M/S. Ntpc Ltd vs M.P. State Electiricity Board & Ors

2. 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.

(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.

(ii) The Electricity Regulatory Commissions Act 1998 was enacted for distancing of the Government from determination of tariffs. It created the Central Commission. The act, came into force on 25.4.1998. Tariff determination and other Regulatory functions as far as power generation of NTPC was concerned, no longer remained with the Central Government, and came to be vested in the Central Commission.

Accordingly, the Central Commission issued notifications from time to time on 12.5.1999, 4.4.2001 and 21.10.2003 continuing the existing tariff as on 31.3.2001 until further orders to be passed by the Commission. NTPC raised the monthly invoices as per the existing tariff and the Electricity Boards honoured the same.

11. NTPC duly filed the tariff petitions as required by the Central Commission for the tariff determination, however the proceedings before the Central Commission took their own time and the petitions were ultimately decided on 1.4.2005, 7.4.2005 and 2.6.2006. . As stated earlier when the tariff was finalised, the rates were in fact reduced, and the Electricity Boards became entitled to receive the excess amounts paid in the meanwhile. We must note at this stage that while determining the tariff, the appropriate Commission has to safeguard the consumer's interest as well as recovery of cost of electricity in a reasonable manner under Section 61(d) of the Act which is what is done by the Commission. Subsequently, NTPC adjusted the excess amount which it had 8 received in the intervening period in the subsequent bills to the Electricity Boards.

19. Now, we come to the issue as to whether the Appellate Tribunal was right in awarding the interest on the differential amounts on the basis of justice, equity and fair-play. The Appellate Tribunal has awarded interest at an average of the prevailing lending rates (PLR) of the Reserve Bank of India to the 14 Banks during the relevant period. In this connection, we must note that the Central Commission had, by issuing notifications continued the tariff existing on 31.3.2001 as an interim measure until the final tariff was determined, and the notifications did not provide in any way for interest. The Appellate Tribunal has commented that the notifications were issued mechanically without bestowing any prima facie consideration as to what should be the tariff as an interim arrangement. The Appellate Tribunal was of the view that in passing an interim or provisional order, an examination of all the pros and cons was necessary. The interim arrangement continued for over a period of four years and according to the Appellate Tribunal, it resulted into an undue monetary benefit to the NTPC.

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 23 same under the concept of equity, justice and fair-play. Hence, we allow the appeals filed by the NTPC and dismiss those which are filed by the Electricity Boards. Civil Appeal Nos. 2451, 2452 and 2493/2007 are allowed. Civil Appeal Nos. 3972 and 4231/2007 are dismissed. Parties will bear their own costs.

........................................J. ( J.M. Panchal ) .........................................J. ( H.L. Gokhale ) New Delhi Dated: September 29, 2011 24 IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION Civil Appeal No. 2451 OF 2007 With Civil Appeal No. 2452 of 2007 With Civil Appeal No. 2493 of 2007 With Civil Appeal No. 3972 of 2007 With Civil Appeal No. 4231 of 2007 M/s NTPC Ltd. ...Appellant Versus M.P. State Electricity Board & Ors. ...Respondents Respected Sir, I am enclosing herewith the draft judgment in the above matter for your perusal and approval.

With Warm regards.