IMPORTANT POINT
The provisions of the Electricity Regulatory Commission Act and Regulations show that the Regulatory Commission has the exclusive power to determine the tariff.

Headnote:Electricity Regulatory Commission Act, 1998-Section 22-Electricity (Supply) Act, 1948-Sections 2(3) and (4A)-Maharashtra Electricity Regulatory Commission (Conduct of Business) Regulations, 1999-Regulations 72, 73, 78, 79, 80 to 83-Determination of Tariff by State Commission-Tata Power Company is a generating company and a bulk licensee-Agreement between Maharashtra State Electricity Board and Tata Company (TPC)-Power Company was provided 300 MVA standby facility from the Electricity Board-Enhanced demand of electricity in city of Bombay-Agreement for standby facility to Bombay Suburban Electric Supply Company (BSEB) from standby capacity reserved by Tata Company-BSEB was to pay Rs. 3.5 crores per month to Tata Company for such standby facility-Electricity Board served a notice on TPC intimating enhancement of charges for standby facility from Rs. 24.75 crores to Rs. 30 crores per month-TPC gave notice to BSEB of its intention to enhance charges-Constitution of Maharashtra Electricity Regulatory Commission to determine payment of standby charges-However, both BSEB and TPC not satisfied with order passed by the Commission filed appeals-Whether High Court was justified in remitting the matter back to Commission for de novo consideration-(Yes).
       Held : Sub-section (2) of Section 22 empowers the State Government to confer by notification in the Official Gazette various functions upon the State Commission which are enumerated from clauses (a) to (p) in the said sub-section. One of the function which can be conferred under clause (n) is to adjudicate upon the dispute and differences between the licensees and utilities and to refer the matter for arbitration. (Para 13)
       Section 29 lays down that the tariff for intra-State transmission of electricity and tariff for supply of electricity, wholesale, bulk or retail in a State shall be subject to the provisions of the Act and the tariff shall be determined by the State Commission. Sub-section (2) of Section 29 shows that terms and conditions for fixation of tariff shall be determined by Regulations and while doing so, the Commission shall be guided by the factors enumerated in clauses (a) to (g) thereof. The Regulations referred to earlier show that generating companies and utilities have to first approach the Commission for approval of their tariff whether for generation, transmission, distribution or supply and also for terms and conditions of supply. They can charge from their customers only such tariff which has been approved by the Commission. Charging of a tariff which has not been approved by the Commission is an offence which is punishable under Section 45 of the Act. The provisions of the Act and Regulations show that the Commission has the exclusive power to determine the tariff. The tariff approved by the Commission is final and binding and it is not permissible for the licensee, utility or any one else to charge a different tariff. (Para 16)
       The determination or quantification of the amount which is payable for this kind of standby arrangement made in favour of TPC and BSES would in reality mean determination of the price or charges for wholesale or bulk supply of electricity. It will, therefore, clearly fall within the expression "determine the tariff for electricity, wholesale, bulk, grid or retail" as used in sub-clause (a) of Sub-section (1) of Section 22 and also in the expression "regulate power purchase ..... including the price at which the power shall be procured from the generating companies........." as used in sub-clause (c) of sub-section (1) of Section 22. Therefore, the determination or quantification of the amount which BSES has to pay to TPC falls within the jurisdiction of the State Commission under Section 22 of the Act. This legal position is also reflected by Section 29 of the Act which confers an overriding power and clearly lays down that notwithstanding anything contained in any other law the tariff for supply of electricity, wholesale, bulk or retail shall be subject to the provisions of the Act and shall be determined by the State Commission. This clearly ousts the jurisdiction of any other authority to determine the tariff. It may be noted here that the Act came into force on 25.4.1998 and Maharashtra Electricity Regulatory Commission was formed on 5.8.1999. Therefore, it is not possible to accept the contention of Shri Nariman that the State Government had the authority or jurisdiction on 22.3.2000 to determine or quantify the charges which BSES had to pay to TPC under the terms of the license granted to the former as this was subsequent to the formation of the Maharashtra Electricity Regulatory Commission. (Para 18)
       Several reasons have been given by the High Court for remitting the matter to the Commission for a de novo consideration. The Commission devised a formula for determination of the charges for standby facility which was to be paid by BSES to TPC. Both the sides complained before the High Court that before adopting the formula they were not given an opportunity to place their point of view before the Commission for arriving at a just formula and they were not informed about the exact nature of the formula which was being adopted. The order of the Commission shows that for working out the formula it had appointed consultants. Two members of the Commission had several meetings with the consultants and thereafter the formula was worked out. But the Chairman of the Commission was not present in these meetings. (Para 23)
       The facts mentioned above clearly show that the procedure adopted by the Commission was not fair and proper inasmuch as the Chairman did not participate in the meetings which other two members had with the Consultants, whereunder a formula was devised. Under Regulation 21, the quorum for proceedings before the Commission shall be three. In these circumstances, the High Court was perfectly justified in remitting the matter to the Commission for de novo consideration and no exception can be taken to such a course of action. (Para 24)

JUDGMENT

G.P. Mathur, J.-Leave granted.

These appeals, by special leave, have been preferred against the judgment and order dated 3.6.2003 of Bombay High Court in MERC Appeal No. 1 of 2002 (The Tata Power Company v. BSES Ltd. & Ors.) and MERC Appeal No. 2 of 2002 (BSES Ltd. & Ors. v. The Tata Power Company) which had been preferred under Section 27 of the Electricity Regulatory Commissions Act, 1998 (hereinafter called "the Act") challenging the order dated 7.12.2001 of Maharashtra Electricity Regulatory Commission (for short `the Commission ).

2. The Tata Power Company Ltd. (for short TPC ) is a generating company within the meaning of Sub-section 4A of Section 2 and a bulk licensee within the meaning of Sub-section (3) of Section 2 of the Electricity (Supply) Act, 1948. An agreement was arrived at between Maharashtra State Electricity Board (for short MSEB ) and TPC in or about March, 1985, whereby TPC was provided 300 MVA standby facility from MSEB and it was further agreed that in view of the growing requirement of the city of Bombay, the said standby facility would stand enhanced by a quantum of 50 MVA per year. This standby facility increased to 550 MVA by the year 1990 and payment for the same was to be made irrespective of the fact whether electricity was drawn or not and if electricity was drawn, actual payment for the same was to be made over and above the standby charges. In the year 1990, it was agreed that the annual increase in the standby facility would no longer be operational and henceforth TPC would be entitled to avail of and pay for the standby facility of only 550 MVA. This agreement was reduced in writing by way of letter dated 6.7.1990 addressed by MSEB to TPC.

3. The Bombay Suburban Electric Supply Company (for short BSES ) had been granted a distribution licence in the year 1926 which was amended in the year 1976 to enable it to become a generator of electricity in order to take care of enhanced demand in the city of Bombay. The licence was further amended on 30.5.1992 and it contained a clause requiring BSES to execute suitable interconnection with the system of TPC with the approval of Central Electricity Authority, New Delhi. A meeting was held between TPC and BSES on 29.6.1992 regarding technical/commercial aspect of said interconnection. It was agreed that as TPC already had an arrangement with MSEB whereby standby facility was provided to it, similar standby facility may be provided to BSES from the standby capacity reserved by TPC with MSEB and appropriate sharing of charges could be worked out. The power plant established by BSES at Dahanu became operational in 1995 and with effect from August 1995 it started supplying power to the city of Bombay as per the conditions of the licence.

4. Due to dispute on commercial terms between TPC and BSES the interconnection was not established for a long time though technical arrangements had been made. The Maharashtra Government appointed a Committee under the chairmanship of Principal Secretary, Energy of which representatives of MSEB, TPC and BSES were members. After taking into account the recommendation of the Committee the Government of Maharashtra on 19.1.1998 directed TPC and BSES to interconnect with one another and further directed TPC to provide to BSES standby supply of 275 MVA. It was further directed that BSES would pay Rs. 3.5 crores per month to TPC for such standby facility. It was also mentioned in the order that standby charges were based upon existing tariffs of TPC and BSES and the same may be reviewed during tariff revision in future. An agreement in that regard was thereafter executed between TPC and BSES on 31.1.1998 and the interconnection between the two systems was established on 14.2.1998.

5. The MSEB was charging an amount of Rs. 24.75 crores per month from TPC for providing the standby facility of 550 MVA. On 31.8.1998 MSEB served a notice on TPC intimating its intention to enhance the charges for this standby facility from Rs. 24

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2003 Supreme(SC) 1043

IMPORTANT POINTThe provisions of the Electricity Regulatory Commission Act and Regulations show that the Regulatory Commission has the exclusive power to determine the tariff.

IMPORTANT POINT
The provisions of the Electricity Regulatory Commission Act and Regulations show that the Regulatory Commission has the exclusive power to determine the tariff.