Case: U.P.Power Corporation Ltd Vs. National Thermal Power Corp.Ltd

4. The Parliament with a view to provide for establishment of a Central Electricity Regulatory Commission and State Electricity Regulatory Commissions, rationalization of electricity tariff, transparent policies regarding subsidies, promotion of efficient and environmentally benign policies and for matters connected therewith or incidental thereto, enacted the Electricity Regulation Commissions Act, 1998 (for short `the 1998 Act). It came into force with effect from 9th June, 1998.Pursuant to or in furtherance of the provisions thereof the Central Electricity Regulatory Commission (in short the Central Commission) was established in terms of sub-section (1) of Section 3 of the 1998 Act.Indisputably the powers and functions of the Commission are extensive being contained in Section 13 of 1998 Act i.e.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 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 energy including tariff of the transmission utilities;(d) to promote competition, efficiency and economy in the activities of the electricity industry;(e) to aid and advise the Central Government in the formulation of tariff policy which shall be—(i) fair to the consumers; and(ii) facilitate mobilisation of adequate resources for the power sector;(f) to associate with the environmental regulatory agencies to develop appropriate policies and procedures for environmental regulation of the power sector;(g) to frame guidelines in matters relating to electricity tariff;(h) to arbitrate or adjudicate upon disputes involving generating companies or transmission utilities in regard to matters connected with clauses (a) to (c) above;(i) to aid and advise the Central Government on any other matter referred to the Central Commission by that Government.A regulatory Commission not only makes Regulations but in view of its extensive powers BUT ALSO in-charge of implementation thereof. It furthermore in the event of any dispute or difference arising between several players involved in the framing of tariff for the consumers of electrical energy has also an adjudicatory role to play.6. We are in this batch of appeals are concerned with the power of the Central Commission to make tariff and to revise the same at the instance of a generating company. Before, however, adverting to the said questions, we may notice certain undisputed facts.7. National Thermal Power Corporation Ltd. is a public sector undertaking employed in generation of electrical energy at different parts of India. It has a Thermal Power Station at Korba in the State of Chhatisgarh and Gas Power Station in Dadri in the State of Uttar Pradesh.8. U.P. Power Corporation Ltd. is also a public sector undertaking constituted upon bifurcation of U.P. Electricity Board in terms of the provisions of the U.P. Electricity Regulatory Commission Act, 1998.9. Indisputably the Central Commission only had, at the relevant time, jurisdiction to make tariff for the generating companies.10. The matter relating to generation, transmission, supply and distribution of electrical energy in different States used to be governed by the Electricity (Supply) Act, 1948. With a view to bring reforms in the power sector and to meet shortages in the power supply, the Central Government as also the various State Governments, adopted liberalization policies for industrial economy so as to enable them to attract investment from various parts of the country as also from abroad.11. The Parliament, with a view to give effect to the aforesaid policy decision, as noticed hereinabove, enacted 1998 Act. Parliament, we may place on record, with a view to consolidate the laws relating to generation, transmission, distribution , trading and use of electricity and generally for taking measures conducive to development of electricity industry, promoting competition therein, protecting interest of consumers and supply of electricity to all areas, rationalization of electricity tariff, ensuring transparent polices, regarding subsidies, promotion of efficient and environmentally benign polices, constitution of Central Electricity Authority, Regulatory Commission and establishment of Appellate Tribunal and for matters connected therewith or incidental thereto, enacted the Electricity Act, 2003. It came into force with effect from 10th June, 2003.12. On or about 25th September, 1999 the Government of India issued guidelines for revision of salary to the employees of the Public Sector Undertakings with effect from 1st July, 1997, wherefor, as noticed earlier, a High Powered Committee headed by Justice Mohan was constituted.13. It is stated that the Corporation made provisions in its budget for the relevant years and paid arrears of revised salary with effect from 1st January, 1997 to the Executive in July, 2000 and to the Supervisor and Workmen from April, 2001 and March, 2001 respectively.14. The Corporation had asked the Central Commission to frame tariff in respect of the electricity generated by it wherefor it filed Petition Nos.30/2001 and 44/2001 for determination of tariff for its stations at Korba and Dadri. The Central Commission, upon consideration of the factors placed before it and upon hearing all concerned, including the parties hereto, determined the operational and financial norms applicable, inter alia, for the generating stations of the NTPC which was inclusive of employees costs. In the said order the Central Regulatory Commission dealt with all aspects of the operation and maintenance expenses after setting up the norms for such determination.15. As stated earlier the revision of salary of NTPC employees was revised in terms of the recommendations of the High Level Committee. The said revision was given effect to on and from w.e.f. 1st January, 1997 but was implemented during the period 2000-2001.16. The tariff order was made by Central Regulatory Commission for Korba and Dadri on 6th August, 2003 wherefor the data provided by NTPC were taken into consideration in terms of Regulation 2.7(d)(i) including the provisions made during three years 1997-1998 to 1999-2000 towards anticipated revised costs therefore.17. Indisputably alongwith the said data, datas for the year 2000-2001 were also produced.18. It filed a review petition before the Central Regulatory Commission during various periods in respect of its Korba and Dadra projects on 1st October, 2003. However, it did not lay any claim in respect of actual revised costs for the years 1997-1998, 1998-1999 and 1999-2000.19. Central Regulatory Commission in exercise of its suo motu jurisdiction passed an order in proceeding being No.196 of 20045 to inquire into the actual escalation factor which was found to be less than 6%. Before the Commission certain other issues were also raised. However, on or about 25th April, 2005 and 26th July, 2005 revision applications were filed in respect of Korba and Dadri Power Stations claiming allowance of actual revised costs incurred by the Corporation on account of arrears of paid in 2000-2001.20. The Commission dismissed the said applications by orders dated 11th August 2005 and 19th October, 2005 inter alia, opining"It needs to be noted that in terms of the Commissions order dated 21.12.2000 fresh revision of O&M base charges after determination of tariff is not warranted based on the actual"From the details extracted at Para 10 above, it can be seen that revision of salary of the employee, executives, supervisors and other workmen was notified during July 2000 to April 2001 and the arrears on that account were also paid during the same period. Therefore, the complete employee cost data on account of revision of pay and allowances was available with the petitioner during April, 2001. When the application for determination of tariff were filed on 8.6.2001, the data in this regard could be placed before the Commission by the petitioner. Further, the petitioner had filed amended petitions during January/ February 2002 in all these cases. The Petitioner did not incorporate the actual data of employee cost in the amended petitions as"Under Order 2 Rule 2 of the Code of Civil Procedure (the Code) every suit is to include the whole of the claim to which the party is entitled to make in respect of the cause of action but a party may relinquish any portion of his claim. However, where the party omits to sue in respect of any claim or intentionally relinquishes any portion of his claim, he cannot afterwards sue in respect of the portion so omitted or"After deciding the tariff, the Commission cannot revisit the matter covered in the tariff orders, which have acquired"...On consideration of this, the employee cost indicated by the petitioner for the years 1997-98 and 1998-99 (excluding incentive and ex-gratia), even though beyond the admissible limit of 20% was considered for"...the question of exclusion of these expenses cannot be re- agitated in the present proceedings as they are barred by the principle of"...the tariff approved is the complete package.It, however, appears that an application of the electricity generating station of the Corporation at Rihand was filed for revision of the tariff being Petition No. 38 of 2001 in respect of the tariff period 2001-2004 having regard to the fact that further amount was to be paid by the NTPC to its employees for the purpose of implementation of the recommendations of Justice Mohan Committee, relying on or on the basis of the leave granted, the Corporation filed I.A. No. 9 of 2006 to place on record the impact of revision of wages w.e.f. 1st January, 1997 on the employee costs for the generating station and the Corporate office expenses for the years 1995-1996 to 2000-2001, which was allowed.22. Appellant before us contends that Rihand decision is not applicable in the instant case as therein the original tariff order was yet to come into force. And the said application was filed for revision of tariff and considered in view of the statements made by the Corporation itself in the earlier round of the proceeding.23. The Corporation aggrieved by and dissatisfied with the orders of the Commission dated 11th August, 2005 and 19th October, 2005 filed appeals before the Appellate Tribunal. By reason of the impugned judgment and order dated 7th September, 2006 the said appeals have been allowed, directingof arrears paid by the appellant in the year 2000-2001 on account of employees cost, incurred in the respective years, be considered in the tariff fixation for re-imbursement, as admissible by the Regulations in the forthcoming tariff period in a manner that tariff shock, if any, to the respondents is minimized.Appellant is, thus, before us.

Court's reasoning:
33. Having regard to the nature of jurisdiction of the Central Commission in a case of this nature, we are of the opinion that even principles of res judicata will have no application.34. There cannot be any doubt whatsoever that while a tribunal or a court exercises adjudicatory power, although provisions of Section 11 of the Code of Civil Procedure are not applicable but the general principles of res judicata may be applicable as has been held by this Court in a consolidation matter in Sri Bhavanarayanaswamivari Temple v. Vadapalli Venkata Bhavanarayana Charyulu [(1970) 1 SCC 673,  para 8], in a labour matter in Bharat Barrel and Drum Manufacturing Co. Pvt. Ltd. v. Bharat Barrel Employees Union [(1987) 2 SCC 591,  paras 9 to 11], in a rent control matter in Vijayabai and Others v. Shriram Tukaram and Others [(1999) 1 SCC 693,  para 14], in a writ petition in Forward Construction Co. and Others v. Prabhat Mandal (Regd.), Andheri and Others [(1986) 1 SCC 100,  para 20], and in an arbitration proceeding in K.V. George v. Secretary to Government, Water and Power Department, Trivandrum and Another (1989) 4 SCC 595 , para 16], whereupon strong reliance has been placed by Mr. Gupta, but such a question does not arise herein.Moreover, such a point having never been raised before the Central Commission or the appellate tribunal, we are of the opinion that even otherwise the said argument should not be permitted to be raised before us for the first time.35. The Central Commission, as indicated hereinbefore, has a plenary power. Its inherent jurisdiction is saved. Having regard to the diverse nature of jurisdiction, it may for one purpose entertain an application so as to correct its own mistake but in relation to another function its jurisdiction may be limited. The provisions of the 1998 Act do not put any restriction on the Central Commission in the matter of exercise of such a jurisdiction. It is empowered to lay down its own procedure.36. Regulations 92, 94, 103 and 110 of the 1999 Regulations confer a wide power upon the Central Commission. They are to be exercised in different circumstances. Whereas Regulations 92 and 94 are to be exercised in regard to Chapter V, Regulations 103 and 110 apply in regard to cases where Regulations 92 and 94 would not have any application.Regulations 92 and 94, in our opinion, do not restrict the power of the Central Commission to make additions or alterations in the tariff. Making of a tariff is a continuous process. It can be amended or altered by the Central Commission, if any occasion arises therefor. The said power can be exercised not only on an application filed by the generating companies but by the Commission also on its own motion.37. Assuming that Regulation 103 of the 1999 Regulations would be applicable in a case of this nature, the same also confers a wide jurisdiction. The Commission, apart from entertaining an application for review on an application filed by a party, may exercise its suo motu jurisdiction. While the Central Commission exercises a suo motu jurisdiction, the period of limitation prescribed in Regulation 103 shall not apply. There cannot, however, by any doubt whatsoever that while exercising such jurisdiction, the Central Commission must act within a reasonable time. Furthermore, the statute does not provide for the manner in which a petition is to be filed before the Central Commission or the manner in which the tariff order is to be passed or revision or non-revision thereof.We are unable to accept the contention of Mr. Gupta that the operational and financial norms dated 21.12.2000 were not relevant. The Central Government itself recognized the need to adjust the Operation and Maintenance Expenses based on normative expenses after the actual are available in its order dated 21.12.2000 which was the principal order laying down normswas, thus, in our opinion, enough justification for filing the application for review of the tariff.The concept of regulatory jurisdiction provides for revisit of the tariff. It is now a well-settled principle of law that a subordinate legislation validly made becomes a part of the Act and should be read as such.44. There cannot be any doubt whatsoever that the word `regulation in some quarters is considered to be unruly horse. In Bank of New South Wales v. Commonwealth [(1948) 76 CLR 1] Dixon, J. observed that the word "control" is an unfortunate word of such wide and ambiguous import that it has been taken to mean something weaker than "restraint", something equivalent to "regulation".45. But, indisputably, the regulatory provisions are required to be applied having regard to the nature, textual context and situational context of each statute and case concerned. The power to regulate may include the power to grant or refuse to grant the licence or to require taking out a licence and may also include the power to tax or exempt from taxation. It implies a power to prescribe and enforce all such proper and reasonable rules and regulations as may be deemed necessary to conduct the business in a proper and orderly manner. It also includes the authority to prescribe the reasonable rules, regulations or conditions subject to which the business may be permitted or may be conducted. [See Deepak Theatre v. State of Punjab 1992 Supp (1) SCC 684 at 687]. Even otherwise the power of regulation conferred upon an authority with the obligations and functions that go with it and are incidental to it are not spent or exhausted with the grant of permission. [See State of U.P. v. Maharaja Dharmander Prasad Singh (1989) 2 SCC 505 ] In that sense, the power of Central Commission stricto sensu is not a judicial2001 Regulations, however, show that it had a limited duration, viz., threeRegulation 2.7 (d)(iv) of the 2001 Regulations clearly provides that applications must be entertained only in the event any situation arose within the purview thereof and not at any point of time. If the respondent No. 1 was aware that they were to incur an additional expenditure of Rs. 55/- crores, they could have preferred an appeal before the Central Commission. We have been informed at the bar that the appeals were preferred on other issues but not on this one.50. Framing of tariff is made in several stages. The generating companies get enough opportunity not only at the stage of making of tariff but may be at a later stage also to put forth its case including the amount it has to spend on operation and maintenance expenses as also escalation at the rate of 10% in each of the base year. It cannot, in our opinion, be permitted to re-agitate the said question after passing of many stages. Furthermore, the direction of the tribunal that the additional costs may be absorbed in the new tariff, in our opinion, was not correct. Some persons who are consumers during the tariff year in question may not continue to be the consumers of the appellant. Some new consumers might have come in. There is no reason as to why they should bear the brunt. Such quick-fix attitude, in our opinion, is not contemplated as framing of forthcoming tariff was put subject to fresh regulations and not the old regulations.51. We are not oblivious of the fact that in the Rihand Case, the Central Commission allowed the application of the respondent, but, therein a provision was made therefore in the original tariff order itself. Respondent No. 1 had filed a separate I.A. claiming the impact of arrears paid by it in 2000-2001 towards the years 1997-1998 to 1999-2000.52. We, therefore, on the aforementioned ground alone are of the opinion that it was not a fit case where the appellate tribunal should have interfered with the order of the Centraldo not agree. The jurisdiction of the appellate tribunal is wide. It is also an expert tribunal and, thus, it can interfere with the finding of the Central Commission both on fact as also on law. Both the Central Commission as also the appellate tribunal being expert, we do not see how the decisions of this Court in Union of India and Another v. Cynamide India Ltd. and Another [(1987) 2 SCC 720] and Shri Sitaram Sugar Company Limited and Another v. Union of India and Others [(1990) 3 SCC 223] would be applicable.