2010 Supreme(SC) 229

2010 (2) Supreme 384
SUPREME COURT OF INDIA
K. G. Balakrishnan, CJI., S.H. Kapadia, R.V. Raveendran, B. Sudershan Reddy and P. Sathasivam, JJ.
PTC India Ltd. — Appellant
versus
Central Electricity Regulatory Commission, thr. Secy. — Respondent
Civil Appeal No. 3902 of 2006
with
Civil Appeal Nos. 4354/06, 4355/06, 2875/07, 7437/05, 7438/05, 2073/07, 1471/07, 2166/07, Civil Appeal No.2412 /2010 (D 9870/07) and Civil Appeal No. 2413/2010 arising out of S.L.P. (C) No. 22080/05.
Decided on : 15-3-2010

IMPORTANT POINT
A Regulation stands on a higher pedestal vis-à-vis an Order. The Tribunal cannot go into the validity of the Central Electricity Regulatory Commission (Fixation of Trading Margin) Regulations, 2006. Substitution is a combination of repeal and fresh enactment.

Headnote:(a) Electricity Act, 2003 – Sections 61 and 62 – Tariff – Appropriate Commission can determine actual tariff and specify terms and conditions therefor u/s 61. (Para 17)

        (b) Electricity Act, 2003 – Sections 62 and 64 – Tariff – Although tariff fixation is a legislative function, the same is made appealable vide section 111. (Para 17)

        (c) Electricity Act, 2003 – Sections 178 and 181 – Regulations can be made as long as two conditions are satisfied – They are consistent with the Act and are made for carrying out the provisions of the Act. (Para 20)

        (d) Interpretation of Statute – Electricity Act, 2003 – The decision-making and regulation-making functions are both assigned to CERC – Law comes into existence not only through legislation but also by regulation and litigation. Laws from all three sources are binding. (Para 37)

        (1990) 3 SCC 223; (1987) 2 SCC 720 – Relied upon

        (e) Electricity Act, 2003 – Sections 61 and 62 – Actual determination/fixation of tariff is done under Section 62 whereas Section 61 is the enabling provision for framing of regulations containing generic propositions in accordance with which the Appropriate Commission has to fix the tariff – Delegation of legislative power would not make it an administrative power or adjudicatory power – Also subordinate legislation is outside the purview of administrative action. (Para 38)

        (1971) 2 SCC 747; (1985) 1 SCC 641 – Relied upon

        (f) Electricity Act, 2003 – Sections 79 and 178 – Decision making function u/s 79(1) is administrative/adjudicatory function not dependant upon making of regulations which is a legislative function u/s 178 – However, measures under Section 79(1) have got to be in conformity with the regulations under Section 178. (Paras 39 and 40)

        (g) Electricity Act, 2003 – Sections 79(1) and 178 – A regulation made under Section 178 has the effect of interfering and overriding the existing contractual relationship between the regulated entities – A regulation under Section 178 is in the nature of a subordinate Legislation which can override even the existing contracts including Power Purchase Agreements which have got to be aligned with the regulations under Section 178 – This could not have been done across the board by an Order of the Central Commission under Section 79(1)(j). (Para 40)

        2010 (1) SCALE 5; 2010 (1) SCALE 329; (1985) 2 SCC 16; AIR 1983 SC 1296; (1986) 4 SCC 198; (1991) 3 SCC 299; (1985) 1 SCC 641; (1990) 3 SCC 22 – Relied upon AIR (58) 1971 Allahabad 219 – Cited with approval

        (h) Interpretation of Statute – Applying the test of “general application”, a Regulation stands on a higher pedestal vis-à-vis an Order. (Para 43)

        (i) Judicial review – Tests to distinguish legislative and administrative functions as also scope of judicial review in such cases are well settled. (Para 50)

        (1990) 3 SCC 223 – Relied upon

        (j) Electricity Act, 2003 – Section 121 – The words “orders”, “instructions” or “directions” in Section 121 do not confer power of judicial review in the Tribunal for Electricity – The Tribunal, therefore, cannot go into the validity of the Regulations 2006. (Para 54)

        (k) Interpretation of Statute – Substitution is a combination of repeal and fresh enactment. (Para 58)

        AIR 1959 SC 694 – Relied upon

       Facts of the case:

        1. Vires of the Central Electricity Regulatory Commission (Fixation of Trading Margin) Regulations, 2006 has been challenged in these appeals.

        2. Jurisdiction of the Appellate Tribunal for Electricity as regards judicial review is also under consideration in these appeals. That is to say, “whether the Tribunal has jurisdiction to decide the question as to the validity of the Regulations framed by the Central Commission?” Basically, the matters involve interpretation of Sections 111 and 121 of the 2003 Act.

       Finding of the Court :

        1. Fixation of the trading margin in the inter-State trading of electricity can be done by making of regulations under Section 178 of 2003 Act. Power to fix the trading margin under Section 178 is, therefore, a legislative power and the Notification issued under that section amounts to a piece of subordinate legislation, which has a general application in the sense that even existing contracts are required to be modified in terms of the impugned Regulations. These Regulations make an inroad into contractual relationships between the parties. Such is the scope and effect of the impugned Regulations which could not have taken place by an Order fixing the trading margin under Section 79(1)(j). Consequently, the impugned Regulations cannot fall within the ambit of the word “Order” in Section 111 of the 2003 Act.

        2. The Appellate Tribunal for Electricity has no jurisdiction to decide the validity of the Regulations framed by the Central Electricity Regulatory Commission under Section 178 of the Electricity Act, 2003. The validity of the Regulations may, however, be challenged by seeking judicial review under Article 226 of the Constitution of India.

       Result : Appeals dismissed.