Uttar Pradesh Power
Corporation Ltd. Vs. N.T.P.C. Ltd. & Ors.
J U D G M E N T
ANIL R. DAVE, J.
the request of the learned counsel appearing for the parties, all these appeals
are heard together as similar issues are involved in all these appeals. Central
Electricity Regulatory Commission (hereinafter referred to as the `Central
Commission') had determined tariff for generation and sale of electricity generated
by different units of the respondent-National Thermal Power Corporation Limited
for the period commencing from 1st April, 2001 to 31st March, 2004 and for some
other periods. The tariff so determined was challenged by the respondent before
the Appellate Tribunal for Electricity by filing several appeals. The said
appeals and Review Petition were decided by different orders and all such orders
have been challenged in the aforesaid appeals filed before this Court. Though, the
issues involved are similar, for the sake of convenience, wherever facts have
been referred to in this judgment, we have taken the same from Civil Appeal No.
5775 of 2007.
the main issue involved in all these appeals is with regard to determination of
tariff for electricity generated and sold by the respondent, namely, NTPC, which
is a government company incorporated under the Companies Act, 1956.
of electricity is regulated by the government authorities. The respondent has
several power plants in the country and electricity is generated at those power
plants. The electricity so generated is sold to several State Electricity Boards.
There are 3regulations which determine the price at which the electricity generated
by the respondent is to be sold to State Electricity Boards and the electricity
so generated is transmitted to the ultimate consumers through the State
The generation and sale
of electricity by the respondent is regulated under the provisions of Electricity
Act, 2003 and prior to enactment of the aforestated Act, it was regulated by the
Central Commission under the Provisions of Electricity Regulatory Commissions Act,
1998 (hereinafter referred to as "the Act"). The said Act came into
force with effect from 25th April, 1998 and prior thereto the tariff for generation
and sale of electricity was determined by the Central Government under the Provisions
of the Electricity Supply Act 1948. Under the said provisions, the Central
Government used to issue tariff notifications from time to time for determining
the tariff, i.e. the rate at which electricity generated by the respondent was
to be sold to the State Electricity Boards.
Central Government had issued Tariff Notification dated 30th April, 1994 determining
tariff for the generation and sale of electricity from the Kawas Gas Power Station
for the period commencing from 1st January, 1993 to 31st March, 1998. Thereafter,
another Notification dated 21st December, 2000 was issued whereby it was
directed that the conditions incorporated in notification dated 30th April,
1994 would continue to be applicable even for period commencing from 1st April,
1998 to 31st March, 2001. We are also concerned with determination of tariff
for the aforestated period and for other periods in respect of some other plants
of the respondent.
tariff so determined was subject matter of the present litigation before the Central
Commission and the Tribunal. The respondent was aggrieved by the determination of
tariff and, therefore, the order determining tariff had been challenged by the respondent
before the Tribunal. The final order passed by the Tribunal with regard to the
determination of tariff was reviewed in pursuance of a Review Petition filed by
the respondent. Orders passed in the Review Petition as well as original order
passed by the Tribunal are subject matter of these appeals.
the said review petition as well as in the orders passed by the Tribunal, the issues
were with regard to some of the factors, which ultimately decide the amount of
tariff, namely, calculation of interest on loan capital, calculation of the loan
capital, non- 5inclusion of value of fuel like Naphtha and other liquid fuel
while determining working capital, etc.. Several factual aspects were considered
by the Tribunal while coming to the final conclusion. Equity capital, borrowed
capital, revenue expenditure in the nature of fuel, etc. are of vital
importance for determining the tariff. After considering all these relevant factual
aspects, based on accounting principles, the Tribunal finally decided the
have heard the learned counsel appearing for the parties on the subject of determination
of tariff. The issues were with regard to necessary ingredients of cost to be
considered for the purpose of determination of tariff to be charged by the power
plants of the respondent in the matter of sale of electricity to different State
Electricity Boards. The issues involved are also with regard to calculation of
interest forming part of the tariff.
the purpose of determining tariff for generation and sale of electricity by the
generating stations of the respondent, cost can be broadly divided into fix
charges and energy charges. It also contains the amount of interest paid on the
capital employed as the capital employed in all electricity generating power plants
is very huge. The issues with regard to determination of interest as well as
capital 6are some of the most important issues which were decided by the Tribunal.
hearing the learned counsel for the parties and upon perusal of the record, we
find that several factual issues with regard to calculation of capital employed
are involved in these appeals. The issues are not only based on the principles
on which the amount of interest and the energy charges are to be determined but
they also depend upon certain other technical and factual aspects.
attention was drawn to the judgment delivered by this Court in the case of WEST
BENGAL ELECTRICITY REGULATORY COMMISSION v. CESC LTD. reported in (2002) 8 SCC
715 and more particularly to Para 102 of the same judgment, which reads as
under: "102. We notice that the Commission constituted under Section 17 of
the 1998 Act is an expert body and the determination of tariff which has to be made
by the Commission involves a very highly technical procedure, requiring working
knowledge of law, engineering, finance, commerce, economics and management. A perusal
of the report of ASCI as well as that of the Commission abundantly proves this
Therefore, we think it
would be more appropriate and effective if a statutory appeal is provided to a
similar expert body, so that the various questions which are factual and technical
that arise in such an appeal, get appropriate consideration in the first appellate
stage also. From Section 4 of the 1998 Act, we notice that the Central Electricity
Regulatory Commission which has a judicial member as also a number of other members
having varied qualifications, is better equipped to appreciate the technical and
factual questions involved in the appeals arising from the orders of the Commission.
Without meaning any disrespect
to the Judges of the High Court, we think neither the High Court nor the Supreme
Court would in reality be appropriate appellate forums in dealing with this
type of factual and technical matters. Therefore, we recommend that the appellate
power against an order of the State Commission under the 1998 Act should be conferred
either on the Central Electricity Regulatory Commission or on a similar body.
We notice that under the Telecom Regulatory Authority of India Act, 1997 in Chapter
IV, a similar provision is made for an appeal to a Special Appellate Tribunal and
thereafter a further appeal to the Supreme Court on questions of law only. We think
a similar appellate provision may be considered to make the relief of appeal
to the observations made by this Court to the effect that the Central Commission
constituted under Section 3 of the Act is an expert body which has been
entrusted with the task of determination of tariff and as determination of
tariff involves highly technical procedure requiring not only working knowledge
of law but also of engineering, finance, commerce, economics and management, this
Court was firmly of the view that the issues with regard to determination of tariff
should be left to the said expert body and ordinarily High Court and even this Court
should not interfere with the determination of tariff.
to the aforestated legal position and in view of the technical aspect involved in
the impugned order with regard to determination of tariff, which we prima facie
find to have been determined in a just and proper manner, we are of the view that
the conclusion arrived at by the Tribunal in the impugned orders do not appear to
be unreasonable or unjustified and therefore, in our opinion the impugned
orders require no interference by this Court and, therefore, all these appeals
are dismissed with no order as to costs.
(Dr. MUKUNDAKAM SHARMA)
(ANIL R. DAVE)