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TMI Blog2009 (3) TMI 1074X X X X Extracts X X X X X X X X Extracts X X X X ..... . 4. The Parliament with a view to provide for establishment of a Central Electricity Regulatory Commission and State Electricity Regulatory Commissions, rationalization of electricity tariff, transparent policies regarding subsidies, promotion of efficient and environmentally benign policies and for matters connected therewith or incidental thereto, enacted the Electricity Regulation Commissions Act, 1998 (for short `the 1998 Act'). It came into force with effect from 9th June, 1998. Pursuant to or in furtherance of the provisions thereof the Central Electricity Regulatory Commission (in short the Central Commission) was established in terms of Sub-section (1) of Section 3 of the 1998 Act. Indisputably the powers and functions of the Commission are extensive being contained in Section 13 of 1998 Act i.e.: (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the power supply, the Central Government as also the various State Governments, adopted liberalisation policies for industrial economy so as to enable them to attract investment from various parts of the country as also from abroad. 11. The Parliament, with a view to give effect to the aforesaid policy decision, as noticed hereinabove, enacted 1998 Act. Parliament, we may place on record, with a view to consolidate the laws relating to generation, transmission, distribution , trading and use of electricity and generally for taking measures conducive to development of electricity industry, promoting competition therein, protecting interest of consumers and supply of electricity to all areas, rationalization of electricity tariff, ensuring transparent polices, regarding subsidies, promotion of efficient and environmentally benign polices, constitution of Central Electricity Authority, Regulatory Commission and establishment of Appellate Tribunal and for matters connected therewith or incidental thereto, enacted the Electricity Act, 2003. It came into force with effect from 10th June, 2003. 12. On or about 25th September, 1999 the Government of India issued guidelines for revision o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... about 25th April, 2005 and 26th July, 2005 revision applications were filed in respect of Korba and Dadri Power Stations claiming allowance of actual revised costs incurred by the Corporation on account of arrears of paid in 2000-2001. 20. The Commission dismissed the said applications by orders dated 11th August 2005 and 19th October, 2005 inter alia, opining: (i) "It needs to be noted that in terms of the Commission's order dated 21.12.2000 fresh revision of O&M base charges after determination of tariff is not warranted based on the actual expenses". (ii) "From the details extracted at Para 10 above, it can be seen that revision of salary of the employee, executives, supervisors and other workmen was notified during July 2000 to April 2001 and the arrears on that account were also paid during the same period. therefore, the complete employee cost data on account of revision of pay and allowances was available with the petitioner during April, 2001. When the application for determination of tariff were filed on 8.6.2001, the data in this regard could be placed before the Commission by the petitioner. Further, the petitioner had filed amended petitions duri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed appeals before the Appellate Tribunal. By reason of the impugned judgment and order dated 7th September, 2006 the said appeals have been allowed, directing: amounts of arrears paid by the appellant in the year 2000-2001 on account of employees cost, incurred in the respective years, be considered in the tariff fixation for re-imbursement, as admissible by the Regulations in the forthcoming tariff period in a manner that tariff shock, if any, to the respondents is minimized. 24. Appellant is, thus, before us. 25. Mr. Sunil Gupta, learned senior counsel appearing on behalf of the appellant would urge: (i) The Central Regulatory Commission had no jurisdiction in terms of 1998 Act or 2003 Act or the Regulations made there under to entertain and carry out revision in the tariff order on the basis of purported subsequent events or otherwise. (ii) In view of 2001 Regulations framed under Section 28 of 1998 Act even while undertaking the original tariff determination proceedings the Commissioner had no jurisdiction to consider any data of 2000-2001 for narrative operation and maintenance expenses beyond the statutorily stipulated 5 years, viz., 1995- 1996 to 1999-2000. (ii ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d is contrary to the scheme of the Act. (xi) The Appellate Tribunal although has wide jurisdiction but it, without sufficient or cogent reasons, should not have interfered with the order of the Central Regulatory Commission. 26. Mr. Ramachandran, learned Counsel appearing on behalf of respondent No. 2, on the other hand, urged: (i) Central Regulatory Commission had the requisite jurisdiction to review the tariff, having regard to the powers contained in the Regulations. (ii) Sufficient and cogent reasons for revision of the costs in the first instance, having been assigned and all material facts having been taken into consideration by the Appellate Tribunal, no exception can be taken to the impugned judgment. (iii) It is incorrect to contend that the Appellate Authority had made inconsistent observations in the impugned order. (iv) As in the case of Rihand the actual costs paid by respondent No. 1 for meeting its obligations was granted, there was no reason as to why the same principle should not have been applied in the case of Korba and Dadri, particularly when it was not denied or disputed that the Corporation had to incur a sum of ₹ 55 crores towards arrears of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ixty days of making of any decision, direction or order. Regulation 110 empowers the Central Commission to issue orders and practice directions in regard to the implementation of the Regulations and procedure to be followed and various matters which the Commission has been empowered by these regulations to specify or direct. Regulations 111 and 112 read as under: 111. Nothing in these Regulations shall be deemed to limit or otherwise affect the inherent power of the Commission to make such orders as may be necessary for ends of justice or to prevent the abuse of the process of the Commission. 112. Nothing in these Regulations shall bar the Commission from adopting in conformity with the provisions of the Act,. a procedure, which is at variance with any of the provisions of these Regulations, if the Commission, in view of the special circumstances of a matter or class of matters and for reasons to be recorded in writing, deems it necessary or expedient for dealing with such a matter or class of matters. 30. The Central Commission also in exercise of its power conferred upon it by Section 28 of the 1998 Act framed regulations known as the Central Electricity Regulatory Commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Generating Company while issuing share capital and investment or internal resources created out of free reserve of the existing utility, if any, for the funding of the project, shall also be reckoned as paid up capital for the purpose of computing the return on equity, provided such premium amount and internal resources are actually utilized for meeting the capital expenditure of the generating station and forms part of the approved financial package as set out in the techno-economic clearance accorded by the Authority or approved by an appropriate independent agency, as the case may be. "Operation and Maintenance expenses including insurance" is dealt with in Clause (d) of Regulation 2.7 of the 2001 Regulations; Clauses (i) and (iv) whereof reads as under: (d) Operation and Maintenance expenses including insurance (i) Operation and Maintenance expenses including insurance (hereinafter referred to as O&M expenses) for the existing stations of NTPC and NLC which have been in operation for 5 years or more in the base year of 1999-2000, shall be derived on the basis of actual O & M expenses, excluding abnormal O&M expenses, if any, for the years 1995-96 to 1999-2000 dul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iples of res judicata will have no application. 34. There cannot be any doubt whatsoever that while a tribunal or a court exercises adjudicatory power, although provisions of Section 11 of the Code of civil Procedure are not applicable but the general principles of res judicata may be applicable as has been held by this Court in a consolidation matter in Sri Bhavanarayanaswamivari Temple v. Vadapalli Venkata Bhavanarayana Charyulu [1971]1SCR128 in a labour matter in, paras 9 to 11, in a rent control matter in Vijayabai and Ors. v. Shriram Tukaram and Ors. AIR1999SC431 , in a writ petition in Forward Construction Co. and Ors. v. Prabhat Mandal (Regd.), Andheri and Ors. AIR1986SC391 , para 20, and in an arbitration proceeding in K.V. George v. Secretary to Government, Water and Power Department, Trivandrum and Anr. AIR1990SC53 , whereupon strong reliance has been placed by Mr. Gupta, but such a question does not arise herein. Moreover, such a point having never been raised before the Central Commission or the appellate tribunal, we are of the opinion that even otherwise the said argument should not be permitted to be raised before us for the first time. 35. The Central Commission, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after the actual are available in its order dated 21.12.2000 which was the principal order laying down norms therefore holding inter alia as under: 4.3.6 The Commission is convinced that linking the base level O&M expenses to the capital cost is not appropriate as there are unresolved issues of measurement of the capital cost itself. Thus, the efficacy of the base on the basis of capital cost is questionable. The approach adopted in this order is based on following tenets: 7 The base level of O&M should not be computed as a given proportion of capital cost but should be derived on the basis of actual O&M expenses in the last five years after ironing out the spikes and abnormalities in the yearwise data. 7 Any abnormal expenses incurred by utilities in operating and maintaining their plants should not get reflected in the norms but should be dealt with separately on a case by case basis through separate petitions. This will provide an opportunity to all the stakeholders to assess the merit of claims on the basis of these expenses in a transparent way. There after, in para 4.3.12 of the aforesaid order, the Central Commission held as under: The regulated entities shall include i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndran that actual expenses for 2001-2002 were not available and the normative expenses for the last five years were only available and there was an unexpected abnormal increase. There was, thus, in our opinion, enough justification for filing the application for review of the tariff. 42. While considering the question of jurisdiction vis-`-vis the applicability of the operational and financial norms, it is not for us to consider as to whether such separate petition should have been filed. We would, however, consider the question as to whether such an application for permission should have been filed within a reasonable time or not a little later. 43. The concept of regulatory jurisdiction provides for revisit of the tariff. It is now a well-settled principle of law that a subordinate legislation validly made becomes a part of the Act and should be read as such. 44. There cannot be any doubt whatsoever that the word `regulation' in some quarters is considered to be unruly horse. In Bank of New South Wales v. Commonwealth (1948) 76 CLR 1 Dixon, J. observed that the word "control" is an unfortunate word of such wide and ambiguous import that it has been taken to mean ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulations is to be found in Section 55 of the 1998 Act. Accordingly, CERC has formulated the Regulations which are called the Central Electricity Regulatory Commission (Conduct of Business) Regulations, 1999... It was furthermore held: 12. The appellate authority has clearly erred in giving a literal interpretation to the said provision, namely, Clause 2.7(d)(iv). Learned Counsel urged that the appellate authority was bound to discern the true intendment of the provision and should have given it a meaningful interpretation, in that, the escalation factor should have been calculated keeping 6% as the base and it should not have been limited to the difference alone. Learned counsel Shri Sunil Gupta further argued that the rule was manifestly neutral rule founded on purely neutral considerations and while interpreting the same, the appellate court has divested itself with the logic thereof. Learned Counsel buttressed his arguments by suggesting that the rule was meant for the convenience of all concerned which included both administrative as well as financial convenience. According to both the counsel the intention behind the rule was that CERC should not be exposed to the tedious e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;Regulate' is variously defined as meaning to adjust; to adjust, order, or govern by rule, method, or established mode; to adjust or control by rule, method, or established mode, or governing principles or laws; to govern; to govern by rule; to govern by, or subject to, certain rules or restrictions; to govern or direct according to rule; to control, govern, or direct by rule or regulations. `Regulate' is also defined as meaning to direct; to direct by rule or restriction; to direct or manage according to certain standards, laws, or rules; to rule; to conduct; to fix or establish; to restrain; to restrict. See also: Webster's Third New International Dictionary, Vol. II, p. 1913 and Shorter Oxford Dictionary, Vol. II, 3rd Edn., p. 1784." In Central Power Distribution Co. and Ors. v. Central Electricity Regulatory Commission AIR2007SC2912 , this Court held: 22.3. As already noticed, the Central Commission has the power and function to evolve commercial mechanism such as imposition of UI charges to regulate and discipline. It is well settled that a power to regulate includes within it the power to enforce... In U.P. State Electricity Board, Lucknow v. City Boar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the Central Commission should not have been asked to revisit the tariff after five years and when everybody had arranged its affairs. 49. Regulation 2.7 (d)(iv) of the 2001 Regulations clearly provides that applications must be entertained only in the event any situation arose within the purview thereof and not at any point of time. If the respondent No. 1 was aware that they were to incur an additional expenditure of ₹ 55/- crores, they could have preferred an appeal before the Central Commission. We have been informed at the bar that the appeals were preferred on other issues but not on this one. 50. Framing of tariff is made in several stages. The generating companies get enough opportunity not only at the stage of making of tariff but may be at a later stage also to put forth its case including the amount it has to spend on operation and maintenance expenses as also escalation at the rate of 10% in each of the base year. It cannot, in our opinion, be permitted to re-agitate the said question after passing of many stages. Furthermore, the direction of the tribunal that the additional costs may be absorbed in the new tariff, in our opinion, was not correct. Some perso ..... X X X X Extracts X X X X X X X X Extracts X X X X
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