TMI Blog2010 (3) TMI 1209X X X X Extracts X X X X X X X X Extracts X X X X ..... 27.1.2004 issued u/s 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 u/s 1(3), consequently, Section 121 in its amended form came into force with effect from 27.1.2004. 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 u/s 178, as a part of regulatory framework, intervenes and even overrides the existing contracts between the regulated entities inasmuch as it casts a statutory obligation on the regulated entities to align their existing and future contracts with the said regulations. (iii) A regulation u/s 178 is made under the authority of delegated legislation and consequently its validity can be tested only in judi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies Appellate Tribunal vis-`-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-`-vis Telecom Regulatory Authority of India under the Telecom Regulatory Authority of India Act, 1997. Thus, we dismiss these appeals as having no merit with no order as to costs. - K.G. Balakrishnan, S.H. Kapadia, R.V. Raveendran, B. Sudershan Reddy, P. Sathasivam, JJ. JUDGMENT S. H. KAPADIA, J. 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 Elec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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) licensee 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 licensee 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) specif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 licensee 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: Provided further that any dispute regarding the availability of transmission facility shall be adjudicated up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 16 - Conditions of licence.- The Appropriate Commission may specify any general or specific conditions which shall apply either to a licensee or class of licensees 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 licensees 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 licensee shall comply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 utilization 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 licensees 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 includ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficiency 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; (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 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 elec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r determination of tariff under section 62 shall be made by a generating company or licensee 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 licens ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iciency, 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, licensees 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, licensee 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 licensee, generating company or person generat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der 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. 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 there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal 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 forty-five 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. (2) In particular and without prejudice to the generality of the power 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 sub-section (2) of section 18; (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) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ormation to be maintained by a licensee 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. (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 thirty 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (q) payment of additional charges on charges of wheeling under sub-section (4) of section 42; (r) guidelines under sub-section (5) of section 42; (s) the time and manner for settlement of grievances under sub-section (7) of section 42; (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 licensee under sub-section (1) of section 47; (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 licensee or a class of licensees under sub-section (1) of section 57; (zb) the period within which information to be furnished by the licensee under sub-section (1) of section 59; (zc) the manner of reduction of cross-subsidies under clause (g) of section 61 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 23.1.2006 fixing trading margin for inter-State trading of Electricity, which reads as follows: CENTRAL ELECTRICITY REGULATORY COMMISSION NOTIFICATION New Delhi, the 23rd 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. 2. Trading Margin .- The licensee shall not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 2003 Act, notified the Tariff Policy with effect from 6.1.2006. 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 system of inter-connected transmission lines, sub-station and generating plants. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 licensee(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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Legislatures, as the case may be, under Section 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 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 regulati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aders 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al 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 u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 M/s Narinder Chand Hem Raj and Ors. v. Lt. Governor, Administrator, Union Territory, Himachal Pradesh and Ors. 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 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, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 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 licenses, to adjudicate upon disputes, to levy fees, to s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 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 pre- condition 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 it is also 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 M/s Southern Technologies Ltd. v. Joint Commissioner of Income Tax, Coimbatore 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-`-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 pre- condition 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 , reported in (1985) 2 SCC 16. 46. A similar question arose for determination by this Court in the case of M/s Jagdamba Paper Industries (Pvt.) Ltd. and Ors. v. Haryana State Electricity Board and Ors ., 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 agree ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat 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 takeaway the right to factor in such expenses in the revised tariff structure. This j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ricity to any person not being a licensee 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt 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 authorized 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dertake. 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 wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. 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 27.1.2004: 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 27.1.2004 which is reproduced hereinbelow: MINISTRY OF POWER Notification New Delhi, the 27th 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 27th January, 2004, as the date on which the provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 27.1.2004. 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 inasmuch 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 Electr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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