms. Deepa Chauhan submitted that the rationale of 

evolving the modified fuel price adjustment formula was to ensure that there 

are timely and complete adjustment in respect of increase in the power 

purchase cost from the approved sources and that such an approach is in 

line with The Electricity Act and would safeguard not only the interest of the 

Appellant but also ultimately that of the consumers. 

15. She submitted that Clause 5.3(h)(4) of the National Tariff Policy, reproduced 

below, requires that costs like the fuel cost should be recovered speedily to 

ensure that future consumers are not burdened with the past costs: 

5.3(h)(4) Uncontrollable costs should be recovered speedily to ensure 

that future consumer are not burdened with past costs. Uncontrollable 


143


costs would include (but not limited to) fuel costs, costs on account of 

inflation, taxes and cess, variations in power purchase unit costs including 

on account of hydro-thermal mix in case of adverse natural events. 

a 

16. She said that the Appellant has not challenged this Appeal on the 

ground of UI charges and working capital. 

17. Learned Counsel appearing for the State Commission stated that the 

State Commission had already approved formula for FPPPA for Torrent Power 

Ltd. (TPL) vide its Order dated, 31 st July, 2007. The State Commission has 

examined the request of TPL and concluded that the formula already approved 

covers both fuel price adjustment and power purchase adjustment components 

and could be applied to the extent required for fuel price adjustment or 

power purchase adjustment or both and therefore, is not required to be 

modified. Appellant in its petition has proposed to include (i) change in 

working capital cost on account of change in power procurement cost and 

(ii) actual gain and loss on account of UI mechanism. Working capital cost 

is approved as per norms provided adequately with reference to the actual 

capital required and there is no cause to include this element which is not 

significant in power purchase adjustment formula. UI charges frequently 

vary both ways and, therefore, are not to be recovered from the consumers 

on monthly/quarterly basis. This shall be included in the true up and to be 

approved by the State Commission. In view of this the modified formula was 

not approved by the State Commission. 

18. Raising a preliminary objection learned Counsel for the State Commission 

argued that the Appellant has accepted the earlier formula of the Appellant 

in its earlier Order dated, 31 st July, 2007 in Petition No. 915 of 2007and 

therefore, it is now estopped from challenging the same. In this context 

learned Counsel asserted that the Judgment of this Tribunal relied upon by 

the Appellant (Delhi Transco Ltd. v. DESRC* and Ors.) 1 2009 ELR (APTEL) 

0086 is not applicable. Instead learned Counsel for the State Commission 

relied upon Order of this Tribunal in case of A.P. Transco Ltd. v. NTPC Ltd. 2 

in Appeal No. 25 of 2009 delivered on 5 th May, 2009. Extracts from both these 

Judgments are placed below: 

A.P. Transco v. NTPC 

15…. (vii) It is a well-settled principle of law that once a matter gets 

settled between the parties before the judicial forum, the same cannot 

be reopened ands re-agitated even if a different view has been taken by 

the superior Court as per the relevant provisions of Rules. This is also 

laid down by the Supreme Court in Mohd. Azim Ala v. Union of India 3 

reported in 2001 (10) SCC 93. The relevant observation in this case is 

as follows: 

Once the matter on the Appellants reached finality, it could not be 

opened merely on the ground that in some other matter filed at the 

behest of some other similarly situated persons, the Tribunal or 

the Court has granted some relief. 

(viii) The Appellants’ main contention is that there is a continuous 

cause of action and as such for every cause of action, they have got a 

* The Hon’ble Justice might have meant “DERC” 

1 Ed. MANU/ET/0002/2009 

2 Ed. MANU/ET/0047/2009: 2009 ELR (APTEL) 445 

3 Ed. MANU/SC/2309/2000: JT 2000 (10) SC 447 

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right to file a separate petition opposing the FERV methodology. 

This contention is absolutely wrong because the present case involves 

the issue relating to the period 2003-04, whereas the cause of action 

raised in the methodology of FERV for the said period would arise 

immediately after the Order dated, 21 st December, 2000 was passed. 

There is no fresh FERV issue for the Appellants from 31 st March, 2004. 

Delhi Transco Ltd. v. DERC and Ors. 2009 ELR (APTEL) 0086. 

(17) Although the Appellant did not challenge the earlier Tariff Orders 

it did oppose the proposition that was adopted by the Commission 

namely that the Appellant should be denied the right to recover its 

Revenue requirement to the extent of the past receivables. The Appellant 

has been asking the Commission to transfer the 80 per cent of the past 

receivable to it. In fact, the accounts position of the Appellant reflects 

the factual position namely that the past receivable have not been 

received by it and these accounts have not been held to be incorrect or 

flawed by the Commission. It cannot be said that the Appellant has 

accepted the Commission’s method in this regard for such an unduly 

long time that following the principles in the Judgments mentioned 

above the Appellant can be non-suited on the ground that it is challenging 

a settled position of fact or law. The view taken by the Commission that 

past receivables, not received by the Appellant, be deemed to have been 

received by the Appellant borders absurdity. Since, each Tariff Order is 

distinct and separate the Appellant would be fully justified in approaching 

this Tribunal to challenge the impugned Order vis-à-vis the year 2006-07. 


19. We would first like to deal with the preliminary objection raised by the 

learned Counsel for the State Commission that since the Appellant has 

accepted the earlier formula in the Commission’s Order dated, 31 st July, 2007, 

the Appellant is now estopped from challenging the same. This Tribunal 

in its Judgment dated, 13 th January, 2009 in case of Delhi Transco Ltd. v. Delhi 

Electricity Regulatory Commission ELR (APTEL) 0086 has taken a view 

that each Tariff Order is distinct and separate, the Appellant would 

therefore be fully justified in approaching this Tribunal to challenge 

the impugned Order. In view of this, we are unable to agree with the 

contention of the State Commission that the Appellant cannot now challenge 

the FPPPA formula. 

20. It has also been made clear by the Appellant that it has not challenged 

this Appeal on the ground of Unscheduled Interchange charges and working 

capital as understood by the State Commission. The Appellant has mainly 

challenged the formula so as to claim difference in Power Purchase Cost on 

account of change in the purchase from the approved sources. In its petition 

before the State Commission the Appellant had pleaded that the then existing 

FPPPA formula be modified in view of the segregation of business activities 

and costs into generation business and distribution business so as to account 

for the Fuel Price Adjustment (FPA) in the generation business and Power 

Purchase Adjustment (PPA) in the distribution business separately. 

The Appellant Petitioner had said as below: 

Power Purchase Adjustment 

9.5 TPL-D sources its power partly from its own generation TPL-G(APP), 

TPL-G (SUGEN) and partly through purchase from GUVNL. The Power 


145


Purchase Cost would vary from the projections incorporated in the 

TPL-D ARR due to various uncontrollable factors, such as: 

1. Demand fluctuations; 

2. Forced outage of various units; 

3. Power purchase mix variations arising out of thermal-thermal 

mix and unscheduled outages etc. and 

4. Variations in fuel price, fuel transportation and/or handling 

charges and charges/duties levied by the Government. 

9.6 The objective of Power Purchase Adjustment (PPA) is to adjust for 

the changes in the power purchase in the retail Tariff applicable for 

various categories of consumers. 

21. We find that there is rationale in the statement of the Appellant that 

after segregation into generation and distribution business the formula may 

need adjustment. Accordingly, we direct the State Commission may de novo 

reconsider the proposal of the Appellant and ensure that its concerns are 

addressed. 

(c) Determination of Wheeling Charges 

22. Learned Counsel for the Appellant has submitted that the Respondent 

State Commission should have determined the wheeling charges in terms of 

the capacity to be reserved in terms of rupee per MW but the State Commission 

has determined the same as paise per kWh and that this is not in conformity 

with the GERC (Open Access in Intra-State Transmission and Distribution) 

Regulations, 2005 as modified by the State Commission vide Notification 

No. 13 of 2005. Appellant contended that there will be under-recovery in 

terms of payment not made for the capacity reserved in case the units 

wheeled are less than the reserved capacity. She has contended that adopting 

such an approach will tantamount to cross subsidisation by the retail consumers 

to the open access consumers and is therefore, against the spirit of Section 61(c) 

and 61(d) of The Electricity Act. Moreover, Section 42(3) of The Electricity Act 

which provides for non discriminatory open access but does not contemplate 

any preferential Tariff or treatment at the cost of other retail consumers. 

She contended that the response of the State Commission that it has worked 

out wheeling charges in terms of energy as capacity in terms of MW/MVA at 

11 kV and LT levels were not available and that it has determined the 

transmission charges in rupee per MW on the basis of total transmission 

capacity handled by the transmission licensee and that the Statement of 

the Commission that the Appellant has not specified the MW capacity handled 

by the system is not correct. Appellant asserted that necessary information 

of capacity handled by it has been furnished in its MYT Petition (para 1.48 

page 466 of Appeal Paper Book, Vol. II) and that the same is in line with that 

considered for the transmission licensee by the State Commission. 

23. The Appellant submitted that it has given further segregation of capacity 

handled and distribution losses between HT and LT consumers for determination 

of separate charges to avoid any cross subsidisation and judicious recovery 

of charges without burdening either retail or open access consumers. 

24. Learned Counsel for the Appellant submitted that segregation of the 

voltage-wise details were not submitted by the transmission licensee and 

therefore, the charges have been determined by the State Commission on 

overall basis requiring open access consumers to pay for the assets used by 

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them. The segregation has not been done by the transmission licensee despite 

directions of the State Commission. She pleaded that the State Commission 

be directed to determine the charges on capacity reservation basis. Ms Deepa 

Chauhan contended that if the consumers of open access are not required 

to make the payment of the reserved capacity, the open access consumer 

will tend to reserve higher capacity and cost of maintaining higher capacity 

will be borne by retail consumers. Appellant is required to make the reserved 

capacity available at all times. However, the open access consumer is required 

to pay only for the utilisation and therefore, the cost of maintaining the 

network will be borne by the retail consumers in case of lower utilisation of 

the open access capacity reserved. 

25. Learned Counsel for the Appellant contended that the State Commission 

has also erred in apportionment of wheeling charges amongst HT and LT 

consumers. She stated that consumption at lower voltage should also contribute 

to the cost of higher voltage whereas the consumers at high voltage level 

need to pay for only the used HT system. In view of this the Appellant had 

apportioned HT and LT system charges in two steps namely–(a) apportioning 

ARR of wheeling business to HT and LT voltage level and (b) apportioning the 

ARR of the HT voltage level again between the HT and LT voltage levels. 

The State Commission Order makes the apportionment between the HT and 

LT voltage as 30:70 but it does not provide any reason for arriving at this 

apportionment and, therefore, the impugned Order needs to be modified 

with regard to the wheeling charges. 

26. Mr. Sanjay Sen, learned Counsel for the Respondent Commission has 

contended that in view of the fact that voltage-wise expenses were not available, 

the State Commission was compelled to assume expenses of HT and LT level 

in the ratio of 30:70 as an interim arrangement till voltage-wise cost details 

are furnished by the Appellant. Mr. Sen submitted that in case there is any 

loss to the Appellant on the ground of underutilisation of reserve capacity 

by open access users, the same can be resolved through contractual mechanism 

between the licensee and open access user. He stated that in case there is 

any open access user who is reserving capacity and not utilising the same 

this issue can be brought out to the Commission for appropriate 

Orders/directions. He stated that the network cost is deemed to have been 

recovered from retail Tariff and as such there cannot be any under-recovery 

on this account and that if there is any un-recovery of cost, it will be reflected 

during the truing up exercise. 


27. Gravamen of pleas of the Appellant is that whereas the GERC (Open 

Access in Intrastate Transmission and Distribution) Regulations require 

levying of wheeling charges in terms of capacity to be reserved in MW the 

Commission has determined the wheeling charges in terms of paise per unit. 

Here, it is necessary to set out the Regulation 14(i) of the GERC Regulations: 

(i) Transmission/Distribution (Wheeling) Charges. 

The charges for use of the system of the licensee for intra-state 

transmission or distribution except intervening transmission facilities 

shall be regulated as under, namely: 

(i) The annual charges shall be determined by the Commission in 

accordance with the terms and conditions of Tariff notified by the 

Commission from time to time and after deducting the adjustable 


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Revenue from the short-term users, these charges shall be shared 

by the long-term users; 

(ii) (a) The charges payable by a short-term users shall be calculated 

in accordance with the following methodology: 

ST RATE = 0.25 × (TSC/Av CAP)/365 

Where ST RATE is the rate for short-term open access user in 

Rs. Per MW per day. 

“TSC” means the Annual Transmission/Distribution Charges of 

the transmission or distribution licensee for the previous financial 

year determined by the Commission. 

“Av CAP” means the average capacity in MW served by the system. 

28. The Appellant had also pleaded that in case the capacity is not utilised 

and payment is made in terms of units transmitted, the transmission/ 

distribution line will not be utilised and there will be under-recovery which 

will have to be compensated by other consumers which is not the intention 

of Section 42(2)(3) of The Act which provides for non-discriminatory open 

access but not any preferential Tariff or treatment at the cost of other retail 

consumers. In view of the Commission’s own Regulations requiring wheeling 

charges payable on the basis of capacity reserved and not on the basis of 

paise per unit, we are inclined to agree with the contention of the Appellant. 

We Order accordingly. 

29. We are unable to agree with the contention of the State Commission that 

the capacity in terms of MW at HT and LT was not available as the same has 

been given at Clause 1.48 of the Tariff petition of the Appellant as submitted 

by Ms Chauhan as under: 

Clause 1.48: 

The system peak demand of TPL-D for the year FY 2008-09 is 1494 MW. 

The contract demand for all the HT consumers is about 444 MW. Assuming 

that total contact demand of HT contributes to the system peak demand, 

the total demand of LT contributing to the system peak is computed as 

1050 MW. The ratio of HT and LT voltage contribution to the peak, 

i.e. 30:70. 

30. We are inclined to agree with the contention of the Appellant that the 

apportionment charges need to be reviewed to take into account the fact 

that the consumers at LT level also utilise the HT system whereas HT consumers 

do not use the LT system. 

31. In view of the foregoing we direct the State Commission to re-determine 

the open access charges in terms of the capacity reserved as per its own 

Regulations as also review the apportionment of wheeling charges with respect 

of HT and LT system. 

(d) Specifying Renewable Energy Purchase Obligations discriminately 

32. Appellant has submitted that the impugned Order imposes obligations 

on the Appellant to purchase power renewable energy sources to the extent 

of 4 per cent, 6 per cent and 8 per cent for the years 2008-09, 2009-2010 

and 2010-11, respectively as percentage of the total sales. Appellant has 

contended that whereas it has been wheeling wind energy for captive 

consumption, the Commission has failed to take into consideration such 

wheeling of renewable energy towards fulfillment of purchase obligation from 

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renewable energy sources. Counsel for the Appellant further contended that 

purchase stipulation of 4 per cent for the year 2008-09 is contrary to 

Regulation 3.1 of the GERC (Power Procurement from Renewable Sources) 

Regulations, 2005, reproduced below: 

3.1 Each Distribution Licensee shall purchase a defined minimum 

quantum of its total consumption of electricity during year from renewable 

sources as per the schedule: 

Year 

Minimum Quantum of purchase 

from renewable sources 

2006-07 1.0 per cent 

2007-08 1.0 per cent 

2008-09 2.0 per cent 

33. Appellant has contended that the Commission has stipulated renewable 

purchase obligations discriminately and alleged that the Commission has 

provided differential treatment as regard the renewable purchase obligations 

as it stipulates higher purchase obligation on the Appellant without giving 

any reason in support. Appellant submitted that it is imperative that the 

Commission undertakes an exercise to consider all the parameters and 

factors in evolving the renewable purchase obligation of the licensees in the 

state. In this context, Appellant spelt out case No. 93 of 2007 filed by Indian 

Wind Energy Association seeking review of renewable purchase specification 

as per applicable Tariff Regulations, is pending and subjudice before the 

Commission. The stipulation of renewable power purchase obligation on the 

Appellant is without any comprehensive study. The Appellant has contended 

that the Regulations do not permit to add the purported backlog to the 

present RPO and that the Regulation 3.7 confer on the Commission the 

power to waive the minimum quantum even if stipulated in the Regulation. 

She stated that the interpretation of Regulation by the Commission that if 

the licensee fails to purchase the stipulated percentage in a particular year 

the shortfall will be added in the next year percentage is erroneous. 

Regulation 3.2 states as under: 

3.2 Each Distribution Licensee shall indicate, along with sufficient 

proof thereof, the proposed quantum of purchase from renewable sources 

for the ensuing year in the ARR filing. The proposed quantum of purchase 

shall be as per Clause 3.1 of this regulation of the approved power 

purchase quantity for the previous year. Due to increased sale of power 

in the ensuing year from that of the previous year, there may be a 

shortfall of the targeted quantum from the quantum that would arise 

from the increased sale. This amount would need to be added to the 

targeted quantum for the next year. However, credit for excess sale 

would not be provided in the ensuing year. 

34. She stated that the plea of the Commission in its response, that the 

percentage of RPO approved by the Commission in the MYT year is less than 

the proposed percentage in the Regulation for the FY 2009-2010, 2010-2011 

is not tenable as comparison cannot be made with that of the draft regulations. 

She refuted the reply of the Commission that the RPO percentage as specified 

in the regulation will be the obligation of the Appellant including all licensees 

and will remain same for all on the ground that this is contrary to the 

impugned Order. 


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35. The Appellant contended that the allegations of the Commission that it 

has violated the statutory regulations because the Appellant has not purchased 

renewable energy as specified by the Commission in MYT year for FY 2008-09, 

submitted that the Appellant is bound by the provisions of the law. Its 

willingness to comply with the provisions of the regulation is demonstrated 

by its action as it had signed PPA for purchase of 49.6 MW from renewable 

generator and also signed agreement for 46.66 MW for wheeling and purchase 

of surplus power from renewable captive generators. Moreover, the Appellant 

had made efforts twice by inviting expression of interest from the renewable 

generators in leading newspaper of Gujarat and major cities on 6 th March, 2009 

and 3 rd June, 2009 for procuring renewable power towards compliance of 

RPO. The Appellant will make necessary statements during ARR process in 

accordance with the provisions of the regulations. She prayed that the impugned 

Order should be modified to the extent of the appeal. 

36. Learned Counsel for the Respondent, Shri Sanjay Sen, contended that 

the shortfall in RPO by the licensee in any year is to be added in the next 

year’s RPO as per Regulation 3.2. He agreed that the Commission under 

Regulation 3.7 has the power to waive. However, other licensees of the State 

have complied with the regulations. He submitted that the Commission has 

allowed Tariff @ Rs. 3.37 per unit for the minimum RPO quantity of 4 per cent 

of the total power purchase requirements whereas the Appellant has purchased 

less than 1 per cent of total energy requirement. This act of Appellant is in 

violation of the provisions of Regulations. He submitted that the contention 

of the Appellant that quantum of wheeling of power by the licensee from 

wind mills for captive purchases should be considered towards their RPO is 

not acceptable. Appellant is already recovering network cost from retail 

Tariff and therefore, there is no under-recovery on this ground. 


37. Main grievance of the Appellant is that, for the year 2008-09, whereas the 

Regulations provide 2 per cent as minimum quantum of purchase from renewable 

sources, the State Commission has added the backlog for the years 2006-07 

and 2007-08 by relying on Regulation 3.2 of the power procurement from renewable 

sources regulations. We note that Clause 3.2 of the Notification (supra) stipulates 

that if due to increased sale of power in the current year from that of the 

previous year, there may be shortfall of the targeted quantum from the quantum 

that would arise from the increased sale, such amount resulted due to increased 

sale would be added to the targeted quantum of Renewable Purchase Obligation 

for the next year. However, in this Appeal it is not the case. The Appellant has 

not been able to fulfill its obligations for the years 2006-07 and 2007-08 despite 

efforts made by it by inviting expression of interest from the renewable generators. 

This backlog of 2006-07 and 2007-08 cannot be added to the year 2008-09 as 

per Regulation 3.2 because the short fall has not been caused due to increased 

sales in the area of the licensee. We direct that the State Commission may 

review the targets for the years 2008-09, 2009-10 and 2010-11 depending upon 

the availability of the power from renewable sources. 

(e) Lack of uniformity in principles adopted by the Commission by not 



38. It has been contended by the Appellant that whereas the Commission 

has considered the approved values of coal transit loss in which the Appellant 

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has under-performed due to factors beyond its control, the Commission 

has considered the actual values during the truing up of distribution losses 

where the Appellant has outperformed over and above the approved loss 

level. Learned Counsel for the Appellant argued that the Commission ought 

to have followed the regulations which require consideration of norms to 

arrive at incentives where the Appellant has outperformed the 

approved values. 

39. Learned Counsel for the Appellant asserted that the coal transit loss of 

1.40 per cent for the generating stations at Gandhinagar and Wanakbori 

power stations cannot be the basis for comparison with the transit losses in 

respect of the Appellant because whereas the Appellant procures coal directly 

from the mines, Gandhinagar and Wanakbori power stations are using washed 

coal. She urged that due consideration should be given on the ground of the 

type of coal transported in respect of Appellant. 

40. As far as the distribution losses are concerned, absence of provision for 

sharing of gains and losses in the terms and conditions of Tariff pleaded by 

the Commission cannot be held against it as the Regulation 66 enables the 

Commission to incentivise the distribution licensee for performance better 

than target specified by the Commission. Learned Counsel also refuted the 

plea of the Commission that as capital expenditure is being borne by the 

beneficiaries, the benefit of efficiency accrued should be passed on to the 

consumers. She said as far as capital expenditure is concerned it is being 

borne by the beneficiaries in the entire supply chain of the power sector. 

Reduction of distribution losses requires efforts like strict timely vigilance, 

identification of loss area etc. in addition to the capital expenditure. She said 

that Section 61 of The Electricity Act provides for rewarding efficiency in 

performance. In view of this the Commission ought to have allowed the claim 

of the Appellant for the incentive for reduction of distribution losses achieved 

beyond the approved values. 

41. Per contra the Commission has pleaded that the GERC Terms and 

Conditions of Tariff Regulations, 2005 stipulate that the coal transit losses 

in case of non pit head stations is 0.8 per cent and that the Regulations 

provide certain conditions for which the Commission made deviation from 

the norm specified in the Regulations. Learned Counsel for the Commission 

submitted that the transit coal losses of 3.88 per cent for the year 2005-06, 

1.95 per cent for FY 2006-07 and projected loss at 2.58 per cent for the year 

2007-08 is much less than 3.39 per cent claimed by the Appellant for the 

year 2007-08. The Commission has approved the transit losses of coal as 

1.4 per cent in Petition No. 915 of 2007 which is much higher than normative 

loss of 0.8 per cent. In Petition No. 939 of 2008 the Appellant had claimed 

transit loss as 3.39 per cent which is much higher than the approved transit 

loss and, therefore, the Commission limited the same to 1.4 per cent as 

approved in Petition No. 915 of 2007. Any further deviation from the norm 

will affect the consumers adversely and hence, has not been allowed. 

42. Learned Counsel for the Commission stated that as per the Regulations, 

2005 there is no provision regarding sharing of gain/loss. The Commission 

had approved T&D loss level at 9.26 per cent for the year 2007-08 based on 

the submissions made by the Appellant. The Commission, at the truing up 

stage, has approved the actual T&D Losses as 8.75 per cent. It has been 

urged that the Commission has approved substantial amount of capital 

expenditure towards creation of new/renovation of network for improvement 


151


of the system and therefore, the gains accruing from the capital expenditure 

made by the licensee must be passed on to the consumers. 

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1. Coal Transit Losses 

43. Main plea of the Appellant in case of Transit Coal Losses is that the coal 

transit losses of 1.4 per cent for the generating stations at Gandhinagar and 

Wanakbori power stations cannot be the basis of comparison with that of the 

transit losses in respect of the Appellant because it procures coal directly 

from the mines unlike in the case of Gandhinagar and Wanakbori which are 

procuring washed coal. We find force in the plea of the Appellant. Unfortunately, 

the transit losses in the Railway transportation do occur as there is no 

control of the generators. Coal transportation in open wagons of unwashed 

coal procured directly from the mines which has much larger lumps of coal 

are more prone to pilferage unlike the washed coal which cannot be easily 

pilfered. In view of this ground reality some consideration in coal transit 

losses for the washed and unwashed mined coal deserves to be given. However, 

we leave it to the State Commission to decide increased percentage of allowable 

coal transit losses for the Appellant. We Order accordingly. 

2. Distribution Losses 

44. Appellant has achieved T&D losses of 8.75 per cent against the approved 

T&D losses level of 9.26 per cent for the year 2007-08. The Commission has 

not given any benefit to the Appellant for better performance on the plea that 

as per the Regulations there is no provision regarding sharing of gain/loss. 

Regulation 66 enables the Commission to incentivise the distribution licensee 

for performance better than target specified by the Commission. Section 61 

of The Act also provides for rewarding efficiency in performance. Extract 

from GERC Regulation 66 and Section 61 of The Act are given below: 

61. Tariff Regulations.—The Appropriate Commission shall, subject to 

the provisions of this Act, specify the terms and conditions for the 

determination of Tariff, and in doing so, shall be guided by the following 

namely: 

(a) the principles and methodologies specified by the Central 

Commission for determination of the Tariff applicable to generating 

companies and transmission licensees; 

(b) the generation, transmission, distribution and supply of electricity 

are conducted on commercial principles; 

(c) the factors which would encourage competition, efficiency, 

economical use of the resources, good performance and optimum 

investments 

(d) safeguarding of consumers’ interest and at the same time, 

recovery of the cost of electricity in a reasonable manner; 

(e) the principles rewarding efficiency in performance; 

xxx xxx xxx 

GERC Regulation 66: Principles, terms and conditions for determination of 

Tariff along with their application for Distribution Licensee. 

The Tariff shall be fixed in such a manner that a licensee ordinarily in 

any financial year will earn a permissible return which shall comprise 

of 14 per cent on equity invested into capital expenditure (apportioned 

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to the quantum for the purpose of performing the business electricity 

in the present debt equity on structure) plus permitted incentives minus 

penalties leviable under the Act/Regulations for that year. The incentives 

would result from normative targets on Aggregate Technical and 

commercial losses (AT&C) for the licensee. The Commission would define 

the AT&C targets in line with the regulation on Multi Year Tariff principles... 

45. As pointed out by the learned Counsel for the Appellant capital expenditure 

is borne by the beneficiaries in the entire supply chain of the power sector 

and that reduction of distribution losses requires efforts and therefore, needs 

to be rewarded. In our view the Regulations incentivise performance better 

than the norms and disincentivise performance below norms of AT&C loss 

level. Therefore, we are not in agreement with the plea of the State Commission 

that the gains of efficiency accrue from the capital expenditure made by 

licensee and therefore, must be passed on to the consumers. Capital 

expenditure is anyway made in the entire supply chain. 

46. In this view of the matter we direct that the Commission should decide 

sharing of the gains of efficiency between the Appellant and the Consumers 

as provided for in Regulation 66 of the State Commission (supra). 

(f) Disallowance of Income Tax to earn ROE as post tax. 

47. Learned Counsel for the Appellant has submitted that it had claimed 

Income Tax at applicable tax rate (including the stipulated surcharge and 

education cess) so as to provide post tax regulatory return of 14 per cent. 

She alleged that the Commission has erred in construing provisions of Regulation 

66 of the Commission. The Commission has considered Regulation 66(20) of 

the Tariff Regulations to hold that all taxes on income and profit shall be on 

permissible return relating to the business of electricity as allowed by the 

Commission. She averred that provisions of Regulation 66(20) cannot be 

read in isolation of Regulation 7 of the Regulations. It is undoubtedly clear 

that the Income Tax is a pass through item and return on equity is post tax. 

The Commission ought to have allowed the Income Tax so as to enable the 

Appellant to earn return on equity as post tax in the truing of FY 2007-08 

and the MYT control period. She said that it is an established practice 

throughout the country, even under the repealed statues relating to electricity, 

that ROE is post tax. Even the Commission itself has also considered ROE 

as post tax for the purpose of tax while determining Tariff for wind energy 

generation in its Order No. 2 of 2006 dated, 11 th August, 2006. She said even 

the Central Commission approach paper of 26 th March, 2004 clarifies this 

issue. Even the recent Central Commission Regulations notified on 

19 th January, 2009 also shed light on this aspect. The Commission in the 

impugned Order has calculated income tax on the approved rates of return 

on equity which has resulted in a post tax return of 11.55 per cent instead 

of the stipulated 14 per cent return. She contended that Clause 5.1(a) of the 

National Tariff Policy stipulates that the State Regulatory Commissions may 

adopt rate of return as notified by Central Commission with appropriate 

modification taking into view the higher risk involved in distribution and 

that a uniform approach is desired in respect of return on investment. 

48. Learned Counsel for the Respondent Commission submitted that Income 

Tax has been allowed on approved return @ 33.99 per cent including the 

stipulated surcharge and education cess, in terms of the Regulations. 

Any under-recovery or over-recovery of Income Tax is passed through on 


153


actual basis. He said that Central Commission Regulations, 2009 is not 

applicable in the case of Appellant and that the impugned Order passed by 

the Commission in the present Petition No. 939 of 2008 is in accordance 

with the provisions of the terms and conditions of the Tariff Regulations, 

2005 and MYT Regulations, 2007 and that the Commission has adopted a 

uniform principle while deciding the case of the Appellant. 

49. Learned Counsel also submitted that the Appellant was to provide separate 

details for income from regulatory business on the basis of actuals and the 

same may be passed through. 

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50. Main contention of the Appellant is that whereas it had claimed Income 

Tax rate so as to provide it a post tax regulatory return of 14 per cent, the 

Commission in the impugned Order has calculated Income Tax on the approved 

rate of return on equity which has resulted in a post tax return of 11.55 per cent 

instead of this stipulated 14 per cent return. As the Appellant has submitted 

that provisions of Regulation 66 and Regulation 7 of the GERC (Terms and 

Conditions of Tariff) Regulations, 2005 have to be read together, relevant 

extracts of these two Regulations, are extracted below: 

Regulation 66–Principles, terms and conditions for determination of 

Tariff along with their application for Distribution Licensee. 

The Tariff shall be fixed in such a manner that a licensee ordinarily 

in any financial year will earn a permissible return which shall comprise 

of 14 per cent on equity invested into capital expenditure (apportioned 

to the quantum for the purpose of performing the business electricity 

in the present debt equity on structure) plus permitted incentives 

minus penalties leviable under the Act/Regulations for that year. 

The incentives would result from normative targets on Aggregate 

Technical and commercial losses (AT&C) for the licensee. The Commission 

would define the AT&C targets in line with the regulation on Multi 

Year Tariff principles... 

Regulation 7.1: Tax on Income. 

Tax on the income streams of the generating company or the 

transmission licensee or the distribution licensee, as the case 

may be, from its core business, shall be computed as an expense 

and shall be recovered from the beneficiaries. 

51. Regulation 7.1 states that tax on the income streams from the core 

business of the company shall be computed as an expense and the same 

shall be recovered from the beneficiaries. Regulation 66 stipulates that the 

Tariff shall be fixed in such a manner that a licensee ordinarily in any 

financial year will earn a permissible return which shall comprise of 14 per cent 

on equity. Here it is pertinent to advert to the following provision of the 

Income Tax Act, 1961 regarding Tax on Income. 

Income Payable “net of tax” 

195. In a case other than that referred to in Sub-section (1A) of 

Section 192, the tax chargeable on any income referred to in the foregoing 

provisions of this Chapter is to be borne by the person by whom the 

income is payable, then, for the purposes of deduction of tax under 

those provisions such income shall be increased to such amount as 

would, after deduction of tax thereon at the rates in force for the financial 

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year in which such income is payable, be equal to the net amount 

payable under such agreement or arrangement. 

52. A conjoint reading of the Regulation 7, Regulation 66 of the State 

Commission and Section 195(A) of the Income Tax Act, 1961 leaves no doubt 

that the recovery of income tax paid as an expense from the beneficiaries 

requires to be grossed up in such a manner as to ensure that the actual tax 

paid is fully recovered through Tariff. Grossing up of the return would ensure 


Appellant. In this way the Appellant would neither benefit nor loose on 

account of tax payable which is a pass through in the Tariff. This would 

ensure that the Appellant earns permissible return of 14 per cent stipulated 

in Regulation 66 of the Regulations and mandate of Section 195A of the 

Income Tax Act is also complied with. The National Tariff Policy stipulates 

that the Regulatory Commission may adopt rate of return as notified by the 

Central Commission with appropriate modifications taking into view the 

higher risk involved in distribution and that a uniform approach is desired 

in respect of return on investment. 

53. We agree with the contention of the Respondent Commission that CERC 

Regulations, 2009 are not applicable in this case of the Appellant. However, 

the provisions of CERC Tariff Regulations, 2004 will be of relevance. The relevant 

Clause regarding tax on income of these CERC Regulations is extracted 

below: 

7. Tax on Income.–(1) Tax on the income streams of the generating 

company or the transmission licensee, as the case may be, from its core 

business shall be computed as an expense and shall be recovered from 

the beneficiaries. 

(2) Any under-recoveries or over-recoveries of tax on income shall be 

adjusted every year on the basis of income-tax assessment under the 

Income Tax Act, 1961, as certified by the statutory auditors. 

Provided that tax on any income stream other than the core business 

shall not constitute a pass through component in Tariff and tax on 

such other income shall be payable by the generating company or 

transmission licensee, as the case may be. 

Provided further that the generating station-wise profit before tax 

in the case of the generating company and the region-wise profit 

before tax in case of the transmission licensee as estimated for a 

year in advance shall constitute the basis for distribution of the 

corporate tax liability to all the generating stations and regions. 

Provided further that the benefits of tax-holiday as applicable in 

accordance with the provisions of the Income-Tax Act, 1961 shall 

be passed on to the beneficiaries. 

Provided further that in the absence of any other equitable basis 

the credit for carry forward losses and unabsorbed depreciation 

shall be given in the proportion as provided in the second proviso 

to this regulation. 

Provided further that income-tax allocated to the thermal generating 

station shall be charged to the beneficiaries in the same proportion 

as annual fixed charges, the income-tax allocated to the hydro 

generating station shall be charged to the beneficiaries in the 

same proportion as annual capacity charges and in case of interstate 


155


transmission, the sharing of income tax shall be in the same 

proportion as annual transmission charges. 

54. The above provisions of Regulations, 2004 also make it clear that income 

tax payable on the income from the core business of the company is to be 

treated as an expense and recovered from the Tariff payable by beneficiaries. 

The income earned by the licensee is net of tax and the tax payable is treated 

as a separate expenditure recoverable from the beneficiaries. 

55. In view of the foregoing discussion and analysis, we set aside Order of 

the State Commission in this view of the matter and direct that it allows the 

income tax by grossing up to ensure the stipulated post tax return by the 

State Commission to the Appellant. 

56. In the result Appeal is allowed in part to the extent indicated in Paras 10, 

12, 21, 28, 30, 31, 37, 43, 46 and 55. The State Commission is directed to 

reconsider the claims of the Appellant in view of our findings in these paras 

during the process of truing up to give effect to our findings at the earliest. 

No Order as to costs. 

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2010 ELR (APTEL) 0400* 



NTPC Limited 

v. 



DECIDED ON: 31.03.2010 

Coram 

M. Karpaga Vinayagam, J. (Chairperson) and Rakesh Nath, Member (Technical) 


Whether the Central Commission was right in excluding the committed 

liabilities in relation to capital assets established, commissioned and 

put to use to the extent of amount which has not been paid and has 

been retained by NTPC by way of Retention Money, Security Deposit or 

similar such things to ensure performance of the work undertaken by 

the contractors and others in accordance with the contract and is to 

be released in due course? 

The words “actual expenditure incurred” contained in Regulation 17 of the 

Act would refer to the liabilities incurred and the same would not refer to the 

actual cash outflow. Since, the wordings in Regulation 17 are very clear, the 

only rational interpretation would be that the Appellant would be entitled to 

recover the actual capital expenditure incurred without reference to the 

actual cash outflow. Therefore, the entire value of the capital asset, as soon 

as the same is put into operation is recoverable by way of capital cost under 

Regulation 17 itself, notwithstanding the fact that the part of the payment 

for the capital asset has been retained. Claim made by the Appellant in 

respect of undischarged liabilities is to be allowed. 

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* MANU/ET/0016/2010 

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NTPC Limited v. CERC and Ors. 


0401 

Whether the Central Commission is justified in not allowing the cost of 

Maintenance Spares in the capital cost after taking into account the 

additional capitalisation incurred by the Appellant while computing 

the interest on working capital? 

The Central Commission did not allow the additional capital cost in regard 

to the maintenance spares corresponding to the additional capitalisation 

while computing the historical capital cost. The Central Commission has 

permitted the cost of spares as per the capital cost frozen on the date of 

commercial operation without considering the additional capitalisation 

undertaken from the date of the commercial operation as allowable under 

the Tariff Regulations, 2004. The cost of maintenance spares needs to be 

calculated on the total capital cost inclusive of additional capitalisation. 

Therefore, it has to be held, that the Appellant is entitled to include the cost 

of maintenance spares also into capital cost. 

Appeal Allowed 


CERC Regulations 



Tariff Regulations, 2004 [p. 0403, para 10 h] 

Counsel 


and Swapna Seshadri, Advs. 

For Respondent(s)/Defendant: P.R. Kovilan and Geeta, Advs. 

JUDGMENT 

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1. NTPC is the Appellant herein. Challenging the impugned Order dated, 

24 th November, 2008 passed by the Central Commission, the NTPC (Appellant) 

has filed this Appeal. The short facts of the case are as follows. 

2. Ramagundam Thermal Power Station, Stage-III is owned and operated by 

the Appellant. The Appellant filed a petition before the Central Commission 

for determination of the Tariff for the period from 2005 to 2009. By the Order 

dated, 15 th October, 2007 in Petition No. 140 of 2005, the Central Commission 

determined the fixed charges on the basis of the admitted capital cost. 

However, the Commission did not allow the inclusion of undischarged liabilities 

to be included in the capital cost. Aggrieved by the said Order, the Appellant 

preferred an Appeal No. 152 of 2007 before this Tribunal and the same was 

allowed by this Tribunal by the Order dated, 10 th December, 2008 allowing 

for the inclusion of the undischarged liabilities in the capital cost. 

3. The Appellant filed a separate Petition No. 24 of 2008 for approval of the 

revised fixed charges due to the impact of additional capital expenditure in 

the years 2004-05, 2005-06 and 2006-07. By the impugned Order dated, 

24 th November, 2008, the Central Commission has determined the revised 

fixed charges after consideration of the impact of the additional capital 

expenditure for the years mentioned above but disallowed the undischarged 

liabilities contained in the said additional capital expenditure. In the said 

Order dated, 24 th November, 2008, the Central Commission has also not 


157


considered the provision of additional Maintenance Spares in working capital 

due to additional capital expenditure. 

4. Aggrieved over this finding of the Commission, the present Appeal is filed. 

In this case two issues are involved–(i) undischarged liabilities and (ii) cost 

of Maintenance Spares. 

5. The question raised in this case, as pointed out by the learned Counsel 

for the Appellant are: 

(i) Whether the Central Commission was right in excluding the committed 

liabilities in relation to capital assets established, commissioned and 

put to use to the extent of amount which has not been paid and has 

been retained by NTPC by way of Retention Money, Security Deposit or 

similar such things to ensure performance of the work undertaken by 

the contractors and others in accordance with the contract and is to 

be released in due course? 

(ii) Whether the Central Commission is justified in not allowing the cost 

of Maintenance Spares in the capital cost after taking into account the 

additional capitalisation incurred by the Appellant while computing 

the interest on working capital? 

6. On these issues, arguments were heard from Mr. M.G. Ramachandran, 

learned Counsel for the Appellant and Mr. P.R. Kovilan, learned Counsel for 

the Respondents. The first issue relating to the undischarged liabilities has 

already been considered by this Tribunal in two sets of Appeals in Appeal 

No. 151 etc. of 2007 in Judgment dated, 10 th December, 2008 and in Appeal 

No. 133 etc. of 2008 in Judgment dated, 16 th March, 2009 and the said issue 

has been decided in favour of the NTPC. We now quote the relevant portions 

of the said Judgment dated, 10 th December, 2008 as under: 

This Regulation is fully comprehensible with the above understanding 

of the word actually incurred”. Regulation 18 is dealing with capital 

expenditure incurred after the date of commercial operation and up to 

the cut off date. The nature of such capital expenditures can be deferred 

liability and work deferred for execution and the like. Such capital 

expenditure which were contemplated for being undertaken originally 

but was deferred and actually undertaken after the date of commercial 

operation will be treated as additional capitalisation. In Regulation 18, 

the word repeatedly used is “deferred liability”. Obviously, deferred liability 

is the liability which has not yet been assumed. When a capital asset 

is purchased, the liability is assumed. Such liability is not deferred. 

Only the payment is deferred. Regulation 18 is not dealing with deferred 

payments but is dealing with deferred liabilities. Work deferred for 

execution means works not already undertaken. Certain works, within 

the original scope of work may not have been undertaken before date 

of commercial operation. Such work may be undertaken after the date 

of commercial operation. If it is so done, the same will be available for 

recovery through Tariff under Regulation 18. It must however, be ensured 

that no capital expenditure which is claimed under Regulation 17 is 

claimed again as Additional Capitalisation under Regulation 18. 

7. The relevant portion in the Judgment dated, 16 th March, 2009 is as 

follows: 

4.00 To sum up, our conclusions on the four issues raised in these 

Appeals are as under: 

a 

b 

c 

d 

e 

f 

g 

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March - April, 2010

NTPC Limited v. CERC and Ors. 


0403 

a 

b 

c 

d 

e 

f 

g 

h 

i 

(a) The words “actual expenditure incurred” contained in 

Regulation 17 of the Act would refer to the liabilities incurred and 

the same would not refer to the actual cash outflow. Since, the 

wordings in Regulation 17 are very clear, the only rational 

interpretation would be that the Appellant would be entitled to 

recover the actual capital expenditure incurred without reference 

to the actual cash outflow. 19. We are, therefore, of the opinion 

that the entire value of the capital asset, as soon as the same is 

put into operation is recoverable by way of capital cost under 

Regulation 17 itself, notwithstanding the fact that the part of the 

payment for the capital asset has been retained. 

8. So, in view of the ratio laid down by this Tribunal, this claim made by the 

Appellant in respect of undischarged liabilities is to be allowed. Accordingly, 

allowed. 

9. The next issue relating to the cost of Maintenance Spares. The learned 

Counsel for the Appellant points out that this issue has also been decided 

by his Tribunal by decision in Appeal No. 139 etc. of 2007 dated, 

13 th June, 2007. The relevant portion is as follows: 

It is clear from the abovementioned Clause 18 of the CERC Regulations 

that additional capitalisation after the date of commercial operation is 

recognised as part of the capital expenditure. Historical cost does not 

literally mean that the cost on the date of the commercial operation. 

The term historical cost is used so as to distinguish it from “book value” 

or “the replacement cost”. The cost of maintenance spares limited to 

1 per cent of the historical cost corresponds to the plant and equipment 

and installations which are required to be maintained. If the cost of 

additional equipment is not included in the historical cost, how spares 

for the additional equipment be procured for maintenance of the additional 

equipment. In this view of the matter, the CERC needs to examine 

afresh in the light of the aforesaid observations. 

10. It is also pointed out by the learned Counsel for the Appellant that this 

has been allowed by this Tribunal in its Judgment in Appeal No. 54 of 2009 

dated, 21 st August, 2009. The relevant portion of the Judgment is as follows: 

The second point relates to the disallowance of cost of Maintenance Spares. 

According to the Learned Counsel for the Appellant, the Central Commission 

has not allowed the additional capital cost in regard to the maintenance 

spares corresponding to the additional capitalisation while computing the 

historical capital cost. It is strenuously contended by the Learned Counsel 

for the Appellant that the Central Commission has permitted the cost of 

spares as per the capital cost frozen on the date of commercial operation 

without considering the additional capitalisation undertaken from the 

date of the commercial operation as allowable under the Tariff 

Regulations, 2004. It is further pointed out that this point also has been 

covered in the Judgment in Appeal No. 139 of 2006 dated, 13 th June, 2007. 

In the Judgment, it has been held, that the cost of maintenance spares 

needs to be calculated on the total capital cost inclusive of additional 

capitalisation. Therefore, it has to be held, that the Appellant is entitled 

to include the cost of maintenance spares also into capital cost. 

11. The observations made by this Tribunal, as quoted above, would squarely 

apply to the present facts of the case. Therefore, this claim also made by the 

Appellant has to be allowed in favour of the Appellant. Thus we consider that 


159


the Order impugned by the Central Commission on these two issues are not 

valid in law and as such the same is set aside and consequently the Appellant 

is entitled to include both the amounts in respect of undischarged liabilities 

and also the cost of maintenance spares into the capital cost. 

a 

12. The Appeal is allowed. No cost. 

2010 ELR (APTEL) 0404* 



BSES Rajdhani Power Ltd. 

v. 

Delhi Electricity Regulatory Commission, New Delhi Power Limited, 

Maithon Power Limited and BSES Yamuna Power Limited 

[Alongwith Appeal No. 107 of 2009] 

APPEAL NOS. 106 AND 107 OF 2009 

DECIDED ON: 31.03.2010 

Coram 


b 

c 

d 


Whether the compliance with the Competitive Bidding Process as envisaged 

in Clause 5.1 in the NTP, 2006 is mandatory for the procurement of 

power by a distribution company? 

The domain of Tariff determination is governed under Part-VII of the Act. It 

contains Sections 61 to 65 of the Act. There are two routes and options 

provided: (a) Tariff determination under Section 62(l)(a) by the Appropriate 

Commission in terms of Section 79 and Section 86 of the Act and (b) Tariff 

discovery in terms of the Competitive Bidding Process in accordance with 

the guidelines issued by the Government of India, which shall be binding on 

the Appropriate Commission in terms of Section 63 of the Act. 

Clause 5.1 of NTP provides that the power procurement for future should be 

through a transparent Competitive Bidding Process using the guidelines 

issued by the Central Government on 19 th January, 2005. Further, giving a 

clarification, Ministry of Power issued a circular dated, 28 th August, 2006 

clarifying the above position. 

Whether the State Commission has erred by ignoring the fact that the 

Central Commission had rejected the petition of MPL (R-3) for exemption 

from NTP and that the NDPL (R-2) was seeking to bypass the provisions 

of the NTP by seeking the approval of the State Commission to the PPA 

entered into with MPL (R-3) even though the same was entered into in 

contravention of the provisions of NTP? 

The MPL (R-3) has merely approached the Central Commission to seek a 

clarification for the question as to whether it will fall within the exempted 

category from Clause 5.1 of NTP as it is state owned by virtue of the nature 

of control exercised by the Damodar Valley Corporation, a Central Government 

company. In the said petition the Central Commission did not give any 

e 

f 

g 

h 

i 

* MANU/ET/0017/2010 

160 

March - April, 2010



0405 

a 

b 

c 

d 

e 

f 

g 

h 

i 

findings with regard to the issues concerning the determination of Tariff of 

MPL (R-3). It is clear from the Order dated, 17 th January, 2007 passed by the 

Central Commission that the Central Commission carefully refrained from 

finding any issue relating to Clause 5.1 of NTP and instead the Central 

Commission directed the MPL (R-3) to approach the Central Government to 

seek such clarification as it felt that it does not have the jurisdiction in 

adjudication of such matters. This Order cannot be treated as one relating 

to Tariff determination. As a matter of fact, the Central Government has 

clearly observed in its Order dated, 28 th August, 2006 that it is for the Central 

Government to interpret its policy to determine whether a particular utility 

falls outside the scope of Clause 5.1 of the NTP. 

Whether the State Commission has the jurisdiction to approve the PPA 

entered into between NDPL (R-2) and MPL (R-3) prior to Tariff determination 

for the PPA by the Central Commission? 

Subject to the incorporation of the said rule in the PPA for procurement of 

300 MW of power from MPL (R-3) is approved for a period of 29 years, commencing 

from 2012. The Tariff for supply of this power shall be fixed by the Appropriate 

Commission. It is clear that the State Commission has not fixed the Tariff at 

all. On the other hand, it has observed that exercise has to be done by the 

Central Commission which alone can determine Tariff under Section 79(l)(b) 

in respect of the inter-State transmission of electricity by the generating 

company. In this case, the State Commission has adopted a normative Tariff 

only for the limited purpose of examining and scrutinising the PPA. 

Whether Section 63 of the Electricity Act is the exception to Section 62 

and the guidelines framed by the Central Government will operate only 

when Tariff is being determined by the competitive bidding process? 

Clause 5.1 of the NTP which relates to the power under Section 63 of the Act 

cannot be read to debar the State Commission from exercising its statutory 

power for determination of Tariff under Section 62(1) of the Act for all future 

procurement of power. 

Whether the Appellants are the aggrieved person as provided under 

Section 111 of the Electricity Act? 

The words “person aggrieved” did not mean a man who merely disappointed 

of a benefit which he might have received. A person aggrieved means a person 

who has suffered a legal grievance, a person against whom a decision pronounced 

which have wrongly deprived him of something or wrongfully refused him 

something or wrongly affected his title to something. When a person not been 

deprived of a legal right or subject to legal wrong or not suffered any legal 

grievance, he would not be a person aggrieved. In present case, Appellants 

simply said that if a competitive bidding process would have been allowed, 

it might had access to get the power by becoming successful bidder. Real intention 

of Appellants appeared to be secure indirectly portion of power procured by 

R-2 from R-3 under the PPA . As such Appellant failed to establish that they 

had suffered any legal grievance or legal injury or have been unjustifiably 

deprived and denied of something which it would have been entitled to obtain 

in usual course. Therefore, Appellants not a person aggrieved. 



Agricultural Market Committee v. Shalimar Chemical Works Ltd. (1985) 1 SCC 

641 (mentioned) [p. 0441, para 7 a] 


161


Agricultural Market Committee v. Shalimar Chemicals Works Ltd. MANU/SC/ 

0644/1997: (1997) 5 SCC 516: AIR 1997 SC 2502: 1997 (3) ALT 20 (SC): 

JT 1997 (5) SC 272: 1997 (4) SCALE 93: (1997) Supp 1 SCR 164 (mentioned) 

[p. 0411, para 7 a] 

Anwar Hassan Khan v. Mohd Shaifi MANU/SC/0676/2001: (2001) 8 SCC 

540: AIR 2001 SC 2984: JT 2001 (9) SC 84: 2001 (7) SCALE 398 (mentioned) 

[p. 0411, para 7 a] 

Banarasi and Ors. v. Rampal MANU/SC/0147/2003: (2003) 9 SCC 606: AIR 

2003 SC 1989: 2003 (3) ALD 51 (SC): 2003 (4) ALT 13 (SC): 2003 (3) BLJR 

2441: (2003 (4) JCR 203 (SC)): JT 2003 (5) SC 224: (2003) 2 MLJ 160 (SC): 

2003 (2) SCALE 183: (2003) 2 SCR 22: 2003 (1) UJ 615 (SC) (discussed) 

[p. 0412, para 11 c] 

Bharthidasan University v. All India Council for Technical Education (2001) 8 

SCC 676 (mentioned) [p. 01411, para 7 b] 

Bhavnagar University v. Paltina Sugar Mills (P) Ltd. and Anr. MANU/SC/ 

1092/2002: (2003) 2 SCC 111: AIR 2003 SC 511: (2003) 2 GLR 258: (2003) 

2 GLR 258: JT 2002 (10) SC 55: 2003 (1) UJ 80 (SC) (mentioned) 

[p. 0140, para 6 e] 

British Airways Pic v. Union of India MANU/SC/0712/2001: (2002) 2 SCC 95: 

AIR 2002 SC 391: 94 (2001) DLT 662 (SC): 2001 (78) ECC 468: 2002 (139) 

ELT 6 (SC): JT 2001 (9) SC 544: 2001 (8) SCALE 73 (mentioned) 

[p. 0412, para 7 c] 

Chhatisgarh State Electricity Board v. Chhatisgarh State Electricity Regulatory 

Commission and Ors. MANU/ET/0044/2006: 2007 ELR (APTEL) 746 

(discussed) [p. 0412, para 10 c] 

Commissioner of Wealth Tax v. Smt. Hasmatunnisa and Ors. (1980) Supp (2) 

SCC 43 (mentioned) [p. 0410, para 7 f] 

Deepak Agro Foods v. State of Rajasthan MANU/SC/7812/2008: (2008) 7 

SCC 748: 2008 (228) ELT 510 (SC): 2008 (10) SCALE 263: 2009(16) STR 

518: (2008) 16 VST 454 (SC) (discussed) [p. 0411, para 7 b] 

GRIDCO v. Gajendra Haldia and Ors. (2008) 13 SCC 414 (mentioned) 

[p. 0412, para 10 b] 

GRIDCO Ltd. v. Jindal Stainless Limited and Ors. MANU/ET/0037/2009: 2009 

ELR (APTEL) 459 (relied on) [p. 0412, para 10 c] 

Kerala Samasthana Chethu Thozhilali Union v. State of Kerala and Ors. MANU/ 


2006 (2) KLT 270 (SC): (2006) II LLJ 529 SC: 2006 (3) SCALE 534 (mentioned) 

[p. 0410, para 7 g] 

Municipal Corporation of Greater Bombay v. Lala Pancham and Ors. MANU/ 

SC/0284/1964: (1965) 1 SCR 542: AIR 1965 SC 1008 (mentioned) 

[p. 0410, para 6 f] 

Northern Plastic Ltd. v. Hindustan Photo Films MANU/SC/1286/1997: (1997) 

7 SCC 452: AIR 1997 SC 3236: JT 1997 (7) SC 298: (1998) I MLJ 93 (SC): 

1997 (5) SCALE 380: (1997) Supp 3 SCR 251: 1997 (2) UJ 459 (SC) (mentioned) 

[p. 0412, para 11 d] 

Ramesh Mehra v. Sanwal Chand Singhvi and Ors. MANU/SC/0395/2004: 

(2004) 5 SCC 409: 2004 (5) SCALE 27: AIR 2004 SC 2258: JT 2004 (Supp 

l1) SC 275: RLW 2004 (2) SC 269: 2004 (2) UJ 1307 (SC) (mentioned) 

[p. 0410, para 6 e] 

State of Madhya Pradesh and Anr. v. M/s G.S. Dall & Flour Mills MANU/SC/ 

0191/1991: 1992 Supp (1) SCC 150: AIR 1991 SC 772: (1991) 187 ITR 478 

(SC): JT 1990 (4) SC 430: 1990 (2) SCALE 756: (1990) Supp 1 SCR 590: 

(1991) 80 STC 138 (SC) (mentioned) [p. 0410, para 7 g] 

a 

b 

c 

d 

e 

f 

g 

h 

i 

162 

March - April, 2010



0407 

a 

b 

c 

d 

Sultana Begum v. Prem Chand Jain MANU/SC/0227/1997: (1997) 1 SCC 

373: 1996 IX AD (SC) 469: AIR 1997 SC 1006: JT 1996 (11) SC 1: RLW 1997 

(1) SC 53: 1996 (9) SCALE 55: (1996) Supp 9 SCR 707: 1997 (1) UJ 227 (SC) 

(mentioned) [p. 0411, para 7 a] 


Indian Electricity Act, 2003 [p. 0408, para 4 e] 




Section 62(1)(a) [p. 0410, para 5 c] 






Section 79(l)(a) and (b) [p. 0416, para 26 d] 


Section 86(l)(b) [p. 0409, para 5 e] 



Electricity Rules, 2005, Rule 8 [p. 0409, para 5 h] 

e 

f 

g 

h 

i 

Counsel 

For Appellant/Petitioner/Plaintiff: V.P. Singh and Anuj Berry, Advs. 

For Respondent(s)/Defendant: Amit Kapur and Apporva Misra, Advs. for R-2 

and Meet Malhotra and Ravi S. Singh, Advs. for R-l and Sitesh Mukherjee 

and Sakya Singha Chaudhuri, Advs. for R-3 

JUDGMENT 


1. BSES Rajdhani Power Limited and BSES Yamuna Power Limited have 

filed these two separate appeals in Appeal No. 106 of 2009 and Appeal 

No. 107 of 2009 challenging the Order passed by the Delhi State Electricity 

Regulatory Commission on 30 th April, 2009 allowing the petition filed by 

North Delhi Power Ltd. praying for the grant of approval to the Power Purchase 

Agreement entered into between North Delhi Power Limited (NDPL, R-2) and 

Maithon Power Limited (MPL, R-3). 

2. Since, the Order impugned dated, 30 th April, 2009 challenged by the two 

different parties in two different Appeals is a common Order, we are rendering 

this common Judgment disposing of both these Appeals. 

3. The short facts leading to the filing of these appeals are as follows: 

(i) Both the Appellants are engaged in the business of distribution of 

electricity and retail supply of electricity in the specified areas in Delhi. 

NDPL (R-2) and MPL (R-3) are group companies. Earlier MPL(R-3) filed 

a petition on 29 th January, 2006 before the Central Commission seeking 

for exemption from applicable requirement of competitive procurement 

process of power under Clause 5.1 of the National Tariff Policy (NTP). 

The Central Commission, however, by the Order dated, 17 th January, 2007 


163


directed the MPL (R-3) to approach the Central Government to seek for 

clarification whether the MPL (R-3), the utility falls outside the scope 

of Clause 5.1 of NTP. However, MPL (R-3) did not approach the Central 

Government seeking for the said clarification. 

(ii) There upon, North Delhi Power Ltd. entered into a Power Purchase 

Agreement with Mython Power Ltd. for the supply of power on that 

basis. NDPL (R-2) filed a petition in No. 60 of 2008 before the Delhi 

Electricity Regulatory Commission (R-l) seeking approval of the said 

Power Purchase Agreement (PPA) entered into between NDPL (R-2) and 

MPL (R-3) for supply 300 MW power by MPL (R-3) to NDPL (R-2) on a 

long-term basis. 

(iii) During the pendency of the said petition, the Appellants being the 

distribution companies and stake holders filed the Objection Petition 

before the State Commission mainly contending that the approval sought 

by the NDPL (R-2) is in violation of the mandatory nature of Clause 5.1 

of National Tariff Policy (NTP) which prescribes for bidding process for 

procurement of power by the distribution licensee. 

(iv) However, the Delhi State Commission passed the impugned Order 

dated, 30 th April, 2009 approving the petition filed by the NDPL (R-2) and 

granted the approval for the PPA entered into between NDPC (R-2) and 

MPL (R-3). Aggrieved over this Order, both the Appellants have filed these 

two separate Appeals, Appeal No. 106 of 2009 and Appeal No. 107 of 2009. 

4. The learned Counsel for the Appellants would make the foil owing contentions 

challenging the Order impugned: 

(i) The State Commission has incorrectly accorded approval to the PPA 

by holding that it was not mandatory for the NDPL (R-2) to resort to the 

competitive Bidding Process envisaged under Clause 5.1 of NTP. 

This conclusion is contrary to the provisions of the Indian Electricity 

Act, 2003 which provides that the Commission is to be guided by the 

provisions of the NTP. 

(ii) The State Commission while approving the PPA has committed error 

in fixing the Tariff between the generating company namely, MPL (R-3) 

and a distribution company namely, NDPL (R-2) as the Tariff fixed by 

the Delhi State Commission was in violation of the Competitive Bidding 

Process under Section 66 of the Electricity Act. 

(iii) Originally MPL (R-3), generating company first approached the Central 

Commission by way of a Petition No. 112 of 2006 seeking for exemption 

from applicability of Clause 5.1 of the NTP but the Central Commission 

by its Order dated, 17 th January, 2007 did not incline to give such an 

exemption. However, the Central Commission directed the MPL (R-3) to 

get a clarification from the Central Government. Admittedly, such a 

clarification was not sought by the MPL (R-3) from the Central Government. 

On the other hand, the NDPL (R-2) being the distribution company, had 

filed a petition before the State Commission to seek for approval of the 

PPA entered into between the distribution Licensee (R-2) and Generating 

Company (R-3). Thus, the Order passed by the Central Commission 

dated, 17 th January, 2007 has been circumvented by the distribution 

company (R-2) to obtain the approval from the State Commission thereby 

the NDPL (R-2) managed to get the Orders indirectly from the State 

Commission which he could not have obtained from the Central 

Commission directly. 

a 

b 

c 

d 

e 

f 

g 

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March - April, 2010



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b 

c 

d 

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f 

g 

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i 

(iv) The State Commission does not have the jurisdiction to approve the 

PPA between the NDPL (R-2) and MPL (R-3) prior to the Tariff determination 

for the PPA by the Central Commission. 

(v) The interpretation adopted by the State Commission that Sections 

62 and 63 of the Act provide that alternative route to a licensee for 

procurement of power, is wrong since such an interpretation will encourage 

all distribution licensees to enter into a negotiated PPA only to the 

exclusion of the Competitive Bidding Process. 

5. The learned Counsel appearing for the Respondents have made a common 

reply to these contentions made by the learned Counsel for the Appellants, 

as follows: 

(i) The Order passed by the Central Commission on 17 th January, 2007 

in the application filed by the MPL (R-3) will not in any way affect the 

powers of the State Commission to pass the Order in exercise of the 

power under Section 86(l)(b) of the Act. The only prayer made by the 

MPL (R-3) before the Central Commission was to seek for clarification 

from the Central Commission with reference to the applicability of the 

Clause 5.1 of the NTP. The MPL (R-3) had merely sought for clarification 

as to whether it will fall under the exempted category by virtue of the 

nature of the control exercised by the Damodar Valley Corporation, a 

Central Company, in the ownership, operation and management of 

MPL (R-3). In that context, the Central Commission, without giving any 

finding with regard to the said clarification, merely directed the MPL (R-3) 

to approach the Central Government to seek for such a clarification. As 

such, the Order of the Central Commission did not give any finding with 

regard to the issues concerning the determination of Tariff of MPL (R-3). 

Therefore, the Order of the Central Commission cannot be treated as 

one relating to the Tariff determination. 

(ii) The contention of the Appellants that by approaching the State 

Commission, the MPL (R-3) and the NDPL (R-2) have achieved indirectly 

what they could not achieve directly is baseless. Clause 5.1 of the NTP 

cannot restrict the liberty of the generating company under Section 10(2) 

of the Electricity Act to sell power to any person or licensee. In other 

words, the distribution licensee may be permitted by the State Commission 

to procure power from a generating company on a negotiated Tariff 

irrespective of the fact that the generating company is not a State 

owned Control company. The fact that MPL (R-3) did not approach the 

Central Government for a clarification does not prevent it from entering 

into any contract with a distribution licensee through the negotiated 

route under the NTP. 

(iii) The clear demarcation of the separate and independent jurisdiction 

exercised by the Central Commission and the State Commission in 

discharging their statutory functions has been underlined in Rule 8 of 

the Electricity Rules, 2005. Thus, the regulation of power procurement 

of a distribution licensee by the State Commission under Section 86(l)(b) 

is separate from the determination of Tariff of a generating station by 

the Central Commission under Section 79 of he Act. 

(iv) The State Commission has rightly proceeded to exercise its powers 

under Section 86(1)(b) to approve the PPA entered into between the 

NDPL (R-2) and MPL (R-3) having regard to the reasonability of the 

indicative Tariff. The State Commission has made it amply clear in this 


165


impugned Order that the PPA will be effective only after the Tariff has 

been fixed by the Central Commission. 

(v) Sections 62 and 63 are alternative methods available to the Appropriate 

Commission for determination of Tariff. It is open to the Commission to 

adopt either of the procedures prescribed under Section 62 and 63 of 

the Act. Clause 5.1 of NTP cannot be read to debar the State Commission 

for exercising its statutory power for determination of Tariff under 

Section 62 of the Act for all future procurement of power. The Tariff 

Policy cannot mandate the State Commission to exercise its power of 

approval of power procurement only in a particular manner by allowing 

the procurement of power only through the Competitive Bidding Process. 

Such a mandate will be inconsistent with wider range of regulatory 

power conferred on the State Commission under Section 86(1)(b). In other 

words, the policy directions which are directory cannot exclude the 

operation of Section 62 which confers power to State Commission to 

determine the Tariff of a company under Section 62(1)(a). In other words, 

the Central Government, through a policy direction, cannot take away 

the powers of the State Commission what has been specifically provided 

in the Act. 

(vi) The Appellants have no locus standi to challenge the impugned 

Order since they cannot claim themselves as an aggrieved party as 

they have not shown any direct injury so as to offer it a remedy under 

Section 111 of the Electricity Act, 2003. 

6. The learned Counsel for the Appellants has cited various authorities 

under the Supreme Court. They are as follows: 

(i) Bhavnagar University v. Paltina Sugar Mills (P) Ltd. and Anr. 1 (2003) 2 

SCC 111 

(ii) Ramesh Mehra v. Sanwal Chand Singhvi and Ors. 2 (2004) 5 SCC 409 

(iii) Commissioner of Wealth Tax v. Smt. Hasmatunnisa and Ors. (1980) 

Supp (2) SCC 43 

(iv) Municipal Corporation of Greater Bombay v. Lala Pancham and Ors. 3 

(1965) 1 SCR 542 

7. The learned Counsel for all the Respondents has also cited authorities in 

order to substantiate their pleas. They are as follows: 

(1) Kerala Samasthana Chethu Thozhilali Union v. State of Kerala and 

Ors. 4 (2006) 4 SCC 327 

(2) State of Madhya Pradesh and Anr. v. M/s G.S. Dall & Flour Mills 5 

(1992) Supp (1) SCC 150 

a 

b 

c 

d 

e 

f 

g 

1 Ed. MANU/SC/1092/2002: AIR 2003 SC 511: (2003) 2 GLR 258: (2003) 2 GLR 

258: JT 2002 (10) SC 55: 2003 (1) UJ 80 (SC) 

2 Ed. MANU/SC/0395/2004: 2004 (5) SCALE 27: AIR 2004 SC 2258: JT 2004 (Supp 

l1) SC 275: RLW 2004 (2) SC 269: 2004 (2) UJ 1307 (SC) 


4 Ed. MANU/SC/1654/2006: AIR 2006 SC 3480: JT 2006 (5) SC 41: 2006 (2) KLT 

270 (SC): (2006) II LLJ 529 SC: 2006 (3) SCALE 534 

5 Ed. MANU/SC/0191/1991: AIR 1991 SC 772: (1991) 187 ITR 478 (SC): JT 1990 (4) 

SC 430: 1990 (2) SCALE 756: (1990) Supp 1 SCR 590: (1991) 80 STC 138 (SC) 

h 

i 

166 

March - April, 2010



0411 

a 

b 

c 

d 

e 

f 

g 

(3) Agricultural Market Committee v. Shalimar Chemical Works Ltd. (1985) 

1 SCC 641 

(4) British Airways Pic v. Union of India 6 (2002) 2 SCC 95 

(5) Anwar Hassan Khan v. Mohd Shaifi 7 (2001) 8 SCC 540 

(6) Sultana Begum v. Prem Chand Jain 8 (1997) 1 SCC 373 

(7) Agricultural Market Committee v. Shalimar Chemicals Works Ltd. 9 (1997) 

5 SCC 516 

(8) Deepak Agro Foods v. State of Rajasthan 10 (2008) 7 SCC 748 

(9) Bharthidasan University v. All India Council for Technical Education 

(2001) 8 SCC 676 

8. We have heard the learned Counsel for the parties and considered carefully 

and perused the entire records. In the light of the rival stands taken by the 

respective parties, the following questions would arise for consideration in 

the present appeals: 

(i) Whether the compliance with the Competitive Bidding Process as 

envisaged in Clause 5.1 in the NTP, 2006 is mandatory for the procurement 

of power by a distribution company? 

(ii) Whether the State Commission has erred by ignoring the fact that 

the Central Commission had rejected the petition of MPL (R-3) for 

exemption from NTP and that the NDPL (R-2) was seeking to bypass the 

provisions of the NTP by seeking the approval of the State Commission 

to the PPA entered into with MPL (R-3) even though he same was entered 

into in contravention of the provisions of NTP? 

(iii) Whether the State Commission has the jurisdiction to approve the 

PPA entered into between NDPL (R-2) and MPL (R-3) prior to Tariff 

determination for the PPA by the Central Commission? 

(iv) Whether Section 63 of the Electricity Act is the exception to Section 62 

and the guidelines framed by the Central Government will operate only 

when Tariff is being determined by the competitive bidding process? 

(v) Whether the Appellants are the aggrieved person as provided under 

Section 111 of the Electricity Act? 

9. Before dealing with the various questions relating to the alleged infirmities 

of the impugned Order, it would be appropriate at the outset to deal with the 

question as to whether the Appellants have the locus standi to challenge the 

impugned Order as the aggrieved party. 

10. According to the Appellants, the expression “person aggrieved” appearing 

under Section 111 of the Act, which has not been defined in the Act, has to 

h 

i 

6 Ed. MANU/SC/0712/2001: AIR 2002 SC 391: 94 (2001) DLT 662 (SC): 2001 (78) 

ECC 468: 2002 (139) ELT 6 (SC): JT 2001 (9) SC 544: 2001 (8) SCALE 73 

7 Ed. MANU/SC/0676/2001: AIR 2001 SC 2984: JT 2001 (9) SC 84: 2001 (7) 

SCALE 398 

8 Ed. MANU/SC/0227/1997: 1996 IX AD (SC) 469: AIR 1997 SC 1006: JT 1996 (11) 

SC 1: RLW 1997 (1) SC 53: 1996 (9) SCALE 55: (1996) Supp 9 SCR 707: 1997 (1) UJ 

227 (SC) 

9 Ed. MANU/SC/0644/1997: AIR 1997 SC 2502: 1997 (3) ALT 20 (SC): JT 1997 (5) 

SC 272: 1997 (4) SCALE 93: (1997) Supp 1 SCR 164 

10 Ed. MANU/SC/7812/2008: 2008 (228) ELT 510 (SC): 2008 (10) SCALE 263: 2009(16) 

S.T.R.518: (2008) 16 VST 454 (SC) 


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be given its natural and liberal meaning in the wider sense possible and 

since the impugned Order had been passed in disregard of Clause 5.1 of the 

NTP which would result in denial to access of power to the Appellant through 

Competitive Bidding Process which consequentially would adversely affect 

the interest of the consumer, the Appellants would certainly come under the 

category of aggrieved person and therefore, the Appeal is maintainable. 

Though the word “person aggrieved” as provided under Section 111 of the 

Act has not been defined, this Tribunal as well as the Supreme Court has 

given interpretation and meaning of the words “person aggrieved” in the 

following decisions: 

(i) GRIDCO v. Gajendra Haldia and Ors. (2008) 13 SCC 414 

(ii) Energy Journal in Chhatisgarh State Electricity Board v. Chhatisgarh 

State Electricity Regulatory Commission and Ors. 11 (2007) APTEL 746 

(iii) The recent decision is Jindal Stainless Ltd. v. State of Orissa 12 (2000) 

ELR (APTEL) 0459. 

11. In the Jindal Stainless Limited case this Tribunal has quoted the various 

Supreme Court decisions in (2003) 9 606 Banarasi and Ors. v. Rampal 13 

(1997) 7 SCC 452 in Northern Plastic Ltd. v. Hindustan Photo Films 14 and 

referred to various propositions laid down by the Supreme Court with reference 

to the term “Aggrieved person” These proportions are as follows: 

(i) A person who was not a party to the original proceedings may still 

file an appeal with leave of the Appellate Court, provided that the person 

claiming himself to be the aggrieved party shall make it a prima facie 

case as to how he is aggrieved. 

(ii) A person can be said to be aggrieved by an Order only when it 

caused on him some prejudice in some form or another unless the 

person is prejudicially or adversely affected by the Order, he cannot be 

entitled to file an Appeal as an aggrieved person. 

(iii) The words “person aggrieved” did not mean a man who is merely 

disappointed of a benefit which he may have received if some other 

Order had been passed. A person aggrieved means a person who has 

suffered a legal grievance, a person against whom a decision has been 

pronounced which have wrongly deprived him of something or wrongfully 

refused him something or wrongly affected his title to something. 

(iv) When a person had not been deprived of a legal right, when he is 

not subject to legal wrong, when he has not suffered any legal grievance, 

when he has no legal peg for a justifiable claim to hang on, he cannot 

claim that he is a person aggrieved. 

12. In the light of the above principles laid down by the Hon’ble Supreme 

Court, this question has to be analysed. There is no dispute in the fact that 

11 Ed.: MANU/ET/0044/2006 

12 Ed.: The Hon’ble Justice might have meant GRIDCO Ltd. v. Jindal Stainless Limited, 

Orissa Power Transmission Corporation Ltd., State of Orissa and Central Electricity 

Regulatory Commission MANU/ET/0037/2009 

13 Ed. MANU/SC/0147/2003: AIR 2003 SC 1989: 2003 (3) ALD 51 (SC): 2003 (4) ALT 

13 (SC): 2003 (3) BLJR 2441: (2003 (4) JCR 203 (SC)): JT 2003 (5) SC 224: (2003) 

2 MLJ 160 (SC): 2003 (2) SCALE 183: (2003) 2 SCR 22: 2003 (1) UJ 615 (SC) 

14 Ed. MANU/SC/1286/1997: AIR 1997 SC 3236: JT 1997 (7) SC 298: (1998) I MLJ 

93 (SC): 1997 (5) SCALE 380: (1997) Supp 3 SCR 251: 1997 (2) UJ 459 (SC) 

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the Appellants were a party in the proceedings before the State Commission 

as they had opposed the prayer made by the NDPL (R-2). But that alone will 

not entitle the person to file an appeal before this Tribunal. The ratio decided 

by the Supreme Court as mentioned above is that a person aggrieved does 

not mean a man who is merely disappointed of a benefit which he might 

have received. On the other hand, it is to be established that the Order 

impugned has caused a legal grievance to him, Order impugned is prejudicially 

or adversely affecting him, or the Order impugned has wrongfully deprived 

him or wrongly refused him something. Only when all these ingredients are 

satisfied, the party can claim himself as aggrieved party and is entitled to 

file an appeal. 

13. In the present case, the Appellant simply say that if a Competitive 

Bidding Process is allowed, he may have access to get the power by becoming 

the successful bidder in the Competitive Bidding Process and that opportunity 

is lost. However, it is noticed that the stand taken by the Appellants in these 

appeals that even if the impugned Order is confirmed then such power 

procured under that PPA should be allocated to all the distribution companies 

in Delhi including the Appellants. Thus, it is evident from the pleadings of 

the Appellants and the prayer in the Appeal that real intention of the Appellants 

is to secure indirectly portion of the power procured by the NDPL (R-2) from 

MPL (R-3) under the PPA and as such he has not established any direct legal 

injury due to the impugned Order. As such the Appellant have failed to 

establish that they suffered a legal grievance or legal injury or they have 

been unjustifiably deprived and denied of something which he would have 

been entitled to obtain in usual course. Therefore, our conclusion is that the 

Appellants are not a person aggrieved. 

14. However, we are of the view that in spite of our above conclusions about 

the maintainability of the Appeal, we deem it appropriate to go into the legal 

issues which are raised by the learned Counsel for Appellant, who argued 

at length, questioning the legality or the correctness of the impugned Order. 

15. Let us now discuss those issues. According to the Appellants, the Tariff 

fixed by the State Commission was not determined by a Competitive Bidding 

Process as contemplated by Section 63 of the Act, 2003 read with Clause 5.1 

of NTP and, therefore, the impugned Order is bad in law. On going through 

the relevant provisions of the Act, it is evident that the legislature carved out 

two distinct fields for (i) Tariff determination and (ii) PPA approval. The domain 

of Tariff determination is governed under Part-VII of the Act. It contains 

Sections 61 to 65 of the Act. There are two routes and options provided: 

(a) Tariff determination under Section 62(l)(a) by the Appropriate 

Commission in terms of Section 79 and Section 86 of the Act and 

(b) Tariff discovery in terms of the Competitive Bidding Process in 

accordance with the guidelines issued by the Government of India, 

which shall be binding on the Appropriate Commission in terms of 

Section 63 of the Act. 

16. In terms of Section 86(1)(b), the regulation of electricity purchase and 

procurement process to distribution licensee including the price at which 

electricity shall be procured from generating companies through agreements 

for purchase of power for distribution and supply between the State is within 

the sole domain of the concerned State Commissions. Admittedly, there is 

no provision in the Act which overrides or restricts the said powers of the 

State Commission. But it is contended by the learned Counsel for the Appellants 


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that Clause 5.1 of NTP as well as Section 63 of the Act put such restrictions 

on the power of the State Commission to give approval for the PPA without 

resorting to the Competitive Bidding Process. 

17. Section 62(l)(a) of the Act provides that the Appropriate Commission 

shall determine the Tariff in accordance with the provisions of the Act for 

the supply of electricity by a generating company to a distribution licensee, 

whereas Section 63 of the Act provides that the Tariff arrived through a 

transparent Competitive Bidding Process shall be adopted by the 

Appropriate Commission. Section 62(l)(a) and Section 63 of the Act are 

quoted as under: 

Determination of Tariff.–(1) The Appropriate Commission shall determine 

the Tariff in accordance with the provisions of this Act for: 

(a) supply of electricity by a generating company to a distribution 

licensee. 

Provided that the Appropriate Commission may, in case of 

shortage of supply of electricity, fix the minimum and maximum 

ceiling of Tariff for sale or purchase of electricity in pursuance 

of an agreement, entered into between a generating company 

and a licensee or between licensees, for a period not exceeding 

one year to ensure reasonable prices of electricity. 

63. Determination of Tariff by bidding process.–Notwithstanding 

anything contained in Section 62, the Appropriate Commission 

shall adopt the Tariff if such Tariff has been determined through 

transparent process of bidding in accordance with the guidelines 

issued by the Central Government. 

18. Thus, these Sections provide for two alternatives to the concerned parties 

to procure power with the approval of Tariff by the Appropriate Commission. 

These two alternatives are as follows: 

(i) Under Section 62(l)(a), the Appropriate Commission shall determine 

the Tariff for the supply of electricity by a generating company to a 

distribution licensee. 

(ii) Under Section 63, when the Tariff has been determined by the 

Competitive Bidding Process, the Appropriate Commission shall adopt 

such Tariff. The wording contained in Sections 62 and 63 of the Act 

would make it clear that Section 63 is not couched as a non-obstante 

Clause being an exception carved out from Section 62. Section 62 is a 

substantive provision. Section 63 is an exception. So the exception 

contained in Section 63 cannot override the scope of the substantive 

namely Section 62. In other words, Section 62 provides substantive 

power to the Appropriate Commission for determination of Tariff with 

the sole exception of price discovery through the Competitive Bidding 

Process under Section 63. 

19. Clause 5.1 of NTP provides that the power procurement for future should 

be through a transparent Competitive Bidding Process using the guidelines 

issued by the Central Government on 19 th January, 2005. Further, giving a 

clarification, Ministry of Power issued a circular dated, 28 th August, 2006 

clarifying the above position. The relevant extracts of the said clarification 

issued by the Ministry of Power is reproduced below: 

.... 3. Therefore, the concerned State Commission has a jurisdiction to 

regulate electricity purchase and procurement process of a distribution 

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licensee under Section 86(1)(b) of the Act except the Tariff and the 

Tariff related matters of the PPA. 

4. It is further, clarified that the PPA in cases where Tariff has been 

determined through Competitive Bidding Process under Section 63 of 

the Act and in accordance with the relevant guidelines issued by the 

Central Government, it is finalised within the bidding process and the 

Appropriate Commission is requited to adopt the Tariff in accordance 

with the provisions of the law. 

20. The above relevant quoted portions of the clarification would make it 

clear that Section 63 is optional route for procurement of power by a distribution 

licensee and in case the same is followed, the Appropriate Commission is 

required to adopt the said Tariff. Therefore, the power under Section 62(1)(a) 

and Section 86(1)(b) conferred on the State Commission cannot in any manner 

be restricted or whittled down by way of a policy document or a subordinate 

legislation or notification issued by the Government/Executive. Any rules, 

or executive instructions or notification which are contrary to any provisions 

of the Tariff statute shall be read down as ultra vires of the parent statute. 

This is a settled law as laid down by the Supreme Court in (2006) 4 SCC 327 

in Kerala Samsthana Chethu Thozhilali Union v. State of Kerala and Ors. 15 

(quoted below) 

17. A rule is not only required to be made in conformity with the provisions 

of the Act whereunder it is made, but the same must be in conformity 

with the provisions of any other Act, as a subordinate legislation cannot 

be violative of any plenary legislation made by Parliament or the State 

Legislature: 

21. Another decision cited by the Learned Counsel for the Appellants is 

(1992) Supp (1) SCC 150 in State of Madhya Pradesh v. M/s G.S. Dall and 

Flour Mills (quoted below) 

19. The second ground on which the Full Bench has sought to invoke 

the instructions is also not correct. Executive instructions can supplement 

a statute or cover areas to which the statute does not extend. But they 

cannot run contrary to statutory provisions or whittle down their effect. 

22. In the light of the above rationale laid down by the Supreme Court, 

Clause 5.1 of the NTP which is a subordinate legislation would not restrict 

or whittle down the scope of the statutory powers conferred to a State 

Commission under Section 62(l)(a) especially when it is noticed that Clause 

5.1 of NTP would apply to Section 63 only and not to Section 62 which is a 

substantive provision. As stated above, Section 63 is an exception to Section 62 

and the same cannot be taken away by way of a policy document like 

guidelines-Clause 5.1 of NTP. 

23. Secondly, it has been held that Clause 5.1 of the NTP which is a policy 

direction cannot be held to control or override Section 62 of the Act and 

when these two provisions cannot be reconciled, Section 62 alone must 

prevail. 

24. This aspect has to be viewed from one other angle. The scope and 

applicability of Clause 5.1 of NTP in the present case involves the scrutiny 

of three issues: namely: 

15 Ed. MANU/SC/1654/2006: AIR 2006 SC 3480: JT 2006 (5) SC 41: 2006 (2) KLT 

270 (SC): (2006) II LLJ 529 SC: 2006 (3) SCALE 534 


171


(i) The power of the State Commission to approve the PPAs entered into 

between the distribution licensee and the generating company under 

Section 86(1)(b) of the Act; 

(ii) The jurisdiction of the Central Commission to determine Tariff for 

generating companies set up under composite scheme for supply of 

power to more than one state and 

(iii) The mandate under Clause 5.1 of the NTP in relation to procurement 

of power by distribution licensees through the Competitive Bidding 

route. 

25. In regard to the first aspect, it has to be stated that the procurement of 

power by distribution licensees and the price at which the same is done is 

approved by the State Commission under Section 86(1)(b) of the Act. The power 

to regulate the procurement process of a distribution licensee is a wide 

ranging power vested exclusively with the State Commission. This cannot be 

curtailed in any manner by the Tariff policy. In fact, even for inter-State 

transactions, the State Commission has been conferred with the power 

under Section 64(5) of the Act to determine the Tariff for the supply of power 

by a generating company situated outside the State from whom a distribution 

licensee is procuring the power. 

26. In regard to the second aspect, it is to be pointed out that Section 79(l)(a) 

and (b) of the Act confers the power on the Central Commission to regulate 

the Tariff of a central generating station and of generating stations with 

a composite scheme to supply power to more than one State. The clear 

demarcation of the separate and independent jurisdiction exercised by 

the Central Commission and the State Commissions in discharging their 

statutory functions has been underlined in Rule 8 of the Indian Electricity 

Rules, 2005. 

27. A situation whereby the State Commission can examine and approve the 

PPA leaving it open to the Central Commission to fix the Tariff component 

is itself contemplated in the said Rules-Rule 8. Rule 8 reads as follows: 

Tariff of generating companies under Section 79.–The Tariff determination 

by the Central Commission for generating companies under Clause (a) or (b) 

of Sub-section 1 of Section 79 of the Act shall not be subject to redetermination 

by the State Commission in exercise of the functions under Clause (a) or (b) 

of Sub-section (1) of Section 86 of the Act, and subject to the above, the State 

Commission may determine whether a distribution licensee in a State should 

enter into a PPA or procurement process with such a generating company 

based on the Tariff determined by the Central Commission. 

28. In this case the State Commission has exactly done this following Rule 8. 

The relevant portion of the impugned Order is reproduced as below: 

50. Subject to the incorporation of the said rule in the PPA for procurement 

of 300 MW of power from MPL (R-3) is approved for a period of 29 years, 

commencing from 2012. The Tariff for supply of this power shall be fixed by 

the Appropriate Commission. 

29. From this paragraph it is clear that the State Commission has not fixed 

the Tariff at all. On the other hand, it has observed that exercise has to be 

done by the Central Commission which alone can determine Tariff under 

Section 79(l)(b) in respect of the inter-State transmission of electricity by the 

generating company. In this case, the State Commission has adopted a 

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normative Tariff only for the limited purpose of examining and scrutinising 

the PPA. 

30. As a matter of fact, in the present case the State Commission gave 

conditional approval to the PPA as far as other terms and conditions were 

concerned. In other words, the State Commission did not embark upon the 

exercise of determination of Tariff as the same is wholly in the domain of the 

Central Commission. It is also noticed from the impugned Order that the 

State Commission has made it amply clear in its Order that the PPA will be 

effective only after the Tariff has been fixed by the Central Commission. 

As referred to above, the State Commission has rightly pointed out that 

Section 62(1)(a) and Section 63 are alternative methods available to the 

Appropriate Commission for determination of Tariff and therefore, it is open 

to the Appropriate Commission to adopt either of the procedures prescribed 

under Section 62(1) and under Section 63 of the Act in relation to the 

determination of Tariff. 

31. In regard to the third aspect it is to be stated that Clause 5.1 of the NTP 

which relates to the power under Section 63 of the Act cannot be read to 

debar the State Commission from exercising its statutory power for 

determination of Tariff under Section 62(1) of the Act for all future procurement 

of power. 

32. In the light of the above discussions, the argument advanced by the 

learned Counsel for the Appellants that resort to Tariff determination under 

Section 62(1)(a) without adopting the Competitive Bidding Process will render 

Clause 5.1 of the NTP redundant as the distribution licensees in the future 

will procure power from the generating companies only through the negotiated 

route, cannot be accepted as it is always open to the State Commission to 

direct the distribution licensee to carry out power procurement through 

Competitive Bidding Process only in case where the rates under the negotiated 

agreement are high. In other words, the State Commissions have been given 

discretionary powers either to chose Section 62, 62(1)(a) to give approval for 

the PPA or to direct the distribution licensee to resort to the Competitive 

Bidding Process as per Clause 5.1 of the NTP read with Section 63 of the Act. 

As such, the main contention urged by the Learned Counsel for the Appellant 

would fail. 

33. Next, it was contended by the learned Counsel appearing for the Appellant 

that by approaching the State Commission for the approval of the PPA, MPL 

(R-3) and NDPL (R-2) have achieved and obtained Orders indirectly from the 

State Commission what they could not achieve directly before the Central 

Commission in respect of claim for exemption from the applicability of Clause 5.1 

of NTP. This contention also, in our view, lacks substance. The MPL (R-3) has 

merely approached the Central Commission to seek a clarification for the 

question as to whether it will fall within the exempted category from Clause 5.1 

of NTP as it is state owned by virtue of the nature of control exercised by the 

Damodar Valley Corporation, a Central Government company. In the said 

petition the Central Commission did not give any findings with regard to the 

issues concerning the determination of Tariff of MPL (R-3). It is clear from the 

Order dated, 17 th January, 2007 passed by the Central Commission that the 

Central Commission carefully refrained from finding any issue relating to 

Clause 5.1 of NTP and instead the Central Commission directed the MPL (R-3) 

to approach the Central Government to seek such clarification as it felt that 

it does not have the jurisdiction in adjudication of such matters. This Order 


173


cannot be treated as one relating to Tariff determination. As a matter of fact, 

the Central Government has clearly observed in its Order dated, 

28 th August, 2006 that it is for the Central Government to interpret its policy 

to determine whether a particular utility falls outside the scope of Clause 5.1 

of the NTP. Such an observation cannot be construed to be a finding nor a 

direction of the Central Commission. As such the observation does not have 

a binding effect. Nowhere in the Order the Central Commission observed 

that Clause 5.1 of the NTP will be binding on the State Commission while 

exercising their powers under Section 86(1)(b) to approve all future procurement 

of power by the distribution licensee. The fact that MPL (R-3) did not chose 

to approach the Central Government as directed by the Central Commission 

for a clarification cannot prevent the MPL (R-3) from entering into any contract 

with a distribution licensee through negotiated route nor would it prevent 

the NDPL (R-2) to procure power from the MPL (R-3), the generating company 

through a contract to be approved by the State Commission. It cannot be 

said that MPL (R-3) has done anything which it otherwise is restricted in law 

to do. So far as NDPL (R-2) is concerned, it is purely a decision of the State 

Commission to decide whether to approve a negotiated Tariff for the NDPL 

(R-2) under Section 62 or to direct the licensee to adopt the Competitive 

Bidding Process under Section 63 read with Clause 5.1 of the NTP. Therefore, 

the principle that a person cannot be allowed to do something indirectly that 

he cannot do directly is not applicable to the present facts of the case. 

34. In view of the above discussions, our conclusion is that the approval of 

the State Commission to the PPA entered into between NDPL (R-2) and 

MPL (R-3) by the Order dated, 30 th April, 2009 passed by the State Commission 

subject to the various conditions, is perfectly valid in law and it does not 

warrant any interference. Consequentially, these appeals are liable to be 

dismissed. Accordingly, they are dismissed. No costs. 

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2010 ELR (APTEL) 0418* 



Shrishrimal Plantation Limited 

v. 

Chhattisgarh State Power Distribution Co. Ltd. and Anr. 


DECIDED ON: 18.01.2010 

Coram 



Whether State Commission right in dismissing the review Petition against 

the main tariff Order, dated, 15 th June, 2005 filed after a delay of over 

3 years, with application for condonation of delay? 

While entertaining the application for condonation of delay, the Courts should 

take a liberal view in considering the explanation. The Supreme Court in a 

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* MANU/ET/0007/2010 

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(M. Karpaga Vinayagam, J. (Chairperson) and H.L. Bajaj, Member (Technical)) 

0419 

number of Judgments would observe that even the long delay could be 

considered for condonation only when there is no lack of bona fide, no 

inaction or no negligence on the part of Applicant. The only explanation 

given by the Appellant was that they have been wrongly advised by their 

lawyers. This explanation is preposterous. If the Appellant felt that they 

were wrongly advised by the lawyers, they should have approached the Bar 

Council for legal action to be taken against the said Counsel. The explanation 

lacks bona fide. 


ORDER 

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1. Shrishrimal Plantation Limited is the Appellant. It filed Review before the 

State Commission as against the main Tariff Order dated, 15 th June, 2005 

along with an Application to condone the delay of three years in filing the 

said Review. The said Petition for condonation of delay was dismissed. 

As against this, the Appeal has been filed. 

2. There is no dispute in the fact that the main Order was passed on 

15 th June, 2005 and as against the said Order no Appeal had been filed 

before the appropriate forum. On the other hand, the Appellant approached 

the Consumer Grievance Rederssal forum on 13 th October, 2006 as against 

the said Order and the same was dismissed on 28 th December, 2006 holding 

that the said Forum was having no jurisdiction. Against this Order the 

Appellant filed an appeal before the Ombudsman on 7 th February, 2007 and 

the same was dismissed on 26 th April, 2007 on the very same ground. 

3. As against this Order, the Appellant had filed an Appeal before this 

Tribunal on 26 th June, 2007 but when the matter was taken up for final 

disposal, the Tribunal found that there was no jurisdiction. Therefore, the 

learned Counsel for the Appellant sought permission for withdrawal of the 

Appeal with the liberty to file appropriate petition before the State Commission 

and accordingly the said appeal was dismissed as withdrawn giving the 

said liberty. Instead of approaching the State Commission, as undertaken 

by the learned Counsel for the Appellant before this Tribunal, the Appellant 

had chosen to file a Writ Petition before the Chhattisgarh High Court on 

19 th December, 2007 and ultimately on 23 rd April, 2008 the High Court had 

dismissed the said petition. 

4. Even before the High Court, it was submitted by the learned Counsel for 

the Appellant himself that he ought to have approached the Chhattisgarh 

State Electricity Regulatory Commission as per the undertaking given in 

this Tribunal and the Writ Petition was wrongly filed and therefore, may be 

permitted to withdraw this petition with the liberty to approach the State 

Commission. While dismissing the said petition, the same was incorporated 

in the Order by the High Court. Thereafter, on 14 th May, 2008 Appellant filed 

Review petition before the State Commission as against the main Tariff 

Order dated, 15 th June, 2005. Since, there was a delay of over three years, 

he had to file an application for condonation of delay. 

5. The State Commission after hearing the learned Counsel for the Appellant 

and also considering the available records dismissed the application on the 


175


ground that there is no satisfactory explanation for the long delay in filing 

the Review. Aggrieved by this Order the Appellant has filed this Appeal 


6. We have heard the learned Counsel for the Appellant as well as the 

Respondents. The main point urged by the learned Counsel for the Appellant 

that he approached several forums as against the Tariff Order dated, 

15 th June, 2005. He first approached the Grievance Rederssal Forum then 

approached the Ombudsman, after that approached the Tribunal and 

thereafter, he approached Chhattisgarh High Court and lastly the 

State Commission. 

7. It is true that while entertaining the application for condonation of delay, 

the Courts should take a liberal view in considering the explanation. 

The Supreme Court in a number of Judgments would observe that even the 

long delay could be considered for condonation only when there is no lack 

of bona fide, no inaction or no negligence on the part of Applicant. In this 

case, it cannot be said that there is no lack of bona fide. 

8. As indicated above, the Tariff Order had been passed as early as on 

15 th June, 2005. Appellant approached the Consumer Grievances forum 

only on 13 th October, 2006 and the same was dismissed on 28 th December, 2006. 

Against this Order the Appellant filed an appeal before the Ombudsman only 

on 7 th February, 2007 and the same was dismissed on 26 th April, 2007. 

Only after two months the Appellant approached the Tribunal on 

26 th June, 2007. At the time of hearing he requested the permission to withdraw 

the Appeal. He was allowed to do so with the liberty to approach the State 

Commission. Instead of approaching the State Commission, the Appellant 

approached Chhattisgarh High Court that too after six months of withdrawal 

of Appeal from the Tribunal. 

9. Again the said Writ petition was withdrawn from the High Court with the 

liberty to approach the State Commission. Thus, he approached all the 

forums even though they are not competent forums. The only explanation 

given by the present Counsel for the Appellant that the Appellant had all 

along been wrongly advised by all the lawyers at Raipur. This explanation 

is preposterous. If the Appellant felt that it was wrongly advised by the 

lawyers, he should have approached the Bar Council for legal action to be 

taken against the said Counsel. Admittedly, this was not done. Hence, we 

are unable to accept the explanation which lacks bona fide. 

10. Hence, we are of the view that the Order rejecting the condonation of 

delay petition in filing a Review by the State Commission is well justified 

and there need be no interference. In the result the Appeal is dismissed. 

No costs. 

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2010 ELR (APTEL) 0421* 



Gujarat Energy Transmission Corporation Ltd. 

v. 

Gujarat Electricity Regulatory Commission, ONGC Ltd., Dakshin Gujarat 

Vij Company Ltd. and Uttar Gujarat Vij Company Ltd. 


DECIDED ON: 31.03.2010 

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Coram 



Whether the new locations which Open Access was sought would amount 

to relinquishment which requires ONGC (R-2) to file a fresh Open Access 

application in accordance with the Open Access Regulations along with 

the requisite details for the change of locations? 

Section 2(47) which defines Open Access as meaning non-discriminatory provision 

for the use of transmission lines or the distribution system or associated facilities 

with such lines or system by any licensee or consumer or a person engaged in 

generation. Section 2(72) defines transmission lines. It means, high pressure 

cable and overhead lines transmitting electricity from (a) a generating station 

to another generating station and (b) a generating station to a substation. 

According to this definition, a transmission line is a point to point line to a 

generating station or to a sub-station. Thus, it is clear the Open Access is point 

to point in the transmission system, i.e., for a transmission line and not for the 

entire transmission system. ONGC(R-2) is entitled to claim open access from 

the period from 1 st April, 2006 to the above six identified places and not to any 


any addition or deletion of the locations can be only with the prior direction of 

the State Commission in accordance with the open access regulations. 

Whether the State Commission was justified in holding that the Appellant 

was entitled to change its points of drawl for various transmission 

lines for open access within the State of Gujarat without having to 

follow any procedure under the Open Access Regulation? 

Regulation 9 contemplates that the Applicant in the application shall specify 

the point of injection and point of drawl. This is not an empty formality. 

The entire process deciding to grant Open Access is based on the point of 

injection and point of drawl. Even before the Electricity Act, 2003, the open 

access to the transmission lines and distribution lines were provided in the 

point of injection and point of drawl. This would be clear from the approval 

letter dated, 27 th November, 2000 which was granted by the Board only in 

respect of 6 transmission lines on which wheeling was allowed. This approval 

granted to ONGC(R-2) was on 6 specific lines with the point of injection, 

points of drawl and the capacity for which open access is sought. 

Appeal Allowed 

* MANU/ET/0018/2010 


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Bombay Electricity Duty Act, 1958 [p. 0426, para 17 g] 




Sections 39 and 40 [p. 0424, para 10 e] 


Section 86(l)(f) [p. 0423, para 7 d] 

Indian Electricity Act, 1910, Section 28 [p. 0422, para 4 g] 


Gujarat Electricity Regulatory Regulations for Open Access in Inter-State 

Transmission and Distribution Regulation, 2005 

Regulation 9 [p. 0428, para 22 c] 

Regulation 11 [p. 0428, para 22 c] 

Counsel 

For Appellant/Petitioner/Plaintiff: M.G. Ramachandran and Anand K. Ganesan 

For Respondent(s)/Defendant: Sanjay Sen, Adv. for R-l and S. Ghosh, Adv. 

for R-2 

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JUDGMENT 


1. Gujarat Energy Transmission Corporation Limited (GETCL) is the Appellant 

herein. Aggrieved by the Order impugned dated, 8 th May, 2009 passed by the 

Gujarat State Commission, this Appeal has been filed. The short facts of the 

case are as follows. 

2. Gujarat Energy Transmission Corporation Limited (Appellant) is engaged 

in the business of transmission of electricity in the State of Gujarat. It also 

performs the statutory functions of the State Load Dispatch Center for the 

State of Gujarat. The Oil and Natural Gas Commission (ONGC), Respondent 

No. 2 herein, is operating Combined Cycle Generating Power Plant. The electricity 

generated at the said power plant is used for captive consumption of ONGC 

at the place of generation. 

3. ONGC sought permission for wheeling of its surplus power to its other 

installations namely Mehsana, Ahmedabad and from Ankleshwar Assets to 

the specific points of injection and to the specific points of delivery on the 

transmission system of the Appellant. 

4. The above permission was granted under Section 28 of the Indian Electricity 

Act, 1910 in the year 2000 by the Gujarat Electricity Board (Predecessor of 

the Appellant) for wheeling of 15.9 MVA of power from its captive power plant 

at Ankleshwar Assets to its unit at various places referred to above. In the 

permission granted by the Electricity Board through the letter dated, 

27 th November, 2000, the points of drawl of electricity, the quantum of electricity 

to be wheeled, voltage, line through which the electricity was to be wheeled 

etc. were specified. 

5. Subsequent to the above, in the year 2004, in view of non-utilisation of 

the power generated at the exit locations where the wheeling permission was 

granted, the ONGC (R-2) requested the Appellant for rationalisation of its 

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0423 

existing wheeling arrangement and for addition of new locations of ONGC for 

wheeling electricity from its captive generation plant. 

6. ONGC filed a petition seeking permission to re-apportion of its wheeling 

capacity in the newly proposed installations. During the pendency of the 

petition, the ONGC (R-2) was constantly drilling new wells and mining from 

such wells, resulting in a need for more energy at such locations. At that 

stage, the ONGC (R-2) sent a letter to the Electricity Board on 8 th July, 2004 

seeking rationalisation of wheeling permission without increasing overall 

wheeling permission and thereby not causing any additional burden on 

Electricity Board. Initially, there was no response. There were several meetings 

between the parties. Ultimately, the Appellant rejected the representation 

made by the ONGC (R-2) for rationalisation of wheeling. Thereupon ONGC (R-2) 

filed a petition before the High Court of Gujarat seeking for the relief. However, 

the High Court disposed of the said petition directing the ONGC (R-2) to 

approach the Commission to settle the dispute raised in the petition between 

the parties. 

7. Accordingly, on 26 th August, 2008, the ONGC (R-2) filed a petition under 

Section 86(l)(f) of the Electricity Act before the Sate Commission seeking 

rationalisation of the wheeling capacity from its exiting rights for wheeling 

of power to specified point of injection and at other points of drawl. The said 

application was resisted by the Appellant contending that the permission for 

change in wheeling capacity and change of locations is not permissible 

without following a procedure prescribed in the Open Access Regulation 

namely relinquishing its existing rights over the specified transmission lines 

and applying for a fresh Open Access permission for the specified lines 

where Open Access was sought. After hearing both the parties, the State 

Commission by the Order dated, 8 th May, 2009 allowed the petition filed by 

the ONGC (R-2) holding that the ONGC (R-2) was entitled to change its point 

of drawl and the transmission lines for Open Access without the requirement 

of making application for the new lines and further holding that a right of 

an Open Access consumer extend to the entire system of the licensee in the 

entire State and not to a particular line for which Open Access permission 

is granted. 

8. Aggrieved by this Order dated, 8 th May, 2009 passed by the State 

Commission, the Appellant has preferred the present Appeal before this 

Tribunal. 

9. The learned Counsel for the Appellant has urged the following contentions. 

(i) The right to Open Access is always granted for specific lines and 

with specified capacity. Such right to Open Access does not extend 

to the transmission system with the liberty to change the points of 

injection and drawl at the will of the Open Access consumer. The 

finding of the State Commission to the effect that the ONGC (R-2), 

the Open Access consumer, is not required to follow any procedure 

under the Open Access Regulation for rationalising its open excess 

requirement by reduction of capacity and for using fresh transmission 

lines for open access to different locations is wrong. Hence, this 

Appeal. 

(ii) The Open Access Regulations provide for specific points of drawl, 

injection, capacity for open access, average load, etc. to be specified 

at the time of application for grant of Open Access. The Open Access 

is granted only for specified locations and transmission lines and for 


179


the specified capacity. Therefore, the State Commission cannot hold 

that ONGC (R-2) is entitled to Open Access through new lines for the 

different locations and different capacity without applying for such 

access in accordance with the Open Access Regulations. 

(iii) Under Regulation 11 of the Open Access Regulations, ONGC (R-2) 

was required to relinquish its existing capacity to the extent of the 

reduced capacity and pay compensation to the Appellant. When 

Regulation 11 prefers right of Open Access granted to ONGC (R-2) which 

are for specified locations and lines and for a specified capacity, the 

State Commission cannot hold that there is no relinquishment of existing 

rights by ONGC (R-2). Therefore, the Order impugned passed by the 

State Commission is liable to be set aside. 

10. In reply to the above submissions, the learned Counsel for ONGC (R-2) 

as well as the State Commission have made the elaborate submissions 

and have also filed written submissions. The gist of the same is as follows: 

(i) From the various definitions and Sections under the Electricity Act, 2003 

and Open Access Regulations as formulated by the State Commission, 

it is clear that the Open Access is for transmission lines and not for the 

system. Transmission lines mean all high pressure cables and overhead 

lines transmitting electricity from a generating station to another 

generating station or to a sub-station. Therefore, the term transmission 

lines used in the Act refers to all the transmission lines established 

and operated by the licensee. Consequently it is clear that that the 

transmission lines represent the entire transmission system of the 

transmission licensee and it would not apply to any particular 

transmission lines or point to point transmission line as specified on 

behalf of the Appellant. 

(ii) The provisions of Section 39 and 40 of the Act have to be read 

together. Under these Sections there is an obligation on the State 

Commission for the utility or the transmission licensee to grant 

non-discriminatory open access qua transmission system. These 

provisions which use the word transmission system in relation to grant 

of Open Access cannot be given a restricted interpretation so as to limit 

the grant of Open Access to a particular transmission line. 

(iii) The Regulations of the Gujarat State Commission recognise the 

grant of Open Access in relation to the system as a whole. The fact 

that the Regulation requires disclosure of points of injection and drawls 

do not affect the interpretation of the scheme as a whole, 

(iv) In the absence of any material to show that the Appellant in any 

way would suffer any loss or injury due to change of drawl points by 

ONGC (R-2), the grant of permission by the State Commission to 

reapportion its wheeling capacity by allowing it to the newly proposed 

locations is perfectly valid. 

11. In the light of the rival contentions referred to above, the following 

questions would emerge in the present case for consideration. 

(i) Whether the new locations which Open Access was sought would 

amount to relinquishment which requires ONGC (R-2) to file a fresh 

Open Access application in accordance with the Open Access Regulations 

along with the requisite details for the change of locations 

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(ii) Whether the State Commission was justified in holding that the 

Appellant was entitled to change its points of drawl for various transmission 

lines for open access within the State of Gujarat without having to 

follow any procedure under the Open Access Regulation? 

12. On these questions elaborate arguments were advanced by the learned 

Counsel for both the parties. We have carefully considered the same. We have 

also gone through the entire records including the Written Submissions filed 

by the parties. According to the learned Counsel for the Appellant, the rights 

of an Open Access consumer are not for the entire system as a whole. 

The relinquishment of the right and obligation by an Open Access consumer 

has to refer to right for a particular transmission lines with specified locations 

of injection and drawl points and relinquishment thereof. 

13. According to the learned Counsel for ONGC (R-2), the State Commission 

has correctly held calling for the change of locations for drawl points would 

not amount to relinquishment and as such no fresh application is necessary 

seeking for the same. 

14. Let us refer to basic facts in the present case. The ONGC (R-2) sought 

permission for wheeling the surplus power generated at its power plant to 

its other units at various places. The above permission was granted under 

Section 28 of the Indian Electricity Act, 1910 by the Gujarat Electricity 

Board (the predecessor of the Appellant) through its letter dated, 

27 th November, 2000 for wheeling of 15.9 MVA power from its captive power 

plant at Ankleshwar asset to its units at specified locations. In view of 

non-utilisation of this power generated at the exit locations, ONGC (R-2) 

requested the Appellant for rationalisation of its existing wheeling arrangement 

with reference to new locations. There was delay in this. Therefore, ONGC 

(R-2) sent letters to the Electricity Board seeking for the said permission but 

despite that the Appellant issued several bills for transmission charges. 

Challenging the same, ONGC (R-2) filed write petition before the High Court 

of Gujarat. Ultimately, the said petition was disposed of by the High Court 

directing the ONGC (R-2) to raise this issue before the State Commission. 

Ultimately, ONGC (R-2) approached the State Commission seeking for the 

said permission from the State Commission contending that it is not seeking 

reduction in the total wheeling capacity but it is only seeking for the additional 

locations. The said permission was granted by the State Commission holding 

that ONGC (R-2) is entitled to get this permission by the Order dated, 

8 th May, 2009. 

15. Aggrieved over this Order impugned, the Appellant challenged the same 

in this Appeal. 

16. As narrated above, the main issue relates to the change in the points 

of transmission sought for by the ONGC (R-2) in the Gujarat Power system, 

transmission part of it owned and maintained by the Appellant. 

17. The ONGC (R-2) had been having Open Access to the power system in 

Gujarat for transmission of its captive generation from the place of generation 

to the place of use by ONGC (R-2) at specified locations. This was as per the 

permission applied and obtained by the ONGC (R-2) from the erstwhile Gujarat 

Electricity Board through the letter dated, 27 th November, 2000. The letter 

is as follows: 


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Gujarat Electricity Board 

Head Office: Sardar Patel Vidyut Bhawan, 

Race Course, Vadodara-390 007 

To 

The Manager (CCPP) 

Oil & Natural Gas Co. (CCPP) 

Ill rd Floor, New Building, Ankleshwar Project 

Ankleshwar 

Sub: Permission for wheeling of 15.9 MVA (12.72 MW) surplus SPP 

power from CPP-M/s Oil & Natural Gas Corporation Ltd. Ankleshwar 

to their own various units in Gujarat. 

Ref.–(1) GoG letter No. CPG/11.2000/4232 dated, 10 th November, 2000 

(2) GEB letter No. Com/CPP/Wheeling/OBGC/4224 dated, 13 th July, 2000 

Dear Sir, 

Government of Gujarat has accorded permission under Section 28 

of I.E. Act for wheeling of CPP power. Accordingly, you are permitted 

to wheel surplus CPP power up to 15900 KVA (12720 KW at 0.8 p.f.) 

through Board’s grid from your CPP at Ankileshwar to your various 

units through GEB network for ten years as under: 

a 

b 

c 

d 

S. Name Location C.;D. quantum of power to be 

No. of Unit wheeled and voltage level. 

1. ONGC Santhal, INSITU 3000 KVA (2400 KW) @ 66 KV 

Ph. 1, Mehsana 

2. ONGC Balol, INSITU Ph. 3000 KVA (2400 KW) @ 66 KV 

1, Mehsana 

3. ONGC (A) South 2400 KVA (1920 KW) @ 11 KV 

Santhal GGS CU 

MCTE Mehsana 

4. ONGC Ahmedabad 3500 KVA (2400 KW) @ 66 KV 

CTGFC, Kalol 

5. ONGC CTF Navagam 3000 KVA (800 KW) @ 22 KV 

6. ONGC Ankleshwar LPG 1000 KVA (800 KW @ 22 KV 

Plant 

Total 15900 KVA (12720 KW & at 0.8) 

The Electricity Duty shall be recovered as per Schedule-II of the Bombay 

Electricity Duty Act, 1958. You are requested to contact our Executive 

Engineer (O&M) GeB, Ankleshwar, Mehsana, Kalol, Sabarmati for further 

needful action. 

Thanking you, 

Yours faithfully, 

Sd/- 

General Manager (Comm) 

C.C. to: 

1. The Under Secretary, Government of Gujarat, D&P Deptt, Sachivalaya, 

Gandhinagar. This is in ref. To his letter dated, 10 th November, 2000 

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2. The Commissioner of Electricity, Government of Gujarat, Udyog Bhawan, 

Gandhinagar-For information please. 

3. C.E.(TRZDist) GEB, Surat, Mehsana-for information. 

4. A.C.E. (Zone), GEB, Surat, Mehsana-for information 

5. S.E. (O&M), GEB, Ankleshwar, Mehsana, Kalol, Sabarmati 

6. E.E. (O&M), GEB, Ankleshwar, Mehsana, Kalol, Sabarmati 

7. E.E. (O&M), GEB, Bharuch-To take necessary action for giving credit 

for CPP power wheeled as per Commercial Circular No. 687 

18. As per this letter the permission was granted for Open Access for wheeling 

the electricity of ONGC (R-2) to the six specified locations. Now, the location 

was sought to be changed by the ONGC (R-2) by seeking permission from the 

State Commission. 

19. Let us now refer to some of the definitions/Sections: 

(i) Section 2(47) defines Open Access–Open Access means the 

non-discriminatory provision for the use of transmission lines or 

distribution system or associated facilities with such lines or system by 

any licensee or consumer or a person engaged in generation in accordance 

with regulations specified by the Appropriate Commission. 

(ii) Section 9. Captive Generation.– 

(1) Notwithstanding anything contained in this Act, a person may 

construct, maintain or operate a captive generating plant and 

dedicated transmission lines: 


plant through the grid shall be regulated in the same manner 

as the generating station of a generating company. 

Provided further that no licence shall be required under this 

Act for supply of electricity generated from a captive generating 

plant to any licensee in accordance with the provisions of 

this Act and the rules and regulations made hereunder and 

to any consumer subject to the regulations made under 

Sub-section (2) of Section 42. 

(2) Every person, who has constructed a captive generating plant 

and maintains and operates such plant, shall have he right to 

open access for the purpose of carrying electricity from the captive 

generating plant to the destinations of his use: 

Provided that such open access shall be subject to availability 

of adequate transmission facility such availability of 

transmission facility shall be determined by the Central 

Transmission Utility or State Transmission utility as the case 

may be: 


transmission facility shall be adjudicated upon by the 

Appropriate Commission. 

(iii) Section 39: State Transmission Utility and its Functions: 

(2) The functions of the State transmission shall be: 

(d) to provide non-discriminatory open access to its transmission 

system for use by: 


183


(i) any licensee or generating company on payment of 

the transmission charges or 

(ii) any consumer as and when such open access is 

provided by the State Commission under Sub-section (2) 

of Section 42 on payment of transmission charges thereon, 

as may be specified by the State Commission. 

20. In exercise of its power under Section 39 and other applicable provisions 

of the Electricity Act, the State Commission had notified the Gujarat Electricity 

Regulatory Regulations for Open Access in Inter-State Transmission and 

Distribution Regulation, 2005. 

21. The Open Access Regulation deals with the terms and conditions to be 

satisfied by the Open Access customer such as ONGC (R-2) who seek open 

access of the transmission in the State of Gujarat for seeking open access 

for the Appellant. 

22. The regulations relevant for the above purpose are Regulation 9 and 

Regulation 11. Regulation 9 deals with the procedure adopted by the long-term 

Open Access user and Regulation 11 deals with the exit option to such 

long-term Open Access User. Regulation 9 reads as under: 

9. Procedure for long-Term Open Access User 

(i) An application for long-term access shall be submitted to the 

concerned nodal agency, 

(ii) The application shall contain the details, such as capacity 

needed, point(s) of injection, point(s) of drawl, duration of availing 

open access, peak load, average load and such other additional 

information that may be specified by the nodal agency. 

Provided that the nodal agency shall issue necessary guidelines, 

procedure and application forms within 30 days from the 

date of notification of these Regulations. 

23. Under this Regulation, when an application has been filed for long-term 

Open Access, the consumer shall specifically mention about the details 

such as capacity needed, points of injection, points of drawl etc. 

24. Regulation 11 reads as follows: 

11. Exit Option 

(i) A long-term Open Access users shall not relinquish or 

transfer his rights and obligations specified in the Bulk Power 

Transmission/Distribution Capacity Agreement, without prior 

approval of the Commission. 

(ii) The relinquishment or transfer of rights and obligations by a 

long-term Open Access user shall be subject to payment of 

compensation, as may be determined by the Commission. 

25. This Regulation provides for the conditions to the effect that Open Access 

user shall not relinquish or transfer its rights specified in the agreement 

without the approval of the Commission and such relinquishment shall be 

subject to the payment of compensation. 

26. In the present case the ONGC (R-2) actually wanted a change in the 

transmission lines. In respect of the six locations as mentioned above, the 

Open Excess permission was taken by ONGC (R-2) from the Gujarat Electricity 

Board by the letter dated, 27 th November, 2000. Now, ONGC (R-2) has sought 

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modification of the above existing permission granted to them for Open Access 

by reducing the capacity in each of the said lines and adding 6 more locations 

for which Open Access was sought. 

27. The question for consideration is as to whether such a change of location 

and reduction in Open Access capacity in the existing lines is a relinquishment 

of the existing Open Access permission given to ONGC (R-2) within the 

meaning of Regulation 11. It is the specific stand of the Appellant both before 

the Commission as well as before the Tribunal that the Open Access has 

been granted to ONGC (R-2) by the letter dated, 27 th November, 2000 for a 

specific line and now ONGC (R-2) has sought modification to the lines including 

reduction in the capacity of the existing Open Access lines and adding such 

reduced capacity for all other lines and this would amount to relinquishment 

of the rights under the Bulk Power transmission. 

28. On the other hand, the stand of the ONGC (R-2) that so long as the total 

capacity for the Open Access that was granted, is retained, the mere change 

in the points of delivery within the Gujarat system would not amount to 

relinquishment as no part of the capacity has been reduced. 

29. Accepting the stand of the ONGC (R-2), the State Commission has held 

that the Open Access is to the transmission system of the Appellant as a 

whole and not to the transmission line alone. Therefore, if there is a change 

in the points of delivery without there being a change in the total capacity, 

there is no relinquishment. 

30. As noted above, Section 2(47) which defines Open Access as meaning 

non-discriminatory provision for the use of transmission lines or the 

distribution system or associated facilities with such lines or system by 

any licensee or consumer or a person engaged in generation. Section 2(72) 

defines transmission lines. It means, high pressure cable and overhead 

lines transmitting electricity from (a) a generating station to another generating 

station and (b) a generating station to a substation. According to this 

definition, a transmission line is a point to point line to a generating 

station or to a sub-station. Thus, it is clear the Open Access is point to 

point in the transmission system, i.e. for a transmission line and not for 

the entire transmission system. 

31. As we have stated earlier, Section 39 refers to nondiscriminatory Open 

Access to its transmission system in the context of a State Transmission 

utility providing transmission. Similarly, Section 40 refers to transmission 

system in the context of a transmission licensee maintaining many 

transmission lines forming part of the system. The above does not mean that 

there can be open access only to the entire system. 

32. There has to be a purpose as to why Regulation 9 contemplates that the 

Applicant in the application shall specify the point of injection and point of 

drawl. This is not an empty formality. The entire process deciding to grant 

Open Access is based on the point of injection and point of drawl. Even before 

the Electricity Act 2003, the open access to the transmission lines and 

distribution lines were provided in the point of injection and point of drawl. 

This would be clear from the approval letter dated, 27 th November, 2000 

which was granted by the Board only in respect of six transmission lines on 

which wheeling was allowed. This approval granted to ONGC (R-2) was on six 

specific lines with the point of injection, points of drawl and the capacity for 

which open access is sought. 


185


33. As pointed out by the learned Counsel for the Appellant it is a well-accepted 

practice in the electricity industry that open access is restricted to specified 

transmission lines with specific injection and drawl points. Thus, there is 

no vested right to open access over the entire transmission system of 

the licensee. 

34. Since, the open access customer has no right whatsoever to shift point 

of drawl under the Regulations, the request for substitution of the new 

points of drawl would amount to surrendering capacity of the open access 

between the two specified points and seeking open access for the different 

point to point transmission. 

35. Prior to the constitution of the State Commission, the Tariff or terms and 

conditions for the transmission of electricity or wheeling of electricity were 

decided by the erstwhile Electricity Board under the powers vested with the 

Board under the Electricity Supply Act. The Government of Gujarat also had 

the power and Authority to issue policy directive such as Captive Power 

Policy. After the constitution of the State Commission the power to determine 

and to regulate Tariff of electrical industry including for the transmission of 

electricity on the transmission lines are exercised by the Appropriate 

Commission alone. In exercise of the powers vested in it, the State Commission 

notified the Open Access Regulations governing the transmission and wheeling 

of electricity on the transmission lines and distribution system maintained 

by the Appellant and other electricity utilities in the State of Gujarat. 

36. The above Open Access Regulation defines the criteria for being classified 

as long-term Open Access user and short-term Open Access user, the rights, 

privileges, benefits, etc. applicable to each of the above user. As per Clause 

24 of the Regulations all the existing users are deemed to be a long-term 

Open Access users. Therefore, the ONGC (R-2) was an existing user on the 

date when the Regulation came into force and accordingly it was to be 

treated as a long-term Open Access user. 

37. In terms of the Captive Power Policy earlier announced by the Government 

of Gujarat, the permission for wheeling of 1.9 MVA surplus CPP from the 

ONGC (R-2) at Ankleshwar Asset to their own unit was granted. Subsequent 

to the above approval, erstwhile Gujarat Electricity Board accorded approval 

for wheeling to the specified six locations for a period of 10 years through 

their letter dated, 27 th November, 2000. The arrangement for transmission 

wheeling of electricity as per the undertaking given by the ONGC (R-2) from 

the CPP of ONGC (R-2) located at Ankleshwar to the six identified places of 

consumption by the ONGC (R-2). The undertaking given by the ONGC (R-2) 

clearly means at Clause No. 8 that the permission granted shall not be 

transferable. 

38. Thus, the open access which the ONGC (R-2) is entitled to claim from the 

period from 1 st April, 2006 to the above six identified places and not to any 


any addition or deletion of the locations can be only with the prior direction 

of the State Commission in accordance with the open access regulations. 

39. Therefore, the Order impugned does not satisfy the requirements as 

provided in the Open Access Regulations framed by the State Commission. 

Under those circumstances, we come to the conclusion that the change of 

locations at the point of drawl and the reduction in Open Access capacity 

in the existing lines would amount to relinquishment of the existing Open 

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Access given to the ONGC (R-2) between the meaning of Regulation 11 and, 

therefore, the ONGC (R-2) has to file a fresh application seeking for the Open 

Access for the new locations. As far as the compensation is concerned, it is 

for the State Commission to decide as to whether the compensation is 

compulsory, and if it is decided so, quantum of the same taking into 

consideration the various circumstances. 

40. In view of the above discussions, the Order impugned is set aside and 

the State Commission is directed to take steps to implement the Order 

passed by this Tribunal as indicated above. 

41. The Appeal is allowed. No costs. 

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2010 ELR (APTEL) 0431* 



NTPC Ltd. 

v. 



DECIDED ON: 31.03.2010 

Coram 



Whether the Central Commission has implemented the Order dated, 

14 th November, 2006 passed by the Tribunal in computation of the 

accumulative repayment of loan up to the previous year? 

The previous appeal filed before this Tribunal would show that Appellant 

only challenged criteria adopted by Central Commission. Appellant had not 

challenged the cumulative repayment of loan up to the previous year. 

Tribunal merely came to the conclusion and gave directions to Central 

Commission. Question of repayment of loan was never raised before Tribunal. 

Cumulative repayment of loan was neither the issue before the Tribunal nor 

the same has been decided. 


Counsel 


and Swapna Seshadri, Advs. 

For Respondent(s)/Defendacnt: Pradeep Misra, Adv. for MPPTGCL 

JUDGMENT 


1. NTPC Limited is the Appellant herein. Challenging the Order impugned 

dated, 2 nd November, 2007 passed by the Central Commission, this Appeal 

has been filed. The short facts of the case are as follows: 

* MANU/ET/0019/2010 


187


2. NTPC Limited, Appellant herein, is engaged in the business of generation 

and sale of electricity. One of the generating stations owned by the NTPC 

Limited is Kawas Gas Power Station. The electricity generated from Kawas 

Gas Power Station is sold by the Appellant to the Madhya Pradesh State 

Electricity Board (R-2) and the other Respondents (R-3 to R-9). The Tariff for 

the electricity generated is regulated by the Central Commission. Up to 2001 

the cumulative repayment of loans was worked out to Rs. 39,262 lacs, which 

was calculated on normative basis as per the Notification dated, 30 th April 1984 

issued by the Ministry of Power. 

3. On 19 th April, 2002, the Central Commission directed the Appellant to file 

a petition for determination of Tariff for the claims towards revised fixed 

charges for the period prior to 1 st April, 2001. Accordingly, NTPC Limited filed 

a petition for approval of the Tariff in Petition No. 99 of 2002 claiming the 

Tariff on the basis of actual loan repayment. The Central Commission decided 

the Tariff in the Order dated, 18 th May, 2004 adopting the basis of actual 

loan repayment or normative loan repayment whichever is higher. Against 

this Order, the NTPC filed an Appeal before this Tribunal in Appeal No. 96 

of 2005. On 14 th November, 2006 the Tribunal allowed the Appeal and set 

aside the said Order dated, 18 th May, 2004 holding that the cumulative loan 

repayment has to be considered on normative basis only and not on 

actual basis. 

4. On the strength of this Order, the Appellant approached the Central 

Commission to revise the fixed charges for the period from 1 st April, 1998 to 

31 st March, 2001, requesting for the redetermination of the Tariff on normative 

basis. Though the Central Commission passed an Order on 2 nd November, 2007 

on the basis of this Tribunal’s Order dated, 14 th November, 2006 adopting 

the cumulative repayment of loan up to 31 st March, 1998 on normative basis 

but for the subsequent period determined on actual basis fixing the same 

as Rs. 477.50 crores instead of the amount on normative basis of 

Rs. 392.62 crores. 

5. Since, the Appellant felt that the Central Commission made an arithmetical 

mistake in not making a uniform calculation for all these years, the Appellant 

sent a letter to the Central Commission on 18 th July, 2007 requesting for the 

correction of the above mistake. There was no response. Therefore, the Appellant 

has filed this Appeal, as against the Order dated, 2 nd November, 2007. 

6. The learned Counsel for the Appellant would raise the following main 

contention while challenging the Order impugned. 

7. The Central Commission in its impugned Order dated, 2 nd November, 2007 

has considered the cumulative loan repayment as Rs. 477.50 crores, which 

was based on the principle adopted by the Central Commission earlier, on 

actual loan repayment basis. As per Order of the Tribunal dated, 

14 th November, 2006, the cumulative loan repayment figure should be 

determined based on the normative loan repayment only and not on actual 

basis. Despite this, the Central Commission in the impugned Order dated, 

2 nd November, 2007 has not followed the said principle. Though the Central 

Commission has considered loan repayment during the Tariff period on 

normative repayment basis, the cumulative loan repayment has been still 

considered on actual or normative basis whichever is higher. As such this 

is inconsistent with the Order of the Appellate Tribunal. Therefore, the 

Order impugned is liable to be set aside. 

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0433 

8. The learned Counsel for the Respondent, in justification of the impugned 

Order would make the following reply. 

(i) The question of cumulative repayment of loan was neither raised 

before the Central Commission nor before this Tribunal in the Appeal 

No. 96 of 2005 earlier which was disposed by the Tribunal on 

14 th November, 2006. Hence, the same cannot be challenged at this 

stage, that too after the Tariff for the year 1998-2001, 2001-2004 and 

2004-2009 has been finalised. 

(ii) In the Tariff Petition No. 99 of 2002 filed by the Appellant, they 

themselves stated that the repayment of loan till 31 st March, 1998 was 

to be Rs. 477.50 crores. The said amount has been considered by the 

Central Commission for computation of repayment loan and interest 

thereon. In the Appeal No. 96 of 2005 filed before this Tribunal the said 

outstanding loan of Rs. 477.50 crores as on 1 st April, 1998 has never 

been challenged. Having not challenged the outstanding amount in 

Appeal No. 96 of 2005, the Appellant cannot challenge the same at this 

stage especially when this claim being made by the Appellant is barred 

on principles of res judicata. 

9. In the light of rival contentions of the parties referred to above, the following 

questions would arise for consideration. 

10. Whether the Central Commission has implemented the Order dated, 

14 th November, 2006 passed by the Tribunal in computation of the accumulative 

repayment of loan up to the previous year. 

11. We have heard the Counsel for the parties and considered their respective 

submissions. 

12. The main ground raised by the Appellant in the present Appeal is that 

the cumulative repayment of loan considered by the Central Commission 

as on 1 st April, 1998 is Rs. 477.50 crores but the Central Commission ought 

to have fixed accumulated repayment of loan up to 1 st April, 1998 as 

Rs. 392.62 crores on normative basis. 

13. While dealing with this issue, it is appropriate to refer to the relevant 

facts leading to the filing of the Appeal. On 30 th April, 1994, the Government 

of India issued notification determining the Tariff and the terms and conditions 

for supply of power from Kawas Gas Power Station for the period from 

1 st September, 1993 to 31 st March, 1998. On 19 th April, 2002, the Central 

Commission directed the Appellant to file a petition for determination of 

Tariff for Kawas Gas Power Station for the period from 1 st April, 1998 to 

31 st March, 2001 based on the said Notification dated, 30 th April, 1994. 

Accordingly, in 2002 the Appellant filed a Tariff Petition No. 99 of 2002 

mentioning the cumulative repayment of loan up to the previous year as 

Rs. 477.50 crores for the purpose of calculation for interest on the outstanding 

loan. It is clear from the said petition that the Appellant had shown in the 

said petition that the cumulative repayment of loan up to the previous year 

was Rs. 477.50 crores. Accordingly on 18 th May, 2004, the Central Commission 

determined the Tariff for the period from 1 st April, 1998 to 31 st March, 2001 

accepting the figure of cumulative repayment of loan as Rs. 477.50 crores. 

Not fully satisfied with this Order, the Appellant has filed an appeal in No. 96 

of 2005 before the Tribunal challenging the said Order only on the issue of 

the criteria adopted by the Commission for repayment of loan to the extent 

that repayment during the year made on normative basis or on actual basis, 


189


whichever is higher. The Tribunal by the Order dated, 14 th November, 2006 

ultimately allowed the Appeal by holding that the repayment of loan during 

the Tariff period from 1 st April, 1998 to 31 st March, 2001 will be considered 

on normative basis and not on actual basis. It is noticed from the Order that 

the cumulative repayment of loan prior to 1 st April, 1998 was neither the 

issue before the Tribunal nor the same had been decided. As a matter of fact, 

the Tribunal in the said Order dated, 14 th November, 2006 directed that the 

Central Commission shall adopt the normative debt repayment methodology 

for working out the interest on loan liability for the period from 1 st April, 1998 

to 31 st March, 2001. 

14. In pursuance of the said Order, the Appellant approached the Central 

Commission praying for implementation of the Order of the Tribunal dated, 

14 th November, 2006. This time, the Appellant has shown in Form No. 12-B 

mentioning that the cumulative repayment of loan up to 31 st March, 1998 

is Rs. 392.62 crores. The Central Commission ultimately passed the Order 

on 2 nd November, 2007 implementing the directions given by this Tribunal 

revising the repayment of loan during the Tariff period from 1 st April, 1998 

to 31 st March, 2001 on normative basis for the purpose of computing the 

interest on outstanding loan during this period. Against the said Order this 

Appeal has been filed mainly contending that the cumulative repayment of 

loan before the Tariff period has to be taken as Rs. 392.62 crores and not 

Rs. 477.50 crores. 

15. As correctly pointed out by the learned Counsel for Respondent in the 

Tariff petition earlier filed by the Appellant before the Central Commission 

along with Form No. 12-B, it has been mentioned that the cumulative repayment 

of loan up to the previous years as Rs. 477.40 crores. Accordingly, the 

Central Commission accepted the figure of cumulative repayment of loan as 

Rs. 477.50 crores. The Appeal filed before this Tribunal in Appeal No. 96 of 2005 

would show that the Appellant only challenged the criteria adopted by the 

Central Commission with reference to the observations made by the Central 

Commission that the repayment of loan will be considered for the purpose 

of Tariff on normative basis or on actual basis, whichever is higher. In other 

words, the Appellant has not challenged the cumulative repayment of loan 

up to the previous year amounting to Rs. 477.40 crores. Further, the perusal 

of the Order dated, 14 th November, 2006 passed by this Tribunal would also 

make it clear that the Tribunal merely came to the conclusion and gave 

directions to the Central Commission that the repayment of loan during 

the Tariff period from 1 st April, 1998 to 31 st March, 2001 shall be considered 

on normative basis and not on actual basis. As such, the question of repayment 

of loan prior to 1 st April, 1998 fixed as Rs. 392.62 crores as claimed by 

the Appellant now was never raised before the Tribunal. In other words, 

the cumulative repayment of loan prior to 1 st April, 1998 was neither the 

issue before the Tribunal nor the same has been decided. There is only a 

mere direction to the Central Commission that the Commission shall adopt 

normative debt repayment methodology for the period from 1 st April, 1998 to 

31 st March, 2001. 

16. It has been strenuously contended by the learned Counsel for the 

Respondent that the claim made by the Appellant for the cumulative repayment 

of loan before the Tariff period has to be taken as Rs. 392.62 crores has been 

raised for the first time and not earlier either before the Central Commission 

or before this Tribunal. We find substance in this submission made by the 

learned Counsel for the Respondent. 

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0435 

17. It is also pointed out by the learned Counsel for the Respondent that in 

respect of other generating stations like Vindhyachal STPS, Korba STPS, the 

Central Commission passed earlier Orders of 10 th October, 2002 and 

24 th October, 2002 determining the Tariff before the cumulative repayment 

of loan up to the previous year have been considered on actual basis as 

requested by the Appellant in the Tariff petition. The said Order passed by 

the Central Commission had never been challenged and as such they have 

become final. 

18. Whatever it is, we are concerned with the question raised in the present 

Appeal with reference to the claim made by the Appellant pleading for the 

repayment of loan on normative basis fixed as Rs. 392.62 crores which was 

not an original claim made by the Appellant in the Tariff Petition No. 98 of 2002 

filed before the Central Commission. On the other hand, it was mentioned 

that the repayment of loan till 31 st March, 1998 was Rs. 477.50 crores. 

As held by the Supreme Court in Civil Appeal No. 1110 of 2007 in UPPCL v. NTPC 

Ltd., the claim of the party for revisiting the Tariff that too after the Tariff for 

the years 1998-2001, 2001-2004 and 2004-2009 had been finally determined 

and cannot be entertained. 

19. In view of the above discussions, we find no merit in the Appeal. Hence, 

the Appeal is liable to be dismissed. Accordingly, the Appeal is dismissed. 

No costs. 

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2010 ELR (APTEL) 0435* 



VS Lignite Power Private Limited 

v. 

Kadodara Power Pvt. Ltd. and Ors. 

REVIEW PETITION NO. 02 OF 2010 IN APPEAL NOS. 171 OF 2008, 172 OF 

2008 AND IA NOS. 233/08 AND 234/08, APPEAL NOS. 10 OF 2008 AND 117 

OF 2009 

DECIDED ON: 19.03.2010 

Coram 

M. Karpaga Vinagayam, J. (Chairperson) and H.L. Bajaj, Member (Technical) 

Whether Captive Generation Company (CGP)owned Petitioner/Company 

being Special Purpose Vehicle (SPV) “association of person” or not ? 

Reading the entire Rule 3 as a whole it does appear to us that a CGP owned 

by a special purpose vehicle has to be treated as an association of person 

and liable to consume 51 per cent of his generation in proportion to the 

ownership of the plant. Every legal entity is the person. Therefore, the special 

purpose vehicle which has to be a legal entity shall be a person in itself. 

Any generating company or a captive generating company is also a person. 

The Rules specially deals with co-operative society. In an association of 

persons it has to be a “person” because without being a person it cannot set 

* MANU/ET/0020/2010 


191


up a captive generating plant. Therefore, it will be wrong to say that since 

the special purpose vehicle is a “person” in itself it cannot be covered by a 

definition of “association of persons” and has to be covered by the main 

provision which requires the owner to consume 51 per cent or more of the 

generation of the plant. In our view the definition is somewhat strange in as 

much as the term “person” is said to include an “association of persons”. 

Captive Generating Company (CGP) owned by SPV to be treated as ‘association 

of person’. SPV has to be legal entity shall be ‘person’ in itself along with any 

generating company or CGP. SPV ‘association of persons’. Other issues raised 

in review petition already dealt with by Tribunal in said decision and conclusions 

arrived at based on valid reasoning . 

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Petition Dismissed 


Companies Act, 1956, Section 2(8) [p. 0437, para 4 e] 


Companies Act, 1956 

Rule 3 [p. 0437, para 4 g] 

Rule 3(1)(a)(ii) [p. 0436, para 4 i] 

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Counsel 

For Appellant/Petitioner/Plaintiff: Rana S. Biswas and Achintya Dvivedi, Advs. 

ORDER 


1. This petition has been filed by M/s V. Lignite Power Private Limited for 

review of Judgment dated, 22 nd September, 2009 rendered by this Tribunal 

in Appeal Nos. 171 of 2008, 172 of 2008 and Appeal No. 10 of 2008 and 

Appeal No. 117 of 2009. 

2. The Petitioner is a Special Purpose Vehicle (SPV) with the objective of 

building, owning and operating group captive power plant for supply of electricity 

to its end user shareholders through the transmission lines of Rajasthan 

Rajya Vidut Parasaran Nigam Ltd. or other licensed agencies. 

3. According to the Petitioner, the impugned Judgment has a significant 

impact on the interest of the Petitioner and therefore, he has sought review 

of the Judgment. Admittedly, the Petitioner was not a party in the Appeal 

under reference and no submissions have been made on the issues decided 

in the Appeal. 

4. The Applicant simply seeks the recall of findings in paragraph 15 of the 

impugned Order reproduced below: 

Decision with Reasons 

Is a company formed as a special purpose vehicle an association of person? 

(15) The question has arisen because the word “association of persons” 

is not defined anywhere in the Act or in the Rules. The proviso to 

Rule 3(1)(a)(ii) makes two special conditions for co-operative societies 

and association of persons. If the CGP is held by a person it is sufficient 

that the person consumes not less than 51 per cent of the aggregate 

electricity generated in such plant. In case the plant is owned by a 

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registered co-operative society then all the members together have to 

collectively consume 51 per cent of the aggregate electricity generated. 

In case the CGP is owned by an association of persons the captive users 

together shall hold not less than 26 per cent of the ownership of the 

plant in aggregate and shall consume not less than 51 per cent of the 

electricity generated in proportion to their shares of the ownership of 

the plant within a variation not exceeding + 10 per cent. A special 

purpose vehicle is a legal entity owning, operating and maintaining a 

generating station with no other business or activity to be engaged in 

by the legal entity. Now if three companies need to set up the power 

plant primarily for their own use they can come together and form 

another legal entity which may itself be a company registered under the 

Companies Act. This company may set up a power plant. In that case 

the company formed by three different companies would become a special 

purpose vehicle. If a company which is a special purpose vehicle is one 

person then all that is necessary is that this company should consume 

51 per cent of the generation. However, if it is treated as association of 

persons apart from a condition of consuming minimum 51 per cent of 

its generation the three share holders will also have to consume 

51 per cent of the generation in proportion to their ownership in the 

power plant. It is contended on behalf of some of the Appellants before 

us who are special purpose vehicles that they are not an association 

of persons and accordingly it is only necessary for them to consume 

51 per cent of their generation collectively without adhering to the Rule of 

proportionality of consumption to their share. This does not appear to 

us to be the correct view. Section 2(8) of the Act, as extracted above, 

says that a captive generating plant may be set up by any person and 

includes the power plant set up by any co-operative society or association 

of persons. Mr. M. G. Ramachandran contends that going by this definition 

if the special purpose vehicle is not an association of persons it cannot 

set up a captive generating plant because the definition does not mention 

any person other than a co-operative society and association of person. 

There is small flaw in the argument of Mr. M. G. Ramachandran in as 

much as the definition of captive generating plant is inclusive. In other 

words, the captive generating plant may be set up by any person including 

a co-operative society or association of persons. In other words, the 

person to set up a generating plant may be somebody who does not 

fulfill the description of either a co-operative society or association of 

persons. Nonetheless, reading the entire Rule 3 as a whole it does 

appear to us that a CGP owned by a special purpose vehicle has to be 

treated as an association of person and liable to consume 51 per cent 

of his generation in proportion to the ownership of the plant. Every legal 

entity is the person. Therefore, the special purpose vehicle which has 

to be a legal entity shall be a person in itself. Any generating company 

or a captive generating company is also a person. The Rules specially 

deals with co-operative society. In an association of persons it has to be 

a “person” because without being a person it cannot set up a captive 

generating plant. Therefore, it will be wrong to say that since the special 

purpose vehicle is a “person” in itself it cannot be covered by a definition 

of “association of persons” and has to be covered by the main provision 

which requires the owner to consume 51 per cent or more of the generation 

of the plant. In our view the definition is somewhat strange in as much 

as the term “person” is said to include an “association of persons”. 

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One therefore, cannot say that a CGP owner can be either a “person” 

or an “association of persons” a special purpose vehicle thus can be a 

“person” as well as an “association of persons”. A co-operative society 

is an “association of persons” in the sense that some persons come 

together to form a co-operative society. However, the moment an association 

or society is formed according to the legal provisions it becomes a person 

in itself. A special provision has been made permitting a co-operative 

society from consuming 51 per cent collectively. The first proviso 3(1)(a)(ii) 

itself suggests that a special privilege has been conferred on a co-operative 

society. Other persons who are also legal entities formed by several 

persons coming together have not been given such special privilege. 

Who can such association of persons be? Of the various legal entities 

comprehended as persons owning a CGP the special purpose vehicle 

does seem to fit the description of “association of persons”. We fail to 

comprehend who other than a special purpose vehicle can be an 

“association of persons”. None of the lawyers arguing before us gave 

example of “association of persons” other than a special purpose vehicle. 

Therefore, we have no hesitation to hold that special purpose vehicle is 

an association of persons. 

5. We have heard learned Counsel for the Applicant, Mr. Viswas and considered 

his submission. 

6. The careful reading of the Judgment of this Tribunal reveals that the 

various issues raised in this Review Petition have already been dealt with 

by this Tribunal and the correct conclusions have been arrived at on the 

basis of the valid reasonings. As there is no apparent error on the face of the 

record, we are of the view that no ground is made out for Review. Hence we 

dismiss this Review Petition at the admission stage itself. 

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2010 ELR (APTEL) 0438* 



f 

Maharashtra State Electricity Distribution Co. Ltd. 

v. 

Maharashtra Electricity Regulatory Commission and Ors. 


DECIDED ON: 16.04.2010 

Coram 

M.Karpaga Vinayagam, J. (Chairperson) and Rakesh Nath, Member (Technical) 


Whether Sate Commission justified in disallowing double counting of 

Additional Supply Charges (ASC) revenue in respect of Financial year 

2007-08? 

State Commission had taken a recent decision considering the same in 

respect of Financial Year 2007-08 in final truing up process. The State 

commission, in the final truing up process for financial year 2007-08 audited 

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Maharashtra State Electricity Distribution Co. Ltd. v. Maharashtra 


0439 

(M. Karpaga Vinayagam, J. (Chairperson) and Rakesh Nath, Member (Technical)) 

accounts for financial year 2007-08 after prudence check have been taken 

into consideration and in the latest Tariff Order for MSEDCL for financial 

year 2009-10 vide Order dated, 17 th August, 2009 the State Commission has 

redressed the grievance of the Appellant. This statement has not disputed 

by the Appellants, so appeal has become infructuous. 

Appeal Disposed of 

Counsel 

For Appellant/Petitioner/Plaintiff: Abishika Mitra and Aashish Bernard, Advs. 

For Respondent(s)/Defendant: Buddy A. Ranganadhan, Adv. for MERC 

ORDER 

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Rakesh Nath, Member (Technical) 

1. MSEDCL is the Appellant herein. This Appeal is as against the Order 

stated 20 th June, 2008 and 10 th December, 2008. The Appellant filed an 

application for approval of Annual Performance Review for the Financial 

Year 2007-08 and determination of Aggregate Revenue Requirement and 

Tariff for the financial year 2008-09 before the State Commission. 

2. The State Commission passed an Order after analysing the petition 

for the approval of Annual Performance Review by the Order dated, 

20 th June, 2008. 

3. On 21 st July, 2008, the Appellant filed Review Petition with regard to issue 

of double counting of Additional Supply Charges Revenue for the financial 

year 2007-08 in Review case No. 42 of 2008. 

4. On 10 th December, 2008, the State Commission disposed of the Review 

Petition allowing the same on some counts and disallowing double counting 

of ASC Revenue in respect of financial year 2007-08. The Appellant has 

contended that the same was allowed in respect of the financial year 2006-07 

but disallowed in respect of the year 2007-08 though reasonings to determine 

the double counting of ASC Revenue for the financial year 2006-07 and 

financial year 2007-08 were almost the same. 

5. The learned Counsel for the Respondent Mr. Buddy A. Ranganadhan has 

stated that the State Commission had taken a recent decision considering 

the same in respect of Financial Year 2007-08 in final truing up process. 

6. It is further pointed out by the learned Counsel for the State commission, 

in the final truing up process for financial year 2007-08 audited accounts 

for financial year 2007-08 after prudence check have been taken into 

consideration and in the latest Tariff Order for MSEDCL for financial year 

2009-10 vide Order dated, 17 th August, 2009 the State Commission has 

redressed the grievance of the Appellant 

7. In view of this statement which is not disputed by the learned Counsel for 

the Appellant, we feel that the Appeal has become infructuous. Accordingly 

the Appeal is disposed of. 

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2010 ELR (APTEL) 0440* 



Velagapudi Power Generation Limited 

v. 

Southern Power Distribution Co. of A.P., Transmission Corporation of 

A.P. Ltd. and A.P. Electricity Regulatory Commission 

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b 


DECIDED ON: 19.04.2010 

Coram 



Whether, in the facts and circumstances of the case, the 1st and 2nd 

Respondents were acting in concert and in combination to coerce the 

Appellant to accept a power price for the energy generated by it and 

whether the same was not an unlawful combination and whether the 

Commission was not required to pass the appropriate Orders in terms 

of Section 60 of the Electricity Act and whether in such circumstances 

the Appellant is not entitled to the reliefs prayed for? 

Reading of Section 26 of the Specific Relief Act makes it clear that the 

Appellant has not sought for rectification after satisfying the requirement of 

Section 26. As a matter of fact, the Appellant has failed to disclose that the 

clause 2.2 of the PPA dated 12th November, 2006 is the same as PPA dated 

25th September, 2006. That apart, the Appellant has never claimed that the 

PPA dated 25th September, 2006 has been signed under duress or coercion. 

Respondent, both the State Commission as well this Tribunal cannot declare 

that the actions of R-1 and R-2 would amount to coercion without holding 

detailed enquiry and examining the facts. Further, the Appellant is seeking 

rectification of the PPA which cannot be adjudicated by the State Commission 

under Section 86(1)(f).In the present case, the Appellant never followed 



under Sub-section (2), etc. Therefore, the Appellant cannot seek for its Tariff 

to be determined by the State Commission under Section 62 of the Electricity 

Act. State Commission has taken into consideration all facts and circumstances 

alleged by the Appellant and has come to the correct conclusion after assigning 

elaborate and correct reasons. 



Andhra Pradesh Electricity Reforms Act, 1998 



Companies Act, 1956 [p. 0446, para 17 e] 



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Velagapudi Power Generation Ltd. v. Southern Power Distribution Co. of A.P., 

Transmission Corp. of A.P. Ltd. and A.P. Electricity Regulatory Commission 


0441 




Section 86(1)(f) [p. 0443, para 9 a] 


Specific Relief Act, 1963 Section 26 [p. 0446, para 17 e] 

Counsel 

For Appellant/Petitioner/Plaintiff: K. Gopal Choudhary, Adv. 

For Respondent(s)/Defendant: Surbhi Sharma, Rana S. Biswas, A. Dwivedi 

and Shikha Ohri, Advs. for R 1 and 2 and K.V. Mohan, Adv. for APERC 

JUDGMENT 


1. Velagapudi Power Generation Ltd is the Appellant herein. 

2. The Appellant is the generator of electricity out of non-conventional energy 

source. The sanction was accorded to the Appellant in respect of 3 MW bio-mass 

power plant at Doppalapudi Village, Guntur District. Accordingly, the Appellant 

entered into a Power Purchase Agreement (PPA) with Transmission Corporation 

of Andhra Pradesh Limited (R-2) for the purchase of electric energy generated 

by the Appellant. By revised proceedings, the Non-Conventional Energy 

Development Corporation of Andhra Pradesh (NEDCAD) or the Corporation 

in short, the nodal agency, enhanced the capacity from 3 MW to 4 MW. 

Consequently another PPA was entered into. Since, various disputes arose 

between Southern Power Distribution Company of Andhra Pradesh (R-1) 

and AP. Transco (R-2), the Appellant filed a petition in OP No. 7 of 2007 

before the State Commission seeking for various reliefs in respect of the 

grievances arising out of the disputes relating to the conduct of the licensee 

(R-1) and for modification of the terms of the PPA and for the implementation 

of the Tariff as paid for other biomass power plants and for compensation for 

loss and injury caused to the Appellant. However, the State Commission 

passed the impugned Order dated, 3 rd December, 2008 rejecting all the prayers 

made by the Appellant and dismissing the petition. Feeling aggrieved over 

this, Velagapudi Power Generation Limited (Appellant) has filed this Appeal. 

The short facts of the case are as under. 

3. M/s Velagapudi Power Generation Limited, the Appellant herein applied 

for the sanction from the nodal agency, the Corporation to set up 3 MW 

capacity biomass power project at Doppalapudi Village, Guntur District in 

Andhra Pradesh. Accordingly, the sanction was granted on 28 th April, 2001. 

Pursuant to the said sanction, the Appellant entered into a PPA on 

25 th February, 2002 with the Andhra Pradesh Transmission Company (R-2) 

in respect of the said power plant. The PPA provided for the Tariff and for the 

facilities for generation of power and for the supply of power for any purpose 

prior to the commercial operation date and the PPA was made subject to the 

consent of the State Commission. 

4. On 5 th July, 2002, the PPA was amended in view of the change of the 

Appellant’s company from private limited to public limited. Thereafter, by the 

proceedings dated, 3 rd August, 2002, the Corporation, the nodal agency 

enhanced the capacity of the project from 3 MW to 4 MW. Consequently an 

amendment to the PPA dated, 23 rd August, 2002 with the revised terms was 


197


sent to the State Commission for consent. The State Commission by its 

Order dated, 8 th August, 2002 gave its consent to the Amended PPA. Thereupon, 

Andhra Pradesh Transmission Company Limited (R-2) entered into an amended 

PPA with the Appellant incorporating the enhanced capacity of the project 

in the PPA. Then the Corporation, the nodal agency, approved change of 

location of the project to Nandimpalem. 

5. Meanwhile, the State Commission initiated proceedings by the Order 

dated, 23 rd October, 2003 and determined the Tariff at which the distribution 

licensees are required to purchase electricity from biomass sources from 

1 st April, 2004. 

6. Consequent to the transfer scheme notified by the State Commission 

effective from 9 th June, 2005, the PPA of the Appellant with R-2 and the 

obligations thereunder to purchase the energy stood transferred and vested 

to the Southern Power Distribution Company of Andhra Pradesh (R-1). 

Accordingly, on 6 th October, 2006, the Appellant entered into a fresh draft 

PPA with R-1 on the mutually agreed Tariff. Then the State Commission 

granted its consent by letter dated, 7 th November, 2006 and directed for 

submission of the concluded PPA, duly signed by the parties, to the State 

Commission. Thereupon, the Andhra Pradesh Government directed the 

authorities namely the R-2 to take steps for inspection of the power plant. 

On 22 nd November, 2006, the Appellant’s power plant was inspected and 

the statutory clearance was given. In the meantime, the Appellant filed a 

Writ Petition before the High Court questioning the letter dated, 18 th May, 2006 

of R-2 addressed to the Appellant. However, ultimately on 26 th July, 2006 

the Appellant withdrew the Writ Petition and the same was dismissed as 

withdrawn. 

7. Then the State Commission took up the concluded PPA dated, 

12 th November, 2006 and in this regard R-1 sought permission of the R-2 by 

letter dated, 9 th December, 2006 to allow declaration of commercial operation 

date for their project for purchase of the delivered energy from the Appellant. 

Accordingly, permission was granted and R-1 issued a Memo dated, 

12 th December, 2006 to permit the Appellant for commercial operation of the 

plant. The commercial operation date was subsequently declared as 

13 th December, 2006. 

8. On 19 th December, 2006, the Government of Andhra Pradesh, through 

O.O. No. 346 dated, 19 th December, 2006 rescinded the statutory sanctioned 

power delegated to the R-2. At that stage on 21 st May, 2007, the Appellant 

filed O.P. No. 7 of 2007 before the State Commission for various reliefs in 

respect of the grievances arising out of this dispute relating to the conduct 

of the licensee and for the compensation of Rs. 1.395 crores apart from Tariff 

payment at par with other bio-mass power plants. After hearing the parties, 

the State Commission by its Order dated, 3 rd December, 2008 dismissed the 

said petition by accepting the contention of R-1 and R-2. On being aggrieved 

the Appellant has filed this appeal. 

9. While assailing the impugned Order the learned Counsel for the Appellant 

would make the following contentions: 

(i) The State Commission has failed to exercise powers to grant the 

relief sought for by the Appellant before the State Commission by merely 

stating that the State Commission has no powers to grant those reliefs. 

The reliefs sought by the Appellant before the State Commission are 

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within the powers of the State Commission in the adjudication of a 

dispute between a generating company and the licensee if a wide 

interpretation is given to the scope of Section 86(1)(f) of the Act, the 

State Commission in the exercise of its functions could grant the relief 

and remedy to redress grievances Further, the terms of the contract are 

contrary to law and the same was obtained under coercion or economic 

duress or undue influence. 

(ii) The consent from the State Commission for a PPA and for amendment 

thereto has to be obtained only by the licensee and this obligation is on 

the licensee alone and not on the generating company. 

(iii) The PPA having been made subject to the consent of the State 

Commission is not valid since the licensee alone is obliged to approach 

the State Commission for consent. The generating company, the Appellant, 

had a legitimate expectation that this would be duly done. It is not the 

case that the State Commission has refused to consent which rendered 

the PPA void. 

(iv) The letter dated, 18 th May, 2006 written by the R-1 was clearly 

intended as a coercive measure to obtain a lower Tariff than that being 

paid to other biomass power projects pursuant to Tariff determination 

by the State Commission. The chain of events subsequent thereto and 

the conduct of the R-1 and R-2 on various occasions would indicate 

that the Appellant was put under pressure and severe economic duress 

for securing a lower Tariff. The State Commission did not properly 

appreciate the sequence of events and draw proper legal inferences 

therefrom. 

(v) The Appellant had approached the State Commission for implementing 

the common Tariff being paid to other biomass power plants pursuant 

to its Tariff determination and not for any new or separate determination 

of Tariff. The Appellant was entitled to be paid the same Tariff as was 

being paid to other biomass power plants. It could not be discriminated 

against by a lower Tariff secured through coercive negotiations and 

economic duress. The draft PPA dated, 25 th September, 2006 and 

6 th October, 2006 and the PPA dated, 12 th November, 2006 were always 

expressly on an ad hoc basis without prejudice to the grievances and 

contentions with regard to Tariff and its rights under the PPA dated, 

25 th February, 2006. The consent of the State Commission dated, 

7 th November, 2006 had necessarily to be construed as having taken 

note of the ad hoc nature and the reservations subject to which the 

draft PPA was signed. 

(vi) The involvement of the R-2 in withholding and delaying inspection, 

seeking withdrawal of the Writ Petition by the Appellant and controlling 

and directing the release of back power by the R1 and permitting 

declaration of commercial operation date and purchase of energy is 

clearly evident from the records produced by the Appellant. There is 

clearly abuse of dominant position by the R-1 and R-2 acting in concert 

and in combination. The delay in release of back power was not due to 

any lack of statutory inspection. It was only intended to mount pressure 

and economic duress upon the Appellant to agree to a fresh PPA with 

a lower Tariff. 

(vii) The R-1 being an instrumentality of the State has the responsibility 

of acting fairly and equitably without discrimination and it must also 

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promote generation from renewable sources of energy. Its conduct has 

got to be tested and Judged accordingly. This has not been done by the 

State Commission. Due to this conduct, the R-1 is liable to pay for the 

loss incurred by the Appellant by its conduct of delaying the release of 

back power and the commissioning of the plant from May 2006 to 

December 2006 and therefore, the Appellant is entitled to compensation 

for the same. 

10. The learned Counsel for the Respondents including the learned Counsel 

for the State Commission have pointed out various reasoning given in the 

impugned Order to justify its conclusions for rejecting the prayers made by 

the Appellant before the State Commission. 

11. The question that arises for consideration in this case is this: 

Whether, in the facts and circumstances of the case, the first and 

second Respondents were acting in concert and in combination to coerce 

the Appellant to accept a power price for the energy generated by it and 

whether the same was not an unlawful combination and whether the 

Commission was not required to pass the appropriate Orders in terms 

of Section 60 of the Electricity Act and whether in such circumstances 

the Appellant is not entitled to the reliefs prayed for? 

12. At the outset it shall be stated that the prayer made by the Appellant 

Petitioner before the State Commission is so comprehensive seeking for the 

roving enquiry to give omnibus directions claiming strange reliefs which the 

State Commission is not empowered to grant under the provisions of the 

Electricity Act. 

13. Let us now refer to the prayer made by the Appellant before the State 

Commission. They are as follows: 

(a) To declare that the conduct of First and second Respondents in 

combination and/or severally in the facts and circumstances of the 

case, and in coercing the Petitioner into re-negotiation of the Tariff and 

terms thereof contrary to the provisions of the Electricity Act, 2003 and 

in withholding the release of temporary supply for start-up and testing 

of the power plant contrary to the promise held out to the Petitioner and 

the Petitioner’s legitimate expectation and contrary to the statutory 

obligation to supply and in coercing the Petitioner to sign a draft PPA 

recognising and preserving the Petitioner’s right to legal remedy and 

thereafter, coercing the Petitioner to sign a PPA without the agreed 

Clause preserving rights of legal remedy, precondition to release start-up 

power and to permit commissioning and synchronising of the power 

plant and in adopting and pursuing the coercive illegal, arbitrary 

capricious measures therein, thereby and otherwise as improper arbitrary, 

unconsciousable, capricious and illegal and gross abuse of monopoly, 

power and dominant position and consequently to restrain them from 

so combining and/or acting; and 

(b) To declare that the second Respondent or any of its officers had no 

right to deal in or with, meddle, interfere and/or dictate in matters 

concerning purchase of energy, and that the second Respondent 

is prohibited from doing so and to restrain the second Respondent 

and all its officers and servants from dealing, meddling, interfering 

and or dictating in any matters of power purchase by distribution 

licensees; and 

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(c) To direct the first Respondent to amend Clause 2.2 of the Power 

Purchase Agreement dated, 12 th November, 2006 by deleting therefrom 

the words “Schedule-1A or”, and deleting the words “or negotiated Tariff 

mutually agreed by both the parties, whichever is less shall be applicable”, 

and deleting the last sentence beginning with “Notwithstanding” and 

ending with “Variable Cost”, and also by deleting the Schedule 1-A to 

the said Power Purchase Agreement; and 

(d) To direct first Respondent to allow and implement with effect from 

13 th December, 2006, the Tariff for the supply of energy generated by the 

Petitioner at the same rate as for other biomass plants who were also 

parties to the proceedings and Hon’ble Commission’s Order dated, 

20 th March, 2004 in accordance with the Judgment and Order dated, 

2 nd June, 2006 of the Hon’ble Appellate Tribunal in the appeal against the 

Hon’ble Commission’s Order dated, 20 th March, 2004 in R.P. No. 84/2003 

in O.P. No. 1075/2000 subject to the Orders in, and the outcome of, the 

appeals pending before the Hon’ble Supreme Court and all or any 

proceedings consequent thereto; and 

(e) To direct the first Respondent to make payments for the energy 

supplied by the Petitioner at the same rates as contemporaneously 

being paid to the other biomass plants who were also parties in the 

proceedings and Hon’ble Commission’s Order dated, 20 th March, 2004 

in accordance with the interim Orders and/or arrangements pending 

disposal of the appeals arising out of the Hon’ble Commission’s Order 

dated, 20 th March, 2004 in R.P. No. 84/2003 in R.P. No. 84/2003 in 

O.P. 1075/2000 pending before the Hon’ble Supreme Court, and 

consequently to forthwith make payment of the balance amounts thereby 

becoming payable; and 

(f) To award and direct the first Respondent or both Respondents to pay 

compensation to the Petitioner for the loss and injury caused to and 

suffered by the Petitioner by reason of the acts and omissions of the 

Respondents of the aggregate amount of Rs. 1,39,42,246 or such other 

amounts in respect thereto as the Hon’ble Commission considers fit in 

the facts and circumstances of the case, on account and comprised of 

losses of interest amounts for May 2006 to November 2006 of Rs. 41,84,299 

and Rs. 38,04,541, and losses of salaries and wages for the period from 

May to November 2006 of Rs. 13,86,406, and compensation for loss of 

five months’ warranty period for the plant and equipment at Rs. 18,67,000 

and losses of damage, deterioration and degradation of raw material at 

Rs. 25,00,000 and loss of Rs. 2,00,000 in hiring and utilising a DG set 

instead of availing temporary supply. 

14. In addition to these prayers which have been sought for before the State 

Commission, the Appellant has made further prayers in this Appeal before 

this Tribunal, which are also equally strange. These additional prayers are 

as follows: 

(i) To award exemplary damages and compensation in the aggravated 

circumstances of the conduct of the Respondents comprising coercion, 

malice in fact and law, abuse of monopoly power and dominant position, and 

(ii) To award costs of the petition by way of reimbursement of fees, legal 

costs and expenses and other costs, and 

(iii) To direct initiation of such proceedings and/or measures under 

Section 142 of the Act for willful contravention of the Act, Rules and 


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Regulations, Orders and willful abuse of monopoly power and dominant 

position by the first and/or second Respondents acting in combination 

and concert to the detriment and injury of the Appellant. 

15. While referring to the various prayers and reliefs sought for before the 

State Commission as well as before this Tribunal, it is noticed that the 

Appellant has merely contended that the Appellant was compelled by R-1 

and R-2 to enter into a PPA dated, 6 th October, 2006 by using its dominant 

position and the said agreements have been signed by the Appellant under 

economic duress and therefore, the PPA is void. At the same time, the Appellant 

is also claiming that the PPA should be amended only to the extent of Clause 2.2 

of the PPA dated, 12 th November, 2006 by deleting therefrom the words 

“Schedule-1A” and deleting the words “or negotiated Tariff mutually agreed 

by both the parties, whichever is less shall be applicable”, and deleting the 

last sentence beginning with “Notwithstanding” And ending with “ 

Variable Cost”. 

16. On going through the various prayers it is clear that the Appellant has 

through the prayers sought various reliefs which are mutually contradictory. 

In short, the Appellant on one hand claims for declaration from the State 

Commission that he was coerced into signing of the PPA dated, 

23 rd November, 2006 and as such, such coercion makes the PPA voidable 

and on the other hand it has merely sought for rectification of the PPA only 

in respect of some Clauses. 

17. The rectification of the PPA can be sought under Section 26 of the 

Specific Relief Act, which reads as follows: 

26. When instrument may be rectified.–(1) When through fraud or a 

mutual mistake of the parties, a contract or other instrument in writing 

and being the Articles 628 of association of a company to which the 

Companies Act, 1956 (1 of 1956) applies does not express their real 

intention, then: 

(a) either party or his representative in interest may institute a 

suit to have the instrument rectified; or 

(b) the Plaintiff may, in any suit in which any right arising under 

the instrument is in issue, claim in his pleading that the instrument 

be rectified; or 

(c) a Defendant in any such suit as is referred to in Clause 

(d) may, in addition to any other defender open to him, ask for 

rectification of the instrument. 

(2) If, in any suit in which a contract or other instrument is sought to 

be rectified under Sub-section (1), the Court finds that the instrument, 

through fraud or mistake, does not express the real intention of the 

parties, the Court may, in its discretion, direct rectification of the 

instrument so as to express that intention, so far as this can be done 

without prejudice to rights acquired by third persons in good faith and 

for value. 

(3) A contract in writing may first be rectified, and then if the party 

claiming rectification has so prayed in his pleadings and the Court 

thinks fit, may be specifically enforced. 

(4) No relief for the rectification of an instrument shall be granted to 

any party under this Section unless it has been specifically claimed. 

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Provided that where a party has not claimed any such relief in the 

pleading, the Court shall, at any stage of the proceeding, allow 

him to amend the pleading on such terms as may be just for including 

such claim. 

18. The reading of the above provision makes it clear that the Appellant has 

not sought for rectification after satisfying the requirement of Section 26. 

As a matter of fact, the Appellant has failed to disclose that the Clause 2.2 

of the PPA dated, 12 th November, 2006 is the same as PPA dated, 

25 th September, 2006. That apart, the Appellant has never claimed that the 

PPA dated, 25 th September, 2006 has been signed under duress or coercion. 

19. The proper forum for rectification instrument is a Civil Court exercising 

ordinary civil jurisdiction. Section 26 of the Specific Relief Act refers to suit 

only. Thus, for adjudication of rectification, the party has to render extensive 

evidence in the suit before the Civil Court. This cannot be dealt with in a 

summary proceeding before the State Commission. As pointed out by the 

Learned Counsel for the Respondent, both the State Commission as well 

this Tribunal cannot declare that the actions of R-1 and R-2 would amount 

to coercion without holding detailed enquiry and examining the facts. Further, 

the Appellant is seeking rectification of the PPA which cannot be adjudicated 

by the State Commission under Section 86(1)(f). In fact, Section 86(1) refers 

to the word “disputes”. “Disputes” as used in the said Section refers to a 

dispute arising under the executed contract. Therefore, only with regard to 

adjudication of the dispute post contract? The State Commission can be 

approached. Admittedly the prayer sought for in these proceedings would 

relate not to the post contract but for the execution of the contract. Therefore, the 

finding rendered by the State Commission with reference to the law of 

jurisdiction to go into this sort of dispute, in our view, is perfectly valid. 

20. The Appellant has relied on Section 21(4) of the Reforms Act to infer that 

the licensee is under obligation to pay compensation for the losses suffered 

by the Appellant. This contention in the facts and circumstances of the case 

does not merit consideration. Even assuming that there was no obligation 

on the part of the generating company to obtain the consent, there is no 

reason given by the Appellant as to why no attempt at any stage was made 

to verify the status of the amended PPA executed on 23 rd August, 2002. 

Admittedly, even at that stage when the third transfer scheme was published 

no effort was made by the Appellant to verify the status of the amended PPA. 

21. According to the Appellant, the PPA dated, 25 th February, 2002 as amended 

on 23 rd August, 2002 is void. This contention also is not correct because the 

PPAs which received the consent of the State Commission under Section 21(4) 

of the A.P. Electricity Reform Act, 1998 alone are valid and binding. In other 

words, the PPAs with the corresponding rights and obligations shall be 

vested with the distribution licensee. Admittedly, there was no consent of 

the State Commission in this regard as per Clause 21.5 of the A.P. Electricity 

Reform Act, 1998. 

22. As per Section 86(1)(f), the State Commission is under obligation to 

regulate electricity purchase and procurement process of the distribution 

licensee by approving the PPA entered into between the generating company 

and the distribution licensee. The sale and purchase of electricity including 

the price is recommended by the State Commission. Therefore, the approval 

of the State Commission is necessitated to ensure that transparent and fair 

procedure is adopted. 


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23. The PPA dated, 25 th February, 2002 was made subject to obtaining the 

consent of the State Commission as per Section 21 of the Andhra Pradesh 

Electricity Reforms Act, 1998. Clause 9.2 of the agreement is quite relevant, 

which is reproduced below: 

No oral or written modification of the Agreement either before or after 

its execution shall be of any force or effect unless such modification is 

in writing and signed by the duly authorised representative of the 

Company and the APTRANSCO, subject to the condition that any further 

modification the Agreement shall be done only with the prior approval 

of the Andhra Pradesh Electricity Regulatory Commission. However, the 

amendments to the Agreement as per the respective Orders of APERC 

from time to time shall be carried out. All the conditions mentioned in 

the Agreement are with the consent of APERC. 

24. On going through this Clause, it is clear that subsequent to the amendment 

to the PPA dated, 22 nd May, 2005, it had not obtained the sanction from the 

State Commission and as such the PPA dated, 25 th February, 2002 became 

unenforceable. 

25. As pointed out by the learned Counsel for the Respondents, the State 

Commission correctly held that Section 21 of the A.P. Electricity Act, 1998 

deals with the restrictions on licensees and generating companies. From the 

reading of the different Sub-sections, it is clear that obtaining consent from 

the State Commission is mandatory and grant of such consent by the State 

Commission is not an empty formality. 

26. Section 62 of the Electricity Act empowers the Appropriate Commission 

to determine Tariff for supply of electricity by a generating company to a 

distribution licensee. In the present case, the Appellant never followed 



under Sub-section (2), etc. Therefore, the Appellant cannot seek for its 

Tariff to be determined by the State Commission under Section 62 of the 


27. As indicated earlier, the main contention of the Appellant is that the 

intention of Respondent’s letter dated, 18 th May, 2006 was coercive and an 

act of economic duress and the approved PPA dated, 25 th September, 2006 

and dated, 6 th October, 2006 and the PPA dated, 12 th November, 2006 were 

admittedly mere ad hoc arrangements. It is also the contention by the learned 

Counsel for the Appellant that delays and obstructions caused by R-1 and 

R-2 subsequent to the PPA dated, 12 th November, 2006 were calculated to 

further subject to coercion and economic duress and this is so on the part 

of Respondents since the Respondent licensee are instrumentalities of the 

State Government who are bound to act fairly and without discrimination. 

These contentions have no basis. As pointed out by the learned Counsel for 

the Respondents, the draft PPA executed on 25 th September, 2006 is voluntary 

and without any alleged coercion. The Appellant in his pleadings has 

categorically stated that it had continuously followed up with the Respondents 

to give finality to the draft PPA. Article 2.2 of this draft PPA is ad-verbatim 

same as the concluded PPA dated, 12 th November, 2006. 

28. It is quite strange that the Appellant prays for the rectification of the PPA 

in respect of Article 2.2 only on the point of alleged coercion. The reading of 

the letter dated, 18 th May, 2006 would not show that it has to be construed 

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as a coercive or an act of economic duress. On the other hand, the words 

contained in the letter issued by R-1 would show that it confers freedom and 

choice to the Appellant to deal with the generated energy as per its own 

decision. According to the letter it is open to the Appellant to have access 

and sell the generated energy to third party if a better price was available 

to him. There was no restriction upon the Appellant to sell the electricity to 

the Respondent alone or to a particular person. 

29. It is contended by the Appellant that the Respondents refused to supply 

back-up power till the fresh agreement is signed. Admittedly, the Appellant filed 

a Writ Petition praying for several reliefs. Strangely, the Appellant abandoned 

the same and withdrew the Writ Petition. Had there been any truth in their 

allegations, the Appellant would have pursued the remedy before the High 

Court where the Appellant was able to get some interim relief. Therefore, this 

contention also urged by the learned Counsel for the Appellant cannot be accepted. 

30. It is again contended by the learned Counsel for the Appellant that the 

delays and obstructions subsequent to PPA dated, 12 th November, 2006 were 

calculated to subject to further coercion and economic duress to withdraw 

the petition. The Appellant has stated that the delay caused by the Respondents 

to provide back-up power was solely responsible for pushing the Appellant 

to a corner which subsequently forced the Appellant to enter into a PPA 

dated, 12 th November, 2006. The Appellant has never mentioned in his pleadings 

that it has time and again failed to abide by the terms of the PPA dated, 

25 th February, 2002. As per the MOU dated, 9 th June, 2003, the Appellant 

had to commission the project within 24 months from the date of signing of 

the MOU. The Appellant had not only failed to commission the project as per 

MOU dated, 9 th June, 2003 but also not finalised the site for construction of 

the power plant. On the other hand, the Appellant had requested for a 

change of location from Doppalapudi to Nadipalem in Guntur District. As a 

matter of fact, this request of the Appellant was considered by the Respondent 

and consent to the change of location was given on 7 th June, 2002. 

31. As indicated above, the Appellant obtained an interim Order from the 

High Court on 6 th July, 2006 which clearly directed the Respondents to 

provide back-up for testing the power plant and also directed the Respondents 

to purchase power at Rs. 3.01 from the Appellants. It is quite strange on the 

part of the Appellant that despite having the Orders of the High Court in its 

favour, it had not chosen to get the Order enforced despite the allegation 

that the Respondents failed to abide by the interim Order. On the contrary 

immediately after the interim Order, the Respondents filed a counter in the 

Writ Petition and the matter was argued at length and actually both parties 

expressed their readiness for final disposal of the matter the High Court 

which heard the matter at length on different dates but ultimately, the 

Appellant had to withdraw the petition. 

32. The Appellant had stated that it had procured raw materials for testing 

and commissioning the power plant and that due to the delay caused by the 

Respondents, the said raw materials were deteriorating which was causing 

financial loss to the Appellant and this was another reason which compelled 

the Appellant to sign the PPA dated, 12 th November, 2006 which was approved 

by the State Commission on 7 th November, 2006. Thereupon, the Appellant 

entered into PPA dated, 12 th November, 2006 based on the draft PPA dated, 

6 th October, 2006. At that stage the Appellant withdrew the Writ Petition on 


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27 th November, 2006 and the plant commenced commercial operation on 

13 th December, 2006. Despite the commencement of the operation of the 

power plant in December 2006, acting upon the PPA the Appellant for the 

reasons best known to it choose to file the present petition before the State 

Commission alleging coercion and financial duress etc only on 22 nd May, 2007, 

i.e. after more than seven months. There was no reason as to why the 

allegations of coercion have not been agitated before the same forum prior 

to its withdrawal. 

33. As mentioned earlier, Clause 2.2 of the PPA dated, 12 th November, 2006 

is the same as the draft PPA dated, 25 th September, 2006. The Appellant has 

never claimed that the PPA dated, 25 th September, 2006 has been signed 

under duress or coercion. 

34. In spite of the claim for compensation for damages, the Appellant has 

failed to make out any case for damages. Nothing has been indicated to 

establish that there is a default on the part of the Respondents which makes 

them liable for payment of any compensation. No material has been shown 

that there is breach of agreement. As such the Appellant has miserably 

failed to make any case for any loss and as such relief sought cannot be 

granted by the State Commission. As correctly pointed out by the learned 

Counsel for the Respondents, the Appellant failed to file along with the 

petition before the State Commission any bill or copy of its accounts or any 

substance supporting its claim for damages. Of course, at the end the Appellant 

filed a certificate which only shows interest paid from May to December 

2006, salary and wages from May to December 2006. Therefore, the documents 

filed by the Appellant to prove the losses have not been filed at the appropriate 

stage and therefore, it cannot form the basis for creating any liability upon 

the Respondents. 

35. On going through the impugned Order, it is evident that the State 

Commission has taken into consideration all facts and circumstances alleged 

by the Appellant and has come to the correct conclusion after assigning 

elaborate and correct reasons. 

36. In such situation, we do not find any ground to interfere with the findings 

of the facts and conclusions arrived at by the State Commission. Therefore, 

there is no merit in this Appeal. Accordingly, the Appeal is dismissed. No cost. 

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2010 ELR (APTEL) 0450* 



Tamil Nadu Electricity Board 

v. 

Central Electricity Regulatory Commission and NTPC Ltd. 

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DECIDED ON: 25.02.2010 

Coram 


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Whether the Appeal is barred in terms of the provision of Order 47 

Rule 7 of the Code of Civil Procedure when the Order impugned was 

said to be passed by the Central Commission rejecting the Review 

Petition on the ground that it is time barred under Section 94(1) of the 

Electricity Act? 

Section 94(1)(f) has been incorporated in the Electricity Act by bringing 

into force all the provisions relating to it. Therefore, all the provisions as 

a whole will have to be read as it is a registration by incorporation. In view 

of this it would also include Order 47, Rule 7 containing prohibition 

against the Appeal from an Order rejecting the review. In that context, 

Section 111 cannot be incorporated to provide that an appeal would lie 

against an Order rejecting the Review. Similarly, even in respect of the 

decision of the Provincial Insolvency Act, 1920, it is to be noted hat Section 5 

of the said Act starts with “subject to” the said Act, provides that the 

Court, shall have the same powers as it follows in the exercise of the 

original jurisdiction. There is no such qualification prescribed under 

Section 94 of the Act. Appeal is as against the Order rejecting the Review 

petition by the Central Commission on the ground of long and unexplained 

delay under Section 94 of the Act and as such this Appeal is barred under 

Order 47, Rule 7. 

Appeal Dismissed as not Maintainable 


Chidella Veraiyya v. Kollam Koti Reddy AIR 1941 Madras 588 (mentioned) 

[p. 0457, para 16 d] 

Green View Tea & Industries v. Collector MANU/SC/0140/2004: (2004) 4 

SCC 122: AIR 2004 SC 1738: 2004 (2) AWC 1723 (SC): 98 (2004) CLT 157 

(SC): (2004 (2) JCR 124 (SC)): JT 2004 (2) SC 556: 2004 (2) SCALE 547 

(mentioned) [p. 0459, para 27 h] 

K. Rajamouli v. A.V.K.N. Swsamy MANU/SC/0341/2001: AIR 2001 SC 2316: 

2001 (3) ALLMR (SC) 788: 2001 (2) ArbLR 702 (SC): (2001) 3 CompLJ 144 

(SC): JT 2001 (Supp l1) SC 168: 2001 (4) SCALE 212: (2001) 5 SCC 37: 

(2001) 3 SCR 473 (mentioned) [p. 0459, para 27 h] 

M.N. Haider v. Kendriya Vidalaya Sangathan (2004) 13 SCC 677 (mentioned) 

[p. 0460, para 28 c] 

Nagindas Motilal v. Nilaji MANU/MH/0044/1924: AIR 1924 Bom 399: (1924) 

26 BOMLR 395 (mentioned) [p. 0457, para 16 c] 

Pushharan v. Ramkrishan AIR 1955 Tripura 49 (mentioned) 

[p. 0457, para 16 d] 

Ram Prasad v. Dagdulal AIR 1956 Nagpur 215 (mentioned) 

[p. 0457, para 16 c] 

Sattemma v. Vishnumurthy MANU/AP/0080/1964: AIR 1964 AP 162 (mentioned) 

[p. 0457, para 16 c] 

Shankar Motiram Nale v. Shiolasing Gannusing Rajput MANU/SC/0676/1994: 

(1994) 2 SCC 753 (mentioned) [p. 0459, para 26 e] 

Sher Singh v. Firm Bishan Lal AIR 1937 Lahore 568 (mentioned) 

[p. 0457, para 16 d] 

Suseel Finance & Leading Co. v. M. Lata (2004) 13 SCC 675 (mentioned) 

[p. 0459, para 27 g] 


207



Code of Civil Procedure, 1908 

Order 41, Rule 1 [p. 0458, para 23 h] 

Order 43, Rule 1 [p. 0458, para 23 i] 

Order 47, Rule 1 [p. 0456, para 16 i] 

Order 47, Rule 7 [p. 0454, para 11 a] 

Rule 4(1) [p. 0456, para 16 i] 


Code of Criminal Procedure, 1973, Section 378(3) [p. 0460, para 29 h] 




Section 94(1)(f) [p. 0457, para 19 h] 




Letters Patent Act, 1866, Section 15 [p. 0461, para 32 d] 

Limitation Act, 1963 Article 114 [p. 0460, para 29 h] 

Provincial Insolvency Act, 1920 




Letters Patent, Rule 15 [p. 0457, para 16 c] 

Counsel 

For Appellant/Petitioner/Plaintiff: M.N. Venkataramani, Sr. Adv., S.S. Dash 

and P.R. Kovilan, Advs. 

For Respondent(s)/Defendant: M.G. Ramachandran, Anand K. Ganesan and 

Swapna Seshadri, Advs. 

JUDGMENT 


1. Tamil Nadu Electricity Board (TNEB) is the Appellant. NTPC Ltd. is the 

Second Respondent. 

2. The Appellant filed a Petition for Review of the Order dated, 13 th June, 2005 

before the Central Commission. The said Review Petition was dismissed 

by the Order dated, 25 th June, 2009 on the ground of inordinate delay. 

Aggrieved over this Order, Appellant has filed this Appeal. 

3. Even at the time of admission, the NTPC, The Second Respondent herein 

has raised a preliminary objection with regard to the maintainability of the 

Appeal. 

4. Since, the jurisdiction of this Tribunal to entertain this Appeal in question, 

is in question, we thought it fit to hear the arguments by the leaned Counsel 

for the parties with reference to maintainability of this Appeal even before 

admission of this Appeal. Accordingly, we have heard the learned Counsel 

for both the parties. 

5. Let us now, refer to the relevant facts leading to the filing of this Appeal. 

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6. The NTPC filed a petition before the Central Commission in the year 2003 

in Petition No. 1 of 2003 for determining the Tariff applicable for the Talchar-2 

station belonging to NTPC for the period 2001 to 2004. The TNEB was party 

to the said proceedings before the Central Commission. By the Order dated, 

13 th June, 2005 the Central Commission allowed the outstanding undischarged 

liabilities also by including the same for determination of Tariff in favour of 

the NTPC. This Order dated, 13 th June, 2005 became final since the TNEB, 

the Appellant had not chosen to file any Appeal as against the same. 

7. For the period 2004 to 2009, the NTPC, Respondent No. 2, filed a petition 

before the Central Commission for determining the Tariff for Thalchar-2 

station of the NTPC. The Central Commission after hearing the parties passed 

Order dated, 31 st January, 2008 determining the Tariff but this time did not 

include the undischarged liabilities for the purpose of determining the Tariff 

calculations. Aggrieved over this Order, the NTPC filed an Appeal before the 

Tribunal on 18 th March, 2008 in Appeal No. 66 of 2008. The same is still 

pending before this Tribunal. TNEB, the Appellant is the Respondent in the 

said Appeal. 

8. During the pendency of the said Appeal before this Tribunal, the Appellant 

TNEB filed a petition for review in Petition No. 47 of 2008 before the Central 

Commission for review of the Order dated, 31 st January, 2008 seeking for the 

reconsideration of the earlier Order dated, 13 th June, 2005 passed in favour 

of NTPC on the aspect of inclusion of outstanding undischarged liabilities in 

the light of non inclusion of the outstanding undischarged liabilities in the 

Order dated, 31 st January, 2008. This Review Petition was dismissed on 

29 th May, 2008 by the Central Commission as not maintainable. 

9. Apart from the Order dated, 31 st January, 2008 disallowing the undischarged 

liabilities in respect of Thalchar-2 station of NTPC, the Central Commission 

had passed similar Orders against NTPC in respect of its various other 

generating stations for the period from 2004 to 2009 disallowing the 

undischarged liabilities. Against all these Orders, the NTPC filed different 

Appeals before this Tribunal and the Tribunal ultimately decided the issue 

of undischarged liabilities in respect of various other generating stations in 

favour of the NTPC by setting aside the Order of the Central Commission. 

However, the Appeal filed by the NTPC in regard to Thalchar-2 station in 

Appeal No. 66 of 2008 is still pending. 

10. Again on 13 th April, 2009, the Appellant filed another Review petition in 

No. 138 of 2009 seeking for review of the Order dated, 13 th June, 2005 passed 

in Petition No. 1 of 2003 filed by the NTPC praying that the Order passed on 

13 th June, 2005 has to be cancelled and set aside in view of contrary view 

expressed by the Central Commission in respect of Thalchar-2 station by 

the Order dated, 31 st January, 2008 relating to the period 2004 to 2009. 

Since, there was a delay of three years and ten months from the Order 

dated, 13 th June, 2005, an Application for condonation of delay for the said 

period had also been filed. However, the Central Commission passed the 

impugned Order on 29 th June, 2009 dismissing the said Review Petition on 

the ground of inordinate and unexplained delay in filing the said Review 

Petition. This Order is the subject matter of this Appeal before this Tribunal, 

filed by TNEB, the Appellant. 

11. The maintainability of the Appeal is questioned by the learned Counsel 

for the Respondent on the following grounds: 


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(i) The Order impugned dated, 29 th June, 2009 was passed in the Review 

Petition filed by the Appellant under Section 94 of the Act, before the 

Central Commission under R.P. No. 138 of 2009 rejecting the Review 

Petition on the ground of long and unexplained delay. This Order cannot 

be appealed before the Tribunal as there is a bar under Order 47, 

Rule 7 of the Code of Civil Procedure. 

(ii) The main Order had been passed on 13 th June, 2005 itself. The Appellant 

filed a petition for review before the Central Commission for reviewing 

the Order dated, 13 th June, 2005 with a delay of three years and ten 

months. This inordinate delay has not been explained by the Appellant. 

Unless the delay is properly explained and condoned, the Review Petition 

cannot be entertained. Furthermore, the main Order had been passed 

on 13 th June, 2005. The Appellant must have filed the Appeal long back 

before the Tribunal against the said Order and instead he has now 

chosen to file Review Petition before the Central Commission that too 

after inordinate delay. Therefore, the Appellant should not be allowed 

to circumvent the procedure contemplated under the Act. 

12. Before dealing with the question of maintainability of this Appeal, we feel 

it necessary to bear in mind three aspects which would emerge from the 

background of this case as enumerated earlier. 

(i) According to the Appellant, it is aggrieved over the Order passed on 

13 th June, 2005 determining the Tariff allowing the undischarged liabilities 

in favour of NTPC. Even though the said Order was passed in favour of 

NTPC as early as on 13 th June, 2005, the Appellant did not take immediate 

action by way of filing of any Appeal before the Tribunal or filing the 

Review Petition before the Central Commission, despite the full knowledge 

of the Order passed on 13 th June, 2005 by the Central Commission 

regarding the issue of undischarged liabilities in favour of NTPC. Why, no 

reasons have been accorded by the Appellant as to why no action was 

taken even when it was said to be aggrieved over the Order passed as 

early as on 13 th June, 2005 and why Appellant has allowed the said 

Order to become final? There is no answer. 

(ii) The NTPC for the subsequent period, i.e. for the year 2004 to 2009, 

filed a petition for determination of Tariff praying for inclusion of the 

undischarged liabilities. However, the Central Commission did not allow 

the undischarged liabilities this time in favour of NTPC. This Order was 

passed on 31 st January, 2008. Aggrieved over this Order the NTPC filed 

an appeal before this Tribunal in Appeal No. 66 of 2008 and the same 

is pending before this Tribunal. Admittedly, the TNEB, the Appellant as 

the Respondent was a party to this Appeal in 66 of 2008 before the 

Tribunal. Instead of contesting the matter as Respondent before the 

Tribunal in justification of the Order of Central Commission in this 

Appeal the Appellant filed a Review Petition No. 47 of 2008 before the 

Central Commission for review of its Order dated, 31 st January, 2008, 

seeking for reconsideration of the earlier Order passed by the Central 

Commission on 13 th June, 2005 in favour of NTPC. Instead of directly 

filing a Review Petition as against the Order dated, 13 th June, 2005, 

before the Central Commission, the Appellant thought it fit to file a 

Review Petition No. 47 of 2008 seeking for review of the Order dated, 

31 st January, 2008. But his actual prayer in the said petition is for 

reconsideration of the earlier Order dated, 13 th June, 2005. This petition 

was dismissed by the Central Commission on 29 th May, 2008 as not 

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maintainable. Against this Order also no further action was taken. Why 

Appellant has not shown any reasons as to why he chose to file the 

Review Petition before the Central Commission in R.P. 47 of 2008 as 

against the Order dated, 31 st January, 2008 even though he was not 

aggrieved over that Order? Similarly, why the Appellant had to pursue 

the matter before the Central Commission by way of filing a Review 

Petition as against the Order dated, 31 st January, 2008 even though he 

was a Respondent party in the Appeal filed by the NTPC in Appeal 

No. 66 of 2008 as against said the Order dated, 31 st January, 2008? 

There is no answer. 

(iii) Even though the final Order was passed by the Central Commission 

dated, 13 th June, 2005, in favour of NTPC the Appellant had not chosen 

to file an Appeal against this Order before this Tribunal, but it approached 

the Central Commission for Review. Even though, the said Review Petition 

No. 47 of 2008 was dismissed it again rushed to the Central Commission 

and filed second Review Petition No. 138 of 2008 for review of the Order 

dated, 13 th June, 2005 on the ground that the said Order was to be 

cancelled in the light of the subsequent Order passed by the Central 

Commission dated, 31 st January, 2008 disallowing the undischarged 

liabilities for the period 2004 to 2009. This Review Petition was filed 

after a long delay of more than 3 years and 10 months. Why Appellant 

kept quiet all along without filing any appeal before Tribunal or Review 

Petition before the Central commission as against the Order dated, 

13 th June, 2005 which was passed in favour of the NTPC immediately. 

Similarly, why the Appellant had to approach the Central Commission 

and to file R.P. 47/08 for reviewing the Order dated, 31 st January, 2008, 

although the said Order was passed in favour of the Appellant. The said 

petition was dismissed on 29 th May, 2008 on the ground it was not 

maintainable as its main prayer was for reconsideration of the Order 

dated, 13 th June, 2005. Even then, why it was now chosen to file a 

second Review seeking for the same relief before the Central Commission. 

There is no answer. 

13. We will deal with this aspect at the appropriate time. 

14. Let us now discuss over the preliminary objection with regard to 

maintainability of the Appeal raised by NTPC, the Second Respondent. 

15. The detailed submissions regarding the preliminary objection urged by 

the learned Counsel for NTPC, the Respondent herein could be summarised 

as follows: 

(i) By the impugned Order dated, 25 th June, 2009, the Central Commission 

dismissed the Review Petition in 138/2008 filed by the Appellant on the 

ground of inordinate delay. This amounts to rejection of the Review 

Petition filed under Section 94 of the Act. In terms of Section 94 of 

Electricity Act, the Central Commission can exercise the power of review 

in the same manner as are vested in the Code of Civil Procedure. 

Accordingly, the provision of Order 47, Rule 7 of the CPC would apply. 

As per this provision there is a statutory bar to the maintainability of 

the Appeal against the Order rejecting the Review Petition. In view of 

the said bar, this Appeal cannot be entertained. 

(ii) The Appellant is seeking to challenge the Order dated, 13 th June, 2005, 

passed by the Central Commission, in the petition filed by the NTPC in 

respect of the Tariff fixed for Thalchar-2 station allowing the undischarged 


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liabilities in favour of the NTPC. Even though the Appellant was a party 

to the said proceedings before the Central Commission it did not chose 

to file Appeal before the Tribunal as an aggrieved person. On the contrary, 

it has allowed the said Order dated, 13 th June, 2005 to become final. 

Now, after a long delay, even though he had full knowledge of the earlier 

Order dated, 13 th June, 2005 regarding the issue, has now filed a Review 

Petition before the Central Commission merely on the ground that the 

Central Commission had taken a contrary view regarding undischarged 

liabilities in the Orders passed subsequently, one is on 4 th April, 2005 

and another on 7 th April, 2005. The Appellant must have taken appropriate 

steps to file an Appeal either immediately after passing of the Order 

dated, 13 th June, 2005 or at least after the subsequent Orders passed 

by the Central Commission giving the contrary view in the Orders 

dated, 4 th April, 2005 and 7 th April, 2005. The Appellant did not do so. 

As such, the Appellant should not be allowed to approach the Central 

Commission by way of Review Petition after long delay that too without 

showing sufficient cause. Similarly, the Appellant should not be permitted 

to file an Appeal against the Order passed in the Review Petition instead 

of filing an appeal against the main Order dated, 13 th June, 2005. 

(iii) Having kept quiet all along from 13 th June, 2005 and having filed 

a Review Petition in 2008 seeking reconsideration of the Order passed 

on 13 th June, 2005 and having got the same dismissed by the Central 

Commission by the Order dated, 29 th May, 2008, the Appellant has now 

filed second Review petition which is not permissible under law. Similarly, 

after the dismissal of the second Review Petition, the Appellant has 

filed an Appeal as against the said Order, which is again not permissible 

under law. 

(iv) The casual approach of the Appellant all along by filing review after 

review would show that it has not come to this Tribunal with clean 

hands and as such filing of this Appeal is amounting to gross abuse of 

the process of Tribunal. Therefore, this is to be dismissed in limine. 

16. Refuting the above preliminary objections the learned Senior Counsel for 

the Appellant would make the following submissions to substantiate his 

plea that the Appeal is maintainable. 

(i) It is true that the Central Commission while exercising its power of 

review under Section 94 of the Act, has to act in the same manner as 

are vested under the Code of Civil Procedure while passing Order in the 

Review Petition. Only when the said Order rejecting the Review is on 

merit the said Order cannot be appealed under Order 47, Rule 7. But 

in the present case Order impugned passed by the Central Commission 

is not the Order rejecting the review on merit but it is an Order rejecting 

the Petition for merely condoning the delay in filing of the Review Petition. 

As such the Central Commission did not exercise the power under 

Section 94 of the Act to satisfy as to whether sufficient ground is made 

out to entertain the review. It merely refused permission for the invocation 

of Review Jurisdiction. Hence, the dismissal of the Review Petition cannot 

be said to be in the exercise of jurisdiction in terms of Section 94 of the 

Act or under Order 47, Rule 1 and Rule 4(1) of the CPC. Therefore, the 

bar under Order 47, Rule 7 would not apply to the impugned Order. 

(ii) The words “an Order” occurring in Section 111 of the Act conferring 

Appellate Power to the Tribunal means any Order which is not subject 

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to any qualification. This is because unlike the scheme of the CPC with 

regard to the maintainability of appellate/revisional powers provided 

under the CPC, the scheme of appeals under the Electricity Act, 2003 

is entirely different and distinct. 

(iii) There are various decisions rendered by the various High Courts in 

the matter of Letters Patent Jurisdiction where it has been held that an 

Appeal lies from an Order refusing to excuse delay in filing the appeal. 

It has been further held that the right derived under Clause 15 of the 

Letters Patent is not affected by Order 47, Rule 7. Similarly, under the 

Provincial Insolvency Act the various High Courts have held that the 

statutory provisions of the Appeal would prevail over the Order 47, 

Rule 7 of CPC and accordingly, an Appeal would lie against an Order 

passed in the Review Petition whether rejecting or granting. Therefore, 

Section 111 of the Electricity Act has to be construed to the Rule 15 of 

the Letters Patent and pari materia under the Provincial Insolvency 

Act. This has been decided by the Bombay High Court in Nagindas 

Motilal v. Nilaji 1 AIR 1924 Bom. 399, Sattemma v. Vishnumurthy 2 AIR 

1964 AP 162 and Ram Prasad v. Dagdulal AIR 1956 Nagpur 215, Chidella 

Veraiyya v. Kollam Koti Reddy 3 AIR 1941 Madras 588, Sher Singh v. Firm 

Bishan Lal 4 AIR 1937 Lahore 568, Pushharan v. Ramkrishan AIR 1955 

Tripura 49. Therefore, Order 47, Rule 7 cannot be said to have any 

control over any of the Appeal powers conferred on the Tribunal under 

the Electricity Act, 2003. 

(iv) Section 94 of the Act gives the power of Review to the Central 

Commission. This cannot accommodate a provision relating to the Right 

of Appeal to the Appellate Tribunal. Section 111 is a substantive provision 

relating to Appeal. It does not provide for any such qualification as 

contained in Order 47, Rule 7. The meaning and scope of this provision 

under Section 111 cannot be said to be governed by some other part of 

the statute. Therefore, the Appeal powers given to the Tribunal cannot 

be curtailed. Hence, the Appeal is maintainable. 

17. We have heard the learned Counsel for the parties and considered their 

submissions. 

18. The question that arises for consideration is as follows: 

whether the Appeal is barred in terms of the provision of Order 47, 

Rule 7 of the Code of Civil Procedure when the Order impugned was 

said to be passed by the Central Commission rejecting the Review 

Petition on the ground that it is time barred under Section 94(1) of the 

Electricity Act? 

19. It is not disputed that the Central Commission has got the power to 

review its owns Order or to reject the prayer for Review. This Review jurisdiction 

of the Central Commission is provided under Section 94(1)(f) of the Act 2003. 

This provision is as follows: 

94 Powers of the Appropriate Commission (1) the Appropriate Commission 

shall for the purposes of any inquiry or proceedings under this Act 

i 

1 Ed.: MANU/MH/0044/1924: (1924) 26 BOMLR 395 

2 Ed. MANU/AP/0080/1964 

3 Ed. MANU/TN/0355/1940: (1941) 1 MLJ 537 

4 Ed. MANU/LA/0058/1937 


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have the same powers as are vested in the Civil Court under the Code 

of Civil Procedure, 1908 in respect of the following matters namely. 

...(f) reviewing its decision, directions and Orders. 

Thus, Section 94(1)(f) incorporates by reference to the provisions of the 

Code of Civil Procedure in regard to exercise of power over the Review 

of its own decision, directions and Orders. Accordingly, the relevant 

provisions of CPC 114 and Order 47, Rule 7 deal with Review as if it has 

been provided for in Section 94 of the Electricity Act including the 

provision of Order 47, Rule 7. 

20. The provision of the Order 47, Rule 7 reads as under: 

Rule 7-Order of rejection not appealable, objections to Order granting 

application (1) An Order of the Court rejecting application shall not be 

appealable; but an Order granting an application may be objected to at 

once by an appeal from the Order granting the application or in an 

appeal from a decree or Order finally passed or made in the suit. 

21. So, a reading of Section 94 of the Act would indicate that it incorporates 

the provision of the CPC not only in respect of Rule 1 but also in respect of 

Rule 7 of Order 47. If the intention of Parliament was to restrict the incorporation 

of the review only to the extent that the Central Commission exercise powers 

and not to deal with any other incident of review such as Rule 7 of Order 47, 

the same would have been incorporated for separately. 

22. In other words, the Parliament would have provided for a separate provision 

stating that the Appropriate Commission shall have the powers to review its 

decision, directions and Orders de horse the CPC. As a matter of fact, 

Section 94(2) deals with the powers of the Commission to pass interim Orders. 

In this Section, the Parliament has chosen to say that provision of the CPC 

will not apply but has specifically recognized the power to pass interim 

Orders under Section (2) of 94 of the Act. So the distinction in approach 

adopted in the case of interim Orders under Section 94(2) of the Act and in 

the case of Review under Section 94(1)(f) is quite relevant. In the case of 

Review Parliament had decided that the application shall be in total 

consonance with the provision of the Order 47, Rule 7 of the CPC but not in 

the case of interim Order under Section 94(2) of the Act. Therefore, the 

implication mentioned in Rule 7 of Order 47 will certainly apply. 

23. It is contended on behalf of the Appellant that the scope of Section 111 

is wider and it provides for an Appeal against any Order including the Order 

rejecting the review made by the Appropriate Commission. In elaboration of 

this plea, the Appellant has made a distinction to the effect that the Appeal 

power of this Tribunal does not envisage any restriction and therefore, Appeal 

is maintainable. This contention in our view is not tenable. It is quite relevant 

to note in this context that under the CPC the following Appeal provisions 

are provided: 

(i) Order 41, Rule 1 read with Section 96 provides for the Appeal arising 

out of original decrees. 

(ii) Order 43, Rule 1 provides for an Appeal arising out of the Orders. 

(iii) Section 100 CPC provides for the second appeal. 

24. These provisions which are Appeal provisions do not provide for any prohibition 

that there shall be no appeal against the Order passed in the Review Petition 

but this prohibition of an Appeal as against the Order rejecting the Review 

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Petition alone has been specifically provided in Order XLVII, Rule 7. 

Therefore, despite the other provision which provides for an appeal against the 

Order passed by the Appropriate Commission, the restriction in Section 94(1)(f) 

read with Order 47, Rule 7 CPC will have application to the present case. 

25. The next contention of the Appellant is that the impugned Order is only a 

rejection of condonation of delay application and not the Order of the rejection 

of review and therefore, it is appealable. We are not able to find any merit in this 

contention. Admittedly, the impugned Order shows that the Central Commission 

has rejected the Review Petition on the ground of delay. The Order rejecting the 

Review Petition on the ground that there is no sufficient cause shown for the 

delay and as such it is time barred is virtually an Order passed in the Review 

Petition. Admittedly, this Order rejecting the explanation for the delay was in 

the Review Petition filed by the Appellant. Since, there was a delay in filing the 

Review Petition, the Central Commission has to take a decision as to the Review 

Petition can be entertained or not. Accordingly, there cannot be any differentiation 

on the ground of the matter being related to the condonation of delay or on the 

ground of the merits of the main review sought. The impugned Order which is 

rejecting the Review Petition on the ground of delay is equally to an Order under 

Section 94(1)(f) of the Act within the meaning of Order 47, Rule 7 of the CPC 

rejecting the Review Petition. As a matter of fact even when a Court dismisses 

an application for condonation of delay it does not exercise is independent 

jurisdiction but exercises the substantive jurisdiction, i.e. under Section 94 

conferred by the statute in respect of main matter. 

26. Now let us refer to the various authorities cited by the learned Counsel 

for the parties. The learned Counsel for the Respondent mainly relied on 

Shankar Motiram Nale v. Shiolasing Gannusing Rajput 5 (1994) 2 SCC 753 in 

which Hon’ble Supreme Court has applied the provision of Order XLVII, Rule 

7 rejecting the Appeal against the review Order passed by the learned Single 

Judge. The relevant observation made by the Supreme Court is as follows: 

This appeal is obviously incompetent. It is against an Order of a Division 

Bench of the High Court rejecting the application for review of a Judgment 

and decree passed by a learned Single Judge, who seems to have retired 

in the meantime. It is not against the basic Judgment. Order 47, Rule 7 

of CPC bars an appeal against the Order of the Court rejecting the 

review. On this basis, we reject the appeal. No costs. 

27. The other decision cited by him is (2004) 13 SCC 675 Suseel Finance & 

Leading Co. v. M. Lata. The relevant observation is as follows: 

3. In the case of Shanker Motiram Nale v. Shiolalsing Gann using 

Rajput it has been held by this Court that against an Order rejecting 

an application for review, a special leave petition is not maintainable. 

This Authority is directly on the point in issue. Not only are we bound by it 

but we are also in agreement with it. Faced with this situation, it is 

sought to be submitted that this Court in the case of Green View Tea 

& Industries v. Collector 6 and K. Rajamouli v. A.V.K.N. Swsamy 7 has taken 

5 Ed. MANU/SC/0676/1994 

6 Ed. MANU/SC/0140/2004: (2004) 4 SCC 122: AIR 2004 SC 1738: 2004 (2) AWC 

1723 (SC): 98 (2004) CLT 157 (SC): (2004 (2) JCR 124 (SC)): JT 2004 (2) SC 556: 

2004 (2) SCALE 547 

7 MANU/SC/0341/2001: AIR 2001 SC 2316: 2001 (3) ALLMR (SC) 788: 2001 (2) 

ArbLR 702 (SC): (2001) 3 CompLJ 144 (SC): JT 2001 (Supp l1) SC 168: 2001 (4) 

SCALE 212: (2001) 5 SCC 37: (2001) 3 SCR 473 


215


contrary views. We find that in these two cases the question whether 

a special leave petition was maintainable against an Order rejecting a 

review petition, was not considered at all. In these cases, the question 

was whether special leave petition was barred by principles of res judicata. 

It was held hat special leave petition was not barred by principles of res 

judicata. In neither of these cases has reference been made to the 

abovementioned Judgment of this Court in Shanker Motiram Nale case. 

In both those cases it has been held, that a special leave petition is 

maintainable only in the context of it not being barred on principles of 

res judicata. In both these cases the question whether a special leave 

petition is against an Order disposing of a review petition was not 

considered at all. These cases, therefore, have no relevance at all. 

4. On the basis of the ratio in Shanker Motiram Nale case we hold 

that these special leave petitions are not maintainable. They are 

dismissed as such. There will be no Order as to costs. 

28. The Hon’ble Supreme Court rendered another Judgment in (2004) 13 

SCC 677 M.N. Haider v. Kendriya Vidalaya Sangathan. The relevant observations 

are as follows: 

We are unable to accede to this request. In none of these cases has it 

been considered that once a special leave petition against the main 

Order has been dismissed it would not be open to challenge the main 

Order again. Further, it is settled law (cases of Shanker Motiram 

Nale v. Shiolalsingh Gannusing Rajput and Suseel Finance & Leasing 

Co. v. M. Lata may be looked at) that a special leave petition is not 

maintainable against an Order in a review petition. These authorities 

have not been shown or considered by this Court whilst passing the 

above Orders. Once SLP is not maintainable no Orders can/should be 

passed thereon except to dismiss the same. In view of the settled position, 

the abovementioned Orders cannot be considered to be precedent. 

29. One more decision of Hon’ble Supreme Court cited by the learned Senior 

Counsel for NTPC is quite relevant. In this decision, it has been held that 

when a Court dismisses an application for condonation of delay it does not 

exercise an independent jurisdiction but exercises the substantive jurisdiction 

conferred by the statute in respect of the main matter. This decision would 

clarify the question raised in this Appeal to substantiate the plea made by the 

learned Counsel for the Respondent that even when the Order rejecting the 

application for condonation of delay is passed it would mean rejection of the 

Review Petition itself under Section 94 of the Act. The citation is JT 2009 

SC 344. 8 The relevant observation of the Hon’ble Supreme Court is as follows: 

Firstly, we must clarify that when the Division Bench considered 

the question of condonation of delay in filing the appeal against acquittal, 

though technically, it was deciding the application under 

Section 378(3), Cr.PC. It was actually the whole appeal itself which was 

before it. In this behalf, it will have to be seen that the limitation for 

filing such appeal at the instance of the State Government against 

acquittal is provided by Article 114 of the Limitation Act. It is undoubtedly 

true that Sub-section (3) specifically provides that the appeal under 

Sub-sections (1) and (2) cannot be entertained except with the leave of 

8 Ed.: State of H.P. v. Ram Krishan MANU/SC/0021/2009: 2009 CriLJ 1138: 2009 (1) 

SCALE 324: (2009) 11 SCC 327 

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the High Court and therefore, an application for leave in such appeal 

filed by the State Government is a must. The limitation for filing the 

appeal is 90 days from the date of the Order while the same Article 

provides for 30 days of limitation from the date of granting of special 

leave. Therefore, what was before the High Court was the appeal itself 

and the Petitioner prayed the condonation of delay of 801 days in filing 

appeal against acquittal. When the High Court declined to grant that 

permission, it in effect refused to entertain the Appeal against the 

Order of the Trial Court, thus making it final. 

30. These decisions would squarely apply to the present facts of the case to 

hold that this appeal is not maintainable. 

31. As referred to above, the Appellant has relied on the following decisions 

of the Court for substantiating his plea to show that the Appeal is maintainable. 

(a) Nagindas Motilal v. Nilaji AIR 1924 BOM. 399 

(b) Sattemma v. Vishnumurthi AIR 1964 AP 162 

(c) Ram Prasad v. Dagdulal AIR 1956 Nag. 215 

(d) Chidella Veraiyya v. Kotlam Koti Reddy AIR 1941 Mad 588. 

(e) Sher Singh v. Firm Bishal Lal AIR 1937 Lah 568 

(f) Pushharan v. Ramakrishan AIR 1955 Tr. Co 49 

32. The above cases would not apply to the present facts of the case. They are 

either in relation to the scope under Section 15 of the Letters Patent Act or in 

relation to the scope under Section 75 of Insolvency Act, 1920. Firstly, these 

decisions are prior to the laying down of principle by the Hon’ble Supreme 

Court in number of cases as referred to above. Secondly, the word “Judgment” 

Incorporated to mean that nothing would apply even to the area which are not 

appealable under Order XLVII, Rule 1. This cannot have application to a 

specific provision such as Section 94(1)(f) which has been incorporated in the 

Electricity Act by bringing into force all the provisions relating to it. Therefore, 

all the provisions as a whole will have to be read as it is a registration by 

incorporation. In view of this, it would also include Order 47, Rule 7 containing 

prohibition against the Appeal from an Order rejecting the review. In that 

context, Section 111 cannot be incorporated to provide that an appeal would 

lie against an Order rejecting the Review. Similarly, even in respect of the 

decision of the Provincial Insolvency Act, 1920, it is to be noted hat Section 5 

of the said Act starts with “subject to” Section 5 the said Act, provides that 

the Court, shall have the same powers as it follows in the exercise of the 

original jurisdiction. There is no such qualification prescribed under Section 94 

of the Act. Therefore, the reliance made on behalf of the Appellant on the basis 

of Letters Patent and Provincial Insolvency Act is of no assistance. 

33. In view of the above discussion, we are of the considered opinion that 

this Appeal is as against the Order rejecting the Review petition by the 

Central Commission on the ground of long and unexplained delay under 

Section 94 of the Act and as such this Appeal is barred under Order 47, 

Rule 7. Hence, this Appeal is dismissed as not maintainable. 

34. Before parting with this case we would like to comment about the conduct 

of the Appellant. 

35. As narrated above, the Appellant’s main grievance is that the Central 

Commission determined Tariff allowing the undischarged liabilities in favour 

of the NTPC by the Order dated, 13 th June, 2005. The Appellant for the reasons 


217


best known to it never took any step to file the Appeal before the Tribunal 

which is the Competent Authority to go into the legality of the Order dated, 

13 th June, 2005 passed by the Central Commission. There is no reason as to 

why the Appellant had not taken any steps to file the Appeal before this 

Tribunal till date. On the other hand, it kept quiet all along by allowing the 

Order dated, 13 th June, 2005 to become final. Only when the Central Commission 

by the Order dated, 31 st January, 2008 declined to allow undischarged liabilities 

in respect of the subsequent period in favour of the NTPC, the Appellant has 

chosen to file a petition seeking reconsideration of the Order dated, 

13 th June, 2005 under the garb of filing a petition for review of the Order 

dated, 31 st January, 2008. There is no reason as to why the Appellant did not 

choose to file a Review directly as against the Order dated, 13 th June, 2005. 

36. As stated above the Order dated, 31 st January, 2008 disallowing the claim 

of the NTPC had been challenged by NTPC before the Tribunal in Appeal No. 

66 of 2008. In that Appeal, the Appellant was Opposite Party and the said 

Appeal is still pending. There is no reason as to why it had to approach the 

Central Commission for review of the Order dated, 31 st January, 2008 even 

though he was to oppose the claim of NTPC in Appeal filed by the NTPC in 

Appeal No. 66 of 2008 seeking to set aside the Order dated, 31 st January, 2008 

which was not passed in favour of the NTPC. Similarly, the Review Petition 

was filed by the Appellant for reconsideration of the Order dated, 13 th June, 2005 

under the garb of the petition seeking for the Review dated, 31 st January, 2008. 

This Petition was admittedly dismissed on 29 th May, 2008 rejecting the request 

for reconsideration of the Order dated, 13 th June, 2005. When that being the 

case there is no reason as to why the Appellant had chosen to file the second 

Review petition that too after the delay of three years and ten months as 

against the Order dated, 13 th June, 2005. In the same way there is no reason 

as to why they have filed Appeal against the Order passed in the Review which 

is not maintainable even though the Appellant had no sufficient reason to 

condone the delay of three years and ten months. 

37. It is to be reiterated that the Appellant still is not inclined to file the 

Appeal against the Order dated, 13 th June, 2005 before this Tribunal by 

giving proper explanation to condone the delay in filing the said Appeal. 

38. The above conduct would clearly show that the Appellant has made 

unsuccessful attempts to circumvent the mandatory procedure contemplated 

under the Act as well under CPC thereby it consistently and continually 

abused the process of the Central Commission. The learned Counsel for the 

Respondent pointed out that this is the fittest case where exemplary cost 

has to be imposed on the Appellant who has driven the Respondent, NTPC, 

from pillar to post. We too sincerely feel that the Appellant has to be severely 

dealt with by imposing heavy costs. 

39. However, we refrain ourselves to pass the Orders relating to the costs as 

we fervently hope that the Appellant would not indulge in similar serious 

misconduct in the future. But, we cannot, but express our strong displeasure 

over the misconduct of the Appellant as in our view, that would suffice for the 

present. Registry is directed to send the copy of this Order to the Chief Secretary, 

Government of Tamil Nadu, so that he could give proper directions to the 

concerned officers to avoid committing this sort of misconduct in future. 

40. With these observations the Appeal is dismissed as not maintainable. 

As referred to above, no costs. 

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2010 ELR (APTEL) 0463* 



CESC Limited 

v. 

Central Electricity Regulatory Commission 

[Alongwith Appeal No. 168 of 2009] 

APPEAL NO. 166 AND 168 OF 2009 

DECIDED ON: 04.03.2010 

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Whether in terms of Section 62(1)(a) proviso or any other provisions under 

the Act the Central Commission has got any jurisdiction to fix minimum 

and maximum ceiling of price for inter-state sale or purchase of electricity 

on the ground that there exists scarcity of electricity supply with reference 

to the transaction of power exchanges or inter-state transactions? 

It is not correct to contend that the proviso to Section 62(1)(a) shall be 

limited to the supply of electricity by generating company to a Distribution 

Licensee alone. The perusal of the above section, as is evident from the 

terms of the proviso, it is clear that it does not limit itself to the Tariff for 

supply of electricity by generating company to a Distribution Licensee alone. 

On the contrary it refers to supply of electricity in pursuance of an agreement 

entered into between the generating company and the licensee or between 

licensees. Under Section 14 of the Act, the licensees include Transmission 

Licensee, Distribution Licensees and traders. Under Section 79(1)(k), the 

Central Commission can exercise its powers under Section 62(1)(a) proviso 

on the basis of the prevailing circumstances which reflected shortage of 

electricity as well as escalation of prices, to fix the minimum and maximum 

ceiling of prices. The Central Commission imposes a price cap only for day 

ahead inter-State transactions and that too for a short period of 45 days. 

This cannot be done by the State Commission under the powers under 

Section 64(5) of the Act. Further it is noticed that this period of 45 days had 

already expired. Rule 8 would apply to determination of Tariff and power 

procurement process. Rule 8 cannot prevent the Central Commission from 

exercising the power of fixing minimum and maximum prices of power in the 

abnormal situation of shortage. The Central Commission has got the 

jurisdiction to fix the minimum and maximum prices to deal with the abnormal 

situation of shortage of electricity and the escalation of the price rise, under 

Section 62(1)(a) proviso the power of which is available to Central Commission 

as conferred under Section 79(1)(k) of the Act. 

Appeals Dismissed 


Commissioner of Commercial Taxes, Board of Revenue, Madras and Anr. v. 

Ramkishan Shrikishan Jhaver etc. MANU/SC/0046/1967: (1968) 1 SCR 

148: AIR 1968 SC 59 (mentioned) [p. 0473, para 33 d] 

* MANU/ET/0024/2010 


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Commissioner of Income Tax, Kerala and Coimbatore v. P. Krishna Warriar 

MANU/SC/0120/1964: (1964) 8 SCR 36: AIR 1965 SC 59: (1964) 53 ITR 

176 (SC) (mentioned) [p. 0473, para 33 d] 

Dwarka Prasad v. Dwarka Das Saraf MANU/SC/0505/1975: (1976) 1 SCC 128: 

AIR 1975 SC 1758: (1976) 1 SCR 277 (mentioned) [p. 0473, para 33 d] 

Ishvaerlal Thakorelal Almaula v. Motibhai Nagjibhai MANU/SC/0328/1965: 

(1966) 1 SCR 367: AIR 1966 SC 459: (1966) 0 GLR 233: 1966 MhLJ 1049 

(SC) (mentioned) [p. 0473, para 33 d] 

M.A. Rasheed and Ors. v. State of Kerala MANU/SC/0051/1974: (1974) 2 

SCC 687: AIR 1974 SC 2249: (1975) 2 SCR 93: 1974 (6) UJ 611 (SC) 

(mentioned) [p. 0473, para 33 f] 

Motiram Ghelabhai Maniram Motiram v. Jagan Nagar and Ors. (1985) 1 SCC 

279 (mentioned) [p. 0473, para 33 e] 

Nathi Devi v. Radha Devi Gupta MANU/SC/1071/2004: (2005) 2 SCC 271: 

AIR 2005 SC 648: 2005 (80) DRJ (Supp l) 518: (2005 (2) JCR 71 (SC)): JT 

2005 (1) SC 1: 2005 (1) KLT 443 (SC) (mentioned) [p. 0473, para 33 f] 

Ram Narain and Sons Ltd. v. Commissioner of Sales Tax and Ors. MANU/SC/ 

0084/1955: (1955) 2 SCR 483: AIR 1955 SC 765: (1955) 6 STC 627 (SC) 

(mentioned) [p. 0473, para 33 c] 

S. Sundaram Pillai and Ors. v. V. R. Pattabiraman and Ors. MANU/SC/0387/ 

1985: (1985) 1 SCC 591: AIR 1985 SC 582: 1985 (1) SCALE 74: (1985) 2 

SCR 643 (mentioned) [p. 0473, para 33 e] 

State of Orissa v. Debaki Debi and Ors. MANU/SC/0218/1963: (1964) 5 SCR 253: 

AIR 1964 SC 1413: (1964) 15 STC 153 (mentioned) [p. 0473, para 33 c] 

State of Rajasthan v. Leela Jain and Ors. MANU/SC/0013/1964: (1965) 1 

SCR 276: AIR 1965 SC 1296 (mentioned) [p. 0473, para 33 d] 

Union of India v. Paras Laminates (P) Ltd. MANU/SC/0173/1991: (1990) 4 

SCC 453: AIR 1991 SC 696: (1990) 87 CTR (SC) 180: 1990 (30) ECR 305 

(SC): 1990 (49) ELT 322 (SC): (1990) 186 ITR 722 (SC): JT 1990 (3) SC 510: 

1990 (2) SCALE 283: (1990) 3 SCR 789: (1991) 80 STC 263 (SC): 1990 (2) 

UJ 557 (SC) (mentioned) [p. 0473, para 33 f] 




Section 62(1)(a) [p. 0465, para 3 i] 



Section 79 Clause (a) to (k) [p. 0466, para 6 i] 


Section 79(1)(a) [p. 0470, para 18 i] 

Section 79(1)(a)(b) [p. 0466, para 5 e] 

Section 79(1)(b) [p. 0471, para 19 a] 

Section 79(1)(c) [p. 0471, para 20 b] 

Section 79(1)(d) [p. 0471, para 21 b] 

Section 79(1)(e) [p. 0471, para 22 b] 

Section 79(1)(j) [p. 0471, para 23 c] 

Section 79(1)(k) [p. 0468, para 7 a] 



Electricity Rules, 2003, Rule 8 [p. 0475, para 39 d] 

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March - April, 2010

CESC Ltd. v. Central Electricity Regulatory Commission 


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Counsel 

For Appellant/Petitioner/Plaintiff: M.G. Ramachandran and Avinash Menon, 

Advs. for Appeal No. 166 of 2009 and P.S. Narsimha, Sr. Adv., Vishal 

Anand and Sakya Chaudhari, Advs. for Appeal No. 168 of 2009 

For Respondent(s)/Defendant: T.R. Andhyarjuna, Sr. Adv., Buddy A. 

Ranganadhan, Sumanta Ghosh and Arjit Maitra, Advs. for R 1 and T.R. 

Andhyaryjuna, Sr. Adv., Buddy A. Ranganadhan, Sumanta Ghosh and 

Arjit Maitra, Advs. for R. 1 for Appeal No. 168 of 2009 

JUDGMENT 


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1. Since, the impugned Order is common, we deem it fit to render this 

common Judgment in both these Appeals, i.e. in Appeal No. 166 of 2009 and 

168 of 2009. 

2. Aggrieved by Order dated, 11 th September, 2009 passed by the Central 

Commission fixing the ceiling in Tariff in the suo motto action the Appellant 

CSES Ltd. has filed this Appeal No. 166 of 2009. 

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3. The necessary facts of this Appeal are as follows: 

(i) CESC Ltd., the Appellant herein is engaged in the generation of 

Electricity. It also supplies the electricity in the licensed area in Kolkata 

and its surroundings. 

(ii) On 1 st September, 2008, the Central Commission published a paper 

titled “measures for restricting the price of electricity for short-term 

sale and trading” giving various suggestions. The said staff paper was 

placed for the comments of various stakeholders. The Appellant also 

submitted its comments with regard to the suggestions mentioned in 

the staff paper. The public hearing was held on 29 th September, 2008. 

The same was attended by the various stakeholders including the 

Appellant. 

(iii) On 17 th December, 2008, the Central Commission passed an Order 

clarifying and analysing the suggestions made in the staff paper as well 

as the views expressed by the various stakeholders. Ultimately, the 

Central Commission through the said Order turned down the proposal 

made in the staff paper to put price cap for inter-state short-term sale 

of electricity. 

(iv) When the matter stood thus, the Central Commission issued yet 

another public notice on 27 th August, 2009 expressing its intention of 

considering the analysis of regularising the measures to restrain 

escalation of price of electricity traded in the bilateral market so as to 

protect the interest of the consumers. For this purpose, the draft Order 

containing the proposal of the Central Commission had also been annexed 

along with public notice with proposed fixation of cap for the minimum 

and maximum price for sale or purchase of electricity. The Central 

Commission through the said notice called upon the views and suggestions 

of the parties. Accordingly, the Appellant also submitted its comments 

on 7 th September, 2009. On 8 th September, 2009 public hearing was 

held. The Appellant contended before the Central Commission that 

price ceiling cannot be introduced by the Central Commission by invoking 

the proviso to Section 62(1)(a) of the Act National Electricity Policy and 

Tariff Policy. 


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(v) Despite this objection, the Central Commission passed the impugned 

Order dated, 11 th September, 2009 directing for the inter-State day 

ahead transaction fixing the minimum price as Rs. 0.10/kWh and 

maximum ceiling of price of Rs. 8.00 /kwh. The Central Commission 

also made it clear in the said Order that the fixation of minimum and 

maximum price shall apply only for a period of 45 days from the date 

of the Order dated, 11 th September, 2009. 

(vi) Challenging the same the CESC Limited, the Appellant has filed 

this Appeal No. 166 of 2009. 

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4. West Bengal State Electricity Distribution Company Limited is the 

Appellant in this Appeal No. 168 of 2009. Challenging the Order dated, 

11 th September, 2009 passed by the Central Commission the Appellant has 

filed this Appeal. 

5. The necessary facts are as follows: 

(i) The Appellant is a Distribution Company having its office situated in 

Kolkata. On 29 th August, 2008, the Central Commission issued a public 

notice circulating a draft Order on a suo motto action for imposing a 

ceiling on price of sale and purchase of electricity through bilateral 

agreements and on power exchanges. The said public notice invited 

objections on the draft Order. Public hearing was held on 

1 st September, 2008. The Appellant also participated and made its detailed 

submissions pointing out that Central Commission has no jurisdiction 

to impose ceiling on price of generating companies and Distribution 

Companies other than those covered under Section 79(1)(a)(b). 

(ii) It is also objected by the Appellant stating that the power to be 

exercised under Section 62(1)(a) only of the Electricity Act when an 

emergent situation of short supply faced by the distribution licensee 

and the draft Order of the Central Commission did not record its 

satisfaction of the actual shortage of supply. Despite this objection, 

without any application of mind, the Central Commission on 

11 th September, 2009 passed the impugned Order prescribing the 

maximum and minimum ceiling of Tariff applicable to the bilateral 

transactions and those of power exchange. Hence, this Appeal No. 168 

of 2009 has been filed challenging the impugned Order by the Appellant 

West Bengal State Electricity Distribution Company. 

6. The grounds urged by both the learned Counsel appearing for the Appellants 

in both the Appeals are more or less common. They are as follows: 

(a) The impugned Order has been passed by the Central Commission in 

exercise of the power under proviso to Section 62(1)(a) of the Act. This proviso 

allows the Appropriate Commission to fix the minimum and maximum 

ceiling price only for the generating company and the licensee in case of 

shortage of supply of electricity. This will not apply to the distribution 

company and the licensee. Under this Section the distribution licensee 

can approach only to the State Commission which is the Appropriate 

Commission for imposing minimum and maximum ceiling of price for 

sale and purchase of electricity and not to the Central Commission. 

(b) The functions of the Central Commission are prescribed under 

Section 79 under Clauses (a) to (k) only. Under this Section Central 

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0467 

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Commission has got powers to deal with the fixation of Tariff for electricity 

generated by the generating company owned by Central Government or 

the company having composite scheme for sale of electricity in two or 

more states and the issue of inter-state transmission license and fixing 

the trading margin on inter-state trading only. No other jurisdiction is 

vested with the Central Commission. There is no power for Central 

Commission to compel the distribution licensee like the Appellant to 

purchase the power from such a generating company as the said power 

is vested with the State Commission. 

(c) Under Section 64(5) of the Act, when there is interstate supply of 

electricity with transmission or wheeling, it is the State Commission 

which will have jurisdiction in respect of distribution licensee. In other 

words, even in the case of inter-state supply, the Act provides that the 

place of distribution licensee who purchases the electricity determines 

the jurisdiction of the concerned State Commission and the Central 

Commission cannot have any jurisdiction. 

(d) The proviso to Section 62(1)(a) deals with the sale or purchase of 

electricity. It does not deal with the transmission or wheeling. The 

proviso of Section 62(1)(a) cannot be interpreted to confer jurisdiction 

to the Central Commission on the areas which the Act has specifically 

kept out of its power and functions under Section 64(5) of the Act. 

(e) The proviso to a substantive Section only embraces such an area 

which is covered by the main provision. It means that the proviso of this 

Section is exception to the main Section in which it has been enacted 

by the main provision and not to any other provision. 

(f) The conditions for the invocation of the proviso to Section 62(1) (a) 

are two-fold; (1) the existence of the shortage of supply of electricity 

and (2) unreasonable prices. Admittedly, these conditions have not been 

complied with in the impugned Order. 

(g) Section 66 of the Act does not apply to the present case. This section 

deals with the permission of development of market in power but proviso 

to Section 62(1)(a) permits determination of price through market forces. 

So the two cannot be read together. 

On these grounds, the elaborate arguments were advanced by 

Mr. M.G. Ramachandran, learned Counsel appearing for the Appellant in 

Appeal No. 166 of 2009 and Mr. P.S. Narsimha, learned Senior Counsel 

appearing for the Appellant in Appeal No. 168 of 2009. 

7. In reply to the above grounds Mr. T.R. Andhyarjuna, learned Senior Counsel 

appearing for the Central Commission would make the following submissions 

in justification of the impugned Order passed by the Central Commission: 

(i) Section 62 is a Section for determination of the Tariff by the Appropriate 

Commission. In this case the Central Commission has passed the impugned 

Order by exercising the powers under the proviso to Section 62(1)(a). 

This Order fixes the minimum and maximum reasonable prices of 

electricity for the inter-state day ahead transaction and this will be 

applicable for both the power exchanges and bilateral market. Such a 

power can only be exercised by the Central Commission as the Appropriate 

Commission under proviso to Section 62(1)(a). The State Commission 

has only general functions relating to electricity including Tariff on 

transaction within the State under Section 86 of the Act. On the other 


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hand the Central Commission under Section 79 has functions relating 

to the inter-state transactions and inter-states transmission of electricity. 

(ii) In addition to these powers as referred to above, Section 79(1)(k) 

enables the Central Commission to discharge such other functions as 

may be assigned under any other provisions of the Act. This could 

include the power under Section 62(1)(a) proviso. Under this proviso 

the Central Commission can regulate the inter-state supply of electricity 

in case of shortage of electricity by fixing the minimum and maximum 

ceiling of prices. This power cannot be exercised by the State Commission. 

Further, this proviso cannot be limited to the supply of electricity by 

generating company to a Distribution licensee alone, as it refers to 

supply of electricity in pursuance of an agreement entered into between 

the Generating company and the licensee or agreement entered into 

between the licensees. Therefore, the proviso to this Section is a 

substantive enactment. 

(iii) In addition to these powers, Section 66 of the Act also gives power 

to the Appropriate Commission to promote development of market 

including any power. The shortage in supply which raises the prices of 

electricity unreasonably can be the subject-matter of promoting the 

development of market, including trading for matters relating to inter-state 

transaction. 

(iv) The proviso to Section 62(1)(a) is a special proviso in the statute. 

It can be invoked only in abnormal situations of the shortage of supply 

of electricity and in case of price rise. The words “in case of shortage 

of electricity” and “to ensure reasonable price of electricity” indicates 

the exigent situation. However, this proviso can be applied for a short 

duration. The objective behind the proviso is to ensure the reasonable 

price of electricity when there is shortage of supply of electricity. In the 

impugned Order the Central Commission has explained the abnormal 

situation of shortage of electricity as well as this escalation of the price. 

(v) According to the Appellants, the power of determination of Tariff for 

any inter-state supply or transmission or wheeling is within the jurisdiction 

of the State Commission under Section 64(5) of the Act and the said 

power is not within the jurisdiction of the Central Commission. 

This submission also is erroneous. Section 64(5) deals with an exceptional 

process of determination of Tariff for any inter-State supply between 

two consenting parties who specifically apply to the State Commission 

for determination of Tariff. On the other hand, Section 62(1)(a) proviso 

deals with the abnormal situation of shortage of electricity and the 

increase of prices and in that situation the Appropriate Commission 

has to take suitable steps to tackle the situation by fixing the 

minimum and maximum prices to ensure reasonable price of electricity. 

Therefore, the determination of Tariff under Section 64(5) by the State 

Commission has nothing to do with the fixing of minimum and 

maximum prices by which the electricity can be purchased and sold in 

the abnormal situation. 

On these grounds, the learned Senior Counsel for the Central Commission 

submitted that the impugned Order is well justified. 

8. We have heard the learned Counsel for both the parties. We have also 

given our anxious consideration to their rival contentions and perused the 

records and the written submissions. 

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0469 

9. The only question which arises for consideration in this case is whether 

in terms of Section 62(1)(a) proviso or any other provisions under the Act the 

Central Commission has got any jurisdiction to fix minimum and maximum 

ceiling of price for inter-state sale or purchase of electricity on the ground 

that there exists scarcity of electricity supply with reference to the transaction 

of power exchanges or inter-state transactions. 

10. Before dealing with this question, let us now refer to the relevant finding 

and consequent direction of the Central Commission in the impugned Order. 

This is quoted below: 

15. The above circumstances during the shortage of supply of electricity 

in the country further justifies the fixation of caps for the minimum and 

maximum prices of sale of purchase of electricity in the bilateral markets 

and the power exchanges. 

16. Therefore, to ensure the reasonable price of electricity in the period 

of present shortages, we direct that with immediate effect for inter-state 

day ahead transaction the minimum Tariff or bidding prices as the case 

may be shall be Rs. 0.10 kwH and the maximum ceiling of Tariff or 

bidding price as the case may be shall be capped at Rs. 8 per kWH. 

This shall be applicable to both power exchanges and bilateral marketing. 

The minimum and maximum ceiling of Tariff as aforesaid shall apply for 

a period of 45 days from the date of this Order. 

11. The above direction would indicate that the Order has been passed by 

the Central Commission fixing the minimum and maximum prices of sale 

and purchase of electricity for bilateral markets in the power exchanges and 

the same has been passed under Section 62(1(a) proviso that too only for 

45 days. Let us now quote the Section 62(1)(a) proviso. 

Section 62. Determination of Tariff.–(1) The Appropriate Commission 

shall determine the Tariff in accordance with the provisions of this 

Act for: 

(a) supply of electricity by a generating company to a Distribution 

Licensee Provided that the Appropriate Commission may in case 

of shortage of supply of electricity fix the minimum and maximum 

ceiling of Tariff for sale or purchase of electricity in pursuance of 

an agreement entered into between the generating company and 

a licensee or between licensees for a period not exceeding one year 

to ensure reasonable prices of electricity. 

12. According to the learned Senior Counsel appearing for the Central 

Commission, the Central Commission has fixed the minimum and maximum 

prices quoting the various instances showing shortages of supply and 

escalation of prices of electricity, has exercised power under Section 62(1)(a) 

proviso and as such it has got jurisdiction. 

13. According to the learned Counsel for the Appellants, under the Act the 

Central Commission can exercise the jurisdiction only in relation to some of 

the entities as mentioned in Section 79 and not to all the utilities or entities. 

Under Section 64(5) the State Commission alone has got the jurisdiction in 

respect of Distribution Licensee for the inter-State supply of electricity. 

Section 62(1)(a) proviso will not apply to a Distribution Licensee like the 

Appellant and at any rate the proviso to Section 62(1)(a) is merely an exception 

to the main Section and the said exception cannot embrace the area which 

is not covered by the main Section. 


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14. It cannot be debated that the Central Commission has got the functions 

relating to the regulations of the inter-State transaction of electricity as 

provided in Section 79 of the Act. Similarly, the State Commission has got 

the functions relating to electricity including Tariff for transactions within 

the State under Section 86 of the Act. 

15. The stand of the Central Commission is that the Central Commission 

has exercised powers to fix the minimum and maximum prices under Section 

62(1)(a) proviso. A reading of the above proviso, as referred to above, would 

specify only to the Appropriate Commission. It does not specify as to whether 

it is the Central Commission or the State Commission. Therefore, it shall be 

construed that whenever the powers are exercised with reference to the 

Section 79, in regard to the inter-state transaction the Central Commission 

will be the Appropriate Commission to use the Section 62(1)(a) proviso. 

Similarly, whenever the State Commission exercises the powers under 

Section 86 of the Act, with reference to intra-state transactions it may invoke 

the proviso to Section 62(1)(a) to fix the minimum and maximum prices as 

Appropriate Commission. 

16. It is strenuously contended by the learned Senior Counsel for the Appellants 

that the Central Commission cannot exercise the power under Section 62(1)(a) 

proviso as there is no other provision in the Act which has specifically 

conferred such power to the Central Commission. 

17. Let us now look into Section 79 which reads as under: 

79. Functions of Central Commission.–(1) The Central Commission shall 

discharge the following functions, namely: 

(a) to regulate the Tariff of generating companies owned or controlled 

by the Central Government; 

(b) to regulate the Tariff of generating companies other than those 

owned or controlled by the Central Government specified in Clause 

(a), if such generating companies entered into or otherwise have 

a composite scheme for generation and sale of electricity in more 

than one State; 

(c) to regulate the inter-State transmission of electricity; 

(d) to determine Tariff for inter-State transmission of electricity; 

(e) to issue licenses to persons to function as transmission licensee 

and electricity trader with respect to their inter-State operations; 

(f) to adjudicate upon disputes involving generating companies or 

transmission licensee in regard to matters connected with Clauses 

(a) to (d) above and to refer any dispute for arbitration; 

(g) to levy fees for the purpose of this Act; 

(h) to specify Grid Code having regard to Grid Standards; 

(i) to specify and enforce the standards with respect to quality, 

continuity and reliability of service by licensees; 

(j) to fix the trading margin in the inter-State trading of electricity, 

if considered, necessary; 

(k) to discharge such other functions as may be assigned under 

the Act. 

18. Under Section 79(1)(a), the Central Commission can regulate the Tariff 

of generating companies owned or controlled by the Central Government. 

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19. Under Section 79(1)(b), the Central Commission has got the powers to 

regulate the Tariff of generating companies other than those owned or controlled 

by the Central Government, if such generating companies enter into a 

composite scheme for generation and sale of electricity in more than one State. 

20. Under Section 79(1)(c), the Central Commission has power to regulate 

the inter-State transmission of electricity. 

21. Under Section 79(1)(d), the Central Commission has the power to determine 

the Tariff for inter-State transmission of electricity. 

22. Under Section 79(1)(e), the Central Commission has got the powers to 

issue licence to a person to function as a Transmission Licensee with respect 

to their inter-State operations. 

23. Under Section 79(1)(j), the Central Commission has the power to fix the 

trading margin in inter-State trading of electricity. 

24. So, all these provisions would confer powers to the Central Commission 

to regulate the Tariff, in regard to the inter-State transmission and to fix the 

trading margin in the trading with reference to inter-State supply of electricity. 

Thus, it is clear that all the aforesaid transactions could be dealt with only 

by the Central Commission under Section 79. 

25. In this context, it would be appropriate to refer to one more provision 

which is Section 79(1)(k). According to this provision, the Central Commission 

shall discharge such other functions as may be assigned to it under any 

other provision of this Act. According to the learned Senior Counsel appearing 

for the Central Commission, Section 79(1)(k) enables the Central Commission 

to exercise the powers under Section 62(1)(a) proviso as the same is included 

in Section 79(1)(k). 

26. As indicated above, the Central Commission is the Appropriate Commission 

which can regulate inter-State supply of electricity that too in the case of 

shortage of electricity, i.e. in the exigent situation the Central Commission 

can fix the minimum and maximum ceiling of prices by exercising the said 

power. Hence, the power to regulate shortage of supply in respect of inter-State 

transactions cannot be exercised by State Commission as it has no power 

in respect of inter-State transactions. 

27. It is not correct to contend that the proviso to Section 62(1)(a) shall be 

limited to the supply of electricity by generating company to a Distribution 

Licensee alone as rightly pointed out by the learned Senior Counsel for the 

Central Commission. The perusal of the above Section, as is evident from the 

terms of the proviso, it is clear that it does not limit itself to the Tariff for supply 

of electricity by generating company to a Distribution Licensee alone. On the 

contrary, it refers to supply of electricity in pursuance of an agreement entered 

into between the generating company and the licensee or between licensees. 

Under Section 14 of the Act, the licensees include Transmission Licensee, 

Distribution Licensees and traders. Therefore, we find force in the contention 

urged by the learned Senior Counsel for the Central Commission that as 

envisaged under Section 79(1)(k), the Central Commission can exercise its 

powers under Section 62(1)(a) proviso on the basis of the prevailing 

circumstances which reflected shortage of electricity as well as escalation of 

prices, to fix the minimum and maximum ceiling of prices. 

28. Further, the impugned Order specifically states that the fixation of the 

prices would be applicable to inter-State transactions and bilateral markets. 


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Admittedly, the power exchanges are all inter-State transactions. The National 

Power Exchanges were granted permission to set up and operate under the 

guidelines issued by the Central Commission. The by-laws, Rules and Business 

Rules of Power are to be approved by the Central Commission. The Prices 

Discovery Methodology has to be approved only by the Central Commission. 

The case of collective transactions in day ahead market on Power Exchange 

is double-sided closed bid option. Similarly, the Power Exchanges have to 

comply with the Central Commission regulations. As per the regulations, 

any participant on Power Exchange which is a State utility for inter-State 

entity has to obtain a No Objection from the State Load Dispatch Centre. It is 

due to the concurrence given by the SLDC that the State/distribution network 

has the required transfer capability for transfer of power from the State grid. 

This concurrence is given for the inter-State transactions. 

29. The proviso to Section 62(1)(a) has to be considered as a special provision 

in the statute. It can be invoked by the Appropriate Commission only in 

abnormal situation of shortage of electricity and escalation of price rise. 

The words “in case of shortage of electricity” and “to ensure reasonable 

prices of electricity” would indicate an exigent situation. This proviso can 

only be applied for certain duration. The objective behind this proviso is to 

ensure reasonable prices of electricity at least for the short duration. 

30. In the impugned Order, it is noticed that the Central Commission has 

clearly explained the abnormal and exigent situation of shortage of supply of 

electricity as well as escalation of prices. Further, the Central Commission 

relied upon the Load Generation Balance Report. The steep increase in electricity 

prices has also been explained in detail in the impugned Order based on the 

monitoring by the Central Commission of the bilateral markets and day ahead 

transactions of power exchanges. As a matter of fact, the Central Commission 

has, in the impugned Order, specifically mentioned that the prevailing high 

prices, even for a short period, would not only be harmful to consumers but 

also would erode the buyers confidence in the market’s capability. 

31. As correctly submitted by the learned Senior Counsel for the Central 

Commission, there is no embargo preventing the Central Commission to 

exercise the proviso under Section 62(1)(a) especially when Section 79(1)(k) 

confers powers on the Central Commission to discharge such other functions 

as may be assigned to it under this Act. Under these circumstances, it can 

be safely concluded that this would bring in the functions under proviso to 

Section 62(1)(a). 

32. The learned Senior Counsel for Appellants would strenuously contend 

that Section 62(1)(a) is only exception and it cannot embrace the area not 

covered in the main Section and as such proviso cannot be said to be a 

substantive Section. As indicated above, this proviso is a special provision 

conferring powers to the Appropriate Commission for fixing the minimum 

and maximum prices for transactions between generating companies and 

the licensees or between the licensees. It is not in dispute that this proviso 

deals with the specific situation of shortages which is not referred to in the 

main Section 62(1)(a). But, the proviso has to be construed as a special 

provision for the following reasons: 

(i) Ex facie, the view that a proviso cuts an exception to the main 

provision/enactment cannot be applied to Section 62(1)(a) proviso since 

subject-matter of proviso cannot and does not carve out any exception 

to the main provision. 

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(ii) The scope of the proviso is not limited to sale or purchase between 

generating company and a Licensee alone. Similarly, this proviso covers 

the Tariff for supply of electricity by a generating company to a Distribution 

Licensee especially when the proviso refers to the sale or purchase of 

electricity in pursuance of an agreement between the generating company 

and the licensees. The term “licensee” includes not only Transmission 

Licensee or trading licensee but also Distribution Licensee. Hence, the 

contention that proviso is not of the substantive nature cannot 

be accepted. 

33. In this context, let us refer to the various decisions rendered by the 

Hon’ble Supreme Court cited by both the learned Counsel. The learned 

Counsel for the Appellant would cite the following decisions in order to 

substantiate their plea that the proviso cannot be read in isolation and that 

the proviso to a particular provision or statute can only embrace such fields 

which is covered by the main provision: 

(a) Mr. Ram Narain and Sons Ltd. v. Commissioner of Sales Tax and Ors. 1 

1955 2 SCR 483 

(b) State of Orissa v. Debaki Debi and Ors. 2 1964 5 SCR 253 

(c) Commissioner of Income Tax, Kerala and Coimbatore v. P. Krishna 

Warriar 3 (1964) 8 SCR 36 

(d) State of Rajasthan v. Leela Jain and Ors. 4 (1965) 1 SCR 276 

(e) Ishvaerlal Thakorelal Almaula v. Motibhai Nagjibhai 5 (1966) 1 SCR 367 

(f) Commissioner of Commercial Taxes, Board of Revenue, Madras and Anr. 

v. Ramkishan Shri kishan Jhaver etc. 6 (1968) 1 SCR 148 

(g) Dwarka Prasad v. Dwarka Das Saraf 7 (1976) 1 SCC 128 

(h) S. Sundaram Pillai and Ors. v. V.R. Pattabiraman and Ors. 8 (1985) 1 

SCC 591 

(i) Motiram Ghelabhai Maniram Motiram v. Jagan Nagar and Ors. (1985) 

1 SCC 279 

(j) Union of India v. Paras Laminates (P) Ltd. 9 (1990) 4 SCC 453 

(k) Nathi Devi v. Radha Devi Gupta 10 (2005) 2 SCC 271 

(l) M.A. Rasheed and Ors. v. State of Kerala 11 (1974) 2 SCC 687 

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1 Ed. MANU/SC/0084/1955: AIR 1955 SC 765: (1955) 6 STC 627 (SC) 

2 Ed. MANU/SC/0218/1963: AIR 1964 SC 1413: (1964) 15 STC 153 (SC) 

3 Ed. MANU/SC/0120/1964: AIR 1965 SC 59: (1964) 53 ITR 176 (SC) 


5 Ed. MANU/SC/0328/1965: AIR 1966 SC 459: (1966) 0 GLR 233: 1966 MhLJ 1049 (SC) 


7 Ed. MANU/SC/0505/1975: AIR 1975 SC 1758: (1976) 1 SCR 277 

8 Ed. MANU/SC/0387/1985: AIR 1985 SC 582: 1985 (1) SCALE 74: (1985) 2 SCR 643 

9 Ed. MANU/SC/0173/1991: AIR 1991 SC 696: (1990) 87 CTR (SC) 180: 1990 (30) 

ECR 305 (SC): 1990 (49) ELT 322 (SC): (1990) 186 ITR 722 (SC): JT 1990 (3) SC 

510: 1990 (2) SCALE 283: (1990) 3 SCR 789: (1991) 80 STC 263 (SC): 1990 (2) UJ 

557 (SC) 

10 Ed. MANU/SC/1071/2004: AIR 2005 SC 648: 2005 (80) DRJ (Supp l) 518: (2005 

(2) JCR 71 (SC)): JT 2005 (1) SC 1: 2005 (1) KLT 443 (SC) 

11 Ed. MANU/SC/0051/1974: AIR 1974 SC 2249: (1975) 2 SCR 93: 1974 (6) UJ 611 (SC) 


229


34. On the other hand the learned Senior Counsel appearing for the 

Central Commission would cite the following authorities to show that 

proviso which is of a special nature has to be construed as a substantive 

provision: 

1. State of Rajasthan v. Leela Jain (1965) 1 SCR 276 

2. Ishwarlal Thakorelal Almauloa v. Motibhai Nagibhai (1966) 1 SCR 367 

3. Commissioner of Income Tax, Kerala and Coimbatore v. P. Krishna 

Warriar (1964) 8 SCR 36 

4. Commissioner of Commercial Taxes, Board of Revenue, Madras and Anr. 

v. Ramkishan Shri kishan Jhaver etc. (1968) 1 SCR 148 

5. Motiram Ghelabhai Maniram Motiram v. Jagan Nagar and Ors. (1985) 

1 SCC 279 

35. The crux of the principles and the ratio laid down in the above authorities 

cited by learned Counsel for both the parties are: 

A. It is cardinal rule of interpretation that a proviso to a particular 

provision of a statute only embraces the field which is covered by the 

main provision. It carves out an exception to the main provision to 

which it has been enacted as a proviso and to no other. 

B. It is not an inflexible rule of construction that a proviso in a statute 

should always be read as a limitation upon the effect of the main 

enactment. Generally, the natural presumption is that but for the 

proviso the enacting part of the Section would have included the 

subject-matter of the proviso; but the clear language of the substantive 

provision as well as the proviso may establish that the proviso is 

not a qualifying Clause of the main provisions; but is in itself a 

substantive provision. 

C. It is true that the proviso is an exception to the main part of the 

Section; but it is recognised that in exceptional cases a proviso may be 

a substantive provision itself. 

D. It is a settled rule of construction that a proviso must prima facie be 

read and considered in relation to the principal matter to which it is a 

proviso. It is not a separate or independent enactment. “Words are 

dependent on the principal enacting words”, to which they are tacked 

as a proviso. 

E. Normally, a proviso is meant to be an exception to something within 

the main enactment or to qualify something enacted therein which 

but for the proviso would be within the purview of the enactment. 

In other words, a proviso cannot be torn apart from the main enactment 

nor can it be used to nullify or set at naught the real object of the 

main enactment. 

F. But it is not an inflexible rule of construction that a proviso in a 

statute should always be read as a limitation upon the effect of the 

main enactment, but the clear language of the substantive provision as 

well as the proviso may establish that the proviso is not a qualifying 

Clause of the main provisions, but is in itself a substantive provision. 

These principles would support the plea of the learned Senior Counsel for 

the Central Commission 

36. According to the Appellant, under Section 64(5) of the Act, determination 

of Tariff for any inter-State supply or transmission or wheeling is within the 

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jurisdiction of the State Commission. This submission also is erroneous. 

Section 64(5) deals with an exceptional process of determination of Tariff for 

any inter-State supply, transmission or wheeling between two consenting 

parties who specifically apply to State Commission for determination of Tariff. 

On the other hand, Section 62(1)(a) proviso deals with the abnormal situation 

of shortage of electricity and the steps that the Appropriate Commission may 

take to tackle the same by fixing the minimum and maximum prices to 

ensure reasonable prices of electricity. 

37. That apart, Section 64(5) of the Act begins with a Non-obstante Clause 

which refers specifically to Part-X of the Act. This shows that it is an exception 

to the usual division of inter-State and intra-State functions between the 

Central Commission and the State Commission. As stated above, Section 64(5) 

contemplates a joint application to be made by the two consenting parties, 

i.e. (1) a specific seller and (2) a specific buyer to the State Commission for 

determination of Tariff for any inter-State supply. On the contrary, 

Section 62(1)(a) proviso deals with the buyers and sellers of electricity generally 

and the actions which the Appropriate Commission may resort to in the 

abnormal situation to ensure reasonable prices of electricity. As such the 

determination of Tariff under Section 64(5) has nothing to do with the fixing 

the minimum and maximum prices at which electricity can be bought and 

sold in the shortage situation. 

38. In this case, through the impugned Order, the Central Commission 

imposes a price cap only for day ahead inter-State transactions and that too 

for a short period of 45 days. This cannot be done by the State Commission 

under the powers under Section 64(5) of the Act. Further, it is noticed that 

this period of 45 days had already expired. 

39. The learned Senior Counsel for the Appellants relied upon Rule 8 of the 

Electricity Rules. The relevance on Rule 8 of the Electricity Rules by the 

Appellant is misconceived. Rule 8 would apply to determination of Tariff and 

power procurement process. Rule 8 cannot prevent the Central Commission 

from exercising the power of fixing minimum and maximum prices of power 

in the abnormal situation of shortage. 

40. This can be viewed from yet another angle. The Central Commission alone 

would be in a position to take an overall Pan-Indian view of the electricity 

sector in whole of India. Each State Commission is necessarily concerned 

with the regulation of electricity sector in respect of that State. In other words, 

each State Commission would be expected to take regulatory action on the 

basis of the peculiar problems, challenges prevalent in that State but if country 

as a whole is suffering from shortage of electricity and the escalation of prices 

is very high, it is only the Central Commission which can be in a position to 

take an overall view of the situation and take necessary remedial 

measures accordingly. 

41. In addition to this power, the learned Senior Counsel appearing for the 

Central Commission would rely upon Section 66 of the Electricity Act which 

gives powers to the Commission to promote development of market in power 

including the trading in power. It is contended by the learned Senior Counsel 

for the Appellant that Section 66 of the Act would not apply to the present 

case as it is contrary to Section 62(1)(a). We need not go into this aspect in 

view of the fact that we are convinced that the Central Commission has got 

the jurisdiction to fix the minimum and maximum prices to deal with the 


231


abnormal situation of shortage of electricity and the escalation of the price 

rise, under Section 62(1)(a) proviso the power of which is available to Central 

Commission as conferred under Section 79(1)(k) of the Act. 

42. In view of the above said reasons, we conclude that the power of fixing 

price cap for the inter-State transactions are within the jurisdiction of the 

Central Commission and not of the State Commission. 

43. Therefore, we do not find any merit in these Appeals. Consequently, both 

the Appeals are dismissed. No costs. 

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2010 ELR (APTEL) 0476* 



Chhattisgarh State Power Distribution Co. Ltd. 

v. 

Aryan Coal Benefications Pvt. Ltd. and Chhattisgarh State Electricity 

Regulatory Commission 

AND 

Aryan Coal Benefications Pvt. Ltd. 

v. 

Chhattisgarh State Electricity Regulatory Commission and Chhattisgarh 

State Electricity Board 

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APPEAL NO. 119 OF 2009 AND APPEAL NO. 125 OF 2009 

DECIDED ON: 09.02.2010 

Coram 



Whether the State Commission is correct in holding that the Aryan 

Plant liable to pay cross subsidy charges for past use of the electricity 

generated by it for supply to its own coal washeries ? 

No provision of Act of 2003 restricts supply through dedicated line on ground 

that such supply have not been availed through open access facility. 

Clause 11(6)(b)(ii) of Regulations of 2005 read with Section 181 of Act of 2003 

shows provision for payment of cross subsidy charges. Dedicated transmission 

can be used on payment of cross subsidy charges. 

Whether the Aryan Plant liable to apply for open access or to obtain 

the license for supply of power to its own coal washeries for the future 

use through its own dedicated line? 

Order directing Appellant to apply for license or to get open access for future 

use suffers from infirmity and said portion of order set aside. Appellant 

entitled to use its own dedicated transmission line to supply electricity to its 

own coal washeries on payment of cross subsidy surcharge to Distribution 

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* MANU/ET/0010/2010 

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Benefications Pvt. Ltd. and Chhattisgarh State Electricity Regulatory Comm. 


0477 

Company as compensatory charge for future period. Appellant not bound 

either to avail open access or to obtain license under Act of 2003. 

Appeal by Distribution Company dismissed and Appeal by Aryan Plant 

Allowed. 


Dakshin Gujarat Vidyut Vitran Nigam Ltd. v. Gujarat Electricity Regulatory 

Commission MANU/ET/0086/2009: 2009 ELR (APTEL) 1037 (mentioned) 

[p. 0484, para 18] 

Jindal Steel and Power Ltd. v. CSERC and Ors. MANU/ET/0043/2008: 2008 

ELR (APTEL) 628 (discussed) [p. 0485, para 20 h] 

Nalwa Steel & Power Ltd. v. CSPDCL and Anr. MANU/ET/0049/2009: 2009 

ELR (APTEL) 609 (discussed) [p. 0484, para 18 f] 

Suresh Jindal v. BSES Rajdhani Power Ltd. MANU/SC/4037/2007: (2008) 1 

SCC 341: AIR 2008 SC 281: 2007 (2) BLJR 3086: JT 2007 (12) SC 145: 2007 

(12) SCALE 223: 2007 (2) UJ 1243 (SC) (mentioned) [p. 0483, para 13 e] 



















General Clauses Act, 1897 [p. 0483, para 13 g] 


Chhattisgarh State Electricity Regulatory Commission (Intra-State Open Access 

in Chhattisgarh) Regulations, 2005 [p. 0487, para 23 f] 

Electricity (Removal of Difficulties) Fifth Order, 2005 [p. 0488, para 30 g] 

Counsel 

For Appellant/Petitioner/Plaintiff: K. Gopal Choudhary, A. Bhatnagar, SE/CSPDCL 

for Appeal No. 119 of 2009 and Atul Sharma, Milanka Choudhary, Ashwarya 

Sinha, Ajay Sawheny and Rajat Arora, Advs. for Appeal No. 125 of 2009 

For Respondent(s)/Defendant: M.G. Ramachandran, Anand K. Ganesan, 

Swapna Seshadri for CSERC, Atul Sharma, Milanka Choudhary, Ashwarya 

Sinha, Ajay Sawheny and Rajat Arora for Aryan Coal Benefications Appeal 

No. 119 of 2009 and M.G. Ramachandran, Anand K. Ganesan, Swapna 

Seshadri, K. Gopal Choudhary and A. Bhatnagar, Advs. for Appeal No. 125 

of 2009 


233


JUDGMENT 


1. The common Judgment is being rendered in these two Appeals, as these 

appeals would arise out of the common Order passed by the Chhattisgarh 

State Electricity Regulatory Commission disposing of the two Petitions No. 10 

and 11 of 2008 and giving directions to both the parties, namely Chhattisgarh 

State Power Distribution Co. Ltd. and Aryan Benefication Limited. 

2. The Chhattisgarh State Power Distribution Company has filed an 

Appeal No. 119 of 2009 as against the Aryan Benefication Limited (ABL). 

Similarly, the Aryan Benefication Limited has filed Appeal No. 125 of 2009 

as against the Chhattisgarh Power Distribution Company Limited, on being 

aggrieved over the respective findings made in the impugned Order dated, 


3. The short facts are as follows: 

(i) Ms Aryan Coal Benefication is the coal based generating station. 

This generating station entered into a Power Purchase Agreement 

(PPA) with the Chhattisgarh State Electricity Board for supply of 25 MW 

firm power with effect from 2second February, 2007. There upon the 

Aryan Plant constructed its own 33 KV dedicated transmission line 

and started supplying power to its coal washeries, as a captive 

power plant. 

(ii) On receipt of the information from the Chief Electrical Inspector of 

Chhattisgarh Government, the State Commission came to know that 

M/s Aryan Coal Benefication Limited did not qualify to be captive 

generating plant. Therefore, the State Commission issued a notice 

dated, 12 th August, 2008 to the Aryan plant by giving a suo moto 

direction that it should not supply power to its coal washeries except 

through open access, since the said plant did not fall in the category 

of captive plant. On receipt of the said notice, M/s Aryan Plant filed 

a reply before the State Commission on 31 st July, 2008. The Aryan 

Plant filed further a reply on 4 th August, 2008 stating that it would file 

a separate petition to the State Commission for grant of open access 

for supply of power to its coal washeries within a period of three 

months and requesting the State Commission to withhold further 

action in this regard. 

(iii) However, the State Commission was not satisfied with the reply and 

it initiated suo moto proceeding in Appeal No. 10/08 and sent a Show 

Cause Notice dated, 12 th August, 2008 under Section 142 of the Electricity 

Act, 2003 to the Aryan Plant as to why the penalty be not imposed on 

it for violation of the provisions of the Electricity Act. The Aryan Plant 

there upon submitted its reply stating that the transfer of power from 

the generating plant, to its own coal washeries does not amount to 

supply of electricity to consumers and therefore, there was no violation. 

Besides the reply, the Aryan Plant company by way of abundant caution 

filed a Petition No. 11 of 2008 praying that they may be allowed to 

supply power to its own coal washeries on payment of cross-subsidy 

charges. On receipt of the said petition, the State Commission thought 

it fit to implead the Chhattisgarh State Electricity Board as a necessary 

party in Petition No. 11 of 2008. Accordingly, impleaded. 

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(iv) Both the Petitions were heard together by the State Commission. 

Ultimately, the State Commission disposed of both the Petitions, 

after hearing both the parties, through a common Order dated, 

23 rd January, 2009. In the said impugned Order, the State Commission 

accepted the portion of the plea of the Aryan Plant thereby allowed the 

plant to pay the cross-subsidy surcharge to the Electricity Board in 

regard to the past use. It however, directed that the Aryan Plant being 

a non captive generation plant either to apply for the licence or to avail 

open access from the Distribution Company for future use. It is also 

directed that since the plant has been declared as non-captive generating 

plant, the Parallel Operation Charges (POC) which were earlier paid by 

the Aryan Plant to the Electricity Board, shall be adjusted towards the 

cross-subsidy charges payable by the Aryan Plant to the Electricity 

Board for the past period and consequently dropped proceedings under 

Section 142 of the Electricity Act. 

(v) Aggrieved over the portion of the said Order directing the Aryan 

Plant to obtain licence or obtain the open access from the Distribution 

Company, the Aryan Plant filed a Review Petition. This Review petition 

was however, dismissed on 25 th May, 2009. Hence, the Aryan Plant has 

filed this appeal before this Tribunal in Appeal No. 125 of 2009 both 

against the Main order and the Review Order. 

(vi) Similarly, the Chhattisgarh State Power Distribution Company, which 

is the successor of the Chhattisgarh State Electricity Board, challenging 

the other portion of the common Order, namely dropping of 

the 142 proceedings against the Aryan Plant as well as against the 

Order directing them for the adjustment of parallel operation charges 

towards the cross-subsidy charges, has filed Appeal No. 119 of 2009 


4. Both these Appeals are taken together and heard. 

(i) The main contention urged by the learned Counsel for the Aryan 

Plant in Appeal No. 125 of 2009 are as follows: 

(a) The Aryan Plant Company being a generator which has not been 

qualified as a captive generating plant can transfer power generated 

by it for its own use to its own coal washeries through its own 

dedicated transmission line without licence or open access, as there 

is no prohibition in the Electricity Act, 2003 for such a transfer. The 

State Commission is wrong in holding that the dedicated transmission 

line for self use of power is applicable only in the case of captive 

generating plant and not in the case of any other generator. 

(b) If the dedicated transmission line can be laid from a generating 

company to a load centre, the supply can be made through dedicated 

transmission line. The Aryan Plant Company transferring power 

to its own coal washeries through its own dedicated transmission 

line cannot be treated as “supply” as envisaged under Section 2(70) 

of the Electricity Act. Therefore, the Aryan Plant Company is not 

bound either to avail open access or to obtain a licence under the 


(c) The Company can avail exemption under Clause 6(b)(ii) of open 

access regulations and continue to use its power in its coal washeries 

0479 


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on payment of cross-subsidy charges. The State Commission has 

correctly accepted this plea and held that parallel operation charges 

earlier paid to the Distribution Licensee shall be adjusted towards 

the cross-subsidy charges for the past use. Having recognised and 

regularised the past use of electricity on payment of cross-subsidy 

charges, the State Commission ought to have applied the same 

principle for the future use as well by directing for the continued 

payment of cross-subsidy charges to the distribution company 

instead of directing the Aryan Plant either to obtain the licence or 

to get the open access. 

(d) The cross-subsidy charges are payable not only for availing 

of the open access but also could be made applicable to the 

transfer of electricity by the generating plant to its own coal 

washeries namely the load centre by way of dedicated transmission 

line. 

5. The arguments advanced by the learned Counsel for the State Power 

Distribution Company in Appeal No. 119 of 2009 are as follows: 

(i) The State Commission, having initiated the proceeding under 

Section 142 of the Electricity Act through a Show Cause Notice to 

Aryan Plant to show cause as to why penalty be not imposed, ought 

to have decided upon whether or not was there any violation of the 

Electricity Act and consequently whether the penalty to be imposed in 

terms of Section 142 of the Act. In this case the State Commission, 

having concluded that there was a violation, it unfortunately dropped 

the penalty proceedings by accepting the prayer for payment of 

cross-subsidy charges to the Distribution Licensee for the past use. 

This finding is illegal. 

(ii) The cross-subsidy surcharge is a surcharge in addition to wheeling 

charges and not compensation in lieu of the parallel operation charges. 

It is applicable only where open access had been availed of in pursuance 

of the phased introduction of open access and as a part of the 

consideration for availing of open access. There can be no cross-subsidy 

surcharge when no open access had been availed. 

(iii) When the State Commission held, that the means for the past 

supply of the electricity was unlawful, the prayer to supply power to its 

own coal washeries by paying cross-subsidy charges should have been 

totally rejected. Having rightly held that for the future use the plant 

should apply for open access or to obtain licence, the State Commission 

ought to have applied the same principle for the past use as well. 

(iv) The State Commission without considering the scope of Section 142 

has gone to the extent of directing the Distribution Company for the 

adjustment of parallel operation charges towards the cross-subsidy 

surcharge for the past use. This is beyond the scope of the proceedings 

and this relief has been granted by the State Commission even without 

the prayer to this effect. 

(v) Prior to the passing of the impugned Order, the Aryan Plant in fact 

had availed of parallel operation facilities extended by the distribution 

licensee while supplying its own load. The subsequent determination 

that it is not a captive plant, by reason of not consuming 51 per cent 

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0481 

of the energy generated cannot alter the effect as it had already availed 

parallel operation facilities from the Distribution Company in a manner 

in the capacity of captive generation plant. Therefore, the Order directing 

for the adjustment of parallel operation charges is not legal. 

6. The learned Counsel for the State Commission also has elaborately made 

his submissions in justification of the findings rendered by the State 

Commission in the impugned Order. Two questions that may arise for 

consideration in these Appeals are as follows: 

(i) Whether the State Commission is correct in holding that the Aryan 

Plant is liable to pay cross-subsidy charges for past use of the electricity 

generated by it for supply to its own coal washeries to the distribution 

licensee and consequently, the parallel operation charges which were 

paid earlier by the Aryan Plant to the distribution licensee shall be 

adjusted towards the said cross-subsidy charges for the past use. 

(ii) Having regularised the past use by directing to pay cross-subsidy 

charges, whether the State Commission is correct in holding that the 

Aryan Plant is liable to apply for open access or to obtain the licence 

for supply of power to its own coal washeries for the future use through 

its own dedicated line? 

7. Let us now deal with these questions one by one. In regard to the first 

question, the State Commission has rendered the following findings: 

(i) Aryan Plant is not a captive generation plant. 

(ii) Therefore, Aryan Plant is liable to pay cross-subsidy charges to the 

Distribution Company for the past use. 

(iii) Since, the Aryan Plant was found to be not a captive generation 

plant, there is no liability for the plant to make the payment of parallel 

operation charges to the Distribution Company and the said amount of 

parallel operation charges paid earlier shall be directed to be adjusted 

towards the demand of cross-subsidy charges for the past use. 

8. We shall now see as to whether these findings are proper. 

9. It is noticed that the Section 142 proceedings were initiated against Aryan 

Plant by issue of a Show Cause Notice on two aspects. 

(i) The Aryan plant cannot be considered to be a captive generation 

plant, as it does not fulfill the requirements of the captive power plant. 

(ii) When it is not a captive power plant, Aryan Plant cannot supply 

power to its own coal washeries unless the licence is obtained under 

Section 12 of the Electricity Act, 2003. 

9.1 The main contention urged by the learned Counsel for the Distribution 

Company, the Appellant in Appeal No. 119 of 2009 is that the State 

Commission having initiated the proceedings under Section 142 and having 

found that there was a violation, it ought to have imposed some punishment 

on the Aryan Plant and as this was not done, the impugned Order is 

illegal. This contention in our view does not merit acceptance for the 

following reasons: 

It is the judicial discretion of the State Commission whether to impose 

such punishment as it considers appropriate against Aryan Plant 


237


Company, even when there was any violation. In other words, it is up 

to the State Commission to decide whether at all to impose 

any punishment even when it is found that there was such violation. 

If the State Commission considers that the same was not required in 

the circumstances and facts of the case, it may not impose 

punishment. As a matter of fact, the expression used in Section 142 

is only “May” and not “shall”. So it is not mandatory on the part of 

the State Commission to impose any punishment, even though there 

was violation. 

10. The main prayer made by the Aryan Plant Company in Petition No. 11 

of 2008 before the State Commission is for seeking permission to Aryan 

Plant to continue to supply power to its own coal washeries against payment 

of cross-subsidy charges to the Distribution Company. Therefore, the 

question arises as to whether the Aryan Plant Company is entitled to 

supply power to its own coal washeries through its own dedicated 

transmission line on payment of cross-subsidy charges even without 

obtaining open access. 

11. Under the Electricity Act, 2003 both the generating company and 

captive power plant are entitled to supply electricity to others. The sale 

of electricity by captive power plant and the generating company to the 

end users is also permitted. This is specifically provided under Sections 9 

and 10 of the Electricity Act, 2003, which are reproduced below: 

9. Captive Generation–(1) Notwithstanding anything contained in this 

Act, a person may construct, maintain or operate a captive generating 

plant and dedicated transmission lines: 


plant through the grid shall be regulated in the same manner as 

the generating station of a generating company. 

(2) Every person, who has constructed a captive generating plant and 

maintains and operates such plant, shall have the right to open access 

for the purposes of carrying electricity from his captive generating plant 

to the destination of his use: 

Provided that such open access shall be subject to availability of 

transmission facility shall be the Central Transmission Utility or 

the State Transmission Utility, as the case may be; 


transmission facility shall be adjudicated upon by the Appropriate 

Commission. 

10. Duties of generating companies.–(1) Subject to the provisions of this 

Act, the duties of a generating company shall be to establish, operate 

and maintain generating stations, tie-lines, sub-stations and dedicated 

transmission lines connected therewith in accordance with a the provisions 

of this Act or the rules or regulations made thereunder. 

(2) A generating company may supply electricity to any licensee in 

accordance with this Act and the Rules and Regulations made thereunder 

and may, subject to the regulations made under Sub-section (2) of 

Section 42, supply electricity to any consumer. 

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(3) Every generating company shall: 

(a) submit technical details regarding its generating stations to 

the Appropriate Commission and the Authority. 

(b) co-ordinate with the Central Transmission Utility or the State 

Transmission Utility, as the case may be, for transmission of the 

electricity generated by it. 

12. The perusal of these Sections would make it clear that the first and 

second proviso to Section 9 when it is read together would clearly envisage 

for the supply of electricity generated to any consumer subject to regulations 

made under Sub-section 2 of Section 42. Similarly, Sub-section 2 of Section 10 

also would envisage for the supply of electricity by a generating company 

to a consumer by a generating company to any licensee in accordance with 

this Act and the Rules and regulations made thereunder, and subject to 

the regulations made under Sub-section (2) of Section 42. While the proviso 

to Section 9 uses the expression “the supply of electricity by generating 

plant through the grid”, there is no such qualification provided for in 

Sub-section 2 of Section 10. Thus, these Sections would make it evident 

that it is open to the generating company as well as captive plant to supply 

electricity to end users. 

13. Further, the consumption by a non-captive generating plant of its own 

electricity generation by itself is not prohibited under the Act. Similarly, the 

transmission of electricity by a non-captive generating plant for self-consumption 

by a dedicated transmission line is also not prohibited. It is well-settled in 

law that what is not barred or what is not prohibited is permissible and 

there can be no action at all for carrying out which is not prohibited by the 

statutory provisions. The following is the relevant portion of observations 

made by the Hon’ble Supreme Court in the case of Suresh Jindal v. BSES 

Rajdhani Power Ltd. 1 (2008) 1 SCC 341. 

Section 20 operates one filed namely, conferring a power of entry on the 

licensee. The said provision empowers the licensee, inter alia, to alter 

a meter which would include replacement of a meter. It is an independent 

general provision. In the absence of any statutory provision, we do not 

see any reason to put a restrictive meaning thereto. Even under the 

General Clauses Act, a Statutory Authority while exercising the statutory 

power may do all things which are necessary for giving effect thereto. 

There does not exist any provision in any of statutes referred to 

hereinbefore which precludes or prohibits the licensee to replace one 

set of meter by another. 

14. It cannot be disputed that when the power plant from which electricity 

is made available is a captive power plant, no cross-subsidy charge is 

payable. In the same way, if it is not a captive power plant then the 

cross-subsidy is payable. Since, Aryan Plant was not paying cross-subsidy 

surcharge, on the finding that it is not a captive power plant, the Aryan 

Plant had been asked to pay the cross-subsidy surcharge for the past 

use, especially when the plant itself filed an application before the 

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State Commission in Petition No. 11 of 2008 stating that it was prepared 

to pay the cross-subsidy surcharge. 

15. The Distribution licensee cannot have any grievance in regard to the 

Order directing the Aryan Plant to pay the cross-subsidy charge towards the 

past use, since the Distribution Licensee in fact is actually benefited, since 

it is getting cross-subsidy surcharge which is higher than the parallel operation 

charges which was being paid earlier. Once it is held that the generating 

plant was not operating as a captive generating plant then there was no 

liability to pay parallel operation charges. 

16. Section 42(2) deals with two aspects; (i) open access and (ii) cross-subsidy. 

Insofar as the open access is concerned, Section 42(2) has not restricted it 

to open access on the lines of the distribution licensee. In other words, 

Section 42(2) cannot be read as a confusing with open access to the 


17. The cross-subsidy surcharge, which is dealt with under the proviso to 

Sub-section 2 of Section 42, is a compensatory charge. It does not depend 

upon the use of Distribution licensee’s line. It is a charge to be paid in 

compensation to the distribution licensee irrespective of whether its line is 

used or not in view of the fact that but for the open access the consumers 

would have taken the quantum of power from the licensee and in the result, 

the consumer would have paid Tariff applicable for such supply which would 

include an element of cross-subsidy of certain other categories of consumers. 

On this principle it has to be held that the cross-subsidy surcharge is 

payable irrespective of whether the lines of the distribution licensee are 

used or not. 

18. In this context, the next question that would arise for consideration is 

whether the generation plant can use its own dedicated transmission line 

to supply power to its own coal washeries without obtaining open access. 

This point has been held in favour of the generating plant by this Tribunal 

in Nalwa Steel & Power Ltd. v. CSPDCL and Anr. 2 (Appeal No. 139 and Batch 2009 

ELR (APTEL) 609) dated, 25 th May, 2009. In this decision, it has been held 

that the dedicated transmission line can be laid by generating company to 

the place of consumption of the consumer when a place of consumption is 

a load centre. This is also held valid in another decision in Appeal No. 10 

of 2008 on 22 nd February, 2009 in the case of Dakshin Gujarat Vidyut Vitran 

Nigam Ltd. v. Gujarat Electricity Regulatory Commission 3 . 

19. The relevant portion of the observations of the Tribunal dated, 20 th May, 2009 

in Nalwa Steel & Power Ltd. v. CSPDCL and Anr. in Appeal No. 139 of 2009 

ELR (APTEL) 609 is as follows: 

(11) The new Act envisages grant of transmission licence. The new 

Act also envisages supply by the generating company and the captive 

generating company to a consumer. When a captive generating 

company supplies to a consumer, as permitted by the second proviso 

to Section 9(1) of the Act, such supply would be subject to the regulation 

for open access (Section 42(2) of the Act). Obviously such open access 

regulations are required to be followed when open access is availed 

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3 MANU/ET/0086/2009 

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of, if no open access is availed of, as not necessary or because no 

existing network is available, it cannot be said that the captive 

generating company cannot supply under the enabling provision 

because the generating company has laid its own lines and the existing 

transmission utility has not laid its lines so far. If the term “subject 

to” is interpreted to mean “only under” it may lead to absurd result. 

For example, if the consumer is situated at a close proximity to the 

captive generating station and the existing network is at a distance 

of several kilometers, the captive generating company will then have 

to route the electricity first to the existing lines and then back to the 

consumer and pay the charges for using open access. The legislature, 

we can safely conclude, meant that if a captive generator wants to 

supply electricity to a consumer, it will be entitled to use the lines of 

any transmission or distribution licensee on complying with the relevant 

rules and on payment of the required charges and not that even if 

the existing lines are too far away, the generating company cannot 

directly supply to a consumer. 

(12) The Act permits a captive generating company and a generating 

company to construct and maintain dedicated transmission lines 

“Dedicated Line” as per Section 2(16). It means any electric supply line 

for point to point transmission which connects electric lines or electric 

plants to “any transmission lines or sub stations, or generating stations 

or load centres”. Load centre, it is said is conglomeration of load and 

not an individual industry/factory as consumer. According to 

Mr. Ramachandran, Advocate for the Commission, a load centre cannot 

be a consumer because if the two could be the same, Section 10 would 

permit a generating company to reach a consumer through such dedicated 

line which will amount to distribution which is not permissible except 

with a licence. We are not in agreement with Mr. Ramachandran. 

A dedicated line can go, admittedly, from the captive generating plant 

to the destination of its use. Such destination, i.e. the point of consumption, 

has to be covered by the term “load centre”. The consumption point is 

neither electricity transmission line nor substation or generating station. 

Hence, the only way such a line can be termed as “dedicated transmission 

line” when we treat the point of consumption as a “load centre”. Section 

9 of the Act with the amendment of 2007 specifically provides that to 

supply to a consumer, the captive generating station shall not need a 

licence. No such exemption has been given to a generating station 

under Section 10 of the Act. In this view one may say that a generating 

company may need licence to “supply” to a consumer through a dedicated 

line. For our purpose, the issue is irrelevant and we need not delve 

much into it.” 

20. Now the same question has been raised as to whether non-captive 

generating company can lay the dedicated transmission line for self 

consumption without obtaining a licence or availing the open access. 

This question has been considered in detail by this Tribunal and a finding 

had been given in Jindal Steel and Power Ltd. v. CSERC and Ors. 4 2008 ELR 

(APTEL) 628 in Para 51, 52, 60 and 61 reproduced below: 

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(51) The generating company can reach the consumer for “supplying” 

electricity through dedicated transmission lines as defined in 

Section 2(16). Section 10(1) says that the duties of a generating company 

shall be to establish, operate and maintain generating stations, tie 

lines, sub-stations and dedicated transmission lines connected 

therewith. The “dedicated transmission lines” as defined in Section 2(16) 

is as under: 

2(16). “dedicated transmission lines” means any electric supply 

line for point to point transmission which are required for the 

purpose of connecting electric lines or electric plants of a captive 

generating plant referred to in Section 9 or generating station 

referred to in Section 10 to any transmission lines or sub-stations 

or generating stations, or the load centre, as the case may be. 

(52) Thus, dedicated transmission lines which the generating station can 

establish can go up to the load centre. Therefore, a generating station can 

supply electricity to a consumer through dedicated transmission lines up 

to the load centre. However, if the generating company, instead of establishing 

a dedicated transmission line from its generating station up to a particular 

load centre wants to supply electricity to a large group of consumers in a 

particular area, then what he requires is not a dedicated transmission 

line but a distribution system for he is certainly not contemplating to have 

dedicated transmission line for each consumer. If this is the situation, i.e. 

a generating company intends to supply to a group of consumers but not 

through a dedicated transmission line, then the intended activity become 

distribution. In that case Section 12 of the Electricity Act, 2003 makes no 

exception for him and he would need a licence. 

(60) The next question that arises for consideration is the effect of Sub-section 2 

of Section 42. It has been submitted by Senior Counsel Mr. Ravi Shankar 

Prasad appearing for the Chhattisgarh State Electricity Board that the 

supply from a CPP or even under Section 10(2) is permissible only when 

the same is made by use of the grid or the transmission lines of the 

distribution licensee or a transmission licensee by use of open access. 

According to him unless open access is availed of the supply cannot be 

made. When open access is availed of, the CSEB is able to recover the 

cross-subsidy surcharge. In case the open access is not availed of, the 

CSEB has to lose the cross-subsidy surcharge which may affect the income 

of the CSEB and also the Section of consumers who are subsidised by 

using the money recovered through the cross-subsidy surcharge. 

(61) The question really is what the meaning of is “subject to”. In our 

opinion, open access is an enabling provision. This is a provision to help 

expansion of the electricity sector and not to limit its development. In 

case the supply is made through the grid then, certainly the supply will 

be subject to regulations made for using open access. However, it will not 

be correct to say that even if electricity generated by a CPP or a generating 

company can be supplied to a consumer without the use of the grid, such 

a supply will not be permissible. If the dedicated transmission line can 

be laid from a generating plant up to a load centre, supply can be made 

though dedicated transmission line. No provision of the Electricity Act, 2003 

restricts the supply through a dedicated line because such supply is not 

going through the grid and does not avail of the facility of open access. 

If the intention of the Act was that no sale is possible except by availing 

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open access it could say so. Instead of saying “subject to regulations 

made under Sub-section (2) of Section 42” it could say “by availing access 

through the grid or a distribution system of the licensee of the concerned 

area”. The provision of Section 42(2) would be attracted only when the 

access through the existing distribution system is sought. When no such 

access is sought the question of application of Section 42(2) will naturally 

not arise. 

21. The finding given above in this decision is that if the dedicated 

transmission line is laid from the generating company up to the load 

centre, then the supply can be made through dedicated line. As discussed 

above, no provision of the Electricity Act, 2003 restricted the supply through 

the dedicated line because such supply is not going through the grid and 

does not avail the facility of open access. The proviso of Section 42(2) 

would be attracted only when the open access through distribution system 

is sought. When the open access is not sought the question of application 

of 42(2) will not arise. 

22. As stated above, the transfer of power by Aryan Plant to its own coal 

washeries does not amount to supply of electricity as defined in the Act. 

Under Section 2(70) of the Act, the supply is defined; “supply in relation to 

electricity means the sale of electricity to a licensee or a consumer”. The term 

consumer is defined under Section 2(15) of the Act. From this definition it 

is clear that the consumer is a person who gets supply of the electricity for 

his own use. The coal washeries and the generating plant are owned by the 

same entity, Aryan Coal Benefication Ltd. and no price is paid for such use 

of electricity by coal washeries to it. Therefore, it is clear that to constitute 

“supply” to a consumer there should be a sale. In the absence of any price 

being paid, there cannot be any sale of electricity from generating plant to 

coal washeries. 

23. The State Commission has framed Chhattisgarh State Electricity Regulatory 

Commission (Intra-State Open Access in Chhattisgarh) Regulations, 2005 

in exercise of powers under Section 181 of the Act. Clause 11(6)(b)(ii) of 

Regulations provides that a cross-subsidy surcharge is payable by such 

consumers which receives supply of electricity from a person other than a 

distribution licensee in whose area of supply is located, irrespective of whether 

he avails such supply through transmission/distribution network of the 

Distribution licensee or not. In this case the Aryan Plant’s coal washeries 

received supply of electricity from its own generating plant which is not a 


24. Let us quote the said provision of Section 11(6)(b) as under: 

The principle and procedure for determining the cross-subsidy surcharge 

shall be as under: 

(i) Every open access customer requiring supply of electricity through 

open access in case that these regulations shall be liable to pay 

the cross-subsidy surcharge as may be specified. 

(ii) Cross-subsidy surcharge shall also be liable by such consumer 

who receive supply of electricity BS from a person other than the 

distribution licensee in whose area the supply is located, irrespective 

of whether he avails such supply through transmission/distribution 

network licensee or not. 


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25. Thus, it is clear that the Act read with Regulations as referred to above 

contemplated consumer receiving the supply of electricity from the source 

other than the licensee, thus making a proviso to compensate the licensee 

for the loss in the area thereof. The perusal of the above Regulation would 

show that there is provision for the payment of cross-subsidy charges and 

by that process it safeguards the interest of the distribution licensee in 

whose area the consumer is located. 

26. At the risk of repetition, it is to be stated that the Clause 11(6)(b)(ii) of 

such Regulations recognises two categories. The first is the case of open 

access customer receiving the supply of electricity from the Distribution 

licensee whereas, the second is the consumer who receive supply of electricity 

from a person other than the distribution licensee. The case of Aryan Plant 

falls in the Second category. Thus, the scheme of the Act states a balance 

between the interest of entities and the interest of the distribution licensee. 

These categories are recognised under the Act and the Regulations. 

Naturally, Aryan Plant is entitled to use its own power in coal washeries by 

payment of cross-subsidy as per Clause 6(b)(ii) of the Regulations. 

27. The energy can be generated and same can be supplied to the consumer 

within the premises. Similarly where the electricity is generated at one place 

it may be transmitted to a place of consumption other than the place of 

generation. In the former case, it can be consumed through internal wiring. 

In the later case, there is necessity to lay down electricity line from the place 

of generation to place of use by using the existing line of the licensee through 

the open access. 

28. In the case of Malwa Steel & Power Ltd. v. CSPDCL and Anr. 5 (Appeal 139/2007 

and Batch 2009 ELR (APTEL) 609 at para 12, it has been held that the term 

load centre can be interpreted to mean that even the place of single consumer 

can be a load centre. 

29. If the said finding which is a ratio is followed, then it has to be held, that 

the dedicated transmission line which is laid for supply from the place of 

generation to the place of consumption can be used on payment of cross-subsidy 

charges. 

30. There is one more angle to be noticed. There is no dispute in the fact 

that the dedicated transmission line does not require licence as per Section 12 

of the Act. The conveyance of electricity over a dedicated transmission line 

as defined separately in Section 2(16) will not amount to transmission of 

electricity requiring the transmission licence. The Central Government 

has issued an Order under Section 183 of the Act namely the Electricity 

(Removal of Difficulties) Fifth Order, 2005. As per this Order, no licence is 

required for dedicated transmission line. The relevant portion of the said 

notification is as follows: 

Now, therefore, the Central Government in exercise of its powers conferred 

by Section 183 of the Act hereby, makes the Order in respect of establishing, 

operating or maintaining a dedicated transmission line, not inconsistent 

with the provisions of the Act, to remove the difficulties, namely: 

1. Short title and commencement–(1) This Order may be called the 

Electricity (Removal of Difficulty Fifth Order, 2005). 

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(2) It shall come into force on the date of publication in the Official 

Gazette. 

2. Establishment, operation or maintenance of dedicated transmission 

lines.–A generating company or a person setting up a captive generating 

plant shall not be required to obtain licence under the Act for establishing, 

operating or maintaining a dedicated transmission line if such company 

or person complies with the following: 

(a) Grid code and standards of grid connectivity; 

(b) Technical standards for construction of electrical lines; 

(c) System of operation of such a dedicated transmission line as 

per the norms of system operation the concerned State Load Despatch 

Centre (SLDC) or Regional Load Despatch Centre (RLDC). 

(d) Directions of concerned SLDC or RLDC regarding operation of 

the dedicated transmission line. 

31. These clarifications would make it clear that no licence is required for 

dedicated transmission line. However, a distinction has been made between 

the requirements of taking licence under Section 12 read with Section 14 of 

the Act for the dedicated transmission line under the second proviso of the 

Section 9 of the Act which deals with the captive generation. The second 

proviso in Section 9 was inserted by the amendment effective from 

15 th June, 2007. As per second proviso no licence shall be required for supply 

of electricity generated from the captive generating plant. This proviso does 

not deal with the issue of licence for dedicated transmission line. This proviso 

clarifies that no licence is required for supply of electricity through dedicated 

transmission line. When a doubt was created as to whether a captive generating 

company which is established primarily for the generation and self use of 

electricity can supply electricity to others without getting into the distribution 

system, the same was clarified by this proviso. Thus, similar proviso has been 

provided under Section 10. There cannot be any distinction between a mere 

generating company and a captive generation plant in regard to the supply 

of electricity. A generating company can equally undertake supply of electricity 

to any licensee or to the consumer under Section 10(2) of the Electricity Act. 

Further, Section 49 of the Electricity Act also clarifies the sale of electricity by 

a generating company to a consumer. Therefore, the second proviso of Section 9 

does not place the captive generating company at a higher position than the 

generating company in regard to the supply of electricity through a dedicated 

transmission line. Thus, it is clear that both, the generating company as well 

as the captive generating station are similarly placed. 

32. If the load centre is the installation of the consumer then both the 

captive generating station and the generating company can install the 

dedicated transmission line up to the place of the consumer without the 

need to obtain any licence. Load centre cannot be incorporated as not 

including the installation of the consumer, if such an interpretation is 

given, both captive generation plant and generating company cannot lay 

down the dedicated transmission line up to the place of the consumer. 

So it has to be held that under the regulation no licence is required to 

undertake supply of electricity through a dedicated transmission line without 

using the distribution line of the transmission company or the distribution 

system of the licensee. 


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33. It has been argued by the learned Counsel for the Appellant in Appeal 

No. 119 of 2009 that the parallel operation charges cannot be directed to be 

adjusted towards cross-subsidy charges since the Aryan Plant had already 

paid parallel operation charges after having availed of the parallel operation 

facilities, the subsequent finding that it is not a captive generating plant 

cannot alter the fact that it had used the parallel operation facilities provided 

by the Distribution Licensee after payment of parallel operation charges 

and, therefore, the Order ordering for adjustment of parallel operation charges 

towards cross-subsidy charges is wrong. This contention in our view is 

misconceived. Once it is found out that the generating plant who claimed as 

a captive generating plant did not consume 51 per cent of the energy generated 

by it, it was never a captive generating plant, then the Appellant namely 

Power Distribution Company Limited cannot claim that they are entitled to 

collect parallel operation charges. Therefore, the Order impugned had been 

correctly passed by the State Commission holding that the Aryan Plant 

could never be a captive power plant and therefore, there was no liability to 

pay parallel operation charges. Consequently, the State Commission held 

that the charges which were paid earlier as parallel operation charges have 

to be adjusted as cross-subsidy charges for the past use. There is no illegality 

in this order. Further, no prejudice can be attributed to the Power distribution 

licensee especially when the amount of cross-subsidy surcharge which the 

power distribution company is entitled to claim is much higher than the 

parallel operation charges which were paid earlier. 

34. The learned Counsel for the Distribution Licensee submits that his 

client does not want cross-subsidy charges, merely because it is higher than 

the parallel operation charges. This submission is quite strange. It is not 

open to the distribution licensee to contend that it does not want cross-subsidy 

charges even though it is higher than the parallel operation charges. This 

stand of the distribution licensee is not only against the interest of the 

consumers, but also contrary to the provisions of the Electricity Act, 2003. 

35. Now, we may come to the next question. Having regularised the supply 

of electricity by the Aryan Plant to its own coal washeries on payment of 

cross-subsidy surcharge for the past use, whether Central Commission 

could direct the Aryan Plant to obtain licence or to seek for open access 

for the future use? As we held above the reasoning given in the impugned 

Order by the Central Commission for ordering payment of cross-subsidy 

charges on finding that the generating plant was never be a captive 

generating plant for the past use is perfectly valid in law. In our view, the 

said analogy would apply to the future use also on payment of cross-subsidy 

charges. If the Central Commission had decided that Aryan Plant is liable 

to get licence for open access for supply to its own coal washeries through 

its own dedicated line, then it ought to have held, that the Aryan Plant 

being the mere generating plant cannot supply to its own coal washeries 

without obtaining the licence or open access for the past use as well. 

In this case, it cannot be debated that the Aryan Plant has used its 

dedicated transmission line for supplying its power to its own coal washeries 

both in the past as well as in the future also. Admittedly, they have not 

used any line of the distribution system. If that is so, then there is no 

necessity for directing the Aryan Plant to go for licence or go for open 

access. The direction for payment of cross-subsidy surcharge for the past 

to the Distribution Company would certainly apply to the future also as 

the compensatory cost. 

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36. In the light of the discussion made above, we hold that the Order impugned 

giving the direction to the Aryan Plant to apply for licence or to get open 

access for the future use alone would suffer from infirmity and consequently 

that portion of the Order is liable to be set aside and accordingly set aside. 

Consequently, the Appellant, Aryan Plant is entitled to use its own dedicated 

transmission line to supply electricity to its own coal washeries on payment 

of cross-subsidy surcharge to the Distribution Company as a compensatory 

charge to the distribution company for the future period as well. In other 

respects, the impugned Order is confirmed. 

36. In the light of the above discussions, we make the following conclusions: 

(i) The Aryan Plant Company being a generator which is found to be not 

qualified as a captive generating plant can transfer power generated by 

it for its own use to its own coal washeries through its own dedicated 

line without licence or open access. 

(ii) The Aryan Plant Company transferring power to its own coal washeries 

through its own dedicated transmission line cannot be treated as “supply” 

as envisaged under Section 2(70) of the Electricity Act. Therefore, the 

Aryan Plant Company is not bound either to avail open access or to 

obtain a licence under the Act. 

(iii) Under the Act and the Regulations framed under the said Act a 

consumer is entitled to receive the supply of electricity from the source 

other than the licensee thereby making a proviso to compensate the 

licensee therefore, show that there are provisions for the payment of 

cross-subsidy surcharge and by that process, it safeguards the interest 

of the distribution licensee in whose area the consumer is located. 

(iv) If the load centre is the installation of the consumer, then both the 

captive generating station and the generating company can install the 

dedicated transmission line up to the place of the consumer without 

the need to obtain any licence. In other words, under the Regulations 

no licence is required to undertake supply of electricity through a dedicated 

transmission line without using the distribution line of the transmission 

company or the distribution system of the licensee. 

(v) The State Commission is correct in directing the Distribution 

Company to adjust the parallel operation charges which were earlier 

paid by the Aryan Plant Company, towards the cross-subsidy surcharge 

for the past use. Once it is found out that the generating plant whose 

claim as a captive generating plant was never qualified, as it does 

not consume 51 per cent of the energy generated by it, then the 

distribution company cannot collect the charges from the Aryan Plant 

Company as parallel operation charges. As there is no liability to pay 

parallel operation charges, the State Commission has correctly held 

that the charges which were paid earlier as parallel operation charges 

have to be adjusted as cross-subsidy charges. There is no illegality 

in this Order. 

(vi) Though the State Commission is right in holding that the Aryan 

Plant Company was liable to pay the cross-subsidy surcharge for the 

past use, it is not correct to hold that for the future use it must obtain 

licence or apply for open access. Having regularised the transfer of 

power by the Aryan Plant Company to its own coal washeries on payment 


247


of cross-subsidy surcharge, the State Commission ought to have adopted 

the same analogy for the future use also on payment of cross-subsidy 

surcharge. 

(vii) As such the Order impugned giving direction to the Aryan Plant 

Company to apply for licence or to get open access for the future use 

alone would suffer from illegality. 

Therefore, that portion of the Order is set aside. Consequently, the Aryan 

Plant Company is entitled to use its own dedicated transmission line to 

transfer power to its own coal washeries on payment of cross-subsidy surcharge 

to the Distribution Company as compensatory charge to the Distribution 

Company for the future period as well. In other respects, the impugned 

Order is confirmed. 

37. In the result, the Appeal No. 119 of 2009 filed by the Distribution Company 

is dismissed and Appeal No. 125 of 2009 filed by Aryan Plant is allowed. 

No Order as to the costs. 

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Notifications & Circulars 

B-3 

NOTIFICATIONS AND CIRCULARS 

MINISTRY OF POWER 

A1 Notification — Central Electricity Regulatory Commission 

Corrigendum for Measures to Relieve Congestion in Real Time Operation 

— Notification No. L-7/139(159)/2008-CERC Dated 04.02.2010 

http://www.manupatralawreports.in/notification/MANU-POWR-0020- 

2010.htm 

A2 Notification — The Joint Electricity Regulatory Commission for the 

State of Goa and Union Territories notifies Open Access in Transmission 

and Distribution — Notification No. JERC-9/2009 


2010.htm 

A3 Notification — This notification notifies Government approval to the 

Jawaharlal Nehru National Solar Mission for the National Action Plan on 

Climate Change — Notification No. 5/14/2008-P&C Dated 11.02.2010 


2010.htm 

A4 Notification — The Appropriate Government hereby notifies 

Appointment of Shri R. K. Roy, CEE, Banglore Metro Rail Corporation 

Ltd.(BMRCL) as Electrical Inspector — Notification No. GSR104(E) Dated 

26.02.2010 


2010.htm 

A5 Notification — Central Electricity Regulatory Commission notifies 

Terms and Conditions for Tariff determination from Renewable Energy 

Sources — Notification No. L-7/186(201)/2009-CERC Dated 25.02.2010 


2010.htm 


Salary, Allowances and other Conditions of Service of Chairperson and 

Members — Notification No. GSR196(E) Dated 19.03.2010 


2010.htm 

A7 Notification — In pursuance of Clause 5.6 (vi) of Ministry of Power 

(MOP) Notification dated 19-1-2005 on Guidelines for Determination of 

Tariff by Bidding Process for Procurement of Power by Distribution 

Licensees, the Central Electricity Regulatory Commission notifies the 

following rates and other parameters for the purpose of bid evaluation 

and payment — Notification No. Eco 1/2010-CERC Dated 31.03.2010 


2010.htm 

March – April 2010 B-3 

249

B-4 Energy Law Reports (ELR) [Vol. 1, Part 2, 2010] 


Regulations for Procedures for calculating the expected revenue from 

tariffs and charge — Notification No. L-1/9/2009/CERC Dated 12.04.2010 


2010.htm 


following regulations to amend the Unscheduled Interchange charges 

and related matters — Notification No. L-1(1)/2009-CERC Dated 28.04.2010 


2010.htm 

MINISTRY OF COAL 

A10 Notification — The Government by this notification specifies the 

following Power Units as an end user for the supply of surplus quantity 

of coal — Notification No. SO397(E) Dated 17.02.2010 

http://www.manupatralawreports.in/notification/MANU-COAL-0002- 

2010.htm 

A11 Notification — Corrigendum to Notification No. S.O.2596 (E) dated 

the 13 th October, 2009 published at pages 1 to 3 in the Gazette of India, 

Extraordinary Part II, Section 3, Sub-section (ii), dated 13 th October, 2009 

at page 3, against serial number 18, for “Shri Rajendra Prasad Sinha” 

read “Shri Rajendro Prasad Singha” — Notification No. SO537(E) Dated: 

04.03.2010 

http://www.manupatralawreports.in/notification/MANU-COAL-0004- 

2010.htm 

250 

March - April, 2010

NOTES 


252 

March - April, 2010

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