The Supreme Court, in its recent judgment in Power Grid Corporation of India v Madhya Pradesh Power Transmission Company and Others, clarified the distinction between the powers of the Central Electricity Regulatory Commission (CERC) under sections 79 and 178 of the Electricity Act, 2003.
The appellant entered into an agreement with respondent No. 1 in pursuance of Western Region system strengthening schemes. Respondent No. 1 was to construct and commission an intra-state transmission line from Indore sub-station, coinciding with the timeline for completion of works by the appellant.
When delays arose, the appellant approached the CERC under regulation 4(3) of the Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2014. It sought the approval of the commercial operation date (COD) of its transmission system, along with the determination and billing of transmission charges and tariffs for the established transmission facilities.
The CERC approved the COD as proposed by the appellant and granted liberty to the appellant to claim compensation from respondent No. 1, as the delay was attributable to respondent No. 1. It was also held that the transmission charges of all assets would be borne by respondent No. 1 from COD until one day before the actual charging of the downstream system.
Respondent No. 1 challenged the orders passed by the CERC before the Madhya Pradesh High Court, including the grounds that there was no provision for claiming compensation in the 2014 regulations or in the agreement. The high court admitted the writ petition.
The court observed that section 79 of the act empowers the CERC to regulate and adjudicate specific matters, such as interstate transmission, tariff determination, issuance of licences to transmission licensees and electricity traders, while section 178 allows it to enact regulations in respect of the same.
The court then referred to its judgments in PTC India v CERC and Energy Watchdog v CERC, observing that the regulatory powers of the commission under section 79 are not contingent on existing regulations under section 178. In the absence of specific provisions, the commission is not precluded from passing orders, in exercise of powers under section 79(1), between the parties before it, and such orders are appealable under section 111 of the act.
The court then referred to the judgment in Power Grid Corporation of India v Punjab State Power Corporation, and to the Appellate Tribunal for Electricity judgment in Nuclear Power Corporation of India v CERC, and observed that there was no contractual clause to determine the consequence of delay.
There are no regulations under section 178 regarding transmission charges payable before a transmission element becomes operational, and there is a prohibition on imposing liability for delayed payments on beneficiaries.
In light of the above-mentioned, it was held that the CERC aimed to fill a regulatory lacuna and its orders were not adjudicatory in nature. The Supreme Court, therefore, allowed the appeals and set aside the high court’s order, clarifying that the commission’s orders are appealable under section 111 of the act.
The dispute digest is compiled by Numen Law Offices, a multidisciplinary law firm based in New Delhi & Mumbai. The authors can be contacted at support@numenlaw.com. Readers should not act on the basis of this information without seeking professional legal advice.
