Grid Corporation of
Orissa Ltd. Vs. Gajendra Haldea & Ors.  INSC 1357 (13 August 2008)
IN THE SUPREME COURT
OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 5722 OF 2006 Grid
Corporation of Orissa Ltd. ...Appellant Versus Gajendra Haldea and Ors.
Civil appeal No. 185 of 2007 Civil appeal No. 399 of 2007 SLP (C) No.11629 of
Dr. ARIJIT PASAYAT,
appeals involve an important question regarding jurisdiction of the Appellate
Tribunal for Electricity (in short`Appellate Tribunal'), New Delhi. The first
judgment of the Appellate Tribunal is assailed in the case of appellant-Grid
Corporation of Orissa Ltd.
facts in a nutshell are as follows:
No.1-Gajendra Haldea a serving officer based in Delhi filed a petition before
the Central Electricity Regulatory Commission (in short the `CERC') purportedly
under Section 52 read with Section 79(1)(g) of the Electricity Act, 2003 (in
short the `Act') on 28.2.2006. The prayers inter- alia were under:
(a) Direct GRIDCO to
adhere to the maximum trading margin of 4 paise while entering into a contract
for sale of power to any trading licensee in case such power is ultimately
routed to a licensee outside the State of Orissa through an inter-state transmission
(b) Direct GRIDCO to
file appropriate returns in the prescribed Form-III of the Central Electricity
Regulatory Commission (Procedure, Terms & Conditions for grant of Trading
Licence and other related matters) Regulations, 2004 in respect of each
transaction of sale, where the electricity sold 2 by it has been ultimately
transferred to a license outside the State of Orissa using inter-state
(c) Direct GRIDCO not
to sell electricity in the course of inter state trade with a margin exceeding
4 paisa per unit and to modify any contract that allows it to retain a higher
(d) Direct GRIDCO not
to invite bids with the intent of selling electricity in the course of
inter-state trade with a margin exceeding 4 paisa per unit.
(e) Exempt petitioner
from the requirement of payment of the prescribed fee.
(f) Pass such other
and further orders and/or directions as this Hon'ble Court may deem fit and
proper in the facts and circumstances of the case."
As is evident from paras
9 and 11 of the petition, the same was purportedly in public interest and was
intended to save interests of consumers of electricity in the country. The
appellant-Grid Corporation of India filed objections inter-alia taking the
stand that petition filed by respondent No.1- 3Gejendra Haldea was misconceived
and not maintainable in law and was liable to be rejected. By order dated
1.5.2006 CERC dismissed the petition and following findings were recorded:
considered view, GRIDCO though deemed to be an Electricity trader is an inter-
state trader and is amenable to the jurisdiction of the Orissa Commission.
Trading margin of 4 paise/KW specified by the Commission in its Notification
dated 23.1.2006 published in the Official Gazette on 27.1.2006 does not apply
Challenging the order
of CERC, respondent No.1- Gajendra Haldea carried the matter before the
Appellate Tribunal in appeal purportedly filed under Section 111 of the Act. By
the impugned order, the Appellate Tribunal allowed the appeal and granted
reliefs as prayed for by respondent No.1.
basic challenge in these appeals is that the petition filed by respondent
No.1-Gajendra Haldia was thoroughly mis- 4conceived because the appeal in terms
of sub-section (1) of Section 111 has to fulfill the following requirements.
"111. Appeal to
Appellate Tribunal.-(1) Any person aggrieved by an order made by an
adjudicating officer under this Act (except under section 127) or an order made
by the Appropriate Commission under this Act may prefer an appeal to the
Appellate Tribunal for Electricity:
Provided that any
person appealing against the order of the adjudicating officer levying any
penalty shall, while filing the appeal, deposit the amount of such penalty:
Provided further that
where in any particular case, the Appellate Tribunal is of the opinion that the
deposit of such penalty would cause undue hardship to such person, it may
dispense with such deposit subject to such conditions as it may deem fit to
impose so as to safeguard the realisation of penalty.
(2) Every appeal
under sub-section (1) shall be filed within a period of forty five days from
the date on which a copy of the order made by the adjudicating officer or the
Appropriate Commission is received by the aggrieved person and it shall be in
such form, verified in such manner and be accompanied by such fee as may be
Provided that the
Appellate Tribunal may entertain an appeal after the expiry of the said period
of forty-five days if it is satisfied that there was sufficient cause for not
filing it within that period.
5 (3) On receipt of
an appeal under sub-section (1), the Appellate Tribunal may, after giving the
parties to the appeal an opportunity of being heard, pass such orders thereon
as it thinks fit, confirming, modifying or setting aside the order appealed
(4) The Appellate
Tribunal shall send a copy of every order made by it to the parties to the
appeal and to the concerned adjudicating officer or the Appropriate Commission,
as the case may be.
(5) The appeal filed
before the Appellate Tribunal under sub-section (1) shall be dealt with by it
as expeditiously as possible and Endeavour shall be made by it to dispose of
the appeal finally within one hundred and eighty days from the date of receipt
of the appeal:
Provided that where
any appeal could not be disposed of within the said period of one hundred and
eighty days, the Appellate Tribunal shall record its reasons in writing for not
disposing of the appeal within the said period.
(6) The Appellate
Tribunal may, for the purpose of examining the legality, propriety or
correctness of Appropriate Commission under this Act, as the case may be, in
relation to any proceeding, on its own motion or otherwise, call for the
records of such proceedings and make such order in the case as it thinks
was, therefore, submitted that respondent No.1 was neither entitled to file a
petition before the CERC under 6Section 52 read with Section 79 (1)(g) of the
Act nor is entitled to file an appeal before the Appellate Tribunal.
is pointed out that the expression `any person aggrieved' must be a person who
suffered legal grievance or legal injury or one who has been unjustly deprived
and denied of something which he would have entitled to obtain in usual course.
merits it is submitted that the transaction between the appellant-Grid
Corporation of Orissa Ltd. and PTC India Ltd. was intra-state within the
meaning of Central Electricity Regulatory Commission (Procedure, Terms &
conditions for Grant of Trading Licence and Other Related Matters) Regulations,
2004 (in short the `Regulations'). It is submitted that even on cursory reading
of the Regulations, it would be apparent that the appellant's sale to Power
Trading Corporation of India Ltd. (in short `PTC') cannot be construed as
inter-state trading within the meaning of said expression.
Appeal No.185/2007 has been filed by PTC India Ltd and the challenge is to the
order of the Appellate Tribunal dated 16.11.2006. Here again, the Appellate
Tribunal held that the transaction of sale of surplus energy by GRIDCO to PTC
was in the nature of inter-state trade attracting Regulation 2 of the Central
Electricity Regulatory Commission (Fixation of Trading Margin) Regulations,
2006 (in short `Trading Regulations'). PTC being an inter-state trader could
not sell electricity purchased from GRIDCO in Orissa. Allowing electricity
traders to sell electricity at unregulated price without fixing trading margins
will have baneful effect on the development of the power sector. The aforesaid
findings of the Appellate Tribunal are questioned in this appeal.
is pointed out that PTC was not impleaded as the respondent or a party before
CERC and/or PTC was never afforded an opportunity of placing its case in
writing or even in hearing before the Appellate Tribunal. The Appellate Tribunal
concluded its hearing on 28.8.2006. The subject matter of Petition No.41 of
2005 and Appeal No.81 of 2006 are 8unrelated. It was understood by PTC that it
was not required to intervene in the Appeal No.81 of 2006, particularly, since
hearing of Petition No.1 of 2005, which was subject matter of challenge in
Civil Appeal No.68 of 2007 was concluded on 26.3.2006 and the judgment was
reserved. In said matters larger question of design of electricity market under
Section 66 of the Act and role of regulators under Sections 60, 62, 79 (1)(j)
and 178 thereof were involved.
is pointed out that in terms of the agreement dated 9.3.2006 which was for sale
of electricity by GRIDCO to PTC, sale was completed within Orissa at the points
of supply listed in Clause 2 of the General Terms and Conditions of the
Agreement. The Appellate Tribunal concluded as follows:
passed to PTC within Orissa.
(b) Risk passed to
PTC within Orissa.
(c) Obligation to pay
for electricity arose against PTC within Orissa.
(d) Control over the
electricity so supplied and choice of whom to sell and at what price passed to
PTC within Orissa."
is pointed out that the finding recorded to the effect that the sale took place
only after electricity was exported outside Orissa and sale took place only by
consumption are contrary to the scheme of the Electricity Act. It is also
submitted that the finding regarding protection of consumers' interest and the
question qua exporting of unregulated rates at which the electricity is sold by
a trader of electricity will promote competition and protect consumers and the
finding that the appropriate Commissions must utilize the mechanism of fixing
trading margins under Section 79(1)(j) and 86(1)(j) to protect consumers'
interests is neither based on any pleadings nor arises for adjudication in
Appeal No.81 of 2006.
is pointed out that the Appellate Tribunal itself understood that there is no
power vested in any ERC to determine tariff for trading. It has noted as
10 "Section 66 requires
development of market (price determination by forces of demand by supply); and
(b) Section 60 empowers the ERCs to adjudicate upon any instance of and issue
directions considered appropriate to prevent an adverse effect on competition
in electricity industry by- (i) Entering into an agreement (ii) Abusing its
dominant position; or (iii) Entering into a combination.
appellant-GRIDCO has also submitted that the definition of inter-state trading
in terms of Section 2(g) of the Regulations has not been kept in view.
Reference is made to Clauses 2, 3, 4, 18 and 23 to contend that the Appellate
Tribunal's conclusions are erroneous. It is also submitted that scope and ambit
of Clause 26 has been mis-construed by the Appellate Tribunal.
learned counsel for GRIDCO has submitted that in reply to the petition filed
GRIDCO had categorically submitted that respondent Gajendra had no locus standi
to file the petition and the petition filed was not maintainable.
CERC held that
trading margins are not applicable to GRIDCO since it is carried out the
functions of bulk supply of electricity within the State of Orissa under Bulk
Supply Licence issued by the CERC and the transactions were completed in the
State of Orissa. The entire benefit from the sale of such surplus power was
passed on to the consumers of the State through the Bulk Supply Tariff Orders.
CERC, it is pointed out, had dismissed the petition by respondent No.1-Gajendra
Haldea by holding that GRIDCO is an intra state trader. GRIDCO's transactions
under the said contract with PTC was completed within the State of Orissa.
Accordingly, it was held that the Regulations were not applicable to GRIDCO.
CERC in view of the above did not deal with the question of locus standi.
held that Gajendra Haldea had locus standi to file the petition. Though it did
not disturb the findings of CERC that GRIDCO is an intra-state trader, it held
that the transactions of sale of surplus power by GRIDCO to the inter-state
traders are in the nature of inter-state trading.
Accordingly, it held
that the transactions of GRIDCO are governed by the Trading Regulations and
directed CERC to 12find out a methodology for refund of the excess amount.
behalf of respondent No.1-Gajendra Haldea the order of Appellate Tribunal is
is unnecessary to go into the question as to the nature of the transaction,
because respondent No.1-Gajendra Haldea in order to prove that he had locus
standi relied on Sections 121 and 142 of the Act. It was also stated that it is
not in the nature of PIL. It was stated that the prayer for refund was not
bare reading of Sections 121 and 142 of the Act which read as follows shows
that those provisions are not applicable.
"121. Power of
Appellate Tribunal- The Appellate Tribunal may, after hearing the Appropriate
Commission or other interested party, if any, from time to time, issue such
orders, instructions or directions as it may deem fit, to any Appropriate
Commission for the performance of its statutory function under this Act.
Punishment for non-compliance of directions by Appropriate Commission.-In case
any complaint is filed before the Appropriate Commission by any person or if
that Commission is satisfied that any person has contravened any of the
provisions of this Act or the rules or regulations made thereunder, or any
direction issued by the Commission, the Appropriate Commission may after giving
such person an opportunity of being heard in the matter, by order in writing,
direct that, without prejudice to any other penalty to which he may be liable
under this Act, such person shall pay, by way of penalty, which shall not
exceed one lakh rupees for each contravention and in case of a continuing
failure with an additional penalty which may extend to six thousand rupees for
every day during which the failure continues after contravention of the first
the Appellate Tribunal was wrong in interfering with the conclusions of CERC
that respondent No.1's petition was not entertainable and/or maintainable.
Ben Gorm Nilgiri Plantations Company, Coonoor and ors. v. Sales Tax Officer,
Special Circle, Ernakulam and Ors.
(1964 (7) SCR 706),
it was inter alia observed as follows:
"To constitute a
sale in the course of export of goods out of the territory of India, common
intention of 14 the parties to the transaction to export the goods followed by
actual export of the goods, to a foreign destination is necessary. But
intention to export and actual exportation are not sufficient to constitute a
sale in the course of export, for a sale by export "involves a series of
integrated activities commencing from the agreement of sale with a foreign
buyer and ending with the delivery of the goods to a common carrier or
transport out of the country by land or sea. Such a sale cannot be dissociated
from the export without which it cannot be effectuated, and the sale and
resultant export form parts of a single transaction": State of Travnncore
Cochin and others v. The Bombay Company Ltd. A sale in the course of export
predicates a connection between the sale and export, the two activities being
so integrated that the connection between the two cannot be voluntarily
interrupted, without a breach of the contract or the compulsion arising from
the nature of the transaction. In this sense to constitute a sale in the course
of export it may be said that there must be an intention on the part of both
the buyer and the seller to export, there must be obligation to export, and
there must be an actual export. The obligation may arise by reason of statute,
contract between the parties, or from mutual understanding or agreement between
them, or even from the nature of the transaction which links the sale to
export. A transaction of sale which is a preliminary to export of the commodity
sold may be regarded as a sale for export but is not necessarily to be regarded
as one in the course of export, unless the sale occasions export. And to
occasion export there must exist such a bond between the contract of sale and
the actual exportation, that each link is inextricably connected with the one
immediately preceding it. Without such a bond, a transaction of sale cannot be
called a sale in the course of export 15of goods out of the territory of India.
There are a variety of transactions in which the sale of a commodity is
followed by export thereof. At one end are transactions in which there is a
sale of goods in India and the purchaser immediate or remote exports the goods
out of India for foreign consumption. For instance, the foreign purchaser
either by himself or through his agent purchases goods within the territory of
India and exports the goods and even if the seller has the knowledge that the
goods are intended by the purchasers to be exported, such a transaction is not
in the course of export, for the seller does not export the goods, and it is
not his concern as to how the purchaser deals with the goods. Such a
transaction without more cannot be regarded as one in the course of export
because etymologically, "in the course of export", contemplates an
integral relation or bond between the sale and the export. At the other end is
a transaction under a contract of sale with a foreign buyer under which the
goods may under the contract be delivered by the seller to a common carrier for
transporting them to the purchaser.
Such a sale would
indisputably be one for export, whether the contract and delivery to the common
carrier are effected directly or through agents. But in between lie a variety
of transactions in which the question whether the sale is one for export or is
one in the course of export i.e., it is a transaction which has occasioned the
export, may have to be determined on a correct appraisal of all the facts.
No single test can be
laid as decisive for determining that question. Each case must depend upon its
facts. But that is not to say that the distinction between transactions which
may be called sales for export and sales in the course of export is not real.
In general where the sale is effected by the seller, and he is not connected
with the export which actually takes place, it is a sale for 16export. Where
the export is the result of sale, the export being inextricably linked up with
the sale so that the bond cannot be dissociated without a breach of the
obligation arising by statute, contract or mutual understanding between the
parties arising from the nature of the transaction, the sale is in the course
It may be conceded
that when chests of tea out of the export quota are sold together with the
export rights, the goods are earmarked for export, and knowledge that the goods
were purchased by the bidders for exporting them to the foreign principals of
the bidders must clearly be attributable to them. Does the co-existence of
these circumstances, impress upon the transactions of sale with the character
of a transaction in the course of export out of the territory of India? We are
unable to hold that it does. That the tea chests are sold together with export
rights imputes knowledge to the seller that the goods are purchased with the
intention of exporting. But there is nothing in the transaction from which
springs a bond between the sale and the intended export linking them up as part
of the same transaction. Knowledge that the goods purchased are intended to be exported
does not make the sale and export parts of the same transaction, nor does the
sale of the quota with the sale of the goods lead to that result. There is no
statutory obligation upon the purchaser to export the chests of tea purchased
by him with the export rights. The export quota merely enables the purchaser to
obtain export licence, which he may or may not obtain. There is nothing in law
or in the contract between the parties, or even in the nature of the
transaction which prohibits diversion of the goods for internal consumption.
The sellers have no concern with the actual export of the goods, 17 once the
goods are sold. They have no control over the goods. There is therefore no
direct connection between the sale and export of the goods which would make
them parts of an integrated transaction of sale in the course of export.
In our view, the
transactions of sale in the present case did not occasion the export of the
goods, even though the appellants knew that the buyers in offering the bids for
chests of tea and the export quotas were acting on behalf of foreign
principals, and that the buyers intended to export the goods. There was between
the sale and the export no such bond as would justify the inference that the
sale and the export formed parts of a single transaction or that the sale and
export were integrally connected. The appellants were not concerned with the
actual exportation of the goods, and the sales were intended to be complete
without the export, and as such it cannot be said that the sales occasioned
export. The sales were therefore for export, and not in the course of
Appellate Tribunal's conclusions regarding nature of transactions are not
supportable when various clauses of the agreement are considered. They clearly establish
inter-state nature of the transactions.
is to be noted that under Rule 9 of the Central Electricity Rules, 2005 (in
short the `Central Rules') there is no 18restriction on the licensee effecting
sale or re-sale in the same State and no separate licence is needed. In fact,
there was no agreement to take out the electricity, as was inferred by the
Appellate Tribunal. PTC is bound by the Regulations. It is pointed out that
whenever there is sale for inter state trade, the margin is maintained. Additionally,
PTC was not a party before CERC. Originally also it was not a party before the
Appellate Tribunal. In another case relating to trade margin PTC was a party.
The issues were different and PTC was discharged from the proceedings. It is
stated that PTC is affected by para 56 of the Appellate Tribunal's order. The
observation of the Appellate Tribunal that PTC could not have sold electricity
and it could not have effected sale inside the State is wrong because of Rule 9
of the Central Rules. It is also to be noted that the contract was concluded in
the State of Orissa and the transmission loss was to be borne by PTC who was
not agent of GRIDCO.
that view of the matter, looked at from any angle the order passed by the
Appellate Tribunal cannot be maintained and is set aside.
view of the order passed in Civil Appeal No.5722 of 2006, other Civil Appeals
are allowed, and in view of the said order passed, no separate orders are
necessary to be passed in IAs and they are rejected, and SLP (C) No.11629 of
2007 filed by Haryana Power Generation Corporation Ltd. is dismissed. Costs
(Dr. ARIJIT PASAYAT)