Holding

The fourth proviso to Section 14 of the Electricity Act, 2003 gives a partial exemption to DVC, so that the provisions of the 1948 Act which are not inconsistent with the 2003 Act continue to govern tariff determination and override the 2004 Tariff Regulations, and the Appellate Tribunal’s orders are affirmed.

Summary

The Damodar Valley Corporation (DVC), incorporated under the 1948 Act, had notified its own tariff before the Electricity Act, 2003 came into force. After the 2003 Act, the Central Electricity Regulatory Commission (CERC) issued a tariff order, which DVC challenged before the Appellate Tribunal. The Tribunal held that the fourth proviso of Section 14 of the 2003 Act allows the provisions of the 1948 Act, insofar as they are not inconsistent, to continue to apply to tariff determination, and that these provisions override the 2004 Tariff Regulations. The Supreme Court examined the scope of the proviso, the status of the 2004 Regulations as subordinate legislation, and the validity of the two‑year transitory period and the CERC’s jurisdiction under Section 79. It affirmed that the 1948 Act’s relevant provisions govern depreciation, sinking fund, debt‑equity ratio, pension and gratuity recovery, and costs of DVC’s other statutory activities, and upheld the Appellate Tribunal’s findings. Consequently, all appeals were dismissed.

Issues considered

The extent to which the fourth proviso to Section 14 of the Electricity Act, 2003 allows the Damodar Valley Corporation Act, 1948 to continue to apply for tariff determination.
Whether the Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2004 have overriding effect over the provisions of the 1948 Act.
Whether the Appellate Tribunal’s determinations on depreciation rate, sinking fund, debt‑equity ratio, pension and gratuity fund, and recovery of costs of ‘other activities’ are liable to be interfered with under Section 125 of the 2003 Act.
Whether the two‑year transitory period granted by CERC is valid and lawful.
Whether CERC is the ‘appropriate commission’ for tariff determination of DVC under Section 79 of the Electricity Act, 2003.

Legislation cited

Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2004s. Regulation 20, s. Regulation 21(1)(ii)
Damodar Valley Corporation Act, 1948s. 12, s. 18, s. 19, s. 20, s. 32, s. 33, s. 40, s. 58
Electricity Act, 2003s. 111, s. 125, s. 14 (fourth proviso), s. 173, s. 174, s. 178, s. 61, s. 62, s. 79

Subjects

electricity tariffstatutory interpretationprovisosubordinate legislationDamodar Valley CorporationCentral Electricity Regulatory Commissiondeemed licenseetransitory perioddepreciationpension fund

Judgment

[2018] 10 S.C.R. 773 773

BHASKAR SHRACHI ALLOYS LTD. ETC.ETC. A
v.
DAMODAR VALLEY CORPORATION & ORS. ETC.
(Civil Appeal Nos. 971-973 of 2008)
JULY 23, 2018 B
[RANJAN GOGOI AND R. BANUMATHI, JJ.]
Electricity – Supply/distribution of electricity generated by
Damodar Valley Corporation – Determination of tariff for –
Interplay between the provisions of 1948 Act and the 2003 Act –
C
Corporation notified its own tariff order in 2000 – 2003 Act came
into force – Despite coming into force of the 2003 Act, the
Corporation did not approach the Central Electricity Regulatory
Commission (CERC) for determination of the tariff chargeable by it
– CERC issued tariff order – Challenged by Corporation before
Appellate Tribunal – Tribunal inter alia held that provisions of the D
1948 Act which are not inconsistent with the 2003 Act will continue
to hold the field so far as the determination of tariff is concerned –
Propriety of – Held: Part IV of the 1948 Act not being inconsistent
with the provisions of the 2003 Act can be taken into account for
determination of tariff – Such provisions of the 1948 Act will also
E
have an overriding effect over the inconsistent provisions of the
2004 Tariff Regulations – View taken by the Tribunal affirmed –
Central Electricity Regulatory Commission (Terms and Conditions
of Tariff) Regulations, 2004 – Damodar Valley Corporation Act,
1948 – Electricity Act, 2003 – ss.61, 62 and 125.
F
Electricity Act, 2003 – Fourth proviso to s.14 – Purport and
effect of – Plea of appellants that the application of a proviso must
always be confined and understood within the parameters of the
provisions of the main section of which it is a part – Held: Fourth
proviso to s.14 is clearly a substantive provision to lay down
something more than what a proviso generally deals with – It need G
not be understood to be confined only to the question of licensing
which is dealt with by the main part of s.14 – Damodar Valley
Corporation Act, 1948 – ss.18 and 19.
Electricity – CERC issued tariff order determining the tariff
for generation and transmission for the period from 1st April, 2006 H
773
774 SUPREME COURT REPORTS [2018] 10 S.C.R.

A to 31st March, 2009 by allowing a two-year transition period to the
Damodar Valley Corporation i.e. from 1st April, 2004 to 31st March,
2006 – Upheld by the Appellate Tribunal – Propriety of – Held:
Corporation in addition to generation, transmission and distribution
of electricity is statutorily required to undertake certain social
security/beneficial measures like flood control, control of soil erosion,
B
afforestation, navigation, promotion of public health etc. – Grant
of transitory period can not be faulted with – Said part of the order
of the Tribunal not interfered with.
Electricity Act, 2003 –s.79 – Held: Having regard to the
provisions of s.79 it is the Central Electricity Regulatory Commission
C (CERC) which would be the “Appropriate Commission” for
determination of tariff inasmuch as the Damodar Valley Corporation
is a Corporation owned and controlled by the Central Government
– Said conclusion recorded by the Appellate Tribunal not interfered
with.
D Damodar Valley Corporation Act, 1948 – Incorporation of
Damodar Valley Corporation under – Objects and reasons for –
Discussed.
Central Electricity Regulatory Commission (Terms and
Conditions of Tariff) Regulations, 2004 – If have overriding effect
E over the parallel provisions in the 1948 Act – Plea of appellant that
2004 Regulations must override the provisions of the 1948 Act as
the said regulations are statutory in character – Held: Not accepted –
2004 Regulations though statutory in character are a species of
subordinate delegated legislation – Damodar Valley Corporation
F Act, 1948.
Interpretation of Statutes – External aids – Reports submitted
by Parliamentary Standing Committee – Discussed.
Electricity – ‘Depreciation rate’ and ‘sinking fund’ – Heads
of tariff fixation – Determination of u/s.40 of the 1948 Act –
G Propriety of – Discussed – Damodar Valley Corporation Act, 1948 –
s.40 – Central Electricity Regulatory Commission (Terms and
Conditions of Tariff) Regulations, 2004 – Regulation 20.
Electricity – Tariff – Recovery towards Pension and Gratuity
Fund – In reversal of the decision of the Central Electricity
H Regulatory Commission permitting recovery from consumers to the
BHASKAR SHRACHI ALLOYS LTD. ETC. ETC. v. DAMODAR 775
VALLEY CORPORATION & ORS. ETC.

extent of 60% and contribution of the balance 40% by the Damodar A
Valley Corporation, Appellate Tribunal allowed entire fund to be
recovered by way of tariff from the consumers – Propriety of – Held:
Ex facie, there is no error in the reasoning adopted by the Tribunal
in coming to the aforesaid conclusion so as to justify interference –
Electricity Act, 2003 – s.125.
B
Electricity – Cost relating to “other activities” of the Damodar
Valley Corporation to be recovered through tariff – Allowed by
Appellate Tribunal – Propriety of – Plea of appellants that ss. 32
and 33 of the 1948 Act are in direct conflict with ss. 41 and 51 of
the 2003 Act and, therefore, recovery of cost incurred in “other
works” undertaken by the Corporation through power tariff is C
wholly untenable – Held: “Other activities” of the Corporation are
not optional as contemplated u/ss.41/51 of the 2003 Act but are
mandatorily cast by the 1948 Act which, being in the nature of
socially beneficial measures, per se, do not entail earning of any
revenue so as to require maintenance of separate accounts – D
Allowance of recovery of cost incurred in connection with “other
activities” of the Corporation from the common fund generated by
tariff chargeable from the consumers/customers of electricity as
contemplated by the provisions of the Act of 1948, therefore, do not
collide or is inconsistent with the provisions of the 2003 Act –
Findings of Tribunal not interfered with – Electricity Act, 2003 – E
ss.41 and 51 – Damodar Valley Corporation Act, 1948 – ss.32
and 33.
Dismissing the appeals, the Court
HELD: 1.1 The transitory period has been granted having F
due regard to the statutory functions/social responsibilities that
the Damodar Valley Corporation (DVC/Corporation) is mandated
to undertake in terms of the Damodar Valley Corporation Act,
1948. The tariff fixed is also lower than the tariff that has been
fixed by the Jharkhand and West Bengal Electricity Regulatory
Commission for the general/domestic classes of consumers. While G
it is correct that the classes of consumers served by the
Corporation are HT-Industrial consumers like Steel, Coal,
Railways, etc. beside bulk supply to main beneficiaries of State
Electricity Boards of West Bengal and Jharkhand, the said fact,
itself, is another peculiar feature which distinguishes the H
776 SUPREME COURT REPORTS [2018] 10 S.C.R.

A Corporation from other licenses. If in a situation where the
Corporation in addition to generation, transmission and
distribution of electricity is statutorily required to undertake
certain social security/beneficial measures like flood control,
control of soil erosion, afforestation, navigation, promotion of
public health, etc. the grant of transitory period cannot be faulted
B
with. Therefore, the said part of the order of the Appellate
Tribunal is declined to be interfered with. The Appellate Tribunal
also took the view that having regard to the provisions of Section
79 of the Electricity Act, 2003 it is the CERC which would be the
“Appropriate Commission” for determination of tariff inasmuch
C as the Damodar Valley Corporation is a Corporation owned and
controlled by the Central Government. The said conclusion
recorded by the Appellate Tribunal is neither unreasonable nor
irrelevant so as to warrant interference, particularly, in exercise
of the limited jurisdiction under Section 125 of the 2003 Act.
[Paras 27, 28] [792-G-H; 793-A-D]
D
1.2 The Damodar Valley Corporation had been incorporated
under the provisions of the Damodar Valley Corporation Act,
1948. Sometime in the year 1943, the Damodar River Valley had
been affected by severe floods leading to wide-scale destruction
of life and property. The Provincial Government of Bengal had
E constituted an Enquiry Committee to suggest ways and means to
avoid such catastrophes in the future. The Enquiry Committee
had, inter alia, recommended that a statutory corporation, on the
lines of the Tennessee Valley Authority of the USA, be
incorporated to command and control the Damodar River. The
F then British Government accepted this proposal of the Committee
and had called a senior Engineer working for the Tennessee Valley
Authority to make recommendations and suggestions in this
regard. [Para 30] [793-F-H]
1.3 The Central Electricity Regulatory Commission (Terms
G and Conditions of Tariff) Regulations, 2004 though statutory in
character are a species of subordinate delegated legislation.
Further, it may be wholly unnecessary to detract from the
fundamental principles of law laid down in The Presidential
Reference case which would be an inevitable consequence, if the
contentions advanced on behalf of the appellants to the effect
H that the Tariff Regulations must override the provisions of the
BHASKAR SHRACHI ALLOYS LTD. ETC. ETC. v. DAMODAR 777
VALLEY CORPORATION & ORS. ETC.

Act of 1948 as the said regulations are statutory in character is A
to be accepted. This is also what has been subsequently
emphasised by Supreme Court in Bharathidasan University & Anr.
and Samsthanan Chethu Thozhilali Union cases. No error,
therefore, can also be found in the implicit reliance placed on the
ratio of the above decisions by the Appellate Tribunal. [Paras
B
35, 37] [795-F-G; 798-D-E]
The Presidential Reference, Delhi Laws Act, 1912 AIR
1951 SC 332 : [1951] SCR 747 – followed.
Bharathidasan University & Anr. v. AICTE & Ors.
(2001) 8 SCC 676 : [2001] 3 Suppl. SCR 253; C
Samsthanan Chethu Thozhilali Union v. State of Kerala
& Ors. (2006) 4 SCC 327 : [2006] 3 SCR 420 –
referred to.
1.4 The fourth proviso to Section 14 of Electricity Act, 2003
uses the expression “….and the provisions of the Damodar Valley D
Corporation Act, 1948 in so far as they are not inconsistent with
the provisions of the Act, shall continue to apply to that
Corporation…”. The fourth proviso to Section 14 is clearly a
substantive provision to lay down something more than what a
proviso generally deals with. If the intention of the proviso was
to exclude DVC only from the main part of Section 14 dealing E
with the requirement of obtaining licence for transmission/
distribution/trade in electricity, the purpose is fully achieved by
the first part recognising DVC as a ‘deemed licensee’ and not
requiring to apply for and obtain licence. The Legislature could
have simply stopped there. There was no necessity to incorporate F
the second part. The second part of the fourth proviso is to bring
in the continued application of some of the provisions of the
Damodar Valley Corporation Act, 1948 which are not inconsistent
with the provisions of the Electricity Act, 2003. The third proviso
to Section 14 which provides “that in case an appropriate
Government transmits electricity or distributes electricity or G
undertakes trading in electricity whether before or after the
commencement of the Act, such Government shall be deemed to
be a licensee under the Act but shall not be required to obtain
licence under the Act”. In so far as DVC is concerned, if the
fourth proviso is to be confined only to licensing as in the case of H
778 SUPREME COURT REPORTS [2018] 10 S.C.R.

A third proviso, the fourth proviso also would have stopped with
the first part of the proviso. There would have been no necessity
to incorporate the second part of the proviso. The legislature
does not incorporate any words which are irrelevant or redundant
and every expression used in a statutory provision has some
purpose. A careful comparative reading of the third and the fourth
B
provisos to Section 14 clearly indicates the intention of the
legislature that the second part of the fourth proviso is to bring
in the continued application of some of the provisions of the Act
of 1948 which are not inconsistent with the provisions of the
Electricity Act, 2003. There are no licensing provisions in the
C Damodar Valley Corporation Act, 1948 to be saved. The obvious
reference in the second part of proviso is to provide for the
continued application of the provisions of the 1948 Act insofar as
they are not inconsistent with the provisions of the Electricity
Act, 2003. [Paras 41, 42] [802-A-H]
D 1.5 The appellants made reference to Sections 18 and 19 of
the Damodar Valley Corporation Act, 1948 as being the provisions
relating to licensing which could be said to be considered as saved
by virtue of second part of the fourth proviso to Section 14 of the
Act of 2003. A perusal of Sections 18 and 19 of the 1948 Act show
that they deal with the supply and generation of electrical energy
E and distribution of electricity within the Damodar Valley area.
The provisions of the Electricity Act, 2003 which authorise the
Regulatory Commissions to grant licence to persons (other than
DVC) fully govern the field and there is no question of continued
application of the 1948 Act in that respect. Sections 18 and 19 of
F the 1948 Act do not deal with licence to DVC. These provisions
only deal with activities of other entities to distribute electricity
within the Damodar Valley area. Further, the provisions of
Electricity Act, 2003 authorizes the Regulatory Commissions to
grant licence to persons other than DVC. Therefore, there can
be no question of continued application of the 1948 Act over those
G provisions. The fourth proviso to Section 14, Electricity Act, 2003
which uses the expression “….and the provisions of the Damodar
Valley Corporation Act, 1948 in so far as they are not inconsistent
with the provisions of the Act, shall continue to apply to that
Corporation…” is a positive provision enabling continued
H application of certain provisions of the 1948 Act which are not
BHASKAR SHRACHI ALLOYS LTD. ETC. ETC. v. DAMODAR 779
VALLEY CORPORATION & ORS. ETC.

inconsistent with the provisions of the Electricity Act, 2003. The A
intention behind both the provisions needs to be appreciated and
given effect to. [Paras 43, 44] [803-A-E]
1.6 The Parliamentary Standing Committee had
recommended that the Corporation should be exempted from
the operation of the provisions of the proposed Electricity Act, B
2003 in view of the special status and responsibilities of the
Corporation as envisaged under the Parliamentary enactment
constituting it (i.e the Act of 1948). However, it appears that
Parliament was not inclined to provide a blanket/total exemption
in favour of the Corporation and the 2003 Act did not include the
Corporation as one of the entities in Section 173 of the 2003 Act C
which provides exemption in so far as the provisions of the
Consumer Protection Act, 1986, the Atomic Energy Act, 1962
and the Railways Act, 1989 clearly excluding the provisions of
the 1948 Act therefrom. Instead, the fourth proviso to Section
14 of the 2003 Act was specifically incorporated. Having regard D
to the legislative history behind the enactment of the provision
of Section 173 and the provisions of Section 14 including the fourth
proviso thereto, it may be more in consonance with the
Parliamentary intention to hold that the fourth proviso to Section
14 need not be understood to be confined only to the question of
licensing which is dealt with by the main part of the Section 14. E
Rather, the Parliament had intended to provide partial exemption
to the Corporation by mandating that such provisions of the 1948
Act which are not inconsistent with the 2003 Act will continue to
hold the field. Viewed thus, the fourth proviso to Section 14 of
the Electricity Act 2003 has to be understood to be a legislative F
exercise in the nature of a substantial provision of law. Part IV of
the Act of 1948 not being inconsistent with the provisions of the
2003 Act can, therefore, be taken into account for determination
of tariff. Such provisions of the 1948 Act will also have an
overriding effect over the inconsistent provisions of the Central
Electricity Regulatory Commission (Terms and Conditions of G
Tariff) Regulations, 2004. Said view, as above, will also effectuate
the provisions of the 1948 Act in so far as the activities of the
Corporation, other than generation and transmission of electricity,
is concerned. Therefore, the above view taken by the Appellate
Tribunal is affirmed. [Paras 47, 48] [804-H; 805-A-H] H
780 SUPREME COURT REPORTS [2018] 10 S.C.R.

A 1.7 So far as the ‘depreciation rate’ and ‘sinking fund’ is
concerned it is the provisions of Section 40 of the Damodar Valley
Corporation Act, 1948 which have been held to be determinative.
Having clarified the manner in which the fourth proviso to Section
14 of the Electricity Act, 2003 has to be understood, one does
not find the reasoning adopted by the Appellate Tribunal on the
B
issues relating to ‘depreciation’ and ‘sinking fund’ to be
fundamentally flawed in any manner so as to give rise to a
substantial question of law requiring intervention/interference
under Section 125 of the 2003 Act. Insofar as the debt-equity
ratio is concerned, it is found that except for the projects which
C have been completed prior to 1992 in which case the ratio has
been worked out at par with other public-sector organisation at
50:50, the ratio of 70:30 has been adopted following the
prescription under Regulation 20 of the Central Electricity
Regulatory Commission (Terms and Conditions of Tariff)
Regulations, 2004 in the absence of any specific rate under the
D
Act of 1948. [Paras 50, 51] [806-E-H]
1.8 So far as the pension and gratuity fund is concerned,
the only issue arising is whether the fund worked out on Actuary
basis at Rs.1534.49 crores should be apportioned between the
Corporation and the consumers as held by the CERC in the ratio
E of 40:60 or the entire fund should be allowed to be recovered by
way of tariff from the consumers as held by the Appellate Tribunal.
A careful consideration of the reasoning adopted by the Appellate
Tribunal would not disclose any such error so as to warrant
interference of this Court. No error or fallacy, ex facie, is disclosed
F in the reasoning adopted so as to justify interference under
Section 125 of the Electricity Act, 2003. [Paras 52, 53] [807-A-B,
E-F]
1.9 Sections 41 and 51 of the Electricity Act, 2003 inter alia,
require maintenance of separate accounts of the other business
G undertaken by transmission/distribution licensees so as to ensure
that the returns from the transmission/distribution business of
electricity do not subsidize any other such business. Not only
Sections 41 and 51 of the 2003 Act contemplate prior approval of
the Appropriate Commission before a licensee can engage in any
other business other than that of a licensee under the 2003 Act,
H
BHASKAR SHRACHI ALLOYS LTD. ETC. ETC. v. DAMODAR 781
VALLEY CORPORATION & ORS. ETC.

what is contemplated by the aforesaid provisions of the 2003 Act A
is some return or earning of revenue from such business. In the
instant case, the “other activities” of the Corporation are not
optional as contemplated under Sections 41/51 of the 2003 Act
but are mandatorily cast by the statute i.e. Act of 1948 which,
being in the nature of socially beneficial measures, per se, do not
B
entail earning of any revenue so as to require maintenance of
separate accounts. The allowance of recovery of cost incurred in
connection with “other activities” of the Corporation from the
common fund generated by tariff chargeable from the consumers/
customers of electricity as contemplated by the provisions of the
Damodar Valley Corporation Act of 1948, therefore, do not collide C
or is, in any manner, inconsistent with the provisions of the 2003
Act. Therefore, there is no occasion to interfere with the findings
recorded by the Appellate Tribunal on the above score. [Para
55] [808-D-H]
Shah Bhojraj Kuvarji Oil Mills & Ginning Factory v. D
Subhash Chandra Yograj Sinha [1962] 2 SCR 159 –
followed.
S. Sundaram Pillai & Others v. V.R. Pattabhiraman &
Others (1985) 1 SCC 591 : [1985] 2 SCR 643;
Kalpana Mehta & Ors. v. Union of India & Ors. 2018 E
(7) SCALE 106 – relied on.
Dwaraka Prasad v. Dwarka Das Saraf (1976) 1 SCC
128 : [1976] 1 SCR 277; Union of India & Ors. v.
Dileep Kumar Singh (2015) 4 SCC 421 : [2015] 2 SCR
882; PTC India Ltd. v. Central Electricity Regulatory F
Commission (2010) 4 SCC 603 : [2010] 3 SCR 609 ;
State of Rajasthan v. Leela Jain [1965] 1 SCR 276 ;
Motiram Ghelabhai v. Jagan Nagar (1985) 2 SCC
279 : [1985] 2 SCR 1051 – referred to.
Case Law Reference G
[1976] 1 SCR 277 referred to Para 12
[2015] 2 SCR 882 referred to Para 12
[2001] 3 Suppl. SCR 253 referred to Para 13
[2006] 3 SCR 420 referred to Para 13 H
782 SUPREME COURT REPORTS [2018] 10 S.C.R.

A [2010] 3 SCR 609 referred to Para 14
[1965] 1 SCR 276 referred to Para 22
[1985] 2 SCR 643 relied on Para 22
[1962] 2 SCR 159 followed Para 22
B [1985] 2 SCR 1051 referred to Para 22
[1951] SCR 747 followed Para 36
2018 (7) SCALE 106 relied on Para 45
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 971-973
C of 2008
From the Judgment and Order dated 23.11.2007 of the Appellate
Tribunal for Electricity, New Delhi in Appeal Nos. 271, 272 and 273 of
2006
WITH
D
C.A. Nos. 1914, 4504-4508 and 4289 of 2008.
Sandeep Sethi, ASG, Jaideep Gupta, Sr. Adv., Nikhil Nayyar, N. Sai
Vinod, Dhananjay Baijal, Ms. Smriti Shah, Divyanshu Rai, Rajiv Shankar
Dvivedi, S. K. Sarkar, Ms. Arti Dvivedi, Praveen Kumar Singh,
E Md. Ziauddin Ahmad, Mohan Prasad Gupta, Ms. Liz Mathew, Sachin
Sharma, Arvind Kumar Sharma, Shibashish Misra, M. G. Ramachandran,
K. V. Mohan, Ms. Anushree Bardhan, Ms.Poorva Saigal, Shubham Arya,
Amit Kapur, Rajesh Gupta, Sidharth Sharma, Jishnu Chowdhury,
Pukhrambam Ramesh Kumar, Ms. Priyanka Tibrewal, Akshat Jain,
Ms. Radika Seth, Abhinav Lilothia, Devashish Bharuka, Rajiv Yadav.
F Mohaq Siddiqi, Anil Kumar Jha, Hiren Dasan, Harish Dasan, Chand
Qureshi, Mrs. Sarla Chandra, Anupam Lal Das, Saurabh Mishra, Sunil
Kumar Jain, Abhijit Sengupta, Ms. Sharmila Upadhyay, Partha Sil, Advs.
for the appearing parties.
The Judgment of the Court was delivered by
G
RANJAN GOGOI, J. 1. This group of appeals arise out of a
common judgment and order dated 23rd November, 2007 passed by the
learned Appellate Tribunal for Electricity at New Delhi (hereinafter
referred to as “learned Appellate Tribunal”). The challenge in the appeals
before the learned Appellate Tribunal was against the order of the Central
H
BHASKAR SHRACHI ALLOYS LTD. ETC. ETC. v. DAMODAR 783
VALLEY CORPORATION & ORS. ETC. [RANJAN GOGOI, J.]

Electricity Regulatory Commission (hereinafter referred to as “CERC”) A
dated 3rd October, 2006 determining the tariff chargeable by the Damodar
Valley Corporation (hereinafter referred to as “Corporation”) from the
consumers of electricity generated and transmitted by the Corporation.
The tariff has been determined under the provisions of Section 61 and
62 of the Electricity Act, 2003 (hereinafter referred to as “2003 Act”)
B
read with such other provisions of the Damodar Valley Corporation Act,
1948 (hereinafter referred to as “Act of 1948”) which have been found
to be not inconsistent with the provisions of the 2003 Act.The appeals
being under Section 125 of the 2003 Act are required to be answered
only on such substantial questions of law that may arise for determination
by this Court. C
2. First, the facts.
The Corporation has been established under the Act of 1948 for
the development of the Damodar Valley area falling within the States of
West Bengal and Jharkhand. As evident from the provisions of Section
12 of the Act of 1948, three (03) major areas of activity undertaken by D
the Corporation under the Act of 1948 are: (i) power generation,
transmission and distribution; (ii) flood control; and (iii) irrigation and
some connected activities like soil conservation, afforestation, etc.
3. Under Section 20 of the Act of 1948, the Corporation was
empowered and authorised to determine the tariff chargeable by it from E
its consumers. Part IV of the Act of 1948 under the heading “Finance,
Accounts and Audit” though, superficially, may appear to be dealing
with the indoor management of the Corporation contain provisions which
could have a relevant bearing to tariff fixation under Section 20 of the
Act of 1948. Some of the said provisions are to be found in Sections 32, F
37, 38, 39 and 40 of the Act of 1948 which deals with facets of expenditure,
depreciation, allowances, payment of interest, etc. all of which would
have a reasonable bearing on working out the tariff that the Corporation
would be entitled to charge from its consumers after taking into account
the said items of expenditure or allowances/disallowances, as may be.
G
4. Acting under the provisions of Section 20 of the Act of 1948,
the Corporation had notified its own tariff order on 1st September, 2000.
The 2003 Act came into force with effect from 10th June, 2003. Despite
coming into force of the 2003 Act the Corporation had not approached
the CERC for determination of the tariff chargeable by it. Consequently,
H
784 SUPREME COURT REPORTS [2018] 10 S.C.R.

A the CERC initiated suo motu proceedings by order dated 29th March,
2005 and directed the Corporation to submit an application for
determination of tariff for the period from 1st April, 2004 to 31st March,
2009. In terms of the said order passed by the CERC, the Corporation
made an application dated 8th June, 2005 before the CERC (i.e. Petition
No.66 of 2005) for determination of tariff for the period in question. It
B
appears that in view of the “complexity” of the issues involved, the CERC
had requested one of its members to go into the necessary fact-finding
exercise and to submit a report of the detailed facts that would be relevant
for determination of tariff by the CERC. On the basis of the available
inputs received from the aforesaid single member Bench of the CERC,
C the CERC issued a tariff order dated 3rd October 2006 determining the
tariff for generation and transmission for the period from 1st April, 2006
to 31st March, 2009 by allowing a two-year transition period to the
Corporation i.e. from 1st April, 2004 to 31st March, 2006.
5. At this stage, it may be appropriate to take note of the contents
D of the tariff order dated 3rd October, 2006 passed by the CERC so as to
appreciate and understand the grievances entertained by the respective
appellants before this Court who were also the appellants before the
learned Appellate Tribunal challenging the order of the CERC dated 3rd
October, 2006.
E 6. The CERC by its order dated 3rd October, 2006 took the view
that the matter of determination of tariff chargeable by the Corporation
would be governed by the provisions of the 2003 Act and the Central
Electricity Regulatory Commission (Terms and Conditions of Tariff)
Regulations, 2004 (hereinafter referred to as “Tariff Regulations”)
framed thereunder. Accordingly, the CERC proceeded to determine the
F tariff after giving due weightage to the various relevant factors which
are required to be considered for such determination as spelt out by the
Regulations in force. A reading of the order of the CERC would go to
show that in determining the tariff due consideration of the following
issues was made by the CERC.
G (i) Choice between GFA and NFA Method;
(ii) Capital Cost;
(iii) Extra Rupee Liability;
(iv) Additional Capitalisation;
H
BHASKAR SHRACHI ALLOYS LTD. ETC. ETC. v. DAMODAR 785
VALLEY CORPORATION & ORS. ETC. [RANJAN GOGOI, J.]

(v) Debt-Equity Ratio; A
(vi) Return on equity;
(vii) Interest on loan;
(viii) Depreciation including Advance against Depreciation;
(ix) O & M expenses; B
(x) Pension and gratuity fund;
(xi) Interest on working capital;
(xii) Operational Norms;
C
(xiii) Energy charges and the fuel component for the thermal
generating stations;
(xiv) Fuel Price Adjustment
7. Aggrieved by the aforesaid order dated 3rd October, 2006, the
Corporation, insofar the exclusion of the provisions of the Act of 1948 D
while determining the tariff and refusal to grant claims of certain expenses
thereunder; the consumers, namely, Bhaskar Shrachi Alloys Ltd., Impex
Ferro Tech Ltd., Shyam Ferro Alloys Ltd., Maithan Alloys Ltd., Anjaney
Ferro Alloys Ltd., Dayal Steel Ltd. and Castrol Technologies Ltd. insofar
as transitory period is concerned and the State of Jharkhand and West
Bengal Electricity Regulatory Commission insofar as the exclusion of E
the power of the State Regulatory Commission to determine the intra-
State transmission of electricity is concerned had approached the learned
Appellate Tribunal by way of separate appeals.
8. The learned Appellate Tribunal by the impugned judgment and
order dated 23rd November, 2007 took the view that by virtue of fourth F
proviso to Section 14 of the 2003 Act, while the Corporation continued
to be a deemed licensee, the provisions of the Act of 1948, which are not
inconsistent with the provisions of the 2003 Act, shall continue to apply
to the Corporation. In other words, insofar as the inter-play between
the provisions of the Act of 1948 and the 2003 Act is concerned, according G
to the learned Appellate Tribunal, it is only the provisions of the earlier
Act inconsistent with the later Act that will cease to have effect and
such provisions of the Act of 1948 that are consistent will continue to
hold the field notwithstanding the enactment of the 2003 Act. Continuing
further, the learned Appellate Tribunal held that while Section 20 of the
H
786 SUPREME COURT REPORTS [2018] 10 S.C.R.

A Act of 1948 which empowers the Corporation to fix the tariff is
inconsistent with Section 62 of the 2003 Act which authorised the
“Appropriate Commission” to determine the tariff in accordance with
the provisions of the 2003 Act, the specific provisions contained in Sections
32, 37, 38, 39 and 40 of Part IV of the Act of 1948 will continue to be
relevant in the matter of determination of tariff in as much as there are
B
no pari materia/parallel provisions in the 2003 Act. It was further held
that though there are provisions in the Tariff Regulations framed by the
CERC covering the same field, the said Regulations, being in the nature
of subordinate legislation, cannot override the provisions of a law duly
enacted (Act of 1948), particularly, in the absence of any legislative
C intention to the said effect in any of the provisions of the 2003 Act.
Accordingly, the learned Appellate Tribunal while rejecting the following
five claims and upholding the order of the CERC on the aforesaid counts
thought it proper to remand the matter, for a de novo consideration of
the remaining five issues by the CERC in the light of the findings recorded
by it. The tabular chart, extracted below, would indicate the five issues
D
that have been finalized by the learned Appellate Tribunal by upholding
the order of the CERC dated 3rd October, 2006 and the other five issues
which have been remanded for re-determination by the CERC.
Issues finalized by the Issues rema nded for
learned A ppellate re- determination by
E Tr ibunal by upholding the the CERC
orde r of the CERC dated
3 rd October, 2006
(i) High er retur n on equity; ( i) Additional
capitalization for the
per iod 2004-2005 and
2005- 2006;
F (ii) Depr eciation rate; ( ii) Pension and Gratuity
contribution;
(iii) Resetting of operating ( iii) Reven ue to be allowed
norms at variance fr om the to the DVC under the
operating norms presc ribed DVC Act;
in the 2004 r egulations;
G (iv) Retur n on c apital investment ( iv) Operation and
on H ead Of fice, Regional Maintenance expenses;
Offices, administrative and
oth er technical centr es, etc.;
and
(v) Generation projects ( v) Debt Equity Ratio
presently not operating.
H
BHASKAR SHRACHI ALLOYS LTD. ETC. ETC. v. DAMODAR 787
VALLEY CORPORATION & ORS. ETC. [RANJAN GOGOI, J.]

9. Three substantial questions of law would seem to arise for A
determination by this Court in exercise of its jurisdiction under Section
125 of the 2003 Act. The same are enumerated below:
(a) Whether the view taken by the learned Appellate Tribunal with regard
to the fourth proviso to Section 14 of the 2003 Act and the applicability
of the provisions of Sections 32, 37, 38, 39 and 40 contained in Part IV B
of the Act of 1948 in the matter of tariff determination under the 2003
Act is correct?
(b) Whether it is the provisions of the Tariff Regulations (2004
Regulations) which alone would hold the field in the matter of
determination of tariff to the exclusion of the provisions of Sections 32, C
37, 38, 39 and 40 contained in Part IV of the Act of 1948?
(c) Whether the conclusions and findings of the learned Appellate Tribunal
on any one or more of the claims made by any of the stakeholders in the
matter of determination of tariff is vitiated by grave and apparent errors?
10. It will be useful to notice, at this stage, that in terms of the D
impugned order dated 23rd November, 2007 passed by the learned
Appellate Tribunal the matter has been de novo considered and re-
determined by the CERC by its order dated 6th August, 2009. This has
for happened due to the absence of any interim restraint. The said order of
by
the CERC dated 6th August, 2009 has since been affirmed by the learned E
Appellate Tribunal by a separate order dated 10th May, 2010 which is
the subject matter of challenge in Civil Appeal No.4881 of 2010 presently
pending before this Court. The said appeal (Civil Appeal No.4881 of
the 2010) has been ordered to be heard after disposal of the present appeals.
and
11. The arguments advanced by the respective appellants who are F
uity also the respondents in the connected appeals may be noted at this stage.
wed 12. On behalf of the CERC, which is the appellant in Civil Appeal
the No.4289 of 2008, it has been contended that second part of the fourth
proviso to Section 14 of the 2003 Act cannot be understood to mean, as
and has been held by the learned Appellate Tribunal, that the provisions of
G
es; the Act of 1948 which are not inconsistent with the provisions of the
2003 Act so far as the determination of tariff is concerned would continue
to hold the field. Two principal basis have been urged in support of the
above. The first is that a proviso cannot be understood to go beyond the
main part of the Section which, in the present case, deals only with
‘licensing’ and not ‘tariff determination’. Reliance in this regard has H
788 SUPREME COURT REPORTS [2018] 10 S.C.R.

A been placed on the decisions of this Court in Dwaraka Prasad
vs.Dwarka Das Saraf1 and Union of India & Ors. vs. Dileep Kumar
Singh2.
The second limb of the argument is based on the provisions
contained in Section 174 of the 2003 Act which gives an overriding effect
B to the provisions of the 2003 Act notwithstanding any inconsistency with
any other law for the time being in force.
13. Without prejudice to the above, it has been further contended
on behalf of the CERC that the learned Appellate Tribunal was clearly
in error in holding that in case of a conflict between the Act of 1948 and
C the Tariff Regulations framed under the 2003 Act the provisions of the
Regulations will require to be ignored. The decisions of this Court in
Bharathidasan University & Anr. vs. AICTE & Ors.3 and Samsthanan
Chethu Thozhilali Union vs. State of Kerala & Ors.4, relied upon,
has been misconstrued by the learned Appellate Tribunal, it is urged on
behalf of CERC. It is further contended on behalf of the CERC that
D Section 61 of the 2003 Act lays down the principles for tariff
determination which finds detailed manifestation in the 2004 Regulations.
The Regulations, it is contended, embody the principles on which tariff is
required to be determined and the provisions thereof cannot be overridden
by the provisions of any other statute and, that too, enacted at an anterior
E point of time i.e. the Act of 1948. The mandate of Section 174 of the
2003 Act which is subsequent in point of time will be compromised in the
event such an interpretation is accepted.
14. So far as the specific heads of tariff fixation are concerned, it
has been urged on behalf of the CERC that Section 40 of the Act of
F 1948 has been wrongly relied upon by the learned Appellate Tribunal in
determining the question of the extent of depreciation allowable. It is
emphasised that Section 40 leaves the question of the percentage of
depreciation to be determined by the Central Government. It is contended
that the purpose and intent behind the enactment of 2003 Act is to distance
the Central Government from the determination of tariff under the 2003
G Act which is to be fixed by the Regulatory Commissions on the principles
acknowledged in the Tariff Regulations. Regulation 21(1)(ii) of the Tariff
1
(1976) 1 SCC 128 [para 18]
2
(2015) 4 SCC 421 [para 20]
3
(2001) 8 SCC 676 [para 14]
4
H (2006) 4 SCC 327 [Para 17]
BHASKAR SHRACHI ALLOYS LTD. ETC. ETC. v. DAMODAR 789
VALLEY CORPORATION & ORS. ETC. [RANJAN GOGOI, J.]

Regulations, therefore, according to the CERC, should have been the A
basis for the determination of the extent of depreciation. In this regard,
reliance has been placed on the decision of this Court in PTC India
Ltd. vs. Central Electricity Regulatory Commission5 .
15. It is on the same basis that the findings of the learned Appellate
Tribunal so far as the ‘Sinking Fund’ is concerned, which has been held B
to be recoverable through the tariff, has been assailed. It is urged that
the Tariff Regulations do not make any provision for any ‘Sinking Fund’
and, therefore, the recovery of such fund through tariff is abhorrent to
the provisions of Section 61 of the 2003 Act read with the Tariff
Regulations.
C
16. Similarly, the finding of the learned Appellate Tribunal with
regard to the allowability of charging the expenditure on projects other
than electricity from the common fund as common expenditure has been
assailed as being contrary to the spirit of the 2003 Act inasmuch as it is
opposed to the principle of allowance of cross-subsidy which the 2003
Act seeks to do away with. Reference has been made to different D
provisions of the 2003 Act to contend that recovery of expenditure
unrelated to electricity generation from the electricity tariff is alien and
contrary to the provisions of the 2003 Act.
17. The conclusions of the learned Appellate Tribunal with regard
to the debt-equity ratio insofar as the projects completed prior to 1992 E
(which has been fixed at 50:50) has also been assailed on the ground
that the sole basis thereof is the practice followed in the case of another
PSU i.e. NTPC ignoring the fact that the Regulation 20 of the Tariff
Regulations provide for a ratio of 70:30.
18. Likewise, the findings with regard to Pension and Gratuity F
Fund, particularly, the recovery of the entire fund from the consumers
(in reversal of the decision of the CERC permitting recovery from
consumers to the extent of 60% and contribution by the Corporation of
the balance 40%) has been assailed on the ground that no discernible or
rational basis is disclosed for the view taken, particularly when the G
Corporation has been permitted and, in fact, collected tariff at the rate
fixed by the Corporation itself under the Act of 1948 for the years 2004-
2005 and 2005-2006 which constitute 40% of the tariff period.

5
(2010) 4 SCC 603 [Para 17]
H
790 SUPREME COURT REPORTS [2018] 10 S.C.R.

A 19. The allowances of capital investment in respect of Head Office,
Regional Offices, Administrative & other Technical Centres have also
been assailed as being contrary to the provisions of the Tariff Regulations.
20. The above contentions made on behalf of the CERC has been
reiterated on behalf of the consumers who are the appellants in Civil
B Appeal Nos. 971-973 of 2008. So far as the interpretation of the provisions
contained in the fourth proviso to Section 14 of the 2003 Act is concerned,
learned counsel for the said appellants (consumers) has additionally drawn
the attention of the Court that in the course of the exercise leading to the
enactment of 2003 Act, the Parliamentary Standing Committee on Energy
had, in fact, recommended that the Corporation, having regard to the
C special responsibility entrusted to it under the Act of 1948, should be
exempted from the application of the 2003 Act. Parliament, however,
decided not to provide a blanket exemption in favour of the Corporation.
It is pointed out that under Section 173 of the 2003 Act it is only such of
the provisions of the 2003 Act which are inconsistent with the provisions
D of the Consumer Protection Act, 1986 or the Atomic Energy Act, 1962
or the Railways Act, 1989 that will not have any effect. Instead, insofar
as the Corporation is concerned what was provided for is a limited
exemption, the extent of which has been spelt out by Section 14 (fourth
proviso) of the 2003 Act, which, necessarily, has to be understood to be
circumscribed by the provisions of the main part of Section 14 of the
E 2003 Act which deals with licensing as distinguished from tariff
determination. It is further urged on behalf of the appellants – consumers
that the decision to keep in abeyance the tariff for a period of two years
is ultra vires the provisions of the 2003 Act, there being no authority in
law to order any such relaxation or to postpone the coming into effect of
F the tariff fixed under the 2003 Act. The fact that the provisions of the
Act of 1948 do not find any mention in the proviso to Section 61 of the
2003 Act has also been stressed upon.
21. In so far as the pension and gratuity fund is concerned, in
addition to the grounds urged in this regard on behalf of the CERC, it is
G further urged that almost 99% of the pension and gratuity liability, as
assessed by the Actuary, has been permitted to be loaded on to the
electricity business without any reference or finding with regard to the
percentage of man-power deployed in the electricity business. Such a
decision which has been based on the sole submission of the Corporation
is contended to be untenable in law.
H
BHASKAR SHRACHI ALLOYS LTD. ETC. ETC. v. DAMODAR 791
VALLEY CORPORATION & ORS. ETC. [RANJAN GOGOI, J.]

The calculation and allowance of percentage of depreciation by A
following the provisions of Section 40 of the Act of 1948 has also been
assailed as being contrary to the provisions of the Regulations which,
according to the appellants – consumers should hold the field.
22. The Corporation which is the respondent in the appeals filed
by the Regulatory Commissions and the Consumers had filed its cross- B
objections in the said appeals. Emphasis is laid on the status and peculiar
characteristics of the Corporation as envisaged by the statute i.e. the
Act of 1948 constituting the said body. Reference has been sought to be
made to the various social welfare activities that the Corporation is
statutorily mandated to perform over and above electricity generation
and transmission. The aforesaid peculiar characteristics of the Corporation C
and its multifarious duties, according to the Corporation, would justify
continuity of the due application of the provisions of the Act of 1948 as
are not inconsistent with the provisions of the 2003 Act. It is only such
of the provisions of the Act of 1948 which are in clear conflict with the
provisions of the 2003 Act that will give way. The provisions of the Act D
of 1948 that may be in conflict with those of the Tariff Regulations will
however not have the same effect inasmuch as the provisions of a
subsidiary legislation cannot have an overriding effect over the provisions
of the parent or any other statute. It has been further urged that in a
given situation the proviso to a statutory provision may act as a main
provision itself going beyond the parameters of the matter of which the E
proviso may have been enacted as a part. In this regard, reliance has
been placed on the decisions of this Court in State of Rajasthan vs.
Leela Jain6, S. Sundaram Pillai & Others vs. V. R. Pattabhiraman
& Others7, Shah Bhojraj Kuvarji Oil Mills & Ginning Factory vs.
Subhash Chandra Yograj Sinha8, Motiram Ghelabhai vs. Jagan F
Nagar 9.
23. Coming specifically to the rate of depreciation, sinking fund,
interest on capital, etc., it has been urged that there being no provisions
in the 2003 Act in respect of the aforesaid matters which are dealt with
only by the Tariff Regulations in contra-distinction to specific provisions G
of the Act of 1948 covering the issue i.e. Section 40 of the Act of 1948,
6
(1965) 1 SCR 276
7
(1985) 1 SCC 591 [Para 27 to 43]
8
(1962) 2 SCR 159 [Para 9 and 10]
9
(1985) 2 SCC 279 [Para 9]
H
792 SUPREME COURT REPORTS [2018] 10 S.C.R.

A it is the provisions of Part IV of the Act of 1948 which will govern the
matter. So far as the debt-equity ratio is concerned, it has been urged
that the determination of the ratio at 50:50 for capital assets created
prior to 30th March, 1992 and the ratio of 70:30 for the capital assets
after 30th March, 1992 is consistent with the principles adopted for all
Central Government Corporations like NTPC Limited, Powergrid
B
Corporation of India Limited, NHPC etc.
24. Insofar as the pension and gratuity contribution required to be
made by the Corporation is concerned, it is contended that the issue has
been raised only at the stage of arguments by the HT-consumers i.e.
appellants in Civil Appeal Nos. 971-973 of 2008. The same has not been
C raised by the Regulatory Commission at all or even by the HT-consumers
before the forums below. That apart, it is contended that the break-up
of the details of the percentage of employees called for by the CERC in
this regard was made available which fact is borne out by the documents
placed before the learned Appellate Tribunal which has also been laid
D before this Court (Annexure 18 to the Memo of Appeal before the
learned Appellate Tribunal).
25. Similarly, in so far as the Operation and Maintenance
expenditure is concerned, it is contended that the same has been rightly
allowed as per the Tariff Regulations in force.
E 26. Before delving into the issues arising in the appeals, two
preliminary questions need to be answered which we propose to do at
the outset. The first pertains to the grant of a transitory period making
the tariff order effective from 1st April, 2006 instead of 1st April, 2004.
27. We have considered the reasons which had weighed with the
F CERC as well as the learned Appellate Tribunal in granting the aforesaid
transitory period. The present dispute, regardless of the way it is resolved,
would have relevance to the quantum of the tariff, depending on whether
the determination is made on the basis of the provisions of Part IV of the
Act of 1948 or the provisions of the Tariff Regulations, as may be. So
G far as the grant of the transitory period is concerned, the same, we have
noticed, has been so granted having due regard to the statutory functions/
social responsibilities that the Corporation is mandated to undertake in
terms of the Act of 1948. The tariff fixed is also lower than the tariff
that has been fixed by the Jharkhand and West Bengal Electricity
Regulatory Commission for the general/domestic classes of consumers.
H
BHASKAR SHRACHI ALLOYS LTD. ETC. ETC. v. DAMODAR 793
VALLEY CORPORATION & ORS. ETC. [RANJAN GOGOI, J.]

While it is correct that the classes of consumers served by the Corporation A
are HT-Industrial consumers like Steel, Coal, Railways, etc. beside bulk
supply to main beneficiaries of State Electricity Boards of West Bengal
and Jharkhand, the said fact, itself, is another peculiar feature which
distinguishes the Corporation from other licenses. If in a situation where
the Corporation in addition to generation, transmission and distribution of
B
electricity is statutorily required to undertake certain social security/
beneficial measures like flood control, control of soil erosion, afforestation,
navigation, promotion of public health, etc. we do not see how the grant
of transitory period can be faulted with. We, therefore, decline to interfere
with the aforesaid part of the order of the learned Appellate Tribunal.
28. The learned Appellate Tribunal has also taken the view that C
having regard to the provisions of Section 79 of the 2003 Act it is the
CERC which would be the “Appropriate Commission” for determination
of tariff inasmuch as the Damodar Valley Corporation is a Corporation
owned and controlled by the Central Government. The detailed inputs
to arrive at the aforesaid conclusion have been duly considered by us. D
On such consideration, we are of the view that the above conclusion
recorded by the learned Appellate Tribunal is neither unreasonable nor
irrelevant so as to warrant our interference, particularly, in exercise of
the limited jurisdiction under Section 125 of the 2003 Act.
29. We may now turn to the other/larger issues arising in the E
appeals.
30. The Damodar Valley Corporation had been incorporated under
the provisions of the Act of 1948. The facts antecedent to the incorporation
of this entity would throw considerable light on the objects and reasons
for its incorporation. Sometime in the year 1943, the Damodar River F
Valley had been affectedby severe floods leading to wide-scale destruction
of life and property. The Provincial Government of Bengal had constituted
an Enquiry Committee to suggest ways and means to avoid such
catastrophes in the future. The Enquiry Committee had, inter alia,
recommended that a statutory corporation, on the lines of the Tennessee
Valley Authority of the USA, be incorporated to command and control G
the Damodar River. The then British Government accepted this proposal
of the Committee and had called one Mr. W.L. Voorduin, a senior
Engineer working for the Tennessee Valley Authority to make
recommendations and suggestions in this regard.
H
794 SUPREME COURT REPORTS [2018] 10 S.C.R.

A 31. The preamble to the Tennessee Valley Authority Act10, 1933,
reads that the statute has been enacted by the Congress “to improve
the navigability and to provide for the flood control of the
Tennessee River; to provide for reforestation and the proper
use of marginal lands in the Tennessee Valley; to provide for the
agricultural and industrial development of said valley; to provide
B
for the national defence by the creation of a corporation for the
operation of Government properties at and near Muscle Shoals
in the State of Alabama, and for other purposes.” As can be observed,
the primary objective of the Tennessee Valley Authority Act is to prevent
floods across the Tennessee River Valley and the generation of electricity
C is incidental to this activity of flood-control.
32. The objects and reasons behind the incorporation of the Act
of 1948 may now be noticed:
“The Damodar River rises in Western Bihar and flows generally
in a south-easterly direction into Bengal. It is a seasonal river
D having a large flow of water during the rains which, apart from
being generally wasted, at times causes great damage to life and
property. It is now proposed to harness the water of this river
and some of its tributaries and utilize it in multiple development
of the Damodar Valley and the adjoining area.
E This Bill seeks to set up a Corporation, called the
Damodar Valley Corporation on the lines of the Tennessee
Valley Authority in the USA. It will be an autonomous body
within the framework of the enactment. Its objects,
constitution and powers are laid down in the Bill. Briefly,
F its main function will be to control flood in the Damodar,
generate electric power for distribution and provide water
for irrigation and other purposes. In addition, the
Corporation will, endeavour to promote economic
development of the Damodar Valley and the adjoining
areas. It will consist of three members including the Chairman.
G These three members and the Secretary and the treasurer will
be appointed by the Central Government. The Corporation will
have the power to acquire land and construct or cause to be
constructed such dams, barrages, reservoirs, power-houses and

10
16 U.S. Code § 831
H
BHASKAR SHRACHI ALLOYS LTD. ETC. ETC. v. DAMODAR 795
VALLEY CORPORATION & ORS. ETC. [RANJAN GOGOI, J.]

power structures, electrical transmission line, irrigation and A
navigation works as may be necessary. The capital required by
the Corporation will be provided by the Central Government and
the Government of Bihar and West Bengal. The profits and losses
will be distributed between these three Governments in certain
agreed proportions.
B
The provisions of this Bill are designed to give effect to the broad
outlines of the agreement reached between the three
Governments concerned.”
33. Having noticed the objects and reasons behind the creation of
the incorporated body and the main functions assigned to it by Parliament, C
we may now specifically revert to the issue of determination of tariff for
supply/distribution of the electricity generated by the Corporation.
34. Insofar as the issue as to whether the Tariff Regulations would
have an overriding effect to render the parallel provisions in the Act of
1948 ineffective, the reliance placed on behalf of the appellants on the D
decision of a Constitution Bench of this Court in PTC India Limited
(supra) may now be considered. The primary issue that was considered
by the Constitution Bench of this Court in PTC India Limited (supra)
was “whether the Appellate Tribunal constituted under the Electricity
Act, 2003 has jurisdiction under Section 111 of the Act to examine
the validity of the Central Electricity Regulatory Commission E
(Fixation of Trading Margin) Regulations, 2006 framed in exercise
of power conferred under Section 178 of the Electricity Act?”
35. The observations of this Court in PTC India Limited (supra)
with regard to the efficacy of the Tariff Regulations in the light of its
statutory character must necessarily be understood in the above context. F
The opinion rendered in PTC India Limited (supra) itself makes it
clear that the Tariff Regulations though statutory in character are a species
of subordinate delegated legislation, the purport of which has been
described and dealt with in the following manner:
“52. In Indian Express Newspapers (Bombay) (P) Ltd. v. Union G
of India this Court* held that subordinate legislation is outside
the purview of administrative action i.e. on the grounds of violation
of rules of natural justice or that it has not taken into account

* (1985) 1 SCC 641
H
796 SUPREME COURT REPORTS [2018] 10 S.C.R.

A relevant circumstances or that it is not reasonable. However, a
distinction must be made between delegation of legislative function
and investment of discretion to exercise a particular discretionary
power by a statute. In the latter case, the impugned exercise of
discretion may be considered on all grounds on which
administrative action may be questioned such as non-application
B
of mind, taking irrelevant matters into consideration, etc. The
subordinate legislation is, however, beyond the reach of
administrative law. Thus, delegated legislation - otherwise known
as secondary, subordinate or administrative legislation - is enacted
by the administrative branch of the government, usually under
C the powers conferred upon it by the primary legislation. Delegated
legislation takes a number of forms and a number of terms -
rules, regulations, by-laws etc; however, instead of the said labels
what is of significance is the provisions in the primary
legislation which, in the first place, confer the power to
enact administrative legislation. Such provisions are also
D
called as “enabling provisions”. They demarcate the
extent of the administrator’s legislative power, the
decision-making power and the policy making power.
However, any legislation enacted outside the terms of the enabling
provision will be vulnerable to judicial review and ultra vires.”
E 36. The opinion of a seven Judge Bench of this Court, though of
considerable vintage, in The Presidential Reference, The Delhi Laws
Act, 191211 may usefully be recalled at this stage:
“(In delegated legislation), a portion of the law-making power of
the legislature is conferred or bestowed upon a subordinate
F authority and the rules and regulations which are to be framed
by the latter constitute an integral portion of the statute itself. As
said already, it is within powers of Parliament or any competent
legislative body, when legislating within its legislative field, to
confer subordinate administrative and legislative powers upon
G some other authority. The question is: What are the limits within
which such conferment of bestowing of powers could be properly
made?
11
A.I.R. 1951 S.C. 332; Coram: Hon’ble the Chief Justice H.J. Kania, Hon’ble Mr.
Justice Syed Fazl Ali, Hon’ble Mr. Justice Patanjali Sastri, Hon’ble Mr. Justice
M.C. Mahajan, Hon’ble Mr. Justice B.K. Mukherjea, Hon’ble Mr. Justice S.R.
H Das and Hon’ble Mr. Justice Vivian Bose
BHASKAR SHRACHI ALLOYS LTD. ETC. ETC. v. DAMODAR 797
VALLEY CORPORATION & ORS. ETC. [RANJAN GOGOI, J.]

It is conceded by the learned Attorney-General that the legislature cannot A
totally abdicate its functions and invest another authority with all the
powers of legislation which it possesses. Subordinate legislation, it is not
disputed, must operate under the control of the legislature from which it
derives its authority, and on the continuing operation of which, its capacity
to function rests. As was said by Dixton, J., (vide, Victoria
B
Stevedoring and General Contracting Company v. Dignan, 46 C.L.R.
73) “a subordinate legislation cannot have the independent and
unqualified authority which is an attribute of true legislative
power”. It is pointed out by this learned Judge that several legal
consequences flow from this doctrine of subordinate legislation. An
offence against subordinate legislation is regarded as an offence against C
the statute and on the repeal of the statute the regulations automatically
collapse. So far, the propositions cannot, and need not, be disputed. But,
according to the learned Attorney-General, all that is necessary in
subordinate legislation is that the legislature should not totally abdicate
its powers and that it should retain its control over the subordinate agency
D
which it can destroy later at any time it likes. If this is proved to exist in
a particular case, then the character or extent of the powers delegated
to or conferred upon such subordinate agent is quite immaterial and into
that question the courts have no jurisdiction to enter. This argument seems
plausible at first sight, but on closer examination, I find myself unable to
accept it as sound. In my opinion, it is not enough that the legislature E
retains control over the subordinate agent and could recall him at any
time it likes, to justify its arming the delegate with the legislative powers
in regard to a particular subject. Subordinate legislation not only connotes
the subordinate or dependent character of the agency which is entrusted
with the power to legislate, but also implies to subordinate or ancillary
F
character of the legislation itself, the making of which such agent is
entrusted with. If the legislature hands over its essential legislative powers
to an outside authority, that would, in my opinion, amount to a virtual
abdication of its powers and such an act would be in excess of the limits
of permissible delegation.
... On a consideration of all these decisions I have no hesitation G
in holding that as regards constitution of the delegation of
legislative powers the Indian Legislature cannot be in the same
position as the prominent British Parliament and how far
delegation is permissible has got to be ascertained in India as a
matter of construction from the express provisions of the Indian H
798 SUPREME COURT REPORTS [2018] 10 S.C.R.

A Constitution. It cannot be said that an unlimited right of
delegation is inherent in the legislature power itself. This
is not warranted by the provisions of the Constitution and
the legitimacy of delegation depends entirely upon its being
used as an ancillary measure which the legislature
considers to be necessary for the purpose of exercising
B
its legislative powers effectively and completely. The
legislature must retain in its own hands the essential
legislative functions which consist in declaring the
legislative policy and laying down the standard which is to
be enacted into a rule of law, and what can be delegated in
C the task of subordinate legislation which by its very nature
is ancillary to the statute which delegates the power to
make it.”
37. It may be wholly unnecessary to detract from the fundamental
principles of law laid down in The Presidential Reference (supra), which
D would be an inevitable consequence, if the contentions advanced on
behalf of the appellants to the effect that the Tariff Regulations must
override the provisions of the Act of 1948 as the said regulations are
statutory in character is to be accepted. This is also what has been
subsequently emphasised by this Court in Bharathidasan University
& Anr. (supra) andSamsthanan Chethu Thozhilali Union (supra). No
E error, therefore, can also be found in the implicit reliance placed on the
ratio of the above decisions by the learned Appellate Tribunal in its order
dated 23rd November, 2007.
38. This will bring us to a consideration of the purport and effect
of the fourth proviso to Section 14 of the 2003 Act on which much
F debate and discussion have been generated in the course of prolonged
hearing of the case that had taken place. Section 14 of the Act may
usefully be extracted below at this stage:
“14. Grant of Licence : “The appropriate Commission may, on
an application made to it under Section 15, grant a licence to any
G person
(a) to transmit electricity as a transmission licensee; or
(b) to distribute electricity as a distribution licensee; or
Provided that the Developer of a Special Economic Zone notified
H under sub-section (1) of Section 4 of the Special Economic Zones
BHASKAR SHRACHI ALLOYS LTD. ETC. ETC. v. DAMODAR 799
VALLEY CORPORATION & ORS. ETC. [RANJAN GOGOI, J.]

Act, 2005, shall be deemed to be a licensee for the purpose of A
this clause, with effect from the date of notification of such
Special Economic Zone.
(c) to undertake trading in electricity as an electricity trader,
In any area as may be specifi-ed in the licence:
B
PROVIDED that any person engaged in the business of
transmission or supply of electricity under the provisions of the
repealed laws or any Act specified in the Schedule on or before
the appointed date shall be deemed to be a licensee under this
Act for such period as may be stipulated in the licence, clearance
or approval granted to him under the repealed laws or such Act C
specified in the Schedule, and the provisions of the repealed laws
or such Act specified in the Schedule in respect of such licence
shall apply for a period of one year from the date of
commencement of this Act or such earlier period as may be
specified, at the request of the licensee, by the Appropriate D
Commission and thereafter the provisions of this Act shall apply
to such business:
PROVIDED FURTHER that the Central Transmission Utility
or the State Transmission Utility shall be deemed to be a
transmission licensee under this Act: E
PROVIDED also that in case an Appropriate Government
transmits electricity or distributes electricity or undertakes trading
in electricity, whether before or after the commencement of this
Act, such Government shall be deemed to be a licensee under
this Act, but shall not be required to obtain a licence under this Act: F
PROVIDED also that the Damodar Valley Corporation,
established under sub-section (1) of Section 3 of the
Damodar Valley Corporation Act, 1948, shall be deemed
to be a licensee under this Act but shall not be required to
obtain a licence under this Act and the provisions of the
G
Damodar Valley Corporation Act, 1948, insofar as they are
not inconsistent with the provisions of this Act, shall
continue to apply to that Corporation:
PROVIDED also that the Government company or the company
referred to in sub-section (2) of section 131 of this Act and the
H
800 SUPREME COURT REPORTS [2018] 10 S.C.R.

A company or companies created in pursuance of the Acts specified
in the Schedule, shall be deemed to be a licensee under this Act:
PROVIDED also that the Appropriate Commission may grant a
licence to two or more persons for distribution of electricity
through their own distribution system within the same area, subject
B to the conditions that the applicant for grant of licence within the
same area shall, without prejudice to the other conditions or
requirements under this Act, comply with the additional
requirements 1 (relating to the capital adequacy, Credit
worthiness or code of conduct) as may be prescribed by the
Central Government, and no such applicant, who complies with
C all the requirements for grant of licence, shall be refused grant
of licence on the ground that there already exists a licensee in
the same area for the same purpose:
PROVIDED also that in a case where a distribution licensee
proposes to undertake distribution of electricity for a specified
D area within his area of supply through another person, that person
shall not be required to obtain any separate licence from the
concerned State Commission and such distribution licensee shall
be responsible for distribution of electricity in his area of supply:
PROVIDED also that where a person intends to generate and
E distribute electricity in a rural area to be notified by the State
Government, such person shall not require any licence for such
generation and distribution of electricity, but he shall comply with
the measures which may be specified by the Authority under
section 53:
F PROVIDED also that a distribution licensee shall not require a
licence to undertake trading in electricity.”
39. It is contended on behalf of the appellants that the application
of a proviso must always be confined and understood within the
parameters of the provisions of the main section of which the proviso is
G a part and that a proviso, in no case, can be construed to have any
general application. This argument would require some examination. In
this regard the decision of this Court Shah Bhojraj Kuvarji Oil
Mills(supra) may be usefully recapitulated and the following observations
may be specifically taken note of:
H
BHASKAR SHRACHI ALLOYS LTD. ETC. ETC. v. DAMODAR 801
VALLEY CORPORATION & ORS. ETC. [RANJAN GOGOI, J.]

“It is contended by the learned Attorney-General that the A
construction placed by the High Court upon the first proviso to
Section 50 (of Bombay Rents, Hotel and Lodging House Rates
Control Act of 1947) is erroneous. Though he concedes that the
proviso must be read as qualifying what the substantive part of
Section 50 enacts, he urges that the proviso goes beyond that
B
purpose and enacts a substantive law of its own. He relies upon
the following observations of Lord Loreburn, L.C., in Rhondda
Urban Council v. Taff Vale Railway, (1909) A.C. 253, where a
proviso to Section 51 of the Railway Clauses Consolidation Act,
1845, was under consideration:
“It is true that Section 51 is framed as a proviso upon preceding C
sections. But it is also true that the latter half of it, though in
form a proviso, is in substance a fresh enactment, adding to
and not merely qualifying that which goes before.”,
and contends that the latter portion of the proviso, in question,
being a substantive enactment, comprehends not only those suits D
which were pending on the date of repeal but also those cases,
which came within the language of the latter part of the proviso,
whenever the Act was extended to new areas…………..
…..…As a general rule, a proviso is added to an enactment
to qualify or create an exception to what is in the E
enactment, and ordinarily, a proviso is not interpreted as
stating a general rule. But, provisos are often added not
as exceptions or qualifications to the main enactment but
as savings clauses, in which cases they will not be
construed as controlled by the section.” F
40. Similarly in S. Sundaram Pillai(supra) this Court has
observed:
“A very apt description and extent of a proviso was given by
Lord Oreburn in Rhondda Urban District Council v. Taff Vale
Railway Co., (1909) A.C. 253, where it was pointed out that G
insertion of a proviso by the draftsman is not always strictly
adhered to its legitimate use and at times a section worded as a
proviso may wholly or partly be in substance a fresh enactment
adding to and not merely excepting something out of or qualifying
what goes before.”
H
802 SUPREME COURT REPORTS [2018] 10 S.C.R.

A 41. The fourth proviso to Section 14 of 2003 uses the expression
“….and the provisions of the Damodar Valley Corporation Act, 1948 in
so far as they are not inconsistent with the provisions of the Act, shall
continue to apply to that Corporation…”. On a careful reading of the
aforesaid later part of the fourth proviso to Section 14 of the Act of
2003, it is seen that it is clearly a substantive provision to lay down
B
something more than what a proviso generally deals with. If the intention
of the proviso was to exclude DVC only from the main part of Section
14 of the Act of 2003 dealing with the requirement of obtaining licence
for transmission/distribution/trade in electricity, the purpose is fully
achieved by the first part recognising DVC as a ‘deemed licensee’ and
C not requiring to apply for and obtain licence. The Legislature could have
simply stopped there. There was no necessity to incorporate the second
part. The second part of the fourth proviso is to bring in the continued
application of some of the provisions of the Act of 1948 which are not
inconsistent with the provisions of the Act of 2003. To elaborate it further,
let us take the case of the third proviso to Section 14 of the Act of 2003
D
which provides “that in case an appropriate Government transmits
electricity or distributes electricity or undertakes trading in electricity
whether before or after the commencement of the Act, such Government
shall be deemed to be a licensee under the Act but shall not be required
to obtain licence under the Act”. In so far as DVC is concerned, if the
E fourth proviso is to be confined only to licensing as in the case of third
proviso, the fourth proviso also would have stopped with the first part of
the proviso. There would have been no necessity to incorporate the
second part of the proviso. The legislature does not incorporate any
words which are irrelevant or redundant and every expression used in a
statutory provision has some purpose.
F
42. A careful comparative reading of the third and the fourth
provisos to Section 14 of the Act of 2003 clearly indicates the intention
of the legislature that the second part of the fourth proviso is to bring in
the continued application of some of the provisions of the Act of 1948
which are not inconsistent with the provisions of the Act of 2003. There
G are no licensing provisions in the Act of 1948 to be saved. The obvious
reference in the second part of proviso is to provide for the continued
application of the provisions of the Act of 1948 insofar as they are not
inconsistent with the provisions of the Act of 2003.

H
BHASKAR SHRACHI ALLOYS LTD. ETC. ETC. v. DAMODAR 803
VALLEY CORPORATION & ORS. ETC. [RANJAN GOGOI, J.]

43. In the course of arguments, the appellants made reference to A
Sections 18 and 19 of the Act of 1948 as being the provisions relating to
licensing which could be said to be considered as saved by virtue of
second part of the fourth proviso to Section 14 of the Act of 2003. A
perusal of Sections 18 and 19 of the Act of 1948 show that they deal
with the supply and generation of electrical energy and distribution of
B
electricity within the Damodar Valley area. The provisions of the Act of
2003 which authorise the Regulatory Commissions to grant licence to
persons (other than DVC) fully govern the field and there is no question
of continued application of the Act of 1948 in that respect. Sections 18
and 19 of the Act of 1948 do not deal with licence to DVC. These
provisions only deal with activities of other entities to distribute electricity C
within the Damodar Valley area. Further, the provisions of Electricity
Act, 2003 authorizes the Regulatory Commissions to grant licence to
persons other than DVC. Therefore, there can be no question of continued
application of the Act of 1948 over those provisions.
44. The fourth proviso to Section 14 which uses the expression D
“….and the provisions of the Damodar Valley Corporation Act, 1948 in
so far as they are not inconsistent with the provisions of the Act, shall
continue to apply to that Corporation…”, in our view, is a positive provision
enabling continued application of certain provisions of the Act of 1948
which are not inconsistent with the provisions of the Electricity Act,
2003. The intention behind both the provisions needs to be appreciated E
and given effect to.
45. There is yet another dimension of the case that has been
urged and, therefore, will require our consideration. While dealing with
the question as to whether Reports submitted by Parliamentary Standing
Committee, can be taken as permissible external aids for interpretation F
of a statute, this Court in a recent decision in Kalpana Mehta &
Ors.vs.Union of India & Ors.12 had occasion to observe as follows:
“xxxx
it clear as day that the Court can take aid of the report of G
the parliamentary committee for the purpose of
appreciating the historical background of the statutory
provisions and it can also refer to committee report or
the speech of the Minister on the floor of the House of
12
2018 (7) SCALE 106 H
804 SUPREME COURT REPORTS [2018] 10 S.C.R.

A the Parliament if there is any kind of ambiguity or
incongruity in a provision of an enactment. Further, it is quite
vivid on what occasions and situations the Parliamentary Standing
Committee Reports or the reports of other Parliamentary
Committees can be taken note of by the Court and for what
purpose. Relying on the same for the purpose of interpreting the
B
meaning of the statutory provision where it is ambiguous and
unclear or, for that matter, to appreciate the background of the
enacted law is quite different from referring to it for the purpose
of arriving at a factual finding. That may invite a contest, a
challenge, a dispute and, if a contest arises, the Court, in such
C circumstances, will be called upon to Rule on the same.”
46. The proceedings of the Parliamentary Standing Committee on
Energy (13th Lok Sabha), insofar as the Electricity Bill of 2001 presented
before the Lok Sabha on 19-12-2002 is concerned, would go to indicate
that various organisations like the Ministry of Railways, the Bhakra Beas
D Management Board (BBMB) and also the Corporation had requested
for exemption from the operation of the provisions of 2003 Act citing the
peculiar, sensitive and specialised nature of task that such bodies have
been entrusted by the statutory enactments constituting and governing
the said bodies/organizations. Specifically, in this regard, the peculiar
duties and responsibilities cast on the DVC by Section 12 of the Act of
E 1948 had been highlighted before the Parliamentary Standing Committee.
It had been urged before us that it was recommended by the
Parliamentary Standing Committee that exemption from the provisions
of the proposed 2003 Act should be granted to the Corporation in view
of its special statutory status which may get eroded if the exemptions
F are not to be granted. The provisions of Section 58 of the Act of 1948
which is in the following terms were also placed before the Parliamentary
Standing Committee while seeking exemption from the operation of the
proposed 2003 Act:
“58. Effect of other laws : The provisions of this Act or any
G rule made thereunder shall have effect notwithstanding anything
contained in any enactment other than this Act or any instrument
having effect by virtue of any enactment other than this Act.”
47. On the other hand, it would appear from the record of the
proceedings of the Parliamentary Standing Committee that the Industry
H represented by Chhotanagpur Chamber of Commerce & Industry and
BHASKAR SHRACHI ALLOYS LTD. ETC. ETC. v. DAMODAR 805
VALLEY CORPORATION & ORS. ETC. [RANJAN GOGOI, J.]

The Bengal Chamber of Commerce & Industry as well as the States of A
Jharkhand and West Bengal had contested the claims made by the
Corporation for exemption and had pleaded before the Parliamentary
Standing Committee that the Act of 1948 itself be repealed/amended
insofar as all non-power related activities are concerned which constitute
only about 10% of the total activities of the Corporation.
B
48. After considering the respective stands taken, the Parliamentary
Standing Committee had recommended that the Corporation should be
exempted from the operation of the provisions of the proposed 2003 Act
in view of the special status and responsibilities of the Corporation as
envisaged under the Parliamentary enactment constituting it (i.e the Act
of 1948). However, it appears that Parliament was not inclined to provide C
a blanket/total exemption in favour of the Corporation and the 2003 Act
did not include the Corporation as one of the entities in Section 173 of
the 2003 Act which provides exemption in so far as the provisions of the
Consumer Protection Act, 1986, the Atomic Energy Act, 1962 and the
Railways Act, 1989 clearly excluding the provisions of the Act of 1948 D
therefrom. Instead, the fourth proviso to Section 14 of the 2003 Act
was specifically incorporated, details of which have already been noted.
Having regard to the legislative history behind the enactment of the
provision of Section 173 and the provisions of Section 14 including the
fourth proviso thereto, it may be more in consonance with the
Parliamentary intention to hold that the fourth proviso to Section 14 need E
not be understood to be confined only to the question of licensing which
is dealt with by the main part of the Section 14. Rather, we are inclined
to hold that Parliament had intended to provide partial exemption to the
Corporation by mandating that such provisions of the Act of 1948 which
are not inconsistent with the 2003 Act will continue to hold the field. F
Viewed thus, the fourth proviso to Section 14 of the Electricity Act 2003
has to be understood to be a legislative exercise in the nature of a
substantial provision of law. Part IV of the Act of 1948 not being
inconsistent with the provisions of the 2003 Act can, therefore, be taken
into account for determination of tariff. Such provisions of the Act of
1948 will also have an overriding effect over the inconsistent provisions G
of the Tariff Regulations. Our view, as above, will also effectuate the
provisions of the Act of 1948 in so far as the activities of the Corporation,
other than generation and transmission of electricity, is concerned. We,
therefore, affirm the above view taken by the Appellate Tribunal for the
reasons afore-stated. H
806 SUPREME COURT REPORTS [2018] 10 S.C.R.

A 49. The specific heads of tariff fixation on which grievances have
been raised by the appellants in the present set of appeals are enumerated
as hereunder:
(a) Depreciation rate;
(b) Sinking Fund;
B
(c) Debt Equity ratio;
(d) Pension & Gratuity Contribution;
(e) Return on Capital Investment on Head Office etc.;
(f) Revenue relating to afforestation etc., which are not relatable to
C
power generation;
(g) Period of transition (two years) allowed for the tariff fixed by
the CERC to come into effect;
(h) The treatment of entire transmission as inter-State transmission
D lines thereby divesting the Jharkhand and West Bengal State
Electricity Regulation Commissions of the power to fix tariff
insofar as intra-State transmission of electricity is concerned;
50. Insofar as the questions under the last two issues at (g) and
(h) above is concerned, the same have already been dealt with in the
E present order. Of the remaining heads of tariff fixation, it appears that
so far as the ‘depreciation rate’ and ‘sinking fund’ is concerned it is the
provisions of Section 40 of the Act of 1948 which have been held to be
determinative. We have gone through the reasoning adopted by the
learned Appellate Tribunal in this regard. Having clarified the manner in
which the fourth proviso to Section 14 of the 2003 Act has to be
F understood, we do not find the reasoning adopted by the learned Appellate
Tribunal on the issues relating to ‘depreciation’ and ‘sinking fund’ to be
fundamentally flawed in any manner so as to give rise to a substantial
question of law requiring our intervention/interference under Section 125
of the 2003 Act.
G 51. Insofar as the debt-equity ratio is concerned, we find that
except for the projects which have been completed prior to 1992 in
which case the ratio has been worked out at par with other public-sector
organisation at 50:50, the ratio of 70:30 has been adopted following the
prescription under Regulation 20 of the Tariff Regulations in the absence
H of any specific rate under the Act of 1948.
BHASKAR SHRACHI ALLOYS LTD. ETC. ETC. v. DAMODAR 807
VALLEY CORPORATION & ORS. ETC. [RANJAN GOGOI, J.]

52. So far as the pension and gratuity fund is concerned, the only A
issue arising is whether the fund worked out on Actuary basis at
Rs.1534.49 crores should be apportioned between the Corporation and
the consumers as held by the CERC in the ratio of 40:60 or the entire
fund should be allowed to be recovered by way of tariff from the
consumers as held by the learned Appellate Tribunal. The reasoning of
B
the learned Appellate Tribunal in coming to the aforesaid conclusion is
as follows:
“D.3 As a general rule, once the Commission, after prudence
check, has agreed with the need for funding the Pension and
Gratuity Contribution funds, DVC should have been allowed to
recover entire amount from the consumers through the tariff. C
Asking DVC to contribute out of its own resources would
tantamount to denying it the return on equity as assured in terms
of Tariff Regulations. However, if we look at it from the point of
view of the consumers, the consumers, particularly the industrial
and commercial ones, have now no option to adjust their sale D
price to take into consideration the need for meeting the
accumulated liability. It is, therefore, an accepted fact that due
to postponing of the creation of such fund, the consumers were
enjoying lesser tariff than the legitimate tariff otherwise applicable
to them.”
E
53. A careful consideration of the reasoning adopted by the learned
Appellate Tribunal would not disclose any such error so as to warrant
interference of this Court. No error or fallacy, ex facie, is disclosed in
the reasoning adopted so as to justify interference under Section 125 of
the 2003 Act.
F
54. Insofar as the consumers (appellants in Civil Appeal Nos.
971-973 of 2008) are concerned, an additional issue has been struck, as
noticed earlier. This is with regard to the number of employees engaged
in the power sector by the Corporation for whom alone proportionate
recovery by way of tariff so far as the pension and gratuity is concerned,
would be justifiable. Apart from the fact that the issue was not raised in G
any of the forums below and had been so raised before this Court for
the first time and that too in the course of the arguments advanced, the
materials on record do not justify a conclusion to be reached by us which
will support the core basis of the contention made, namely, that the
Corporation had not laid before the CERC any materials to show the H
808 SUPREME COURT REPORTS [2018] 10 S.C.R.

A extent of the work-force deployed in the power sector of the Corporation.
In fact, in the counter arguments advanced on behalf of the Corporation
this contention has been refuted and it is asserted that such materials
were, indeed, laid before the CERC, a fact which we find to be correct.
55. Insofar as the issue of allowance of cost relating to other
B activities of the Corporation to be recovered through tariff on electricity
is concerned, we have taken note of the objection(s) raised in this regard
which in sum and substance is that Sections 32 and 33 of the Act of
1948 are in direct conflict with Sections 41 and 51 of the 2003 Act and,
therefore, recovery of cost incurred in “other works” undertaken by the
Corporation through power tariff is wholly untenable. Apart from
C reiterating the basis on which we have thought it proper to affirm the
findings of the learned Appellate Tribunal on the purport and scope of
the fourth proviso to Section 14 of the 2003 Act and the continued
operation of the provisions of the Act of 1948 which are not inconsistent
with the provisions of the 2003 Act, we have also taken note of the
D specific provisions contained in Sections 41 and 51 of the 2003 Act which,
inter alia, require maintenance of separate accounts of the other business
undertaken by transmission/distribution licensees so as to ensure that
the returns from the transmission/distribution business of electricity do
not subsidize any other such business. Not only Sections 41 and 51 of
the 2003 Act contemplate prior approval of the Appropriate Commission
E before a licensee can engage in any other business other than that of a
licensee under the 2003 Act, what is contemplated by the aforesaid
provisions of the 2003 Act is some return or earning of revenue from
such business. In the instant case, the “other activities” of the Corporation
are not optional as contemplated under Sections 41/51 of the 2003 Act
F but are mandatorily cast by the statute i.e. Act of 1948 which, being in
the nature of socially beneficial measures, per se, do not entail earning
of any revenue so as to require maintenance of separate accounts. The
allowance of recovery of cost incurred in connection with “other
activities” of the Corporation from the common fund generated by tariff
chargeable from the consumers/customers of electricity as contemplated
G by the provisions of the Act of 1948, therefore, do not collide or is, in any
manner, inconsistent with the provisions of the 2003 Act. We will,
therefore, have no occasion to interfere with the findings recorded by
the learned Appellate Tribunal on the above score.

H
BHASKAR SHRACHI ALLOYS LTD. ETC. ETC. v. DAMODAR 809
VALLEY CORPORATION & ORS. ETC. [RANJAN GOGOI, J.]

56. Having dealt with all the issues raised/arising in the appeals A
under consideration in the manner indicated above, we deem it proper to
dismiss all the appeals and affirm the judgment and order dated 23rd
November, 2007 passed by the learned Appellate Tribunal. We order
accordingly.
Divya Pandey Appeals dismissed. B

C

D

E

F

G

H