Tariff fixation is regulatory, not adjudicatory, but final orders need a properly constituted Commission with a law member.

Tariff fixation under the Electricity Act, 2003 is regulatory, not adjudicatory, so the absence of a Member with legal expertise does not by itself bar the Commission from hearing tariff petitions. The Court distinguished regulatory from adjudicatory and quasi-judicial functions and rejected the argument that a legal member was a jurisdictional requirement for tariff determination. However, it also applied binding Supreme Court directions requiring a person of law on the Commission, and held that pending tariff proceedings could continue but final orders could not be passed until a law member was appointed.

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Issues: (i) Whether tariff fixation by the Electricity Regulatory Commission is an adjudicatory function requiring the presence of a Member with legal expertise. (ii) Whether the Commission can pass final orders on tariff petitions when it does not have a Member with legal background on the Bench.

Issue (i): Whether tariff fixation by the Electricity Regulatory Commission is an adjudicatory function requiring the presence of a Member with legal expertise.

Analysis: The function of tariff fixation under the Electricity Act, 2003 was held to be regulatory in character and not adjudicatory. The legal distinction between adjudicatory, quasi-judicial, and regulatory functions was applied to conclude that tariff determination does not itself amount to adjudication. The absence of a legal member was therefore not treated as a jurisdictional bar for the Commission to hear tariff petitions.

Conclusion: Negative. Tariff fixation is not an adjudicatory function and does not, by itself, require a Member with legal expertise to sit on the Bench.

Issue (ii): Whether the Commission can pass final orders on tariff petitions when it does not have a Member with legal background on the Bench.

Analysis: The Court applied the binding direction that the Commission must have a person of law as a Member. It held that the Supreme Court's declaration on this requirement is binding and must be implemented in letter and spirit. While the pending tariff proceedings could continue, final disposal of the tariff petitions could not be made until a law member was appointed.

Conclusion: Negative. The Commission was restrained from passing final orders on the tariff petitions until a law member is appointed.

Final Conclusion: The challenge failed on the nature of tariff fixation, but succeeded in securing a limited restraint against final orders until the Commission is properly constituted with a law member.

Ratio Decidendi: Tariff fixation under the Electricity Act, 2003 is regulatory and not adjudicatory, but a Commission must be properly constituted in accordance with binding Supreme Court directions before it can finally dispose of tariff petitions.

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