Ltd. Vs. Central Electricity Reg. Comm. Thr.Secy.  INSC 507 (6 March
SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL No. 3902 OF
2006 PTC India Ltd. ...Appellant Versus Central Electricity Regulatory
Commission Thr. its Secretary ...Respondent (With Civil Appeal Nos. 4354/2006,
4355/2006, 2875/2007, Civil Appeal D. 9870/2007, SLP (C) No.22080/2005, Civil
Appeal Nos. 7437/2005, 7438/2005, 2073/2007, 1471/2007, 2166/2007)
ARIJIT PASAYAT, J.
In these appeals and special leave petition, challenge in each
case is to the order passed by the Appellate Tribunal for Electricity (in short
the `Tribunal'). Challenge before the Tribunal was to the order/decision dated
23.1.2006 of the Central Electricity Regulatory Commission (in short the
`CERC') and the Central Electricity Regulatory Commission (Fixation of Trading
Margin) Regulations, 2006 (in short the `Regulations') published in the Gazette
of India on 27.1.2006. The Tribunal by the impugned judgment held that it has
no jurisdiction to deal with the matter. For this purpose the Tribunal placed
reliance on a three-Judge Bench decision of this Court in West Bengal
Electricity Regulatory Commission v. CESC Ltd. (2002 (8) SCC 715). The
conclusion in the said decision was to the effect that the High Court sitting
as an Appellate Court under Section 27 of the Electricity Regulatory Commission
Act, 1998 (in short `1998 Act') has no jurisdiction to go into the validity of
the Regulations. It was ultimately held that there is weighty authority for the
proposition that a Tribunal which is a creature of the statute cannot question
the vires of the provisions under which it functions.
Questioning correctness of the said view the present appeals have
been filed. It has been contended that the decision in West Bengal Electricity
case (supra) has no application to the present case. The Regulations have been
framed under Section 178 of the Electricity Act, 2003 (in short `2003 Act'). It
is pointed out that there is conceptual difference between the provisions which
have relevance, as contained in 1998 Act and 2003 Act. Section 121 of 2003 Act
gives ample power to the 2 Tribunal to deal with the matter. The fixation of
tariff is conceptually and contextually different from fixation of trading
margin. With reference to Sections 61 and 62 of 2003 Act it is pointed out that
the former relates to "tariff regulations" and later relates to
"determination" of tariff.
Therefore, there is no question of dealing with trading margin.
Section 66 deals with the issue of development of market including trading.
79 deals with functioning of CERC. Section 111 deals with appellate Tribunal.
Section 121 confers supervisory powers on the Tribunal of statutory functions.
Section 121 has power to issue orders, instructions and directions. It is not
only in a sense revisional but also supervisory in character. Its jurisdiction
encompasses all aspects relating to statutory functions under the Act. Section
79(1)(j) deals with fixation of trading margin. It is the stand of the
appellants that this can be done by an order and not by a Regulation. With
reference to Section 178(2)(y) it is submitted that power is given to prescribe
the manner by which development of market in power sector including trading can
be prescribed. Said provision has to be read alongwith Sections 60, 61 and 62.
There is significantly no reference to Section 79.
Learned counsel for the respondents on the other hand submitted
that the Tribunal is a creature of the statute and therefore cannot go into the
validity or legality of the Regulations and, therefore, the view of the
Tribunal is correct.
At this juncture, it is to be noted that sub-section (3) of
Section 79 talks of transparency. Section 79 deals with functioning of CERA and
Section 178 deals with power to make Regulations. In terms of Section 179, the
Regulations have to be placed before the Parliament and, therefore, have
It is also to be noted that in West Bengal Electricity case
(supra) in para 102 the need for having an expert body was highlighted and that
appears to be the basis for enacting Section 121 in the 2003 Act.
In Clariant International Ltd. and Anr. v. Securities &
Exchange Board of India (2004 (8) SCC 524) certain observations have relevance.
33, 34, 42, 51 and 52 read as follows:
In Kruger v. Commonwealth of Australia (1997)146 Aus.
it is stated:
"Moreover, when a discretionary power is statutorily conferred on a
repository, the power must be exercised reasonably, for the legislature is
taken to intend that the discretion be so exercised.
can be determined only by reference to the community standards at the time of
the exercise of the discretion and that must be taken to be the legislative
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Black's Law Dictionary, the word "compensation" has been defined as
given to compensate loss or injury".
34. In a
given case where the liability arises during pendency of a litigation, doctrine
of restitution can be invoked. In South Eastern Coalfields Ltd. v. State of M.P
(2003 (8) SCC 648) it was observed: (SCC pp. 662-63, para 26) "In law, the
term `restitution' is used in three senses: (i) return or restoration of some
specific thing to its rightful owner or status; (ii) compensation for benefits
derived from a wrong done to another; and (iii) compensation or reparation for
the loss caused to another. (See Black's Law Dictionary, 7th Edn., p. 1315.)
The Law of Contracts by John D. Calamari & Joseph M. Perillo has been
quoted by Black to say that `restitution' is an ambiguous term, sometimes referring
to the disgorging of something which has been taken and at times referring to
compensation for injury done:
the result under either meaning of the term would be the same. ...
impoverishment as well as unjust enrichment is a ground for restitution. If the
defendant is guilty of a non-tortious misrepresentation, the measure of
recovery is not rigid but, as in other cases of restitution, such factors as
relative fault, the agreed- upon risks, and the fairness of alternative risk
allocations not agreed upon and not attributable to the fault of either party
need to be weighed.' "
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determining the cases of commercial transaction also, fall in rate of interest
has been taken note of by this Court in Citi Bank N.A. v. Standard Chartered
Bank 2004 (1) SCC 12 (SCC para 62) and Citibank N.A. v. Standard Chartered Bank
2004 (6) SCC 1 (SCC para 54).
xx xx xx
Palmer's Company Law, 23rd Edn. at p.154, para 12-07, it is stated:
Subscribers as members.--The subscribers of the memorandum are deemed to have
agreed to become members of the company, and on its registration shall be
entered as members in its register of members [1948 Act, Section 26 (1)]."
Other members.--In the case of members other than the subscribers to the
memorandum two 6 essential conditions have to be satisfied to constitute a
person a member:
agreement to become a member; and (2) entry in the register.
conditions are cumulative: unless they are both satisfied, the person in
question has not acquired the status of member.
agreement to become a member alone does not create the status of membership; it
is a condition precedent to the acquisition of such status that the shareholder's
name should be entered in the register. Conversely, the company is not entitled
to place a person's name on the register without his having agreed to become a
member; a person improperly registered without his assent is not bound thereby
and may have his name removed from the register."
Howrah Trading Co. Ltd. v. CIT 1959 Supp (2) SCR 448) the law is stated thus:
(SCR p.456) "The question that falls for consideration is whether the
meaning given to the expression `shareholder' used in Section 18(5) of the Act
by these cases is correct. No valid reason exists why `shareholder' as used in
Section 18(5) should mean a person other than the one denoted by the same
expression in the Indian Companies Act, 1913. In Wala Wynaad Indian Gold Mining
Co., In re (1882) 21 Ch D 849) Chitty, J., observed:
now myself the term which is common in the courts, "a shareholder",
that means the holder of the shares. It is the common term used, and only means
the person who holds the shares by having his name on the register.' "
also Balkrishan Gupta v. Swadeshi Polytex Ltd 1985 (2) SCC 167)) 8. Similarly
in Cellular Operators Association of India and Ors. V. Union of India and Ors.
(2003 (3) SCC 186) in paras 27, 33 and 34 it has been observed as follows:
TDSAT itself is an expert body and its jurisdiction is wide having regard to
sub-section (7) of Section 14-A thereof. Its jurisdiction extends to examining
the legality, propriety or correctness of a direction/order or decision of the
authority in terms of sub-section (2) of Section 14 as also the dispute made in
an application under sub-section (1) thereof. The approach of the learned
TDSAT, being on the premise that its jurisdiction is limited or akin to the
power of judicial review is, therefore, wholly unsustainable. The extent of
jurisdiction of a court or a tribunal depends upon the relevant statute. TDSAT
is a creature of a statute. Its jurisdiction is also conferred by a statute.
The purpose of creation of TDSAT has expressly been stated by Parliament in the
amending Act of 2000. TDSAT, thus, failed to take into consideration the
amplitude of its jurisdiction and thus misdirected itself in law.
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regulatory bodies exercise wide jurisdiction. They lay down the law. They may
prosecute. They may punish.
they act like an internal audit. They may fix the price, they may fix the area
of operation and so on and so forth.
doing so, they may, as in the present case, interfere with the existing rights
of the licensees.
Statutory recommendations made by it are normally accepted by the Central
Government, as a result of which the rights and obligations of the parties may
seriously be affected.
8 It was
in the aforementioned premise Parliament thought of creating an independent
expert tribunal which, if an occasion arises therefor, may interfere with the
finding of fact, finding of law or a mixed question of law and fact of the
stated, the jurisdiction of the Tribunal is not circumscribed in any manner
are also certain observations in National Sewing Thread Co. Ltd. v. James
Chadwick and Bros. Ltd. (1953 SCR 1028) which have relevance. It was inter alia
observed as follows:
second error lies in the assumption that the appellate jurisdiction exercised
by the High Court of Calcutta is much more limited than that possessed by the
other High Court. The matter has been discussed at length in an earlier part of
also not been able to appreciate the emphasis laid to negative the
applicability of clause 15 of the Letters Patent by reference to the provision
of Section 77 of the Act. The provision of that section are merely enabling
provisions and, as already pointed out, it is open to the High Court to make
use of them or not as it likes. There is nothing in the provisions of that
section 9 which debars the High Court from hearing appeals under Section 76 of
the Trade Marks Act according to the rules under which all other appeals are
heard, or from framing rules for the exercise of that jurisdiction under
Section 108 of the Government of India Act, 1915, for hearing those appeals by
Single Judges or by Division Benches.
Section 77 had not been enacted it could not be said that the High Court would
then have no power to make rules for the hearing of appeals under Section 76.
a number of legislative enactments which have conferred appellate jurisdiction
on the High Court without more and the High Court exercises appellate jurisdiction
conferred by these enactments by framing its own rules under the powers it
already possesses under its different charters and under the various statutes
which have conferred power on it."
the background of what has been stated above and considering the importance of
the matter we feel it necessary to refer the matter to a larger 10 Bench to
consider whether the West Bengal Electricity case (supra) can have application
to the cases coming under 2003 Act, where the parties go before the Tribunal in
terms of Section 121 of the 2003 Act. The other important question would be
whether the Tribunal has jurisdiction to decide the question as to the validity
of the Regulations framed by the CERC. The matter may be placed before Hon'ble
the Chief Justice of India for necessary orders. It is open to the parties to
move the Hon'ble Chief Justice for fixing date for taking up the interim relief
...................................J. (Dr. ARIJIT PASAYAT)
....................................J. (HARJIT SINGH BEDI)
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