1. Power generation entity disputed inclusion of Sinking Fund in tariff determination alongside asset depreciation as a double financial benefit, leading to tribunal review proceedings. (Para 2 , 3 )
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2026 Supreme(SC) 1310
SUPREME COURT OF INDIA
J. B. PARDIWALA, K. VINOD CHANDRAN, JJ.
Damodar Valley Corporation – Appellant
Versus
Maithan Alloys Limited & Ors. – Respondents
Civil Appeal No. 11106 of 2024
Decided On : 30-10-2026
Advocates appeared:
For the Appellant(s) : Dr. Abhishek Manu Singhvi, Sr. Adv. Mr. Vikas Singh, Sr. Adv. Mr. Shri Venkatesh, Adv. Ms. Kanika Chugh, Adv. Mr. Shryeshth Ramesh Sharma, Adv. Mr. Ashutosh Kumar Srivastava, Adv. Ms. Priya Dhankhar, Adv. Mr. Nihal Bhardwaj, Adv. Ms. Deepeika Kalia, Adv. Ms. Priyansha Sharma, Adv. Mr. Adarsh Singh, Adv. Ms. Devishi Gupta, Adv. Mr. Sudeep Chandra, Adv. Ms. Khushi, Adv. Mr. Nitin Saluja- 2868, AOR
For the Respondent(s): Mr. Rajiv Yadav- 2121, AOR Mr. Ujjwal Kumar, Adv. Mr. Rajiv Shakdher, Sr. Adv. Mr. Pawanshree Agrawal, AOR Ms. Kamana Divya Sree, Adv. Ms. Kriti Jain, Adv. Ms. Solanki Das, Adv. Mr. Chinmoy Samajdar, Adv. Mr. Atul Tripathi, Adv.
For the Appellant(s) : Dr. Abhishek Manu Singhvi, Sr. Adv. Mr. Vikas Singh, Sr. Adv. Mr. Shri Venkatesh, Adv. Ms. Kanika Chugh, Adv. Mr. Shryeshth Ramesh Sharma, Adv. Mr. Ashutosh Kumar Srivastava, Adv. Ms. Priya Dhankhar, Adv. Mr. Nihal Bhardwaj, Adv. Ms. Deepeika Kalia, Adv. Ms. Priyansha Sharma, Adv. Mr. Adarsh Singh, Adv. Ms. Devishi Gupta, Adv. Mr. Sudeep Chandra, Adv. Ms. Khushi, Adv. Mr. Nitin Saluja- 2868, AOR
For the Respondent(s): Mr. Rajiv Yadav- 2121, AOR Mr. Ujjwal Kumar, Adv. Mr. Rajiv Shakdher, Sr. Adv. Mr. Pawanshree Agrawal, AOR Ms. Kamana Divya Sree, Adv. Ms. Kriti Jain, Adv. Ms. Solanki Das, Adv. Mr. Chinmoy Samajdar, Adv. Mr. Atul Tripathi, Adv.
Review jurisdiction is limited to errors apparent on the record and cannot be used to override binding Supreme Court precedents under Article 141. Statutory provisions authorizing specific tariff recoveries (depreciation and sinking funds) prevail over general accounting principles.
Headnote:(A) Electricity Act, 2003 - Sections 14, 173, 174 - Damodar Valley Corporation Act, 1948 - Sections 32, 37, 38, 39, 40, 58 - Constitution of India - Article 141 - Tariff determination - Recovery of depreciation and Sinking Fund - The 4th proviso to Section 14 of the Electricity Act ensures the continued application of the specific Corporation Act in so far as it is not inconsistent with the Electricity Act - Specifically, Section 40 of the Corporation Act and the relevant Tariff Regulations allow both the depreciation rate specified by the Auditor-General and funds established under Section 40 (including Sinking Funds for bond redemption) to be considered as items of expenditure recoverable through tariff - Such statutory provisions prevail over general accounting principles of appropriation from net profits. (Paras 13, 18-21)
(B) Review Jurisdiction - Scope and limits - The power to review is akin to the power of a civil court under Section 114 read with Order 47 Rule 1 CPC - A "mistake or error apparent" must be self-evident from the record and not require a long process of reasoning or detailed examination - A tribunal cannot sit in appeal over its own judgment or correct an order merely because a different view is possible. (Paras 27-28)
(C) Judicial Discipline - Article 141 of the Constitution of India - Decisions of the highest court of the land are binding on all lower courts and tribunals - A review order that contradicts a binding precedent of the highest court is in blatant breach of judicial discipline and violates the constitutional mandate of Article 141. (Para 29)
Facts of the case:
An appellate tribunal had previously upheld the regulatory commission's order allowing both depreciation and a Sinking Fund to be factored into the tariff determination of a power corporation, based on statutory provisions and a binding precedent of the highest court. More than five years later, the tribunal allowed a review petition, ruling that allowing both elements constituted a "double benefit" and was a patent error, thereby reversing its previous decision and contradicting the superior court's precedent.
Findings of Court:
The court found that the tribunal overstepped its review jurisdiction and acted in breach of judicial discipline. The specific statutory framework and regulations explicitly permitted the recovery of both depreciation and the Sinking Fund through the tariff. The tribunal could not use the power of review to override a settled legal position established by the highest court.
Issues: Whether the recovery of both depreciation and a Sinking Fund through the tariff constituted an illegal double benefit and whether the appellate tribunal was justified in reviewing its order five years later to reverse a finding based on a binding Supreme Court precedent.
Ratio Decidendi: Statutory authorizations under Section 40 of the Corporation Act and Regulation 43 of the 2009 Regulations override general accounting principles, permitting both depreciation and Sinking Fund contributions as deductible expenditures for tariff recovery. Furthermore, the power of review is limited to apparent errors and cannot be exercised to disregard binding precedents under Article 141 of the Constitution of India.
Result: Appeal allowed with costs.
Legal Category Hierarchy
Table of Contents
2. Parties disputed whether the Sinking Fund constitutes a permissible expense under Section 40 of the DVC Act or represents unjustified double recovery in tariff determination. (Para 5 , 6 , 23 )
3. The Tribunal erred in review by ignoring binding precedent regarding statutory provisions and judicial discipline, and incorrectly conflated Sinking Fund contributions with double depreciation benefits. (Para 24 , 25 , 27 , 29 )
4. A judicial review cannot be used to relitigate settled issues or correct alleged errors of law when a binding precedent already governs the subject matter. (Para 27 , 28 )
5. The impugned review order is set aside, the original tribunal order is restored, and exemplary costs are imposed on the review petitioner and intervener. (Para 30 , 31 )
6. Does a tribunal have the power to review a decision based on a change of opinion regarding precedent or settled legal interpretation?
No. A tribunal is limited to reviewing errors apparent on the face of the record and cannot treat a desire to re-examine or re-litigate settled legal issues—especially those covered by binding precedent—as grounds for review under established judicial norms. (Para 27 , 28 )
7. Is the Sinking Fund provision under the DVC Act consistent with the Electricity Act 2003 regarding tariff determination?
Yes. The fourth proviso to Section 14 of the Electricity Act 2003 ensures the continued application of provisions in the DVC Act, including Section 40, which specifies the creation of depreciation and reserve funds, provided they are not inconsistent with the Electricity Act. (Para 9 , 13 , 19 )
8. Can a regulated entity claim both depreciation and Sinking Fund contributions in its tariff determination?
Yes. While accounting principles might differentiate between reserve appropriations and charges, statutory provisions under Section 40 of the DVC Act expressly permit both depreciation and Sinking Fund contributions to be factored as recoverable expenditure in tariff determination for the Corporation. (Para 18 , 21 , 24 )
JUDGMENT :
K. VINOD CHANDRAN, J.
It is not often, but we do come across orders akin to the one impugned, which is in blatant breach of judicial discipline and in clear violation of Article 141 of the Constitution of India. It raises serious doubts in our minds about independence vis-à-vis accountability. We cannot but recall the sagacious words of Justice Benjamin Cordozo that a judge “… (He) is not a knighterrant roaming at will in pursuit of his own ideal of beauty or of goodness. He is to draw his inspiration from consecrated principles” (sic-The Nature of the Judicial Process)”. However, here we have a Tribunal ‘innovating at pleasure’ (sic-supra). The impugned order was passed in a petition seeking review of an order of the year 2019, which was allowed in 2024, after more than five years. That too, against established orders of tariff fixation under the Electricity Act, 2003, also on the strength of a decision of this Court in Bhaskar Shrachi Alloys Limited & Ors. v. Damodar Valley Corporation & Ors., (2018) 8 SCC 281, a binding precedent under Article 141 of the Constitution of India.
2. The respondent herein was also a party in the earlier proceedings, which determined the tariff between 01.04.2006 to 31.06.2009, by allowing a two-year transition period to the Damodar Valley Corporation (DVC), the appellant herein, from 01.04.2004 to 31.03.2006. In the instant case, we are concerned with the period 2009 to 2014, for which the Central Electricity Regulatory Commission (CERC) fixed the tariff of DVC based on the statutory provisions of the Electricity Act, 2003 (the Act of 2003), the DAMODAR VALLEY CORPORATION ACT , 1948 (the DVC Act) and the Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2009 (the Tariff Regulations of 2009). The very same issue of whether the ‘Sinking Fund’ which refers to a portion of the profits appropriated for the purpose of redeeming the bonds issued by the DVC, was entitled to be factored in the tariff of the power generated and supplied by the DVC was considered and upheld in the cited decision of this Court, which considered the issue on the basis of the enactments above referred and the Tariff Regulations of 2004.
3. The CERC, for the subsequent period, passed an order in the year 2013, which is produced as Annexure A7 when the matter was pending before this Court. When the orders were passed by the Appellate Tribunal for Electricity at New Delhi, in the appeal filed by the consumers, the above cited decision had been delivered. The Tribunal by Annexure A12 judgment upheld the order of the CERC on its own reasoning and based on the binding precedent of the cited decision of this Court. None challenged the appellate order, and a review was filed by one of the appellants, which was pending before the Tribunal for 5 years, disposed of by the impugned order. The DVC has filed the above appeal in which a Public Sector Undertaking, Steel Authority of India Limited has intervened to add fuel to the fire.
4. We heard Sri Vikas Singh and Dr. Abhishek Manu Singhvi, learned Senior Counsel appearing for the appellant, Sri Rajiv Shakdher, learned Senior Counsel appearing for the Steel Authority of India Limited and Sri Rajiv Yadav, learned AoR appearing for the first respondent, who was the review petitioner before the Tribunal.
5. The appellants first took umbrage at the review of an order passed five years back that too after noticing the binding precedent, but finding an error apparent on the record, in the order in review, which was based also on the decision of this Court. It was also pointed out that apart from accounting principles ‘Sinking Fund’ is an expense permissible for tariff determination as enabled by the statutory provisions. We were taken through the specific provisions of the Act of 2003, the DV Act as also the Tariff Regulations of 2009. In addition to power generation, the DVC is statutorily enjoined to ensure flood control, irrigation and development
