TaxTMI 
TaxTMI 
2009 (3) TMI 1074
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....97-1998 ; 1998 - 1999 and 1999 - 2000. 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.: (a) 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 sch....
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....s 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 liberalisation 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 in....
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....nquire 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: (i) "It needs to be noted that in terms of the Commission's order dated 21.12.2000 fresh revision of O&M base charges after determination of tariff is not warranted based on the actual expenses". (ii) "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 fi....
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....roceeding. 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, directing: amounts of 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. 24. Appellant is, thus, before us. 25. Mr. Sunil Gupta, learned senior counsel appearing on behalf of the appellant would urge: (i) The Central Regulatory Commission had no jurisdiction in terms of 1998 Act or 2003 Act or the Regulations made there under to entertain and carry out revision in the tariff order on the basis of purported subsequent events or otherwise. (ii) In view of 2001 Regulations framed under Section 28 of 1998 Act even while undertaking the original tariff determination proceedings the Commissioner had no jurisdiction....
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....tion was entertained in a case of Original Tariff Order itself and thus could not have been relied upon. (x) The Tribunal's order providing for relief by way of reimbursement in the forthcoming tariff period is contrary to the scheme of the Act. (xi) The Appellate Tribunal although has wide jurisdiction but it, without sufficient or cogent reasons, should not have interfered with the order of the Central Regulatory Commission. 26. Mr. Ramachandran, learned Counsel appearing on behalf of respondent No. 2, on the other hand, urged: (i) Central Regulatory Commission had the requisite jurisdiction to review the tariff, having regard to the powers contained in the Regulations. (ii) Sufficient and cogent reasons for revision of the costs in the first instance, having been assigned and all material facts having been taken into consideration by the Appellate Tribunal, no exception can be taken to the impugned judgment. (iii) It is incorrect to contend that the Appellate Authority had made inconsistent observations in the impugned order. (iv) As in the case of Rihand the actual costs paid by respondent No. 1 for meeting its obliga....
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....ons expressly confer a power of review on the Central Commission in terms of Regulation 103 thereof. For the aforementioned purpose, the Central Commission may not only exercise its jurisdiction suo motu but it may review a decision even if an application is filed within a period of sixty days of making of any decision, direction or order. Regulation 110 empowers the Central Commission to issue orders and practice directions in regard to the implementation of the Regulations and procedure to be followed and various matters which the Commission has been empowered by these regulations to specify or direct. Regulations 111 and 112 read as under: 111. Nothing in these Regulations shall be deemed to limit or otherwise affect the inherent power of the Commission to make such orders as may be necessary for ends of justice or to prevent the abuse of the process of the Commission. 112. Nothing in these Regulations shall bar the Commission from adopting in conformity with the provisions of the Act,. a procedure, which is at variance with any of the provisions of these Regulations, if the Commission, in view of the special circumstances of a matter or class of matte....
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.... norms, whichever is lower. Regulation 2.7 of the 2001 Regulations provides for payment of capacity (fixed) charges; Clause (c) whereof deals with return on equity in the following terms: (c) Return on Equity: Return on equity shall be computed on the paid up and subscribed capital and shall be 16 per cent of such capital. Explanation: Premium raised by the Generating Company while issuing share capital and investment or internal resources created out of free reserve of the existing utility, if any, for the funding of the project, shall also be reckoned as paid up capital for the purpose of computing the return on equity, provided such premium amount and internal resources are actually utilized for meeting the capital expenditure of the generating station and forms part of the approved financial package as set out in the techno-economic clearance accorded by the Authority or approved by an appropriate independent agency, as the case may be. "Operation and Maintenance expenses including insurance" is dealt with in Clause (d) of Regulation 2.7 of the 2001 Regulations; Clauses (i) and (iv) whereof reads as under: (d) Opera....
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..... Revision of a tariff must be distinguished from a review of a tariff order. Whereas Regulation 92 of the 1999 Regulations provides for revision of tariff, Regulations 110 to 117 also provide for extensive power to be exercised by the Central Commission in regard to the proceedings before it. 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 [1971]1SCR128 in a labour matter in, paras 9 to 11, in a rent control matter in Vijayabai and Ors. v. Shriram Tukaram and Ors. AIR1999SC431 , in a writ petition in Forward Construction Co. and Ors. v. Prabhat Mandal (Regd.), Andheri and Ors. AIR1986SC391 , para 20, and in an arbitration proceeding in K.V. George v. Secretary ....
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.... order is to be passed or revision or non-revision thereof. 38. Section 28 of the 1998 Act empowers the Central Commission to determine the terms and conditions for fixation of tariff. 39. 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 norms therefore holding inter alia as under: 4.3.6 The Commission is convinced that linking the base level O&M expenses to the capital cost is not appropriate as there are unresolved issues of measurement of the capital cost itself. Thus, the efficacy of the base on the basis of capital cost is questionable. The approach adopted in this order is based on following tenets: 7 The base level of O&M should not be computed as a given proportion of capital cost but should be derived on the basis of actual O&M expenses in the last five years after ironing out the spikes and abnormalities in the yearwise data. 7 Any abnormal expenses incurr....
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....rder along with the order dated 4th January, 2000 on Availability Based Tariff read with our order on review petition No. 13/2000 on availability based tariff will constitute the frame work for notifications on terms and conditions of tariff to be regulated under Section 13(a)(b) and (c) of the ERC Act. Separate notifications shall be issued by the Commission incorporating the findings in accordance with Section 28 of the ERC Act, 1998. 41. It was contended by Mr. Ramachandran that actual expenses for 2001-2002 were not available and the normative expenses for the last five years were only available and there was an unexpected abnormal increase. There was, thus, in our opinion, enough justification for filing the application for review of the tariff. 42. While considering the question of jurisdiction vis-`-vis the applicability of the operational and financial norms, it is not for us to consider as to whether such separate petition should have been filed. We would, however, consider the question as to whether such an application for permission should have been filed within a reasonable time or not a little later. 43. The concept of regulatory jurisdiction provides for r....
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.... State Electricity Board v. Central Electricity Regulatory Commission and Ors. AIR2007SC1711 , whereupon counsels for both the parties relied upon, upon consideration of the provisions of Section 28 of the 1998 Act, opined as under: A bare glance of the above quoted section suggests that CERC would formulate regulations for providing terms and conditions for fixation of tariff under Clauses (a), (b) and (c) of Section 13. The power for making the regulations is to be found in Section 55 of the 1998 Act. Accordingly, CERC has formulated the Regulations which are called the Central Electricity Regulatory Commission (Conduct of Business) Regulations, 1999... It was furthermore held: 12. The appellate authority has clearly erred in giving a literal interpretation to the said provision, namely, Clause 2.7(d)(iv). Learned Counsel urged that the appellate authority was bound to discern the true intendment of the provision and should have given it a meaningful interpretation, in that, the escalation factor should have been calculated keeping 6% as the base and it should not have been limited to the difference alone. Learned counsel Shri Sunil Gupta further argued that the rule was....
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....ficult to define as having any precise meaning. It is a word of broad import, having a broad meaning, and is very comprehensive in scope. There is a diversity of opinion as to its meaning and its application to a particular state of facts, some courts giving to the term a somewhat restricted, and others giving to it a liberal, construction. The different shades of meaning are brought out in Corpus Juris Secundum, Vol. 76 at p. 611: 'Regulate' is variously defined as meaning to adjust; to adjust, order, or govern by rule, method, or established mode; to adjust or control by rule, method, or established mode, or governing principles or laws; to govern; to govern by rule; to govern by, or subject to, certain rules or restrictions; to govern or direct according to rule; to control, govern, or direct by rule or regulations. `Regulate' is also defined as meaning to direct; to direct by rule or restriction; to direct or manage according to certain standards, laws, or rules; to rule; to conduct; to fix or establish; to restrain; to restrict. See also: Webster's Third New International Dictionary, Vol. II, p. 1913 and Shorter Oxford Dictionary, Vol. II, 3rd Edn., p. 17....
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...., such an application ordinarily could have been filed within the period during which the tariff order was in force. 48. It is difficult to agree with the opinion of the appellate tribunal that increase in the salary with retrospective effect could have been a subject matter for determination of tariff in another period. In a fact situation obtaining herein, we are of the opinion that the claim of the respondent - corporation was not justified as the Central Commission should not have been asked to revisit the tariff after five years and when everybody had arranged its affairs. 49. Regulation 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 ....