NTPC Limited vs Central Electricity Regulatory Commission & Anr.

Headnote:(A) Central Electricity Regulatory Commission (Sharing of Inter-State Transmission Charges and Losses) Regulations, 2010 - Regulation 8(5) & 8(6) - Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2014 - Regulation 45 - Billing, Collection and Disbursement Procedure - Clause 3.1 - Late Payment Surcharge - Liability to pay late payment surcharge arises only when there has been deliberate or contumacious delay in payment of a correct bill - Where the original bill is found to be erroneous and based upon inapplicable regulations, and the same is set aside by the Commission, the entity that successfully challenged the bill cannot be held liable for late payment surcharge for the period before the issuance of the corrected bill.

(B) Appeal - Challenge to order of Central Electricity Regulatory Commission - Appellate Tribunal for Electricity has the power to set aside an order that suffers from legal lacuna, infirmity, or perversity - The Tribunal found no reason for the Commission to impose late payment surcharge when the appellant had paid the revised bill without delay.

Facts of the case:
The appellant, a generating company, developed a 2400 MW coal-based power station. The Central Transmission Utility (2nd respondent) granted Long Term Access (LTA) on behalf of the beneficiaries. Disputes arose regarding transmission charges. The 2nd respondent raised a bill dated 06.11.2017 on the appellant for transmission charges from August to October 2017, based on Regulation 8(5) of the Sharing Regulations, 2010. The appellant challenged this bill before the Central Electricity Regulatory Commission in Petition No. 261/MP/2017. The Commission, vide order dated 06.11.2018, held that the appropriate provision was Regulation 8(6), not 8(5), and directed the 2nd respondent to raise a revised bill. The 2nd respondent raised a revised bill on 28.12.2018, which the appellant paid on 11.01.2019. Subsequently, the 2nd respondent filed Petition No. 323/MP/2019 seeking late payment surcharge for the period from August 2017 to September 2018, which the Commission allowed via the impugned order dated 29.01.2020.

Findings of Court:
The Tribunal found that the Commission, in its order dated 06.11.2018, had implicitly set aside the original bill dated 06.11.2017 by directing the revision of the RTA and the issuance of a fresh bill. The Commission had specifically rejected the applicability of Regulation 8(5) under which the original bill was raised. The appellant was within its right to refuse payment of an erroneous bill. The appellant paid the revised bill (dated 28.12.2018) on time (11.01.2019). Therefore, there was no delay in payment of a valid bill. The provisions for late payment surcharge (Clause 3.1 of BCD Procedure and Regulation 45 of Tariff Regulations, 2014) apply only to correct bills and cases of deliberate delay, not where refusal is due to an error later affirmed by the Commission. The Supreme Court cases cited were distinguished as those involved unsuccessful challenges, unlike the present case where the challenge succeeded.

Issues: The main issues were whether the appellant was liable to pay late payment surcharge for not paying the original erroneous bill dated 06.11.2017, and whether the Commission's order imposing such surcharge was sustainable.

Ratio Decidendi: The court ruled that liability for late payment surcharge only arises from a delay in paying a valid and correct bill. Where a bill is found to be erroneous and based on the wrong regulation, and is subsequently set aside, the party that successfully challenged the bill cannot be penalized for refusing to pay it. The relevant provisions for surcharge do not apply to bills that are legally flawed.

Result: The appeal was allowed. The impugned order of the Commission dated 29.01.2020 was set aside. The appellant was held not liable to pay any late payment surcharge. The petition filed by the 2nd respondent (Petition No. 323/2019) was dismissed.

Legal Category Hierarchy

1. Appeal against order holding generator liable for late payment surcharge on transmission charges where original bill was erroneous and later revised. (Para 1 , 2 , 3 , 4 , 5 , 6 , 7 , 8 , 9 , 10 , 11 , 12 , 13 , 14 , 15 , 16 , 17 , 18 , 19 , 20 )

2. Generator argued no delay as revised bill paid promptly; transmission utility argued original bill was valid and late payment surcharge applies. (Para 22 , 23 , 24 , 25 , 26 )

3. Impugned order set aside; generator held not liable to pay late payment surcharge on transmission charges for disputed period. (Para 37 )

4. Whether a generator can be held liable for late payment surcharge on a bill that was subsequently found to be erroneous and revised?

No, late payment surcharge provisions apply only when the bill is correct; refusal to pay an erroneous bill does not attract surcharge. (Para 27 , 29 , 30 , 33 )

5. Whether the principle in Nava Bharat and J.K. Synthetics applies when the challenge to the bill ultimately succeeds?

No, those cases are distinguishable because the challenge failed; here the challenge succeeded and the bill was set aside. (Para 34 , 35 , 36 )

6. Does a direction to revise the RTA and raise fresh bill imply that the original bill was erroneous?

Yes, such a direction carries an implicit finding that the original bill was erroneous and needed rectification. (Para 28 )

JUDGMENT

PER HON’BLE MR. VIRENDER BHAT, JUDICIAL MEMBER

1. In this appeal, assail is to the order dated 29.01.2020 passed by the 1^st respondent Central Electricity Regulatory Commission (hereinafter referred to as “the Commission”) in petition no.323/MP/2019 whereby the appellant has been held liable to pay late payment surcharge on the monthly transmission charges from August, 2017 to September, 2018 reflected in the revised bill/invoice dated 21.01.2019 raised by the 2^nd respondent Central Transmission Utility of India Limited (in short CTUIL) in pursuance to the order dated 06.11.2018 passed by the Commission in previous petition no.261/MP/2017.

2. A brief conspectus of the facts and circumstances of the case are narrated hereinbelow.

3. The appellant NTPC Limited is a generating company and is, inter alia, engaged in supply of electricity from its various generating stations in the country.

4. The appellant has developed a 2400MW (3x800MW) coal-based power station at Kudgi in the State of Karnataka (hereinafter referred to as the Kudgi TPS) and power generated in the said power station is being supplied to various beneficiaries in southern region through ISTS under Long Term Access (LTA) granted by the CTUIL with the corresponding liability to pay LTA charges for the same. The transmission system for providing transmission services to the long-term transmission customers of the appellant has been implemented by Kudgi Transmission Limited (in short KTL) which is a wholly owned subsidiary of L&T Infrastructure Development Projects Limited, under the tariff based competitive bidding process. Vide letter dated 17.01.2011, the Ministry of Power allocated electricity from the said Kudgi TPS as under: -

i. Karnataka (1196.24 MW);

ii. Kerala (119.18 MW);

iii. Tamil Nadu (300.10 MW); and

iv. Andhra Pradesh (418.10 MW).

5. The appellant entered into Power Purchase Agreements with the beneficiaries on various dates. In terms of clause 3.1 of the Power Purchase Agreements, the sale of power by appellant is at the busbar of the station and it is for the beneficiaries to make arrangements thereafter to deal with the ISTS licensees / PGCIL and arrange for transmission of power. Thus, the title of the power passed on to the beneficiaries at the busbar.

6. In terms of clause 3.2 of the Power Purchase Agreements, the appellant applied for LTA for Kudgi generating station on 15.04.2011 on behalf of the beneficiaries of the power station for a period of 25 years. Power Grid Corporation of India Limited (in short PGCIL) which was previously notified by the Government of India as Central Transmission Utility (CTU) under Section 38(1) of the Electricity Act, 2003, granted LTA to the appellant vide letter dated 23.12.2011.

7. Upon reorganization of State of Andhra Pradesh, the allocation of power from the Kudgi TPS done earlier vide letter dated 17.01.2011 required modification. Consequently, PGCIL notified the LTA granted to appellant vide letter dated 23.01.2015.

8. It appears that subsequently dispute arose between appellant and KTL with respect to delayed operationalization of the 400kV D/C Kudgi TPS and Narendra (New) Transmission Line (Element-I) and payment of transmission charges for the same which led to the filing of petition no.236/MP/2015 by KTL before the Commission. In the said petition, KTL had sought declaration of deemed Commercial Operation Date (COD) of the said line as 04.08.2015 and for payment of transmission charges for it from the said date. There was no dispute with regards to the Elements-II and III namely Narendra (New)- Madhugiri 765kV DC Line and Madhugiri-Bangalore 400kV DC Quad line respectively as the transmission charges for the same were being recovered through the PoC mechanism from their respective Commercial Operation Dates.

9. Vide order dated 27.06.2016 passed in the said petition, the Commission observed that due to non-availability of interconnection facility required to be developed by appellant and PGCIL at each end,

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2025 Supreme(Online)(APTEL) 21

APPELLATE TRIBUNAL FOR ELECTRICITY
NTPC Limited – Appellant
Versus
Central Electricity Regulatory Commission & Anr. – Respondent
APPEAL No.97 2022 (PDF)

An entity is not liable for late payment surcharge for failing to pay a bill that is subsequently found to be erroneous and based on inapplicable regulations, provided the corrected bill is paid on time.

Legal Category Hierarchy

Table of Contents

4. Whether a generator can be held liable for late payment surcharge on a bill that was subsequently found to be erroneous and revised?

5. Whether the principle in Nava Bharat and J.K. Synthetics applies when the challenge to the bill ultimately succeeds?

6. Does a direction to revise the RTA and raise fresh bill imply that the original bill was erroneous?

2025 Supreme(Online)(APTEL) 21

APPELLATE TRIBUNAL FOR ELECTRICITYNTPC Limited – AppellantVersusCentral Electricity Regulatory Commission & Anr. – RespondentAPPEAL No.97 2022 (PDF)

An entity is not liable for late payment surcharge for failing to pay a bill that is subsequently found to be erroneous and based on inapplicable regulations, provided the corrected bill is paid on time.

Legal Category Hierarchy

Table of Contents

4. Whether a generator can be held liable for late payment surcharge on a bill that was subsequently found to be erroneous and revised?

5. Whether the principle in Nava Bharat and J.K. Synthetics applies when the challenge to the bill ultimately succeeds?

6. Does a direction to revise the RTA and raise fresh bill imply that the original bill was erroneous?

APPELLATE TRIBUNAL FOR ELECTRICITY
NTPC Limited – Appellant
Versus
Central Electricity Regulatory Commission & Anr. – Respondent
APPEAL No.97 2022 (PDF)