Case: M/S. Ntpc Ltd Vs. M.P. State Electiricity Board

M/s NTPC Ltd. is a power `generating company within the definition of the concept under Section 2 (28) of the Electricity Act, 2003. The Electricity Boards concerned, receive the power generated from the thermal power plants of NTPC situated at Kawas, Gandhar and Rihand. The Central Commission had determined the tariff payable by the Electricity Boards to NTPC by the above referred orders dated 1.4.2005, 7.4.2005 and 2.6.2006.(i) The orders dated 1.4.2005 and 7.4.2005 were on the Petitions No.33 of 2001 and 31 of 2001 respectively filed by NTPC for determining the tariff with respect to the power supplied by it during the period 1.4.2001 to 31.3.2004 to MPSEB and others from Gandhar and Kawas power stations.(ii) The order dated 2.6.2006 was on Petition No.38 of 2001 by NTPC for the determination of tariff with respect to power supplied during the same period from the Rihand power station to PSEB, Delhi Vidyut Board and others.3. The Central Commission while determining the tariff, had determined the final tariff at a rate lesser than the pre-existing tariff, as a result of which NTPC was found to have collected excess amounts during this intervening period, and the Electricity Boards became entitled to get the refund/adjustment of these differential amounts. Thus, the amount overcharged in respect of Gandhar power station is to the tune of Rs.460.52 crores and the one in respect of Kawas power station is Rs.254.47 crores. The Central Commission had however disallowed the claim of the Electricity Boards for payment of interest on the differential amounts between (i) the tariff finally determined by the Central Commission and (ii) the pre-existing tariff continued by the Central Commission until the final determination of the tariff. There is no dispute that thereafter NTPC has duly and immediately adjusted the excess amounts in favour of the purchaser Electricity Boards in their subsequent bills.4. The MPSEB, PSEB and Delhi Vidyut Board, therefore, invoked Section 111 of the Electricity Act, 2003 and filed appeals against the above three orders of the Central Commission before the Appellate Tribunal which were numbered as Appeal Nos.64, 212 and 237 of 2006. The Appellate Tribunal rejected the claim of the Electricity Boards for interest as being payable under Section 62(6) of the Electricity Act, 2003. It however, held by its impugned common order dated 20.4.2007, that NTPC was liable to pay interest on the differential amounts on the grounds of justice, equity and fair-play. The NTPC has therefore, filed three Civil Appeals being Civil Appeal Nos. 2451/2007, 2452/2007 and 2493/2007 to challenge this order. As against that, PSEB and Delhi Vidyut Board have filed Civil Appeal Nos. 3972/2007 and 4231/2007 to challenge the same order of the Appellate Tribunal to the extent it rejected their claim for interest under Section 62(6) of the Electricity Act.

Reasoning:
26. It is true that the power to make restitution is inherent in every Court as observed by this Court in Kavita Trehan and Anr. Vs. Balsara Hygiene Products Ltd. reported in (1994 (5) SCC 380 ) which was relied upon by the council for the Electricity Boards. Thus, restitution will apply even where the case does not strictly fall under Section 144 of CPC . However, we must note that Kavita Trehan was a case where the submission was made to the effect that termination of the contract was wrong and an injunction was sought in a civil suit to restrain the respondent from interfering with the disposal of goods. It was in this context that the principle of restitution was applied. It is therefore, difficult to appreciate as to how the Appellate Tribunal could bring in either the principles of justice, equity and fair-play or that of restitution in the present case. What is important to note is that in paragraph 16 of its order the Appellate Tribunal has specifically observed in terms that this was not a case where the beneficiaries were made to pay the excess tariff at the instance of NTPC through force, coercion or threat. This being the position the principles of equity, justice and fair-play could not have been brought in to award interest to the Electricity Boards.27. It is true that there was delay in the process of determination of the tariff. We are informed that the Commission became functional only on 15.5.1999. NTPC had filed the tariff petitions duly as required by the Central Commission. The delay in the case of Kawas and Gandhar Power Stations was because of the Commission requiring them to appropriately devise norms and parameters. As far as Rihand Station is concerned, one of the beneficiaries, namely Rajasthan Rajya Vidyut Vitaran Nigam Limited had obtained stay of proceedings before the Commission from the High Court of Rajasthan. NTPC was not in any way responsible for these factors. Ultimately, the tariff was reduced, but the tariff charged by the NTPC in the meanwhile was in accordance with the rates permitted under the notifications issued by the Commission. It cannot, therefore, be said that NTPC had held on to the excess amount in an unjust way to call it unjust enrichment on the part of NTPC, so as to justify the claim of the Electricity Boards for interest on this amount.28. Submissions were advanced before us on the question as to whether the tariff determination under Section 62 was in any way legislative or quasi-judicial. The counsel for NTPC drew our attention to a number of judgments concerning price fixation.a. In West Bengal Electricity Regulatory Commission V. CESC (2002 (8) SCC 715 ), the court noted, in the context of electricity tariff determination under the Electricity Regulatory Commissions Act, 1998, that price fixation is in the nature of a legislative function, and hence, generally, no hearing is required. However, as the statute provides for a hearing opportunity, the same must be provided.b. Similar view was taken in this context in the following cases:(i) Levy sugar pricing under the Essential Commodities Act, 1955 has been held to be a legislative function in Shri Sitaram Sugar Mills Vs. UOI (1990 3 SCC 223 ), Saraswati Industrial Syndicate V. UOI (1974 (2) SCC 630 ), Malaprabha Sugars V. UOI (1994 1 SCC 648 ) and Mahalakshmi Sugar Mills V. UOI (2009 (16) SCC 569 ).c. Coal price fixation has been held to be a legislative function under the Essential Commodities Act, 1955 in Pallavi Refractories V. Singareni Collieries (2005 (2) SCC 227 ).d. Fixation of the price of Natural Gas under the Essential Commodities Act, 1955, is held to be legislative function in ONGC V. Assn. of Natural Gas Consuming Industries of Gujarat (1990 Supp. (1) SCC 397) .e. In Prag Ice and Oil Mills V. UOI (1978 (3) SCC 459 ), the court in the context of price fixation of oil under Essential Commodities Act, 1955, observed asthink that unless by the terms of particular statute or order, price fixation is made a quasi judicial function for specified purposes or cases, it is really legislative in character. The legislative measure does not concern itself to the facts of an individual case. It is meant to lay down a general rule applicable to all persons or objects or transactions of a particular kind of class.The counsel for the Electricity Boards, however, drew our attention to a recent judgment of a Constitution Bench of this Court in PTC India Ltd. Vs. Central Electricity Regulatory Commission reported in (2010 (4) SCC 603 ), wherein this Court has observed in para 50 asApplying 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.......In the facts of the present case, however, this controversy as to whether tariff fixation is legislative or quasi-judicial need not detain us any further. As held by the Constitution Bench, price fixation is really legislative in character, but since an appeal is provided under Section 111 of the Act, it takes a quasi-judicial colour. That by itself cannot justify the claim for interest during the period when the proceedings were pending for the tariff fixation. The tariff that was being charged at the relevant time was as per the previous notifications. Once the tariff was finalized subsequently, NTPC has adjusted the excess amount which it has received. It cannot be said that during this period the NTPC was claiming the charges in an unjust way, to make a case in equity. Our attention has been drawn to the industry practice which also shows that on all such occasions interest has never been either demanded or paid when the price fixation takes place. As held by us hereinabove, claim for interest could not be covered under Section 62 (6). The provision for interest has been introduced by regulations subsequent to the period which was under consideration before the Commission. If we apply the propositions in Rallia Ram (supra) and Watkins Mayor (supra), we find that the terms of the supply agreement, the governing regulation and notifications did not contain any provision for interest. The industry practice did not provide for it as well. In view thereof, interest could not be claimed either on the basis of equity or on the basis of restitution.31. In the circumstances, it is not possible to accept the submission that the Appellate Tribunal erred in any way in declining to award interest under Section 62 (6) of the Act. There was however, an error on its part in granting the same under the concept of equity, justice and fair-play.