Power Grid Corporation Of India Limited vs Madhya Pradesh Power Transmission Company Limited & Ors

2025 INSC 697 REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 6847 OF 2025 (Arising from SLP (C) No. 7605 of 2021)

POWER GRID CORPORATION OF INDIA LIMITED ...APPELLANT(S)

Versus

MADHYA PRADESH POWER TRANSMISSION COMPANY LIMITED & ORS. ...RESPONDENT(S)

WITH

CIVIL APPEAL NO. 6848 OF 2025 (Arising from SLP (C) No. 7607 of 2021)

JUDGMENT

Signature Not Verified Digitally signed by VISHAL ANAND Date: 2025.05.15 13:25:19 IST Reason: J.B. PARDIWALA, J.

For the convenience of exposition, this judgment is divided into the following parts:

INDEX

A. FACTUAL MATRIX ......................................................................................2

B. IMPUGNED ORDER ......................................................................................8

C. SUBMISSIONS ON BEHALF OF THE APPELLANT ............................12

D. SUBMISSIONS ON BEHALF OF THE RESPONDENTS .......................16

E. ISSUES FOR DETERMINATION ..............................................................20

F. ANALYSIS .....................................................................................................21

i. Relevant Provisions of the Act, 2003 ....................................................21

ii. Relationship between Sections 79 and 178 of the Act, 2003 respectively .............................................................................................31

iii. Regulatory and adjudicatory functions of the CERC under Section 79 ................................................................................................38

iv. Grant of compensation for delay on the part of a party is a regulatory function ...................................................................................................41

G. CONCLUSION ..............................................................................................55

SLP (C) No. 7605 of 2021 Page 1 of 56

1. Leave granted.

2. Since the issues raised in both the captioned appeals are the same, those were

taken up for hearing analogously and are being disposed by this common

judgment and order.

3. These appeals arise from the Judgment and Order passed by the High Court of

Madhya Pradesh, Indore Bench dated 25.02.2021, in Writ Petition No. 10845

of 2020 and Writ Petition No. 9136 of 2020 respectively, by which the High

Court admitted the writ petitions filed by the Madhya Pradesh Power

Transmission Company Limited (“MPPTCL”) on the ground that the Central

Electricity Regulatory Commission (the “CERC”) had exercised powers

beyond those vested in it as per the regulations under the Electricity Act, 2003

(the “Act, 2003”) in passing the orders dated 21.01.2020 and 27.01.2020 in

Petition No. 311/TT/2018 and Petition No. 266/TT/2018 respectively.

A. FACTUAL MATRIX

4. The appellant herein is a Government of India Undertaking constituted for the

purpose of undertaking inter-state transmission of electricity. In other words,

the scope of work of the appellant includes inter alia, establishing and operating

transmission lines, sub-stations and other transmission assets associated with

SLP (C) No. 7605 of 2021 Page 2 of 56 inter-State transmission of power. These include ‘bays’ and inter-connecting

‘transformers’ at sub-stations to provide inter-connection facilities. By virtue

of being a central transmission utility, the appellant is a deemed transmission

licensee in terms of Section 38 of the Act, 2003. The respondent no. 1 herein is

the State Transmission Utility and intra-state transmission licensee in the State

of Madhya Pradesh.

5. The case on hand pertains to a dispute between the appellant and respondent

no. 1 in respect of the implementation of the “Western Region System

Strengthening Scheme XIV (WRSS-XIV) and Western Region Strengthening

Scheme XVI (WRSS-XVI)” respectively by the appellant. The transmission

assets were implemented by the appellant at the Indore sub-station upon the

specific request of the respondent no. 1. In this regard, the parties planned and

approved the WRSS-XIV in its 37th Standing Committee Meeting on Power

System Planning of Western Region held on 05.09.2014 and WRSS-XVI in the

38th Standing Committee Meeting for the Western Region on 17.07.2015.

6. According to the agreement between the parties, the respondent no. 1 was

required to construct and commission the intra-state transmission line from

Indore sub-station coinciding with the timeline of completion of works which

SLP (C) No. 7605 of 2021 Page 3 of 56 were within the scope of the appellant. However, the construction and

commissioning of the intra-state transmission line by respondent no. 1 was

delayed. Such delay constrained the appellant to file Petition No. 311/TT/2018

and Petition No. 266/TT/2018 corresponding to WRSS-XIV and WRSS-XVI

respectively, before the CERC for (i) approval of the Commercial Operation

Date (the “COD”) of its transmission system, under Regulation 4(3) of the

Central Electricity Regulatory Commission (Terms and Conditions of Tariff)

Regulations, 2014 (the “2014 Tariff Regulations”), and (ii) determination of

transmission charges and billing of the tariff for the transmission facilities

established by it at the Indore sub-station.

7. The CERC vide its order dated 21.01.2020, observed, inter alia, that as per the

investment approval accorded to the transmission scheme on 27.01.2016, the

assets were scheduled to be commissioned within 30 months from the date of

investment approval. Accordingly, the scheduled COD came to be 27.07.2018.

However, the commissioning of such assets was delayed thereby compelling

the appellant to file a petition for approval of COD under Regulation 4(3) of

the 2014 Tariff Regulations. The details of the transmission assets are as follow:

SLP (C) No. 7605 of 2021 Page 4 of 56

Proposed Date of COD as Time-

Scheduled active Asset Description per overrun/ COD power Regulation Delay flow 4(3)(ii)

1 x 500 MVA, 400/220 kV ICT-2 along with associated transformer Asset-1 27.07.2018 02.09.2018 10.12.2018 37 days bays and 2 no. 220kV line bays at 400/220 kV Indore substation.

2 no. 220 kV line bays Asset-2 at 400/220 kV Indore 27.07.2018 02.09.2018 12.12.2018 37 days substation.

1 x 500 MVA, 400/220 kV ICT-1 along with Asset-3 associated transformer 27.07.2018 14.10.2018 10.12.2018 79 days bays at 400/220 kV Indore substation.

1 no. 220 kV line bays Asset-4 at 400/220 kV Indore 27.07.2018 14.10.2018 - 79 days substation.

1 no. 220 kV line bay at Asset-5 400/220 kV Indore 27.07.2018 05.12.2018 - 131 days substation.

8. As regards the specific issue of time-overrun, the order dated 21.01.2020

passed by the CERC noted that the appellant herein had attributed the entire

time-overrun in case of the instant assets to the respondent no. 1 who delayed

SLP (C) No. 7605 of 2021 Page 5 of 56 the commissioning of the downstream intra-state assets that were supposed to

be operational at the same time as the transmission assets to be commissioned

by the appellant. Even though the CERC approved the COD proposed by the

appellant under Regulation 4(3)(ii), yet it did not condone the time-overrun on

account of matching the commissioning of the inter-state transmission assets in

question with the downstream network of respondent no. 1, on the ground that

it was the decision of the appellant to coordinate and match the commissioning

dates of both categories of assets. However, the CERC allowed the appellant to

claim compensation for the period prior to the COD as determined under

Regulation 4(3)(ii), by way of liquidated damages, interest during construction

and incidental expenses incurred during construction. It was held that the

transmission charges in case of all the assets as enumerated above would be

borne by the respondent no. 1 from the COD determined under Regulation

4(3)(ii) upto one day before actual charging of downstream system. It is

pertinent to note that the CERC did not allow compensation from the Scheduled

COD upto the newly determined COD as the delay in that case was not

condoned.

SLP (C) No. 7605 of 2021 Page 6 of 56 9. Aggrieved by the aforesaid order of the CERC, the respondent no. 1 challenged

the same by way of a writ petition before the High Court on the following

grounds:

(i) There is no provision in the 2014 Tariff Regulations under which

compensatory transmission charges could be levied on the respondent no.

1 by the CERC and therefore, the CERC fell into grave jurisdictional error

by holding that the appellant could claim compensation from the

respondent no. 1.

(ii) Further, the agreement between the parties was recorded in the minutes of

the 37th and 38th meetings of the Standing Committee held on 05.09.2014

and 17.07.2015 respectively. Such agreement contains no terms and

conditions as regards the recovery of compensation from the respondent

no. 1. Therefore, the CERC, by granting liberty to the appellant to claim

compensation from the respondent no. 1 has effectively re-written the

terms and conditions of the agreement between the parties.

(iii) The bill dated 08.06.2020 raised by the appellant for the payment of Rs.

6.18 crore, in consequence of the order of the CERC dated 21.01.2020 and

27.01.2020 respectively, is illegal and not in accordance with either the

2014 Tariff Regulations or the terms of agreement between the parties.

SLP (C) No. 7605 of 2021 Page 7 of 56

10. On the other hand, the appellant claimed before the High Court that the issue

raised by the respondent no. 1 by way of the writ petition was not that the CERC

did not have jurisdiction at all. The challenge was to the exercise of jurisdiction

by the CERC which was not permissible in light of the alternative remedy

available to the respondent no. 1 in terms of Section 111 of the Act, 2003.

B. IMPUGNED ORDER

11. The High Court vide its judgment and order dated 25.02.2021, recorded the

following submissions of the respondent no. 1:

i. The respondent no. 1 herein relied on this Court’s decision in PTC India

Limited v. Central Electricity Regulatory Commission reported in (2010)

4 SCC 603 to submit that the decision of the CERC must be in conformity

with the Regulations enacted under Section 178 of the Act, 2003 wherever

such regulations are applicable. Therefore, the measures taken by the

CERC under Section 79(1) are required to be in conformity with the

Regulations under Section 178.

ii. It was further submitted that 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

SLP (C) No. 7605 of 2021 Page 8 of 56 of appeal before the Appellate Tribunal for Electricity (the “APTEL”)

under Section 111 of the Act, 2003.

iii. It was submitted that the order of the CERC levying compensatory

transmission charges on the respondent no. 1 was not in conformity with

the 2014 Tariff Regulations enacted under Section 178 of the Act, 2003

and was beyond the scope of the said Regulations. Therefore, the said

order was passed without any jurisdiction and hence, was being assailed

before the High Court without availing the statutory alternative remedy.

iv. Further, the APTEL had already addressed a similar question in Nuclear

Power Corporation of India Limited. v. Central Electricity Regulatory

Commission & Ors. reported in 2019 SCC OnLine APTEL 83 wherein

it was held as under:

“10.5 Accordingly, in absence of specific provisions in the Sharing Regulations/Tariff Regulations, 2014 to deal with the situation under question the Central Commission through exercise of its regulatory powers has prescribed a principle for sharing of transmission charges of the Transmission System of the Respondent No.2 in the Impugned Order. Thus, it is observed that by way of exercising its regulatory power by a way of judicial order(s) the Central Commission has laid down the principles of payment of transmission charges in such an eventuality. However, it is felt that the Central Commission in the impugned Order has abruptly concluded the payment liability on the Appellant just by referring to its

SLP (C) No. 7605 of 2021 Page 9 of 56 earlier orders and not establishing the linkage with the present case explicitly. This Tribunal would like to clarify the same.”

The respondent no. 1 submitted that the APTEL had taken a peculiar view

of the matter. Although the CERC exercises twin powers of adjudication

and regulation, yet the fact remains that the regulatory power cannot be

exercised by way of a judicial order. Since APTEL took a contrary view

on the issues at hand, the respondent no. 1 was of the view that no useful

purpose would be served by filing an appeal under Section 111.

v. Since the orders of the CERC were in the nature of regulations as per the

averments of the appellant, the vires of the same could only be questioned

before the High Court and not before the APTEL in terms of this Court’s

dictum in Whirlpool Corporation v. Registrar of Trademarks reported in

(1998) 8 SCC 1 wherein it has been held that despite the availability of an

alternative remedy, a writ petition can be entertained in the following

cases:

a) Where principles of natural justice are breached,

b) Where fundamental rights are sought to be enforced or breach thereof

is complained of,

SLP (C) No. 7605 of 2021 Page 10 of 56

c) Where the impugned order is passed by an authority without

jurisdiction,

d) Where the constitutionality of any provision is called in question.

12. Having heard the parties, the High Court affirmed that despite the availability

of an alternative remedy, a writ petition can be entertained if any of the factors

mentioned in Whirlpool (supra) are satisfied. Since the respondent no. 1 had

challenged the constitutionality of the orders of the CERC dated 21.01.2020

and 27.01.2020 respectively, on the grounds that the power exercised by the

CERC was beyond the powers vested in it as per the relevant regulation and

that the relief granted to the appellant was beyond the reliefs prayed for, the

High Court was of the opinion that the principles of natural justice were

breached. Therefore, despite the availability of an alternative remedy, the writ

petition deserved to be entertained. Having held so, the High Court admitted

the writ petition for hearing on merits. The relevant portion of the impugned

order is reproduced below:

“[13] This is trite that despite availability of alternative remedy, a writ petition can be entertained if any of the factors mentioned in the judgment of Whirlpool (supra) are satisfied. In the instant case, the petitioner has challenged the constitutionality of the orders. Even if it is challenged by way of amendment, once amendment is allowed it will relate back to the original date of filing of writ petitions. Petitioner has also

SLP (C) No. 7605 of 2021 Page 11 of 56 challenged the orders by contending that power exercised by the Commission was beyond the powers vested in it as per relevant regulation. The relief granted was beyond the relief prayed for. Hence, principles of natural justice were breached. In our view, in a case of this nature despite availability of alternative remedy, the writ petition can be entertained. [14] Resultantly, the objection regarding alternative remedy is over ruled. The petition is admitted for hearing.”

C. SUBMISSIONS ON BEHALF OF THE APPELLANT

13. Mr. M.G. Ramachandran, the learned senior counsel appearing on behalf of the

appellant, submitted that the orders dated 21.01.2020 and 27.01.2020

respectively were passed by the CERC under Sections 62 and 79 of the Act,

2003 respectively. Section 111 of the Act, 2003 provides for regular first appeal

on both questions of fact and law to the APTEL which is an expert body

specially constituted as per the recommendations of this Court in West Bengal

Electricity Regulatory Commission v. CESC Limited reported in (2002) 8

SCC 715. A second appeal to this Court is allowed under Section 125 of the

Act, 2003 for the purpose of adjudication of substantial questions of law.

14. He submitted that the Act, 2003 is an exhaustive and self-contained complete

code on all matters concerning electricity including generation, distribution,

trading and transmission of electricity. The Act, 2003 provides for tariff

SLP (C) No. 7605 of 2021 Page 12 of 56 fixation by the CERC under Section 62. Since determination of tariff is a quasi-

judicial function, the same has been made appealable to the APTEL. The

learned counsel relied upon this Court’s decision in PTC India (supra) to

submit that the only exclusion to the scope of the appellate remedies provided

under the Act, 2003 is that the statutory regulations notified by the CERC under

Section 178 cannot be challenged in appeal before the APTEL. The APTEL,

therefore, cannot rule on the vires of a regulation formulated by the CERC but

there is no bar on it to interpret such regulations.

15. Therefore, a writ petition before the High Court cannot be maintained when an

efficacious alternative remedy was available to the respondent. The learned

counsel relied on this Court’s judgment in Jaipur Vidyut Vitran Nigam

Limited v. MB Power (Madhya Pradesh) Limited reported in (2024) 8 SCC

513 and GRIDCO v. Western Electricity Supply Co. of Orissa Ltd. reported in

(2024) 2 SCC 500 to fortify his submission in this regard. He also contended

that as per this Court’s dictum in Titaghur Paper Mills Co. Ltd. v. State of

Orissa reported in (1983) 2 SCC 433, Nivedita Sharma v. Cellular Operators

Association of India reported in (2011) 14 SCC 337 and U.P. Jal Nigam &

Anr. v. Nareshwar Sahai Mathur & Anr. reported in (1995) 1 SCC 21, where

SLP (C) No. 7605 of 2021 Page 13 of 56 statutory tribunal or statutory remedies are in place, a writ petition should not

ordinarily be entertained at other fora.

16. It is the case of the appellant that the respondent has not challenged any

regulation or provision of the Act, 2003 and has only challenged the orders

dated 21.01.2020 and 27.01.2020 respectively passed by the CERC which in

ordinary circumstances may be appealed under Section 111 of the Act, 2003.

17. In the case on hand, no issue of constitutionality of the order arises as the

conditions prescribed in this Court’s judgment in Whirlpool (supra), for

exercise of writ jurisdiction are fulfilled. The learned counsel submitted that

there is no violation of principles of natural justice as the respondent was duly

served. Further, no issue as regards the defect in jurisdiction of the CERC was

raised before that forum in the first instance.

18. Mr. Ramachandran submitted that it was not the case of the respondent that the

CERC had acted wholly without jurisdiction. The respondent has admitted that

in terms of Section 62 and Section 79(1)(c) and (d) of the Act, 2003, the CERC

undoubtedly and undisputedly has the function and the jurisdiction to deal with

inter-state transmission, determination of transmission charges and the sharing

thereof. The orders dated 21.01.2020 and 27.01.2020 respectively passed by

SLP (C) No. 7605 of 2021 Page 14 of 56 the CERC had been challenged by the respondent only on one consideration

that is, the correctness of the decision holding the respondent liable for

transmission charges. It is the case of the appellant that the APTEL is competent

to decide such issues.

19. The learned counsel further submitted that the respondent had intentionally not

approached the APTEL with a view to escape the decision rendered by it in a

similar set of facts wherein the liability of payment of transmission charges was

imposed on the generating company in the event of delay in commissioning of

downstream assets by it. It was submitted that the writ petition was filed by the

respondent to avoid the binding decision of the APTEL in Nuclear Power

Corporation (supra).

20. Mr. Ramachandran also highlighted the consequences of entertaining writ

petitions against the orders of the CERC. He submitted that there are multiple

beneficiaries in an inter-state transmission system. Owing to the nature of

electricity transmission systems that span across states, it is possible that an

identical issue relating to the same transmission system may be challenged

before multiple High Courts resulting in multiplicity of decisions as well as a

higher chance of conflict between different decisions for the same transmission

SLP (C) No. 7605 of 2021 Page 15 of 56 assets. He brought to our notice that the respondent no. 4 herein that is,

Maharashtra State Electricity Transmission Corporation Limited

(“MSETCL”), who is one another beneficiary of the transmission system

established by the appellant, has filed an appeal under Section 111 of the Act,

2003 before the APTEL bearing DFR No. 414 of 2024 challenging the order

dated 27.01.2020 passed by the CERC, which is the very same order that has

been challenged by the respondent no. 1 herein before the High Court of

Madhya Pradesh by way of a writ petition.

21. The learned counsel submitted that the delay on the part of the respondent no.

1 in bringing up the intra-state system cannot lead to deprive the appellant of

the charges for its inter-state system. We were informed that as on 23.11.2024,

the principal amount due and outstanding was approximately Rs. 16.86 crore

along with the late payment surcharge.

D. SUBMISSIONS ON BEHALF OF THE RESPONDENTS

22. Mr. Prashant Singh, the learned Advocate General of the State of Madhya

Pradesh appearing on behalf of the respondent no. 1, submitted that the present

appeal is directed against an interim order of admission of the writ petition

passed by the High Court and the same does not warrant any interference by

this Court.

SLP (C) No. 7605 of 2021 Page 16 of 56

23. The learned counsel submitted that the orders dated 21.01.2020 and 27.01.2020

respectively passed by the CERC, wherein the liability of payment of

transmission charges from 11.01.2019 till the downstream transmission assets

achieve their Commercial Operation Date, are beyond its jurisdiction and

violative of the rights of the respondents. It was submitted that no statutory

authority or tribunal can assume jurisdiction in respect of a subject matter

which the statute does not confer on such authority/tribunal. In the

circumstance that a tribunal erroneously decides a fact in which the question of

the jurisdiction depends, then in that case, the order passed thereby stands

vitiated.

24. Mr. Singh further submitted that the powers of the High Court are wide and

unlimited, therefore, the availability of an alternate remedy is not an absolute

bar under Article 226. It is the case of the respondents that as per the dictum of

this Court in Southern Electricity Supply Co. of Orissa Ltd. v. Sri Seetaram

Rice Mill reported in (2012) 2 SCC 108, if the exercise of jurisdiction by a

tribunal ex facie appears to be in futility, then the High Court would be justified

to interfere with the order of the tribunal under Article 226. He also relied upon

this Court’s decision in Maharashtra Chess Assn. v. Union of India reported

in (2020) 13 SCC 285, to submit that the availability of an alternative remedy

SLP (C) No. 7605 of 2021 Page 17 of 56 does not alter the discretionary nature of the High Court under its writ

jurisdiction.

25. The learned counsel submitted that the grounds set out in the writ petition

before the High Court clearly meet the parameters laid down by this Court in

Whirlpool (supra) and The Asssistant Commissioner of State Tax and Ors. v.

M/s Commercial Steel Limited reported in (2022) 16 SCC 447, which are as

follow:

(i) An excess of jurisdiction,

(ii) A breach of fundamental rights,

(iii) A violation of the principles of natural justice, and

(iv) A challenge to the vires of the statute or delegated legislation.

It is the case of the respondent that no statutory authority or tribunal can assume

jurisdiction in respect of subject matter which the statute does not confer on it

and an error of jurisdictional facts renders the order erroneous in law.

26. Mr. Singh submitted that the CERC exceeded its jurisdiction while ordering for

recovery of transmission charges as the provisions for determination of tariff

under the Act, 2003 do not confer power on the CERC to act arbitrarily and

levy unilateral charges. He vehemently submitted that doing so is violative of

SLP (C) No. 7605 of 2021 Page 18 of 56 the principles of natural justice. He argued that there is no provision either in

the agreement between the parties or in the 2014 Tariff Regulations for

claiming compensation or damages. He further submitted that the conditions

governing the commissioning of the transmission assets in question were

approved in the 38th Standing Committee meeting held on 17.07.2015 and the

same include no provision as regards claiming of compensation or damages

from the respondent.

27. The learned counsel brought to our notice the order dated 18.01.2019 passed

by APTEL in Nuclear Power Corporation (supra) wherein, in a similar set of

facts, the liability to pay compensation or damages was imposed on the

generating entity for delaying the commissioning of transmission assets. It is

the case of the respondent that since the APTEL has already passed an adverse

order previously, the concerns of the respondent may not be addressed by filing

an appeal under Section 111 of the Act, 2003.

28. Mr. Singh informed us that the transmission line is now functional and fully

charged. The dispute regarding payment of compensation or damages is with

respect to a limited period of time in which there was admittedly, a delay in

commissioning the line due to force majeure.

SLP (C) No. 7605 of 2021 Page 19 of 56

29. It was submitted that no error or illegality could be said to have been committed

by the High Court while exercising its discretion to entertain the writ petition

and the impugned orders passed thereby are neither perverse nor contrary to

law.

E. ISSUES FOR DETERMINATION

30. Having heard the learned counsel appearing for the parties and having gone

through the materials on record, the following questions fall for our

consideration:

i. Whether the CERC, while exercising its functions under Section 79(1) of

the Act, 2003, is circumscribed by statutory regulations enacted under

Section 178 of the Act, 2003?

ii. Whether the CERC exercises regulatory or adjudicatory functions under

Section 79 of the Act, 2003? In other words, what is the scope of the

CERC’s power to regulate inter-state transmission of electricity and

determine tariff for the same under clauses (c) and (d) of Section 79(1)?

iii. Whether the grant of compensation by the CERC for the delay vide the

orders dated 21.01.2020 and 27.01.2020 respectively, is a regulatory or

SLP (C) No. 7605 of 2021 Page 20 of 56 adjudicatory function and to what extent are the principles of natural

justice applicable to the exercise of such functions?

iv. Whether the High Court was justified in admitting the writ petition filed

by the respondent no. 1 herein challenging the order dated 21.01.2020 of

the CERC when there existed an alternative remedy under Section 111 of

the Act, 2003?

F. ANALYSIS i. Relevant Provisions of the Act, 2003

31. Section 61 reads thus:

“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;

(f) multi year tariff principles;

SLP (C) No. 7605 of 2021 Page 21 of 56 (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 (54 of 1948), the Electricity Regulatory Commission Act, 1998 (14 of 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.”

32. Section 62 reads thus:

“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 a generating company and a licensee or between licensees, for a period not exceeding one year to ensure reasonable prices of electricity;

(b) transmission of electricity;

(c) wheeling of electricity;

SLP (C) No. 7605 of 2021 Page 22 of 56 (d) retail sale of electricity:

Provided that in case of distribution of electricity in the same area by two or more distribution licensees, the Appropriate Commission may, for promoting competition among distribution licensees, fix only maximum ceiling of tariff for retail sale of electricity.

(2) The Appropriate Commission may require a licensee 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 licensee or a generating company to comply with such procedures as may be specified for calculating the expected revenues from the tariff and charges which he or it is permitted to recover.

SLP (C) No. 7605 of 2021 Page 23 of 56 (6) If any licensee 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 licensee.”

33. Section 64 reads thus:

“64. Procedure for tariff order.

(1) An application for 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:

SLP (C) No. 7605 of 2021 Page 24 of 56

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 licensees 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 licensee 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.”

34. Section 79 reads thus:

“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

SLP (C) No. 7605 of 2021 Page 25 of 56 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 licences 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 purposes 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 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.

SLP (C) No. 7605 of 2021 Page 26 of 56 (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.”

35. Section 111 reads thus:

“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 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 forty-five days if it is

SLP (C) No. 7605 of 2021 Page 27 of 56 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 one hundred and eighty days from the date of receipt of the appeal:

Provided that where any appeal could not be disposed of within the said period of one hundred and eighty 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.”

SLP (C) No. 7605 of 2021 Page 28 of 56

36. Section 178 reads thus:

“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) of section 28;

(h) levy and collection of fees and charge from generating companies or transmission utilities or licensees 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;

(j) payment of the 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;

SLP (C) No. 7605 of 2021 Page 29 of 56 (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 licensee or class of licensees under sub-section (1) of section 57;

(q) the period within which information to be furnished by the licensee under sub-section (1) of section 59;

(r) the manner of 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 licensee or generating company under sub-section (2) of section 62;

(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 therefor under sub- section (1) of section 64;

(w) the manner of publication of application under sub- section (2) of section 64;

(x) issue of tariff order with modifications or conditions under sub-section (3) of section 64;

(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 under sub-section (1) of section 91;

SLP (C) No. 7605 of 2021 Page 30 of 56 (za) the terms and conditions of service of the Secretary, officers and other employees of Central Commission under sub-section (3) of section 91;

(zb) the rules of procedure for transaction of business under sub-section (1) of section 92;

(zc) minimum information 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.”

ii. Relationship between Sections 79 and 178 of the Act, 2003 respectively

37. A perusal of the provisions laying down the functions of the CERC indicates

that the statutory authority is enjoined with the task of regulation as well as

adjudication of several aspects of the generation, transmission and distribution

of electricity. Section 79 of the Act, 2003 enumerates the functions of the

CERC which includes the dual functions of regulation and adjudication.

Section 178, on the other hand, empowers the CERC to enact regulations by

notification thereby delegating to the body, the power of legislating statutory

regulations under the Act, 2003.

SLP (C) No. 7605 of 2021 Page 31 of 56

38. The aforesaid two provisions indicate that the CERC functions as both,

decision-making and regulation-making authority under Sections 79 and 178

respectively. However, while the authority exercising both these functions is

one and the same, it is a settled position of law that the functions by themselves

are separate and distinct. The functions under Section 79 are administrative or

adjudicatory whereas those under Section 178 are legislative.

39. This Court in PTC (supra) has succinctly explained that the powers under

Section 79 of the Act, 2003 are supposed to be exercised in conformity with the

statutory regulations under Section 178 wherever such regulations are

applicable. However, there is no bar on the exercise of powers under Section

79 in a situation where a regulation under Section 178 has not been enacted in

respect of a particular subject matter. The relevant portion of the judgment

reads thus:

“53. Applying the abovementioned tests to the scheme of the 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, licensing (including inter-State trading licensing), adjudication upon disputes involving generating companies or transmission licensees fall under the head

SLP (C) No. 7605 of 2021 Page 32 of 56 “mandatory functions” whereas advising the 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 dependent upon making of regulations under Section 178 by the Central Commission. Therefore, functions of the Central Commission enumerated in Section 79 are separate and distinct from functions of the Central Commission under Section 178. The former are administrative/adjudicatory functions whereas the latter are legislative.

54. 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 the 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 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

SLP (C) No. 7605 of 2021 Page 33 of 56 are applicable. Measures under Section 79(1), therefore, have got to be in conformity with the regulations under Section 178.

55. To regulate is an exercise which is different from making of the regulations. However, making of a regulation under Section 178 is not a precondition 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 precondition 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.

56. 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

SLP (C) No. 7605 of 2021 Page 34 of 56 under Section 61 has to be in consonance with the regulations under Section 178.” (Emphasis supplied)

40. What is discernible from the aforesaid exposition of law is that there is a

dichotomy between the power to make a regulation under Section 178 and the

power to regulate or adjudicate on the various areas enumerated under Section

79(1). A regulation under Section 178 is of general application to the entirety

of a particular subject matter as opposed to regulation on a case-to-case basis

which may be done by the CERC under Section 79. Therefore, making of a

regulation under Section 178 has the effect of interfering with and overriding

existing contractual relationships between the regulated entities. On the other

hand, the orders under Section 79 have to be confined to the existing statutory

regulations and do not have the effect of altering the terms of contract between

the specific parties before the CERC.

41. This Court in PTC (supra) also held that though the validity of a delegated

legislation under Section 178 can be tested by way of judicial review of the

courts and not by way of an appeal under Section 111, yet a dispute as regards

the interpretation of a regulation enacted under Section 178 is entertainable

before the APTEL by way of an appeal.

SLP (C) No. 7605 of 2021 Page 35 of 56 42. In Energy Watchdog v. CERC, reported in (2017) 14 SCC 80, this Court has

further held that Section 79(1) is the repository of the regulatory powers of the

CERC and such powers must be exercised in consonance with the guidelines

or regulations under Section 178. However, if there are no such guidelines or

regulations in place, it cannot be said that the hands of the CERC are tied when

it encounters a regulatory lacuna. The relevant portion of the judgment reads

thus:

“20. It is important to note that the regulatory powers of the Central Commission, so far as tariff is concerned, are specifically mentioned in Section 79(1). This regulatory power is a general one, and it is very difficult to state that when the Commission adopts tariff under Section 63, it functions dehors its general regulatory power under Section 79(1)(b). For one thing, such regulation takes place under the Central Government's guidelines. For another, in a situation where there are no guidelines or in a situation which is not covered by the guidelines, can it be said that the Commission's power to “regulate” tariff is completely done away with? According to us, this is not a correct way of reading the aforesaid statutory provisions. The first rule of statutory interpretation is that the statute must be read as a whole. As a concomitant of that rule, it is also clear that all the discordant notes struck by the various sections must be harmonised. Considering the fact that the non obstante clause advisedly restricts itself to Section 62, we see no good reason to put Section 79 out of the way altogether. The reason why Section 62 alone has been put out of the way is that determination of tariff can take place in one of two ways —

SLP (C) No. 7605 of 2021 Page 36 of 56 either under Section 62, where the Commission itself determines the tariff in accordance with the provisions of the Act (after laying down the terms and conditions for determination of tariff mentioned in Section 61) or under Section 63 where the Commission adopts tariff that is already determined by a transparent process of bidding. In either case, the general regulatory power of the Commission under Section 79(1)(b) is the source of the power to regulate, which includes the power to determine or adopt tariff. In fact, Sections 62 and 63 deal with “determination” of tariff, which is part of “regulating” tariff. Whereas “determining” tariff for inter-State transmission of electricity is dealt with by Section 79(1)(d), Section 79(1)(b) is a wider source of power to “regulate” tariff. It is clear that in a situation where the guidelines issued by the Central Government under Section 63 cover the situation, the Central Commission is bound by those guidelines and must exercise its regulatory functions, albeit under Section 79(1)(b), only in accordance with those guidelines. As has been stated above, it is only in a situation where there are no guidelines framed at all or where the guidelines do not deal with a given situation that the Commission's general regulatory powers under Section 79(1)(b) can then be used.” (Emphasis supplied)

43. In the case on hand, the CERC vide its orders dated 21.01.2020 and 27.01.2020

respectively imposed the liability of payment of compensation for delay onto

the respondent no. 1. It is the case of the respondent no. 1 that by doing so, the

CERC did not act in conformity with the 2014 Tariff Regulations which do not

provide for payment of transmission charges by a party to whom the delay is

SLP (C) No. 7605 of 2021 Page 37 of 56 attributable. In our considered view, the said argument does not hold any water.

This Court’s dictum in PTC (supra) and Energy Watchdog (supra)

respectively settles the law in this regard and the absence of a regulation under

Section 178 does not preclude the CERC from exercising its powers under

Section 79(1) to make specific regulations or pass orders between the parties

before it.

iii. Regulatory and adjudicatory functions of the CERC under Section 79

44. The CERC vide its orders dated 21.01.2020 and 27.01.2020 respectively

determined and approved the transmission tariff for the assets commissioned

by the appellant at the Indore substation under Section 79 wherein the specific

prayer for condonation of delay in commissioning of the said assets was taken

by the appellant in terms of the Regulation 4(3)(ii) of 2014 Tariff Regulations.

“4. Date of Commercial Operation:

The date of commercial operation of a generating station or unit or block thereof or a transmission system or element thereof shall be determined as under:

[…] (3) Date of commercial operation in relation to a transmission system shall mean the date declared by the transmission licensee from 0000 hour of which an element of the transmission system is in regular service after successful trial operation for transmitting electricity and communication signal from sending end to receiving end:

SLP (C) No. 7605 of 2021 Page 38 of 56 Provided that:

(i) where the transmission line or substation is dedicated for evacuation of power from a particular generating station, the generating company and transmission licensee shall endeavour to commission the generating station and the transmission system simultaneously as far as practicable and shall ensure the same through appropriate Implementation Agreement in accordance with Regulation 12(2) of these Regulations :

(ii) in case a transmission system or an element thereof is prevented from regular service for reasons not attributable to the transmission licensee or its supplier or its contractors but is on account of the delay in commissioning of the concerned generating station or in commissioning of the upstream or downstream transmission system, the transmission licensee shall approach the Commission through an appropriate application for approval of the date of commercial operation of such transmission system or an element thereof. […]” (Emphasis supplied)

45. The appellant in its petition before the CERC had submitted that the delay was

due to the delay in commissioning of the associated transmission lines which

were in scope of the respondent no. 1 herein. It is in consequence to this prayer

that the CERC, though did not condone the delay, yet granted the liberty to the

appellant to claim compensation from the respondent no. 1.

SLP (C) No. 7605 of 2021 Page 39 of 56

46. It is the submission of the respondent no. 1 that the CERC does not possess any

regulatory or legislative power while adjudicating a petition and it functions as

a purely quasi-judicial body, therefore, it does not have the jurisdiction to

impose a charge on the respondent no. 1. In our considered view, the said

argument must fail for the reason that Section 79 of the Act, 2003 envisages

dual function of regulation and adjudication to be performed by the CERC. The

expressions “to regulate”, “to determine” and “to adjudicate” are used for

different purposes in the list of matters enumerated under Section 79(1) and

cannot be incorporated within the umbrella term of “adjudication”.

47. The exposition of law in PTC (supra) clarifies the scheme of regulatory powers

and functions under the Act, 2003. It was held therein that Section 178 that

deals with making of regulations by way of subordinate legislation by the

CERC, is wider than Section 79(1) which enumerates specified areas where the

CERC exercises regulatory functions to be discharged by orders or decisions.

Therefore, unlike the regulations enacted under Section 178 that have a general

application, the CERC, under Section 79, has both regulatory and adjudicatory

functions which it exercises in respect of specific issues arising between

specific parties. The relevant portion of the judgment reads thus: SLP (C) No. 7605 of 2021 Page 40 of 56

“92. (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).” (Emphasis supplied)

48. The regulatory powers provided to the CERC under Section 79 are of ad hoc

nature and are required to be exercised by the CERC in context of the specific

circumstances of the parties before it. The rationale for provision of such ad

hoc powers by the Act, 2003 is to ensure that regulatory gaps, if any, that may

be discovered on a case-to-case basis, are filled or removed. Therefore, there is

no doubt in our mind that the CERC is enabled to exercise its regulatory powers

by way of orders under Section 79 and the purview of Section 79 is not limited

to only adjudicatory orders but includes within its scope administrative

functions as well.

iv. Grant of compensation for delay on the part of a party is a regulatory function

49. The respondent no. 1 would submit that the CERC exhibits the trappings of an

adjudicatory authority when it determines tariff and therefore, was required to

confine itself to the reliefs as prayed for by the appellant before the CERC. By

SLP (C) No. 7605 of 2021 Page 41 of 56 providing the appellant with the liberty to claim compensation from the

respondent no. 1, CERC could be said to have granted a relief that was not

sought for and the proper opportunity to defend against such claims was not

afforded to respondent no. 1. In order to address this submission, we must first

look into the nature of the power exercised by the CERC while determining

tariff under Section 79(1).

50. This Court in PTC (supra) has held that the determination of tariff under

Section 79(1) is an adjudicatory function of the CERC for the following

reasons:

(i) First, the actual determination/fixation of tariff is done by the appropriate

commission between the parties before it under Section 62 of the Act,

2003. Although Section 61 is the enabling provision for framing of

regulations while keeping in mind the generic propositions provided

thereunder, yet the determination of tariff in respect of a specific

generation unit, asset, transmission line, etc, is done by virtue of the power

emanating from Section 62. Therefore, the determination of tariff is

specific to an individual case and is not of general application under the

Act, 2003. This is in consonance with the test laid down in Sitaram Sugar

Co. Ltd. v. Union of India, reported in (1990) 3 SCC 223 wherein it was

SLP (C) No. 7605 of 2021 Page 42 of 56 held that one of the factors to determine if an order was issued in exercise

of an adjudicatory function, is to ascertain whether it was specific to an

individual or of general application.

(ii) Secondly, even though determination of tariff like price fixation is a

legislative act, yet such determination has been made appealable to the

APTEL under Section 111. The terms of the Act, 2003, therefore, clearly

indicate that determination of tariff is an adjudicatory function. The

relevant observations of this Court in PTC (supra) are reproduced below:

“26. 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.

49. On the above analysis of various sections of the 2003 Act, we find that the decision-making and regulation-

SLP (C) No. 7605 of 2021 Page 43 of 56 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 a part of administrative process resembling a judicial decision by a court of law. (See Shri Sitaram Sugar Co. Ltd. v. Union of India [(1990) 3 SCC 223].)

50. 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 the subject-matter “trading margin” in a different statutory context as will be demonstrated by discussion hereinbelow.” (Emphasis supplied)

SLP (C) No. 7605 of 2021 Page 44 of 56

51. While we are in complete agreement with the observations in PTC (supra), we

are of the opinion that the bench therein had no occasion to consider the issue

of other kinds of reliefs that may be given by the CERC under Section 79(1)

read with Section 61 of the Act, 2003.

52. The question that falls for our consideration is whether the grant of

compensation by the CERC was a decision taken by the authority in its

regulatory or adjudicatory capacity and whether it goes a step beyond the

function of determination of tariff. To answer this question, we may refer to

this Court’s decision in Airports Economic Regulatory Authority of India v.

Delhi International Airport Ltd., reported in 2024 SCC OnLine SC 2923

(“AERA”) wherein one of us, J.B. Pardiwala, J., was a part of the bench. We

may refer to the following observations in AERA (supra) with profit:

(i) First, it was observed that while the distinction between ‘general’ or

‘specific’ as laid down in Sitaram Sugar (supra) is a crucial test

consistently applied by this Court for identifying adjudicatory functions,

it cannot be the sole litmus test for distinguishing between regulatory and

adjudicatory functions, especially where the statute in question does not

draw a clear distinction between the adjudication and regulatory functions.

SLP (C) No. 7605 of 2021 Page 45 of 56 A function, however specific, cannot be considered de hors the context in

which it is being exercised.

(ii) Secondly, an examination of the broad factors that are required to be

considered while exercising a function is important to ascertain the nature

of such function. The relevant portion of the judgment reads thus:

57. It may be argued by relying on the judgment in PTC (supra) that the 2011 Guidelines issued in exercise of the power under Section 15 is a regulatory function while the determination of tariff under Section 13(1)(a) is adjudicatory by relying on the distinction between ‘general’ and ‘specific’ as highlighted above.

In PTC (supra), this Court drew a distinction between Section 61 of the Electricity Act which grants the Appropriate Commission the power to issue specific terms and conditions for determination of tariff and Section 62 which grants the power to determine tariff. The crucial test that has been consistently applied by this Court in drawing the distinction is to determine if the function is discharged in the capacity of a regulator or an adjudicator. Now, it may be possible that certain statutes create a clear distinction between the regulatory and adjudicatory roles with respect to the same function. When such a distinction is created, the Authority does not put on the hat of a regulator while undertaking the adjudicatory function. On the other hand, certain other statutes may require the Authority to ‘determine’ something in its capacity as a regulator. In such cases, a clear distinction between the adjudication and regulatory functions cannot be drawn.

SLP (C) No. 7605 of 2021 Page 46 of 56

---xxx---

59. The respondents have relied on two clauses of Section 13 to argue that tariff determination is an adjudicatory function. The first is the proviso to Section 13(1)(a) which provides that different tariff structures may be determined for different airports. This, it is argued, is a specific/individualistic component which is an indicator of the adjudicatory function. It is true that this Court in Sitaram Sugar (supra) held that one of the factors to assess if a function is adjudicatory is by determining if it has a specific or a general application. However, the observations cannot be interpreted to mean that it is an overarching consideration in the determination of whether the function is adjudicatory. Neither can it be interpreted to mean that the factor must be considered de hors the context. The consideration of the factors while exercising the function is equally and if not more important as a factor. As the judgment in Sitaram Sugar (supra) notes, “judicial decisions are made according to law while administrative decisions emanate from administrative policy.” As held above, the factors to be considered by AERA in terms of Section 13(1)(a) are purely ‘policy’ factors. Further, the function of AERA to determine tariff must be read in the context of the role of the Authority as a ‘regulator’ as has been highlighted above. Modern constitutional governance requires that legislation is not general but context specific. Over- emphasising the distinction between general and specific provisions to determine if a function is regulatory or adjudicatory would be to completely ignore the jurisprudential developments governing both the regulatory domain and Article 14.

SLP (C) No. 7605 of 2021 Page 47 of 56 (Emphasis supplied)

53. A reading of the Act, 2003 would indicate that it makes no distinction between

the regulatory and adjudicatory functions vested in and conferred upon the

CERC, which is a quasi-judicial body enjoined to regulate and administer the

subject of electricity generation, transmission and distribution. In such a

situation, it becomes necessary for us to undertake a harmonious reading of

Sections 61 and 79 respectively to determine whether the CERC granted the

liberty to claim compensation in exercise of its regulatory or adjudicatory

function.

54. Section 61 of the Act, 2003 lays down the guidelines that the CERC must

adhere to while specifying the terms and conditions for determination of tariff,

which inter alia includes that: (i) the generation, transmission, distribution and

supply of electricity are to be conducted on commercial principles; and (ii) the

consumers' interest is to be safeguarded while also recovering the cost of

electricity in a reasonable manner.

55. This Court in Power Grid Corpn. of India Ltd. v. Punjab State Power Corpn.

Ltd., reported in (2016) 4 SCC 797 (“Barh-Balia”) has held that beneficiaries

cannot be made liable to pay for the delay in any transmission element, which

SLP (C) No. 7605 of 2021 Page 48 of 56 in turn prevents the entire transmission system form being operationalized. This

is in consonance with the principle of safeguarding consumers’ interest. We

affirm that in a situation where transmission charges accrue before the assets

are operationalized due to a non-condonable delay on part of one of the utilities

in charge of putting the transmission element into use, the cost of transmission

cannot be put on the beneficiaries or consumers through the Point of

Connection (POC) mechanism. The relevant portion of the Barh-Balia

judgment is reproduced below:

“10. […] In our opinion, Regulation 3(12) of the 2009 Regulations cannot be interpreted against the spirit of the definition of “transmission lines” given in the statute. It is evident from the record that it is not a disputed fact that switchgear at Barh end of Barh-Balia line for protection and metering were to be installed by NTPC and the same was not done by it when transmission line was completed by the appellant. As such the appellant might have suffered due to delay on the part of NTPC in completing the transmission lines for some period. But beneficiaries, including Respondent 1, cannot be made liable to pay for this delay w.e.f. 1-7-2010 as the energy supply line had not started on the said date.

12. Since we are in agreement with the Tribunal that in the present case, Respondent 1 and the beneficiaries could not have been made liable to pay the tariff before transmission line was operational, we find no infirmity in the impugned order. Therefore, the appeals are liable to be dismissed.

SLP (C) No. 7605 of 2021 Page 49 of 56 Accordingly, both the appeals are dismissed without prejudice to the right of the appellant, if any, available to it under law, against NTPC. There shall be no order as to costs.” (Emphasis supplied)

56. In the case on hand, there is no contractual clause between the parties for

establishing the risks of delay in commissioning of a transmission asset. There

is also no uniform settled position as regards the liability of transmission

charges payable before a particular transmission element is put in operation, in

the form of regulations under Section 178. These circumstances, considered

together with the prohibition on imposing liability of delayed payments on

beneficiaries, leave a regulatory gap. This lacuna was recognized by APTEL in

Nuclear Power Corporation (supra) wherein the correctness of the CERC’s

order was questioned. The CERC, therein, had imposed the liability of

transmission charges on the defaulting party on account of a transmission

element not having been put to use by it, in the absence of a contractual

arrangement between the parties. It was held that in the absence of any specific

provisions dealing with the situation in the 2014 Tariff Regulations or any other

concurrent regulations under Section 178, the CERC has prescribed a principle

that the party to which the delay is attributable would be responsible for

SLP (C) No. 7605 of 2021 Page 50 of 56 payment of the transmission charges for the period of delay not condoned. The

relevant portion of the order is reproduced below:

“10.2 […] Similarly, in the facts of the instant Appeal, there is no inter se contractual arrangement between the Respondent No. 2 and the defaulting party, i.e. the Appellant. However, similar to the factual situation in the case of the Patran Judgment, the Respondent No. 2 had entered into the TSA dated 24.07.2013 with the various LTTCs, who were the beneficiaries of the Project being established by it. 10.3 We further observe that these type of major issues ought to have been covered under Regulations by the Central Commission to plug the gaps, which would avoid litigations.

The importance of the same was considered by the Central Commission at one point of time in its order dated 5.8.2015 and directed its staff for appropriate amendments in the Tariff Regulations, 2014. Till date no such modifications have been carried out by it in the Regulations. It is however, observed that there are many regulatory/judicial orders of the Central Commission to deal with the situations like in the present case.

---xxx---

10.5 Accordingly, in absence of specific provisions in the Sharing Regulations/Tariff Regulations, 2014 to deal with the situation under question the Central Commission through exercise of its regulatory powers has prescribed a principle for sharing of transmission charges of the Transmission System of the Respondent No. 2 in the Impugned Order. Thus, it is observed that by way of exercising its regulatory power by a way of judicial order (s) the Central Commission has

SLP (C) No. 7605 of 2021 Page 51 of 56 laid down the principles of payment of transmission charges in such an eventuality. However, it is felt that the Central Commission in the Impugned Order has abruptly concluded the payment liability on the Appellant just by referring to its earlier orders and not establishing the linkage with the present case explicitly. This Tribunal would like to clarify the same.” (Emphasis supplied)

57. The respondent no. 1 has averred that the CERC cannot conflate its powers of

regulation with its adjudicatory functions and a regulation cannot be brought

into force by way of a judicial order. In the specific case of Nuclear Power

Corporation (supra), we are inclined to agree with the submission of the

respondent no. 1 to the extent that a regulation cannot be done through the

process of adjudication. However, could it be said that there is a blanket ban on

the CERC to exercise its regulatory functions by way of orders under Section

79(1)? In light of this Court’s dictum in AERA (supra), our answer to this

question must be an emphatic ‘No’.

58. We are of the view that even though the orders under Section 79 may not always

be limpid as regards the matters where CERC is exercising its regulatory

functions yet this cannot be the reason to conclude that the CERC passes all

orders in its capacity as an adjudicator. The nomenclature “judicial order(s)”

as used in Nuclear Power Corporation (supra) does not change the nature of a

SLP (C) No. 7605 of 2021 Page 52 of 56 specific order that the CERC gives in its capacity as a regulator and the courts

must understand the true import of an order to determine the nature thereof.

59. The CERC granted liberty to the appellant herein to claim compensation from

the respondent no. 1 to deal with a situation caused due to an unprecedented

event not covered by any guidelines, regulations or contractual provisions

between the parties. The dictum of this Court in paragraph 20 of Energy

Watchdog (supra), indicates that in such a situation where there is an absence

of regulations and guidelines, the Act, 2003 mandates the CERC to strike a

judicious balance between the parties keeping in mind commercial principles

and consumers’ interest, in exercise of its general regulatory powers under

Section 79(1).

60. The aforesaid leaves no manner of doubt in our mind that though the CERC’s

orders dated 21.01.2020 and 27.01.2020 respectively were for determination of

tariff, yet the order granting liberty to the aggrieved appellant to claim

compensation from the defaulting party is a consequence of a regulatory lacuna

in the 2014 Tariff Regulations and therefore, is an instance of regulation of

tariff between the parties.

SLP (C) No. 7605 of 2021 Page 53 of 56

61. Since the CERC was not adjudicating the issue of delay between the parties but

was only regulating the consequences of the delay to the commissioning of the

transmission elements, we are of the view that there was no requirement for a

specific prayer in this regard. As a natural corollary, there was also no occasion

for the respondent no. 1 to be afforded an opportunity to be heard at that stage.

In our considered view, any dispute pertaining to the levy of transmission

charges incurred before the concerned transmission assets were put to use,

would arise only upon the appellant raising bills to the respondent no. 1 in this

regard. In such a scenario, it cannot be said that there was a contravention of

the principles of natural justice by the CERC.

62. As regards the contention of the respondent no. 1 that the validity of a

regulation cannot be looked into by the statutory authorities under the Act,

2003, we are of the view that the said submission was made without considering

the general regulatory power under Section 79(1). While we are in agreement

with the submission of the respondent no. 1 that the vires of a regulation under

Section 178 cannot be challenged before an authority that is the creation of the

parent statute, the same cannot be said so for a specific regulation effected

under Section 79(1).

SLP (C) No. 7605 of 2021 Page 54 of 56

63. It is apposite to mention that the sources of power for enactment of a regulation

under Section 178 and regulatory order under Section 79(1) are different. The

former emanates from the power of delegated legislation whereas the latter is

an ad hoc power which is limited to the specific parties and situation in context

of which the order is given. Since the regulatory powers under Section 79(1)

are of an ad hoc nature and are not of general application, the orders thereunder

are made appealable under Section 111.

64. In view of the aforesaid exposition of law, we find that this Court’s

observations in Whirlpool (supra) are of no avail to the respondent no. 1 as the

present matter falls in none of the cases enumerated therein. Therefore, there

was no occasion for the High Court to admit the writ petition of the respondent

no. 1.

G. CONCLUSION

65. For all the foregoing reasons, we have reached the conclusion that the High

Court committed an egregious error in passing the impugned judgment. We are

left with no other option but to set aside the impugned judgment and order dated

25.02.2021 passed by the High Court and dismiss both the writ petitions. In the

result, the appeals succeed and are hereby allowed.

SLP (C) No. 7605 of 2021 Page 55 of 56

66. Before we close this judgment, we must clarify something important with a

view to obviate the possibility of any confusion. The matter before us pertained

to the maintainability of the writ petitions filed by the respondent no. 1 on the

grounds that CERC had no jurisdiction to grant liberty to the appellant herein

to claim compensation. As already discussed by us in the foregoing paragraphs,

the CERC is empowered to order for imposition of transmission charges on the

party to whom delay is attributable. We, however, have not considered the

question whether such liability of payment of transmission charges could be

imposed on the respondent no. 1 in the specific facts of the case on hand. We

are of the opinion that APTEL is the appropriate authority to look into the

merits of the matter should the respondent no. 1 choose to prefer an appeal

before APTEL under Section 111 of the Act, 2003.

67. Pending application(s), if any, are disposed of.

68. We direct the Registry to circulate a copy of this judgment to all High Courts.

………………………………J. (J. B. Pardiwala)

………………………………J. (R. Mahadevan) New Delhi.

15th May, 2025.

SLP (C) No. 7605 of 2021 Page 56 of 56