Preserved special statute provisions governed tariff determination, with tariff heads, transition period, and regulatory jurisdiction all sustained.

The fourth proviso to Section 14 of the Electricity Act, 2003 was read as preserving the non-inconsistent provisions of the Damodar Valley Corporation Act, 1948 for tariff determination, and those preserved provisions were held to prevail over conflicting tariff regulations. On tariff heads, the treatment of depreciation and sinking fund was upheld, the debt-equity ratio was accepted, recovery of pension and gratuity liabilities through tariff was sustained, and common expenditure attributable to the Corporation's mandatory non-power activities was also allowed. The two-year transition period and the choice of the Central Electricity Regulatory Commission were sustained, given the Corporation's special statutory functions and central ownership.

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Issues: (i) Whether the fourth proviso to Section 14 of the Electricity Act, 2003 saves the provisions of the Damodar Valley Corporation Act, 1948 that are not inconsistent with the 2003 Act for tariff determination; (ii) Whether the tariff heads including depreciation, sinking fund, debt-equity ratio, pension and gratuity contribution, and common expenditure from the Corporation's other statutory activities were correctly allowed or disallowed; (iii) Whether the grant of a two-year transition period and the determination of the Central Electricity Regulatory Commission as the appropriate Commission were sustainable.

Issue (i): Whether the fourth proviso to Section 14 of the Electricity Act, 2003 saves the provisions of the Damodar Valley Corporation Act, 1948 that are not inconsistent with the 2003 Act for tariff determination?

Analysis: The fourth proviso was treated as more than a mere licensing proviso. Its second limb was read as a substantive legislative command that the Damodar Valley Corporation Act, 1948 would continue to apply to the Corporation to the extent not inconsistent with the Electricity Act, 2003. The Court held that the proviso was deliberately framed to preserve selected provisions of the 1948 Act, and that such provisions would prevail over inconsistent Tariff Regulations because subordinate legislation cannot override a parent or other statute. The legislative history and the statutory scheme supported this construction.

Conclusion: The fourth proviso to Section 14 does save the non-inconsistent provisions of the Damodar Valley Corporation Act, 1948, and those provisions can be relied upon in tariff determination.

Issue (ii): Whether the tariff heads including depreciation, sinking fund, debt-equity ratio, pension and gratuity contribution, and common expenditure from the Corporation's other statutory activities were correctly allowed or disallowed?

Analysis: The Court found no substantial error in the treatment of depreciation and sinking fund under Section 40 of the Damodar Valley Corporation Act, 1948. It also upheld the debt-equity ratio, noting that the relevant ratio was taken from comparable public sector practice where the 1948 Act did not prescribe a specific rate for all cases. The allowance of the entire pension and gratuity liability through tariff was sustained on the basis that the consumers had been enjoying a lower tariff earlier and the fund had to be prudently recovered. The recovery of costs relating to the Corporation's statutorily mandated non-power activities was also upheld, since those functions were compulsory under the 1948 Act and did not operate as an optional cross-subsidised business under Sections 41 and 51 of the 2003 Act.

Conclusion: The tariff determinations on these heads were upheld and no interference was warranted.

Issue (iii): Whether the grant of a two-year transition period and the determination of the Central Electricity Regulatory Commission as the appropriate Commission were sustainable?

Analysis: The Court accepted the transitional arrangement in view of the Corporation's special statutory obligations and its mixed functions beyond electricity generation and transmission. It also upheld the view that the Central Electricity Regulatory Commission was the appropriate Commission because the Corporation was owned and controlled by the Central Government, and the conclusion was neither unreasonable nor irrelevant in the limited jurisdiction under Section 125 of the Electricity Act, 2003.

Conclusion: The two-year transition period and the jurisdiction of the Central Electricity Regulatory Commission were sustained.

Final Conclusion: The appeals were dismissed, and the judgment of the Appellate Tribunal was affirmed in full.

Ratio Decidendi: Where a special statute is preserved by a later Act through an inconsistency-saving proviso, the preserved statute continues to govern those matters not inconsistent with the later Act, and such preserved provisions may override conflicting subordinate legislation.

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