TMI Blog2009 (3) TMI 1074X X X X Extracts X X X X X X X X Extracts X X X X ..... f years 1997-1998 ; 1998 - 1999 and 1999 - 2000. 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 ente ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riff for the generating companies. 10. The matter relating to generation, transmission, supply and distribution of electrical energy in different States used to be governed by the Electricity (Supply) Act, 1948. With a view to bring reforms in the power sector and to meet shortages in 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 2003. However, it did not lay any claim in respect of actual revised costs for the years 1997-1998, 1998-1999 and 1999-2000. 19. Central Regulatory Commission in exercise of its suo motu jurisdiction passed an order in proceeding being No. 196 of 20045 to inquire into the actual escalation factor which was found to be less than 6%. Before the Commission certain other issues were also raised. However, on or 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 to 2000-2001, which was allowed. 22. Appellant before us contends that Rihand decision is not applicable in the instant case as therein the original tariff order was yet to come into force. And the said application was filed for revision of tariff and considered in view of the statements made by the Corporation itself in the earlier round of the proceeding. 23. The Corporation aggrieved by and dissatisfied with the orders of the Commission dated 11th August, 2005 and 19th October, 2005 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: ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses for the year 2000-2001 could have been taken into consideration as thereby a duplication would be caused, which is not contemplated in law. (viii) The Tariff Order being a complete package and which having not been challenged or appealed against, any application for review or revision was not maintainable. (ix) The Appellate Tribunal had committed a serious error in so far as it took into consideration the Rihand case where Interlocutory Application was entertained in a case of Original Tariff Order itself and thus could not have been relied upon. (x) The Tribunal's order providing for relief by way of reimbursement in the forthcoming tariff period 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... review of the tariff shall be the same as set out in Chapter II of these Regulations. 93. Review of orders of the Commission on tariff will be entertained strictly in accordance with the relevant regulations governing review as contained in the relevant regulation herein. 94. The utilities shall submit periodic returns as may be prescribed containing operational and cost data to enable the Commission to monitor the implementation of its order and reassess the bases on which Tariff was approved. Chapter VII of the 1999 Regulations deals with Miscellaneous Matters. The 1999 Regulations expressly confer a power of review on the Central Commission in terms of Regulation 103 thereof. For the aforementioned purpose, the Central Commission may not only exercise its jurisdiction suo motu but it may review a decision even if an application is filed within a period of sixty 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e norms of operation. Regulation 2.4(viii) provides for the period of stabilization and explanations in the following terms: (viii) Stabilization period Stabilization period commencing from the date of commercial operation shall be reckoned as follows: (a) Thermal (coal/lignite) station - 180 days. (b) Open cycle gas and Naphtha based station - 90 days. (c) Combined cycle gas and Naphtha based station - 90 days Explanations: 1. For the purpose of calculating the tariff, the operating parameters, i.e. `Station Heat Rate', `Secondary Fuel Oil Consumption' and `Auxiliary Consumption' shall be determined on the basis of actuals or norms, whichever is lower. Regulation 2.7 of the 2001 Regulations provides for payment of capacity (fixed) charges; Clause (c) whereof deals with return on equity in the following terms: (c) Return on Equity: Return on equity shall be computed on the paid up and subscribed capital and shall be 16 per cent of such capital. Explanation: Premium raised by the Generating Company while issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... limit shall be adjusted on the basis of the actual escalation factor arrived at by applying a weighted price index of CPI for industrial workers (CPI_IW) and an index of select components of WPI (WPIOM) as per formula given in note below clause (v) herein below, for which the utility shall approach the Commission with a petition. 31. While exercising its power of review so far as alterations or amendment of a tariff is concerned, the Central Commission stricto sensu does not exercise a power akin to Section 114 of the Code of civil Procedure or Order XLVII, Rule 1 thereof. Its jurisdiction, in that sense, as submitted by Mr. Gupta, for the aforementioned purposes would not be barred in terms of Order II, Rule 2 of the Code of civil Procedure or the principles analogous thereto. 32. Revision of a tariff must be distinguished from a review of a tariff order. Whereas Regulation 92 of the 1999 Regulations provides for revision of tariff, Regulations 110 to 117 also provide for extensive power to be exercised by the Central Commission in regard to the proceedings before it. 33. Having regard to the nature of jurisdiction of the Central Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... occasion arises therefore. The said power can be exercised not only on an application filed by the generating companies but by the Commission also on its own motion. 37. Assuming that Regulation 103 of the 1999 Regulations would be applicable in a case of this nature, the same also confers a wide jurisdiction. The Commission, apart from entertaining an application for review on an application filed by a party, may exercise its suo motu jurisdiction. While the Central Commission exercises a suo motu jurisdiction, the period of limitation prescribed in Regulation 103 shall not apply. There cannot, however, by any doubt whatsoever that while exercising such jurisdiction, the Central Commission must act within a reasonable time. Furthermore, the statute does not provide for the manner in which a petition is to be filed before the Central Commission or the manner in which the tariff order is to be passed or revision or non-revision thereof. 38. Section 28 of the 1998 Act empowers the Central Commission to determine the terms and conditions for fixation of tariff. 39. We are unable to accept the contention of Mr. Gupta that the operational and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Section 51 of the ERC Act, the Central Government notified the deletion of Section 43A(2) of the Electricity (Supply) Act, 1948 (ES Act), in respect of tariff of companies falling under Sections 13(as) and (b) of the ERC Act. Section 43A(2) which deals with the terms and conditions for sale of power by generating companies to State Electricity Boards was in force until that date. Consequent to the deletion of Section 43A(2) new sets of terms and conditions were required to be notified under the provisions of Section 28 of the ERC Act, as they now fall under the tariff jurisdiction of the Commission. X X X 1.4 Applicability and effective date: 1.4.1 The terms and conditions as will be notified, shall, apply to all utilities covered under Section 13(a)(b) and (c) of the ERC Act unless specifically stated otherwise..... X X X 10.2 This order has to be read along with our orders on petitions 85/2000 and 86/2000 on operational norms for hydro power stations and for inter state transmission respectively. This order along with the order dated 4th January, 2000 on Availability Based Tariff read with our order on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted or may be conducted. See Deepak Theatre v. State of Punjab AIR1992SC1519 . Even otherwise the power of regulation conferred upon an authority with the obligations and functions that go with it and are incidental to it are not spent or exhausted with the grant of permission. See State of U.P. v. Maharaja Dharmander Prasad Singh [1989]1SCR176 In that sense, the power of Central Commission stricto sensu is not a judicial power. This Court in V.S. Rice and Oil Mills v. State of A.P. [1964]7SCR456 held: Then it was faintly argued by Mr. Setalvad that the power to regulate conferred on the respondent by Section 3(1) cannot include the power to increase the tariff rate; it would include the power to reduce the rates. This argument is entirely misconceived. The word regulate is wide enough to confer power on the respondent to regulate either by increasing the rate, or decreasing the rate, the test being what is it that is necessary or expedient to be done to maintain, increase, or secure supply of the essential articles in question and to arrange for its equitable distribution and its availability at fair prices... Recently, this Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the only intendment of the rule. In Hotel Restaurant Assn. and Anr. v. Star India (P) Ltd. and Ors. 2007[5]S.T.R.161 , in regard to the role of TRAI as a regulator, this Court said: 55. TRAI exercises a broad jurisdiction. Its jurisdiction is not only to fix tariff but also laying down terms and conditions for providing services. Prima facie, it can fix norms and the mode and manner in which a consumer would get the services. 56. The role of a regulator may be varied. A regulation may provide for cost, supply of service on non-discriminatory basis, the mode and manner of supply making provisions for fair competition providing for a level playing field, protection of consumers' interest, prevention of monopoly. The services to be provided for through the cable operators are also recognised. While making the regulations, several factors are, thus required to be taken into account. The interest of one of the players in the field would not be taken into consideration throwing the interest of others to the wind. In K. Ramanathan v. State of Tamil Nadu [1985]2SCR1028 , this Court held: 18. The word regulat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia issued guidelines for revision for the employees of the Central Public Sector undertakings as far back on 25.09.1999 with effect from 1.04.1997. It has not been denied or disputed that the respondent No. 1 implemented the revision and paid arrears of salaries with effect from 1.04.1997 to executives, workmen and supervisors, respectively during the years 2000-2001 by orders dated 6.07.2000, 2.03.2000 and 19.04.2001, respectively. They were already aware of the impending revision of scale of pay and had implemented in part, albeit, on a provisional basis. We fail to understand as to why it had filed applications for tariff determination for its generating stations at Korba and Dadri on 28.05.2001 and 8.06.2001, respectively. Not only that the amended applications did not contain the details of the prescribed data, a sheet with data of year 2000-2001, which was not a part of Form 16, was inserted at a later stage. Amended applications were filed only on 30.01.2002 and 7.02.2002. The year 2000- 01 was not the relevant year for the aforementioned purpose. 47. There cannot be any doubt whatsoever that for the purpose of making tariff the actual costs r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... application of the respondent, but, therein a provision was made therefore in the original tariff order itself. Respondent No. 1 had filed a separate I.A. claiming the impact of arrears paid by it in 2000-2001 towards the years 1997-1998 to 1999-2000. 52. We, therefore, on the aforementioned ground alone are of the opinion that it was not a fit case where the appellate tribunal should have interfered with the order of the Central Commission. 53. Although on the question of jurisdiction the Central Commission might not have been correct, before parting with this case, we may, however, also notice a submission of Mr. Gupta that the appellate tribunal should not ordinarily interfere with an order of the Central Commission. We do not agree. The jurisdiction of the appellate tribunal is wide. It is also an expert tribunal and, thus, it can interfere with the finding of the Central Commission both on fact as also on law. Both the Central Commission as also the appellate tribunal being expert, we do not see how the decisions of this Court in Union of India and Anr. v. Cynamide India Ltd. and Anr. [1987]2SCR841 and Shri Sitaram Sugar Company Limited and Anr. v ..... X X X X Extracts X X X X X X X X Extracts X X X X
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