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SUPREME COURT OF INDIA
RANJAN GOGOI, R. BANUMATHI, JJ.
Bhaskar Shrachi Alloys Ltd. Etc. Etc. – Appellants
Versus
Damodar Valley Corporation & Ors. Etc. – Respondents
Civil Appeal Nos. 971-973, 1914, 4504-4508 & 4289 of 2008
Decided On : 23-07-2018
(b) Damodar Valley Corporation Act, 1948 – Section 20 r/w Section 62, Electricity Act, 2003 and Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2004 – Section 20 being inconsistent with section 62 cannot prevail – Further, Tariff Regulations being subordinate legislation cannot override statutory provisions of Act 1948; more so in absence of any provision in Act 2003 in pari materia to sections 32, 37, 38, 39 and 40 of Act 1948 – Held, Appellate Tribunal rightly decided the issue. (Para 37)
(2010) 4 SCC 603; A.I.R. 1951 S.C. 332; (2001) 8 SCC 676; (2006) 4 SCC 327 – Relied upon
(c) Electricity Act, 2003 – Section 14, Fourth Proviso – Continued application of provisions of Damodar Valley Corporation Act, 1948 in so far not inconsistent with Act 2003 – Act 1948 not providing for licensing – Held, such provisions of Act 2003 would apply. (Para 42, 43, 44)
(1962) 2 SCR 159; (1985) 1 SCC 591 – Relied upon
(1965) 1 SCR 276; (1985) 2 SCC 279 – Referred
(d) Electricity Act, 2003 – Section 14, Fourth Proviso – Legislative history of Section 173 and the provisions of Section 14 including the fourth proviso – Main part of section 14 dealing with licensing – Fourth proviso, held, not confined only to question of licensing – Corporation partially exempted from licensing – Continued applicability of provisions of Act 1948 to the extent of not being inconsistent to Act 2003 – Proviso, held, in the nature of substantial provision for determination of tariff. (Para 48)
2018 (7) SCALE 106 – Relied upon
(1976) 1 SCC 128; (2015) 4 SCC 421 – Referred
(e) Electricity Act 2003 – Sections 41 and 51 r/w sections 32 and 33, Act 1948 – Other activities of a licensee under Act 2003 optional requiring prior approval of Commission – Other functions/activities of Corporation under Act 1948, in the nature of socially beneficial measures, on the other hand mandatory – Allowance of recovery of cost incurred in connection with “other activities” of Corporation from common fund generated by tariff chargeable from consumers/customers, held, not inconsistent with provisions of Act 2003. (Para 55)
Facts of the case:
Acting under the provisions of Section 20 of the Damodar Valley Corporation Act, 1948, the Corporation had notified its own tariff order on 1st September, 2000. Despite coming into force of the Electricity Act 2003, the Corporation did not approach the CERC for determination of the tariff chargeable by it.
The CERC initiated suo motu proceedings and directed the Corporation to submit an application for determination of tariff for the period from 1st April, 2004 to 31st March, 2009. The Corporation made an application before the CERC for determination of tariff for the period in question. The CERC issued a tariff order determining the tariff for generation and transmission for the period from 1st April, 2006 to 31st March, 2009 by allowing a two year transition period to the Corporation i.e. from 1st April, 2004 to 31st March, 2006.
The learned Appellate Tribunal while rejecting five claims and upholding the order of the CERC remanded the matter, for a de novo consideration of the remaining five issues by the CERC in the light of the findings recorded by it.
Finding of the Court:
The reasoning adopted by the learned Appellate Tribunal on the issues relating to ‘depreciation’ and ‘sinking fund’ as also ‘pension and gratuity fund` is not fundamentally flawed in any manner.
Result: Appeals dismissed.
JUDGMENT :
Ranjan Gogoi, J.
1. This group of appeals arise out of a common judgment and order dated 23rd November, 2007 passed by the learned Appellate Tribunal for Electricity at New Delhi (hereinafter referred to as “learned Appellate Tribunal”). The challenge in the appeals before the learned Appellate Tribunal was against the order of the Central Electricity Regulatory Commission (hereinafter referred to as “CERC”) dated 3rd October, 2006 determining the tariff chargeable by the Damodar Valley Corporation (hereinafter referred to as “Corporation”) from the consumers of electricity generated and transmitted by the Corporation. The tariff has been determined under the provisions of Section 61 and 62 of the Electricity Act, 2003 (hereinafter referred to as “2003 Act”) read with such other provisions of the Damodar Valley Corporation Act, 1948 (hereinafter referred to as “Act of 1948”) which have been found to be not inconsistent with the provisions of the 2003 Act. The appeals being under Section 125 of the 2003 Act are required to be answered only on such substantial questions of law that may arise for determination by this Court.
2. First, the facts.
The Corporation has been established under the Act of 1948 for the development of the Damodar Valley area falling within the States of West Bengal and Jharkhand. As evident from the provisions of Section 12 of the Act of 1948, three (03) major areas of activity undertaken by the Corporation under the Act of 1948 are: (i) power generation, transmission and distribution; (ii) flood control; and (iii) irrigation and some connected activities like soil conservation, afforestation, etc.
3. Under Section 20 of the Act of 1948, the Corporation was empowered and authorised to determine the tariff chargeable by it from its consumers. Part IV of the Act of 1948 under the heading “Finance, Accounts and Audit” though, superficially, may appear to be dealing with the indoor management of the Corporation contain provisions which could have a relevant bearing to tariff fixation under Section 20 of the Act of 1948. Some of the said provisions are to be found in Sections 32, 37, 38, 39 and 40 of the Act of 1948 which deals with facets of expenditure, depreciation, allowances, payment of interest, etc. all of which would have a reasonable bearing on working out the tariff that the Corporation would be entitled to charge from its consumers after taking into account the said items of expenditure or allowances/disallowances, as may be.
4. Acting under the provisions of Section 20 of the Act of 1948, the Corporation had notified its own tariff order on 1st September, 2000. The 2003 Act came into force with effect from 10th June, 2003. Despite coming into force of the 2003 Act the Corporation had not approached the CERC for determination of the tariff chargeable by it. Consequently, the CERC initiated suo motu proceedings by order dated 29th March, 2005 and directed the Corporation to submit an application for determination of tariff for the period from 1st April, 2004 to 31st March, 2009. In terms of the said order passed by the CERC, the Corporation made an application dated 8th June, 2005 before the CERC (i.e. Petition No.66 of 2005) for determination of tariff for the period in question. It appears that in view of the “complexity” of the issues involved, the CERC had requested one of its members to go into the necessary fact finding exercise and to submit a report of the detailed facts that would be relevant for determination of tariff by the CERC. On the basis of the available inputs received from the aforesaid single member Bench of the CERC, the CERC issued a tariff order dated 3rd October 2006 determining the tariff for generation and transmission for the period from 1st April, 2006 to 31st March, 2009 by allowing a twoyear transition period to the Corporation i.e. from 1st April, 2004 to 31st
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