2025 Supreme(Online)(APTEL) 6

APPELLATE TRIBUNAL FOR ELECTRICITY
Bhopal Dhule Transmission Company Limited VERSUS Central Electricity Regulatory Commission & Ors
APPEAL NO. 272 2018

In the absence of specific regulations, CERC can use its regulatory power under Section 79 of the Electricity Act, 2003 to impose transmission charges for a commissioning mismatch on the delaying transmission licensee, not on beneficiaries. A force majeure finding under a contract does not absolve the licensee of this liability to a non-contractual third party.

Headnote:(A) Electricity Act, 2003 - Sections 38(2)(d)(ii), 40(c)(ii), 61, 63, 79, 111, 178 - Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2014 - Regulations 3(25), 4(3), 8(5), 8(7), 11(A), 12(2) - Central Electricity Regulatory Commission (Sharing of Inter State Transmission Charges and Losses) Regulations, 2010 - Regulations 7(1)(o), 8 - Indian Contract Act, 1872 - Sections 73, 74 - Constitutional law - Article 141 - Jurisdiction of CERC - CERC has dual functions of regulation and adjudication under Section 79 of the Electricity Act and the power to legislate statutory regulations under Section 178 - CERC can exercise its regulatory power under Section 79 even in the absence of a regulation under Section 178 - However, if a regulation is in force, CERC's decisions must be in accordance with it.

(B) Electricity Act, 2003 - Tariff based competitive bidding (TBCB) projects governed by Section 63 vs. Regulated Tariff Mechanism (RTM) projects governed by Section 62 - Distinction and interplay - Under the TSA for a TBCB project, a transmission service provider can declare a deemed COD and is eligible for monthly transmission charges - However, once the CERC (Sharing of Inter State Transmission Charges and Losses) Regulations, 2010 come into force, corresponding TSA clauses regarding sharing of transmission charges are overwritten.

(C) Electricity Act, 2003 - Force Majeure - Scope and effect - Force Majeure is a contractual right under the TSA - Relief from a Force Majeure event under a TSA can only be claimed against the other party to that contract - It cannot be used to claim exemption from paying transmission charges to a different inter-State transmission licensee with which there is no contractual privity - A finding by the CERC that a delay was due to a Force Majeure event does not extinguish a transmission licensee's liability for payment of transmission charges to another transmission licensee whose asset is stranded because of the delay.

Facts of the case:
The case involves two appeals (Appeal No. 272 of 2018 and Appeal No. 24 of 2021) regarding the imposition of bilateral transmission charges for a mismatch in the commissioning of interconnected transmission assets implemented by two different inter-State transmission licensees. M/s Bhopal Dhule Transmission Company Limited (BDTCL) was developing a transmission project under the Tariff Based Competitive Bidding (TBCB) route (Section 63 of the Electricity Act), while Power Grid Corporation of India Ltd. (PGCIL) was developing the terminal elements (bays and reactors) under the Regulated Tariff Mechanism (RTM) route (Section 62 of the Act). The assets were part of a comprehensive scheme and were inter-linked to enable power flow. A mismatch occurred because the transmission lines of one entity were ready before the interconnection facilities of the other. The Central Electricity Regulatory Commission (CERC), invoking its regulatory powers under Section 79 of the Electricity Act (in the absence of any specific provision in the Tariff or Sharing Regulations), directed the entity responsible for the delay to bear the transmission charges of the ready-but-stranded assets. BDTCL challenged the order imposing liability on it, while PGCIL challenged the order imposing liability on it.

Findings of Court:
The Appellate Tribunal for Electricity (APTEL) dismissed both appeals and upheld the CERC's orders, finding them to be a valid exercise of regulatory power in the absence of specific regulations to address the situation of commissioning mismatch. It held that the “Tariff Regulations 2014” and “Sharing Regulations 2010” do not contain provisions to govern this scenario. It affirmed the principles established in the “Barh-Balia” and “POWERGRID v. M.P. Power Transmission Co. Ltd.” judgments that the beneficiaries/LTTCs cannot be made liable to pay for delays, and the liability must be fastened on the defaulting transmission utility. It rejected the argument that a Force Majeure event absolves BDTCL of liability to PGCIL, stating that Force Majeure is a contractual right under the TSA between BDTCL and its LTTCs and cannot be used against a non-party like PGCIL. The Tribunal also held that a party which has commissioned its asset on time cannot be denied its legitimate transmission charges for no fault of its own. The date of deemed COD for a specific transmission line of BDTCL was also upheld.

Issues: The main issue was whether the CERC was correct in using its regulatory power under Section 79 of the Electricity Act, 2003 to impose bilateral transmission charges for a commissioning mismatch on one transmission licensee for the benefit of another, where no contract existed between them and where the delay was found to be partly on account of Force Majeure. Subsidiary issues included whether these charges could be passed on to the LTTCs or the Point of Connection (PoC) pool, and whether the CERC's order violated the contractual force majeure protections under the TSA.

Ratio Decidendi: The court ruled that (i) The CERC can exercise its regulatory and adjudicatory powers under Section 79 of the Act even in the absence of specific regulations under Section 178, especially to address regulatory lacunae. (ii) When a mismatch occurs between the commissioning of two inter-linked transmission systems, the liability for transmission charges of the ready-but-stranded system must fall on the entity whose delay caused the stranding, as beneficiaries cannot be held liable for charges before the system is used. (iii) A Force Majeure relief granted under a contract (TSA) is a contractual right between the parties to that contract. It cannot be used as a defense against a third party (another transmission licensee) with whom there is no contractual relationship. Result : Both appeals dismissed. The Impugned Orders of the CERC were upheld.