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SUPREME COURT OF INDIA
ABHAY S. OKA, UJJAL BHUYAN, JJ.
Powergrid Corporation of India Limited – Appellant
Versus
Central Electricity Regulatory Commission and Others – Respondents
Civil Appeal Nos. 5857-5858 of 2011
Decided On : 05-05-2025
| Table of Content |
|---|
| 1. facts regarding the appeals and their background. (Para 1 , 2 , 3 , 8 , 9 , 10 , 11 , 12 , 13 , 14 , 15 , 16 , 17) |
| 2. introduction of appeals regarding additional capitalization. (Para 5 , 6 , 7) |
| 3. arguments presented by the appellant and respondents. (Para 18 , 19 , 20) |
| 4. court's observations and analysis of regulations. (Para 21 , 22 , 23 , 24 , 27 , 28 , 29 , 30 , 32 , 34 , 37 , 39) |
| 5. ratio decidendi regarding proximate cause and insurance policy. (Para 31 , 33 , 36) |
| 6. final conclusion and dismissal of the appeals. (Para 38 , 40) |
JUDGMENT :
UJJAL BHUYAN, J.
1. This order will dispose of both Civil Appeal Nos. 5857 and 5858 of 2011.
2. Since both the civil appeals filed by the appellant under Section 125 of the ELECTRICITY ACT , 2003 arise out of the common order dated 23.03.2011 passed by the Appellate Tribunal for Electricity in Appeal Nos. 91-92 of 2009 with the issue being inter-related and between the same parties, both the appeals were heard together and are being disposed of by this common order.
3. Appellant in this case is Powergrid Corporation of India Limited.
4. In Appeal No. 91 of 2009, the challenge made was to the order dated 03.02.2009 passed by the Central Electricity Regulatory Commission in Petition No. 68 of 2008. In Appeal No. 92 of 2009, challenge made was to the order dated 03.02.2009 passed by the Central Electricity Regulatory Commission in Petition No. 80/2008. Both Appeal Nos. 91 and 92 of 2009 were dismissed by the Central Electricity Regulatory Commission vide the order dated 23.03.2011 (impugned order).
5. Hence, the two appeals.
6. This Court by order dated 01.08.2011 had issued notice.
7. Relevant facts may be briefly noted.
8. Appellant Powergrid Corporation of India Limited (for short ‘Powergrid’) is a public sector undertaking of the Government of India. It is mainly engaged in the business of transmission of power through its transmission network. It discharges its statutory functions under the ELECTRICITY ACT , 2003 and transmits electricity throughout the country. On the other hand, respondent No. 1 is the Central Electricity Regulatory Commission . It is a statutory body established under the provisions of the erstwhile Electricity Regulatory Commission Act, 1998 (since repealed). After coming into force of the ELECTRICITY ACT , 2003, the Central Electricity Regulatory Commission (‘CERC’ for short) began to exercise its functions under the said statute.
9. At the relevant point of time, appellant was a central transmission utility responsible for establishing transmission assets of Inter-State Transmission Systems (‘ISTS’ for short) dealing with planning and transmission of electricity. Amongst others, appellant owned and operated two transmission systems in the northern region: Rihand I and Rihand II. Rihand I comprises of Mandola and Ballabgarh sub-stations whereas Rihand II comprises of Kaithal, Mainpuri and Abdullapur sub-stations. Rihand I had three Inter-connecting Transformers (‘ICT’ for short): one at Ballabgarh and two at Mandola. Rihand II had four ICTs: two at Kaithal and two at Mainpuri.
10. Between 28.04.2006 and 09.05.2006, all the three transformers in the Rihand I transmission system failed and broke down. In fact, those were burnt and damaged due to internal faults. Considering that it was peak summer season with high anticipated load demand in the National Capital Territory of Delhi, the transformers were required to be replaced immediately. According to the appellant, procurement of new transformers would have taken a long time. Therefore, it was decided to temporarily take out one transformer each from Mainpuri and Kaithal sub-stations and to divert the same to Ballabgarh and Mandola. It was also decided to divert one transformer which was procured for Bahadurgarh sub-station to Mandola as commissioning at Bahadurgarh was scheduled later.
11. Accordingly, appellant restored the transformers at Ballabgarh and Mandola during the period from 29.05.2006
AI
The self-insurance policy covers fire-related damage to equipment, asserting that additional capitalization for maintenance replacements cannot be claimed under the Tariff Regulations.
Regulatory authorities must allow reimbursement of costs based on compliance with directives, without arbitrarily limiting recoverable costs.
ACE allowed for replacing critical obsolete substation equipment under Reg.25(2)(c) if grid stability at risk, subject to true-up; <₹20 lakh items via O&M depreciation spread over balance life or 10 ....
Regulatory framework governs the approval of transmission tariffs, requiring justifications for capital and operational expenditures based on actual costs and adherence to stipulated regulations.
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