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of <h1>Supreme Court upholds Appellate Tribunal's tariff decisions under 2003 Act, validating key provisions.</h1> <h3>Bhaskar Shrachi Alloys Ltd. and Ors. Versus Damodar Valley Corporation and Ors.</h3> Bhaskar Shrachi Alloys Ltd. and Ors. Versus Damodar Valley Corporation and Ors. - TMI Issues Involved:1. Interpretation of the fourth proviso to Section 14 of the Electricity Act, 2003.2. Applicability of the provisions of the Damodar Valley Corporation Act, 1948 in tariff determination.3. Validity of the Tariff Regulations (2004 Regulations) in the context of the 1948 Act.4. Specific heads of tariff fixation: Depreciation rate, Sinking Fund, Debt-Equity ratio, Pension & Gratuity Contribution, Return on Capital Investment on Head Office, Revenue from non-power activities, Transition period, and intra-State transmission.Detailed Analysis:1. Interpretation of the Fourth Proviso to Section 14 of the Electricity Act, 2003:The fourth proviso to Section 14 of the 2003 Act states that the Damodar Valley Corporation (DVC) shall be deemed a licensee under the Act but shall not be required to obtain a license, and the provisions of the Damodar Valley Corporation Act, 1948, insofar as they are not inconsistent with the 2003 Act, shall continue to apply. The Court affirmed that this proviso is a substantive provision, enabling the continued application of certain provisions of the 1948 Act which are not inconsistent with the 2003 Act. This interpretation was supported by the legislative history and the specific responsibilities of the DVC under the 1948 Act.2. Applicability of the Provisions of the Damodar Valley Corporation Act, 1948 in Tariff Determination:The Court held that the provisions of the 1948 Act, particularly those in Part IV, which are not inconsistent with the 2003 Act, continue to apply to the DVC. This includes provisions related to financial management, expenditure, and depreciation. The Court emphasized that the 2003 Act did not intend to completely override the 1948 Act but to allow certain provisions to coexist, especially given the unique statutory duties of the DVC.3. Validity of the Tariff Regulations (2004 Regulations) in the Context of the 1948 Act:The Court clarified that while the Tariff Regulations are statutory in character, they are subordinate legislation and cannot override the provisions of the 1948 Act. The Court cited previous judgments to support the view that subordinate legislation must operate within the confines of the enabling statute and cannot contradict primary legislation.4. Specific Heads of Tariff Fixation:- Depreciation Rate and Sinking Fund: The Court upheld the Appellate Tribunal's reliance on Section 40 of the 1948 Act for determining depreciation rates and the sinking fund, finding no fundamental flaws in the reasoning.- Debt-Equity Ratio: The ratio of 50:50 for projects completed before 1992 and 70:30 for projects thereafter was deemed consistent with practices for other public-sector organizations.- Pension & Gratuity Contribution: The Court found no error in the Appellate Tribunal's decision to allow the full recovery of the pension and gratuity fund from consumers, emphasizing that the consumers had benefited from lower tariffs in the past.- Return on Capital Investment on Head Office: The Court did not find any substantial question of law warranting interference with the Appellate Tribunal's decision.- Revenue from Non-Power Activities: The Court upheld the inclusion of costs related to non-power activities in the tariff, noting that these activities are mandatory under the 1948 Act and do not generate revenue.- Transition Period: The Court declined to interfere with the two-year transition period allowed by the CERC, considering the statutory functions and social responsibilities of the DVC.- Intra-State Transmission: The Court affirmed that the CERC is the appropriate commission for determining tariffs for the DVC, given its central government ownership and control.Conclusion:The Supreme Court dismissed all the appeals and affirmed the judgment and order of the Appellate Tribunal, recognizing the continued relevance of the 1948 Act's provisions in tariff determination under the 2003 Act, and validating the specific tariff decisions made by the Appellate Tribunal.
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