Supreme Court of India
TAMIL NADU STATE ELECTRICITY BOARDversusCENTRAL ELECTRICITY REGULATORY COMMISSION AND ORS.
- Citation
- 2007 INSC 447
- Decided
- 20 April 2007
- Disposal
- Dismissed
- Bench
- H K SEMA
Holding
Regulation 2.7(d)(iv) mandates that the 6% escalation factor is the standard and only deviations beyond the 4.8%‑7.2% band are to be adjusted; deviations within that band are to be absorbed by the utilities.
Summary
The case concerned the interpretation of Regulation 2.7(d)(iv) of the Central Electricity Regulatory Commission (Terms & Conditions of Tariff) Regulations, 2001, which prescribes a 6% escalation factor for revising operation and maintenance (O&M) charges and allows a deviation of up to 20% (i.e., 4.8% to 7.2%) to be absorbed by utilities. The CERC had applied the actual escalation factor for years when the deviation exceeded this range, a decision that was set aside by the Appellate Tribunal for Electricity. The utilities (TNSEB, UPCL, Rajasthan Rajya Vidhyut Prasaran Nigam) appealed, arguing that the regulation should be read more flexibly to benefit generators. The Supreme Court examined the language of the regulation and held that its plain meaning is clear: the 6% factor is standard and any deviation within 4.8%‑7.2% must be ignored, while only deviations beyond these limits are to be adjusted. The Court rejected the argument for a broader, purposive reading and affirmed the literal construction. Consequently, the appeals were dismissed without costs.
Issues considered
- Whether Regulation 2.7(d)(iv) of the CERC (Terms & Conditions of Tariff) Regulations, 2001 requires a literal interpretation of the 6% escalation factor and the 20% deviation tolerance.
- Whether deviations within the 4.8%‑7.2% range must be absorbed by utilities or can be adjusted in favour of generators.
- Whether the Appellate Tribunal erred in setting aside the CERC's order on the basis of a purposive interpretation.
Legislation cited
- Electricity Act, 2003s. 125
- Electricity (Supply) Act, 1948s. 28, s. 55
Subjects
Escalation factorOperation and Maintenance expensesTariff regulationLiteral interpretationElectricity ActCERCRegulation 2.7(d)(iv)Deviation toleranceUtility tariffs
Judgment
"V--·
.;,
A TAMIL NADU STATE ELECTRICITY BOARD
v.
CENTRAL ELECTRICITY REGULATORY COMMISSION AND ORS.
APRIL 20, 2007
B [H.K. SEMA AND V.S. SIRPURKAR, JJ.]
.'
Central Electricity Regulatory Commission (Terms and Conditions of >-·
Tarriff) Regulations, 2001; Regulation 2. 7(d)(iv)/Electricity Act, 2003; S. I 25:
c Operation and Maintenance/expenses including insurance-Revision-·
Escalation factor for the deviation between 4.8% and 7.2% in terms of
Regulation 2. 7 (d)(iv)-Interpretation of-Held: In terms of Regulation
2. 7(d)(iv) escalation factor of 6% is to be used for revising other charges-
On each year the escalation factor would be computed on the basis of actual
D inflation data-In case, the deviation factor works out to be within 20% of
the standard escalation factor of 6% such deviation shall be ignored since
i
objective behind the provision is that an exercise of computation could be
"*
dispensed with for a little or insignificant charges-Plain and simple meaning
of the provision admits that the deviation beyond the prescribed limit would
only be available for adjustment and such a deviation has to be absorbed
E by utilities/beneficiaries-Interpretation of Statutes.
Words and Phrases:
'Beyond the limit'-Meaning of the context of Regulation 2. 7 (d)(iv).
~-
F National Thermal Power Corporation, one of the respondents, generates
electricity at its various plants and sells it to the State utilities viz. appellants
at the tariff fixed by the Central Electricity Regulatory Commission (CERC).
After CERC Regulations, 2001 were notified which provide the method for
working out the allowable Operation and Maintenance expenses and escalation
factors thereupon, the Commission with a view to look into the question of
G revision of O&M expenses for the period from 2001-2002 to 2003-2004
,f
initiated suo motu proceedings in the year 2004. The Commission circulated
its Draft Order dated 4.1.2005 dealing with adjustment of 0 & M expenses
based on actual escalation factor for the deviation beyond the limit prescribed
by Regulation 2. 7 (d)(iv) of the Central Electricity Regulatory Commission
H 416
TAMIL NADU STAlE ELECTRICITY BOARD v. CENlRAL ELECTRICITY REGULATORY COMMISSION 417
- .. (Terms and Conditions of Tariff) Regulation, 2001. The CERC vide its order A
dated 28.2.2005 directed that the O&M charges between April 1, 2001 to
March 31, 2004 should be worked out by applying the actual escalation rates
for the years 2001-2002 and 2003-2004 as calculated by CERC. A Review
Petition was filed before the CERC by the NTPC was rejected by the CERC
by its order dated 7.6.2005. Aggrieved, NTPC and others filed an appeal before
the Appellate Authority. The Appellate Authority vide its order dated 3.1.2006
B
allowed the appeals filed by the NTPC and set aside the orders passed by the
> .. CERC dated 28.2.2005 and 7.6.2005. Hence the present appeals.
~
Appellant-Utilities contended that the Appellate Authority has clearly
erred in giving a literal interpretation to the provision, namely, Clause
2. 7(d)(iv) of CERC Regulations; that the Appellate Authority was bound to
c
discern the true intendment of the provision and should have given it a
meaningful interpretation, in that, the escalation factor should have been
calculated keeping 6% as the base and it should not have been limited to the
difference alone; that the rule was manifestly neutral rule founded on purely
neutral consideration and while interpreting the same, the Appellate Court D
bas divested itself with the logic thereof, that the rule was meant for the
• t convenience of all concerned which included both administrative as well as
financial convenience; that the intention behind the rule was that the CERC
should not be exposed to the tedious exercise of review and re-adjustment of
tariff already fixed so long as the deviation was within 20% which was
E
perceived to be the reasonable tolerance limit and hat being the only objective
behind the peculiar language of the rule; that by adopting the literal
interpretation, the Utilities could not have been deprived of the full benefits if
the O&M factor went below 20% of the escalation factor of6%; that in case
the O&M factor went beyond the 20% by way of an upswing then the
- '1 generating unit like NTPC-the respondent was always justified to charge on F
the basis of the full difference between the actual upswing point and the 6%;
that this was the only intendment of the rule; that the range of 20% upswing
or downswing, i.e., between 7.2% and 4.8% was not to be viewed as a cushion
so as to keep it to be a constant factor and in fact there was no question of the
generating station being allowed to suffer in the event of the upswing beyond
7.2%; that the range of 20% up or down from the presumed notional
G
-\· escalation factor of 6% only represented thi; margin of error in its tariff
fixation exercise which the Regulator, i.e., CERC could overlook because of
the considerations like administrative and financial convenience of all
concerned; and that the literal interpretation would be illogical, unprincipled
and impractical. H
418 SUPREME COURT REPORTS [2007] S S.C.R.
A On behalf of the respondents it was substituted that as per the
:..,,,
established legal principles no unnatural interpretation could be given to the
concerned legal provisions particularly when its plain meaning was crystal
clear; there was no necessity of any interpretation to be given when provision
was crystal clear; and that where the plain meaning of the provision did not,
in any manner, do harm to the objective nor could bring out any absurdity, the
B golden rule of literal interpretation was the only course to be adopted by the
courts of law.
Dismissing the appeal, the Court . ~
~
HELD:l.l. It is obvious from the plain reading of clause 2.7 (d) of the
c Central Electricity Regulatory Commission (Terms and Conditions of Tariff)
Regulations that the escalation factor of 6% was to be used for revising the
base figure ofO&M charges. Plainly speaking it would mean that the O&M
charges would be revised on the basis of escalation factor of 6%. The 6%
would be standard. It is further provided that each year the escalation factor
would be computed on the basis of actual inflation data and if the said deviation
D
factor works out to be within 20% of the standard escalation factor of 6%,
such deviation shall be ignored meaning thereby ifthe deviation factor goes
beyond 6% upto 7.2%, still the deviation would be treated to be 6% only. So 1 .
only if the deviation goes below upto 4.8%, still deviation to this extent, as
per the clause,-would not make any change. However, ifthe deviation goes
E beyond 7.2% on upper side or below 4.8% on the lower side, the same would
be adjusted, in the sense that then the calculation would have to be made of
O&M factor on the basis of the deviation. [Para 17) [427-C-F)
1.2. The objective of the provision appears to be that there does not have
to be an exercise of computation for a little or insignificant change ranging
F between 1.2% and such deviations would be ignored. The language used is T'.
that "such changes shall be absorbed by the utilities/beneficiaries". This.
appears to be with the idea that the calculations do not have to be made on the
basis of labile deviations upto the limit of 1.2%. The meaning becomes
extremely clear from the clause which starts from "in other words" and ends
G with "absorbed by the utilities". It means any deviations beyond this limit alone
shall be adjusted. It is extremely clear from the further sentence that what is
to be adjusted is "the deviations beyond the limit of 7.2% on the upper side
.;
and 4.8% on the lower side, i.e., if the deviation goes below 4.8%, say, upto
4% then the O&M factor would be considered in respect of .8% deviation
because that is the deviation contemplated by the clause.
H [Para 17) [427-F-H; 428-A)
TAMIL NADU STATE ELECTRICITY BOARD v. CENTRAL ELECTRICITY REGULATORY COMMISSION 419
- .. 1.3. If the meaning contemplated by the appellants is to be given, it would A
do harm to the unambiguous language of the clause. Plain and simple meaning
of the provision admits of, no doubt, in the sense that it would be only the
deviation "beyond the limit" of 1.2% which would be available for adjustment
In that sense there would a cushion between the two points, namely, 7.2% on
the upper side and 4.8% on the lower side. That is precisely provided by the
words "any deviation beyond this limit". The word "beyond this limit" would B
signify the extent of deviation that is to be taken into consideration and that
), . is required to be "adjusted." [Para 17) [428-A-B)
... Ombalika Das & Anr. v. Hulisa Shaw, [2002) 4 SCC 539 and Keshavji
Ravji & Co. v. CIT, [1990) 2 SCC 231, relied on.
c
Pakala Narayanasami v. Emperor, AIR (1939) PC 47, referred to •
. 1.4. Since the language of Regulation 2.7(d)(iv) of the Act is absolutely
clear so as to take into consideration only the deviations beyond the limit,
i.e., above 7.2% or below 4.8% for the purposes of adjustment, there will be
D
no question of adjusting the full deviation between 6% to the percentage
beyond 7.2% or below 4.8%. It is more than clear from the language that
)>
t any deviation between 4.8 to 7.2 has to be absorbed by utilities/beneficiaries,
In that view the argument that this Court would have to search for any logic
and hold that the full difference between the actual upswing and downswing
point and 6% would be available for adjustment is rejected. It is not the task E
of this Court to find out or search for the wisdom of legislature. For the same
reasons, the argument that the word "adjust" should be read to mean
"accommodate" is not accepted. (Para 21) [429-A-C)
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2149 of2006.
~
F
From the Judgment and Order dated 03.01.2006 of Appellate Tribunal for
Electricity, New Delhi in Appeal No. 103 of2005.
WITH
Civil Appeal No. 2352 & 3027 of2006 . G
. G.E. Vahanvati, SG., Sunil Gupta, Pradeep Misra, Aruneshwar Gupta,
Navin Kumar Singh, Mukul Sood, Shashwat Gupta, Shikha Tandon, M.G.
Ramachandran, K.V. Mohan, K.V. Balakrishnan, Anand K. Ganesan, Hrishikesh
Barnah, A.S. Bhasme, Varon Thakur, Sanjay Kumar Dubey, Rana Mukherjee,
H
420 SUPREME COURT REPORTS (2007) 5 S.C.R.
A Sidharth Gautam, Goodwill Indeevar, Janaranjan Das, Swetaketu Mishra, Rajiv ...
Mehta and T. Mahipal for the appearing parties.
The Judgment of the Court was delivered by
V.S. SIRPURKAR, J 1. This judgment will dispose of the above three
· B Civil Appeals which have been filed by three Appellants, namely, Tamil Nadu
State Electricity Board, Uttar Pradesh Power Corporation Ltd. and Rajasthan
Rajya Vidhyut Prasaran Nig~m Ltd. The common question of law is involved
in all the three appeals which relates to the interpretation of Regulation
2.7(dXiv) of the Central Electricity Regulatory Commission (Terms & Conditions
C _of Tariff) Regulation, 200 I (hereinafter called the "CERC Regulations, 200 l ").
These appeals are filed under Section 125 of The Electricity Act, 2003 (36 of
2003) and against the orders passed by the Appellate Tribunal allowing the
appeals filed by the respondents therein. The following factual matrix would
be necessary for the proper understanding of the controversy involved in
these appeals.
D
2. Before the present Act came in the anvil, the Electricity Supply Act,
1948 was occupying the field and the Central Government norms for fixing
tariff for the period 1.11.1992 to 31.l 0.1997 were notified under Section 43A t .
of the said Act. The Legislature then brought in Electricity Regulatory
Commissions Ordinance which was ultimately converted into an Act in the
E year 1998. Section 3 of the Act provides for the establishment and incorporation
of Central Electricity Regulatory Commission (hereinafter called the "CERC"
for short). Section 13 provides power to regulate the tariff of generating
companies, owned and controlled by the Central Government, sub-section (b)
thereof provides power to regulate the tariff of the other companies amongst
F the other powers which are to be found upto clauses (i) of that Section.
Section 28 of the 1998 Act reads as under: y·
"28. The Central Commission shall determine by regulations the terms
and conditions for fixation of tariff under clauses (a), (b) and (c) of
Section 13, and in doing so, shall be guided by the following namely:
G (a) the generating companies and transmission entities shall adopt
such principles in order that they may earn an adequate return and
at the same time that they do not exploit their dominant position in
the generation, sale of electricity or in the inter-State transmission of
electricity;
H
TAMIL NADU STATE ELECTRICITY BOARD"'· CENTRAL ELECTRICITY REGULATORY COMMISSION (V.S. SIRPURKAR. l.J 421
~
)
(b) the factors which would encourage efficiency, economical use of A
the resources, good performance, optimum investments and other
matters which the Central Commission considers appropriate;
(c) national power plans formulated by the Central Government; and
(d) such financial principles and their applications contained in
B
Schedule VI to the Electricity (Supply) Act, 1948 as the Commission
considers appropriate."
.. '
A bare glance of the above quoted Section suggests that the CERC would
.... formulate regulations for providing terms and conditions for fixation of tariff
under Clauses (a), (b) & (c) of Section 13. The power for making Regulations c
is to be found in Section 55 of the 1998 Act. Accordingly, the CERC has
formulated Regulations which are called Central Electricity Regulatory
Commission (Conduct of Business) Regulations, 1999. We are concerned
herein with the Regulations called CERC Regulations, 2001 and more particularly,
clause 2.7(d)(iv) thereof.
D
3. Before we take up the task of interpretation, we must state the facts
which necessitate the interpretation of the above clause. In all these appeals
• t we are concerned with the tariff for the period 1.4.2001 upto 31.3.2004. Clause
1.4 of the CERC Regulations, 2001 provides as under:
"1.4. The generation tariff under these Regulations shall be determined E
station-wise and transmission tariff shall be determined line-wise, sub
station-wise, as the case may be, and aggregated to regional tariff."
Provided that a utility may file a petition for fixation of tariff in respect
of the completed units/systems.
F
Clause 1.11 provides:
"For removal of doubts, it is clarified that the norms prescribed herein
are the ceiling norms only and this shall not preclude the Generating
Company and other beneficiaries from agreeing to improved norms."
,-
G
Chapter 2 relates to other power generating stations. Para 2.1 is a definition
~
clause and the definition of "Operation and Maintenance Expenses" provides
as under:
"Operation and Maintenance Expenses" or "O&M Expenses"-ln
relation to a period means the expenditure incurred in operation and maintenance H
422 SUPREME COURT REPORTS (2007] 5 S.C.R.
,. -:
A of the generating station including manpower, spares, consumables, insurance ·/- -
and overheads." '
Regulation 2.2 in the same Chapter provides as under:
"2.2. The tariff for sale of electricity from Thermal Generating Stations
B (including Gas and Naphtha based stations) shall comprise of two
parts, namely, the recovery of annual capacity (fixed) charges and
Energy (variable) charges. The annual capacity (fixed) charges shall
consist of interest on loan capital, depreciation, return on equity, ' •
advance against depreciation, operation and maintenance expenses, ,,..
and interest on working capital. The Energy (Variable) charges shall
c cover fuel cost." (Emphasis Supplied)
Then comes Regulation 2.7 which under sub-clause (d) provides for Operation
and Maintenance expenses including insurance. We are not concerned with
sub-clauses (i), (ii) & (iii) thereof. However, the relevant clause which has
fallen for our consideration is clause (iv) which reads as under:
D
"2. 7. Payment of Capacity (Fixed) Charges:
The Capacity Charges shall be computed on the following basis and 1' •
its recovery shall be related to Availability.
E (a)················
(b) ················
(c) ..............:.
(d) Operation and Maintenance expenses including insurance:
F y·
(i) ············
(ii) ...........
(iii) .~ ........
G (iv) The escalation factor of 6 percent per annum shall be used to -,
revise the base figure of O&M expenses. A deviation of the escalation
factor computed from the actual inflation data that lies within 20 -}-
percent of the above notified escalation factor of 6 percent (which
works out to be 1.2 percentage points on either side of 6 percent) shall
H be absorbed by the utilities/beneficiaries. In other words if the
TAMIL NADU STATE fl.ECTRICllY BOARD v. CENTRAL ELECTRICITY REGULATORY COMMISSION 1v.s. SIRPURKAR, J.J 423
escalation factor computed from the observed data lies in the range A
-"> of 4.8 to 7.2 percent, this variation should be absorbed by the utilities.
Any deviations beyond this limit shall be adjusted on the basis of the
actual escalation factor arrived at by applying a weighted price index
of CPI for industrial workers(CPI_IW) and an index of select components
ofWPI (WPIOM) as per formula given in note below clause (v) herein
below, for which the utility shall approach the Commission with a B
petition."
,, ' 4. National Thermal Power Corporation (hereinafter called the NTPC)
_. generates the electricity at its various plants and sells it to the State utilities
like appellants at the tariff fixed by CERC. We have already pointed out that
it is the CERC which has the exclusive task of fixing the tariff. After CERC
c
Regulations, 200 l were notified which provide the method for working out the
allowable Operation and Maintenance expenses and escalation factors
thereupon, the Commission with a view to look into the question of revision
of O&M expenses from 2001-2002 to 2003-2004 initiated suo motu proceedings
being Petition No.196 of 2004. As per procedure the Commission circulated D
its Draft Order dated 4.1.2005 dealing with adjustment of O&M expenses
based on actual escalation factor for the deviation beyond the limit prescribed
.... t by Regulation 2. 7(dXiv). The inflation rates for the relevant years were specified
by the Commission in this order which were based on computation arrived
at by the staff of CERC. The Draft Order was circulated to the Central Utilities
as also the State Utilities like UPCL. The UPCL did not question the inflation E
rates. The stand of the NTPC throughout was that revision ofO&M expenses
be undertaken on the notional 6% escalation factor based on actual escalation
between 4.8 and 7.2 since 20% was considered to normal deviation. Its further
stand was that in case the deviation goes below 4.8 or beyond 7.2, as the case
-., may be, it would be required to be adjusted on the basis of the actual F
escalation factor meaning thereby it would be only the deviation of the two
points, namely, below 4.8% and beyond 7.2% which would be taken into
consideration whereas the stand of the Utilities was that the said escalation
factor should be related to the standard 6%. For example, according to the
NPTC, if the escalation went to 4% which was below 4.8% then only .8%
~
should be taken as an escalation factor so also if the escalation went beyond G
7.2, i.e., 8%, then it would be only .8% which woYld be taken as an escalation
...... factor. On the other hand as per the Utilities the said escalation factor should
not be limited to the deviation but it should be 2% in the first and the second
case because it was actually the deviation of 2% from the standard 6%.
H
424 SUPREME COURT REPORTS [2007] 5 S.C.R.
A 5. By its order dated 28.2.2005, the CERC held that where the escalation
factor is not in the prescribed nonn, O&M expenses should be calculated by
working out "the actual escalation factor" and not "the marginal adjusted
escalated factor" as explained above. Consequently, the CERC directed that
the O&M charges between April I, 200 I to March 31, 2004 should be worked
B out by applying the actual escalation rates for the years 2001-2002 and 2003-
2004 which was calculated by the staff of CERC.
6. A Review Petition was filed before the CERC by the NTPC. However,
that review petition was rejected by the CERC by its order dated 7.6.2005. ' .
NTPC, therefore, filed an appeal before the Appellate Authority vide Appeal
C No. I 03 of 2005 (We have taken the facts only in the case of UPCL, i.e., CA
No.2352/2006 for the sake of convenience as there is no difference in the facts
of the other two appeals and the question is absolutely common).
7. The Appellate Authority vide its order dated 3.1.2006 allowed the
appeals filed by the NTPC and set aside the orders passed by the CERC dated
D 28.2.2005 and 7.6.2005. It is against this order of the Appellate Authority that
the present appeals have been filed.
8. We would reproduce para 13 of the order of the Appellate Tribunal + •
which contains the findings arrived at by the Appellate Authority:
E 13. The aforesaid calculations reveal that the CERC did not attach any
importance to the deviation beyond the range of 4.8 to 7.2%. It did
not work out the deviations at all. Deviations beyond the tenninal
limits of 4.8% to 7.2% were required to be adjusted on the basis of
the actual escalation factor. In Regulation 2.7(d)(iv), the words 'any
deviation beyond this limit shall be adjusted on the basis of actual
F escalation factor' are very significant and must be given effect to.
The word 'adjust' used in the Regulation means to accommodate.
CERC has not accommodated the deviation at all. In fact the CERC
ought to have deducted the actual deviation from the limit of 4.8%.
In order to give effect to the real meaning of the Regulation 2.7(d)(iv),
G the CERC should have made the calculations in the following manner
in respect of say for the year 2000-200 I:
6x-035x
=x(6-0.35) = 5.65x
H {where
TAMIL NADU STATE ELECTRICITY BOARD v. CENTRAL ELECTRICITY REGULATORY COMMISSION (V.S. SIRPURKAR, J.J 425
x =signifies nonnalized O&M expenses for the year 2000-2001; A
4.45 is actual escalation factor;
4.8 is the tenninal limit;
0.35 has been arrived at by deducting 4.45 from 4.8; and
B
all figures represent percentages}."
• 9. Shri Sunil Gupta, Senior Advocate for UPCL and Shri Aruneshwar
Gupta addressed us on behalf of the appellants whereas Shri G.E. Vahanvati,
Solicitor General addressed us on behalf of respondents. The contentions
raised by Shri Sunil Gupta and Shri Aruneshwar Gupta were as under. C
10. The Appellate Authority has clearly erred in giving a literal
interpretation to the said provision, namely, Clause 2.7(dXiv). Learned counsel
urged that the Appellate Authority was bound to discern the true intendment
of the provision and should have given it a meaningful interpretation, in that,
the escalation factor should have been calculated keeping 6% as the base and D
it should not have been limited to the difference alone. Learned counsel Shri
Sunil Gupta further argued that the rule was manifestly neutral rule founded
on purely neutral considerations and while interpreting the same, the Appellate
Court has divested itself with the logic thereof. Learned counsel buttressed
his arguments by suggesting that the rule was meant for the convenience of E
all concerned which included both administrative as well as financial
convenience. According to both the counsel the intention behind the rule
was that the CERC should not be exposed to the tedious exercise of review
and re-adjustment of tariff already fixed so long as the deviation was within
20% which was perceived to be the reasonable tolerance limit and that being
the only objective behind the peculiar language of the rule. By adopting the F
literal interpretation, the Utilities could not have been deprived of the full
benefits if the O&M factor went below 20% of the escalation factor of 6%.
Learned counsel very fairly submitted that in case the O&M factor went
beyond the 20% by way of an upswing then the generating unit like NTPC
was always justified to charge on the basis of the full difference between the G
actual upswing point and the 6%. According to the learned counsel this was
the only intendment of the rule.
11. Learned counsel further urged that the range of 20% upswing or
downswing, i.e., between 7.2 and 4.8 was not to be viewed as a cushion so
as to keep it to be a constant factor and in fact there was no question of the H
426
4'
SUPREME COURT REPORTS [2007) 5 S.C.R.
A generating station being allowed to suffer in the event of the upswing beyond
7.2%.
\
12. According to learned counsel the range of20% up or down from the
presumed notional escalation factor of 6% only represented the margin of
error in its tariff fixation exercise which the Regulator, i.e., CERC could overlook
B because of the considerations like administrative and financial convenience
of all concerned. For this proposition the learned counsel sought to rely on
the margin of 3% in Rule 57(1) of the Indian Electricity Rules, 1956. Lastly,
the learned counsel urged that the literal interpretation would be illogical,
unprincipled and impractical.
c 13. Learned counsel Shri Suresh Tripathi appearing on behalf of Tamil
Nadu Electricity Board also filed written submissions more or less on the same
lines. According to those submissions, it is urged, that the Appellate Authority
completely missed the meaning of "adjust" which could only mean
"accommodate". The said adjustment was concerned with the tariff setting
D or in simple terms readjustment of the tariff. The submissions further suggest
that the underlying philosophy behind the Regulations in question was that t .
the tariff setting should not be disturbed every now and then on trivial
adjustments and, therefore, the Regulator had taken a pragmatic view in
making provision for 20% adjustment. Therefore, if the deviation went beyond
20%, there was no scope to limit it only to the extent of beyond the margin.
E The argument goes further and suggests that the statute envisaged the
interest of the consumers to be safeguarded and, therefore, when the O&M
factor dipped beyond 20% limit, the full advantage should have been given
to the beneficiaries, i.e., consumers because the dipping of the O&M factor
would certainly bring down the price required to be paid by the consumers
F for the electricity.
14. Shri Aruneshwar Gupta, learned counsel also argued the matter more
or less on the same lines explaining the actual effect of the judgment by the
Appellate Authority on the price of the electricity payable by the consumers.
G 15. As against this, the learned Solicitor General urged that as per the
established legal principles no unnatural interpretation could be given to the J.
concerned legal provisions particularly when its plain meaning was crystal
clear. Learned counsel analysed the whole provision taking each line of the
same and urged that there was no necessity of any interpretation to be given
when provision was crystal clear. It was urged that where the plain meaning
H
TAMIL NADU STATE ELECTRICITY BOARD\.'. CENTRAL ELECTRICIIT REGULATORY COMMISSION 1v.s. SIRPURKAR. J.) 427
of the provision did not, in any manner, do harm to the objective nor could A
bring out any absurdity, the golden rule of literal interpretation was the only
course to be adopted by the courts of law. Learned counsel went on to
analyse the first order of the CERC as also the review order and on that
backdrop compared the same with the Appellate Authority's order.
16. In the wake of these rival submissions, the only question that falls B
for our consideration is whether we should adopt the literal construction
""I ' which has been given by the Appellate Authority or should interpret the
-... provision keeping in mind the various other factors like the intended logic
behind the rule, the benefit which is likely to be given to the ultimate consumers,
etc.
c
--- 17. It will be our first task to see whether the provision as it stands is
clear in its language. It is obvious from the plain reading of the clause that
the escalation factor of 6% was to be used for revising the base figure of
O&M charges. Plainly speaking it would mean that the O&M charges would
be revised on the basis of escalation factor of 6%. The ()% would be the D
standard. It is further provided that each year the escalation factor would be
computed on the basis of actual inflation data and if the said deviation factor
works out to be within 20% of the standard escalation factor of 6%, such
deviation shall be ignored meaning thereby if the deviation factor goes
beyond 6% upto 7.2%, still the deviation would be treated to be 6% only. So
also if the deviation goes below upto 4.8%, still deviation to this extent, as E
per the clause, would not make any change. However, if the deviation goes
beyond 7.2% on upper side or below 4.8% on the lower side, the same would
be adjusted, in the sense that then the calculation would have to be made
of O&M factor on the basis of the deviation. The objective of the provision
appears to be that there does not have to be an exercise of computation for p
a little or insignificant change ranging between 1.2% and such deviations
would be ignored. The language used is that "such changes shall be absorbed
by the utilities/ beneficiaries''. This appears to be with the idea that the
calculations do not have to be made on the basis of labile deviations upto
the limit of 1.2%. The meaning becomes extremely clear from the clause which
starts from "in other words" and ends with "absorbed by the utilities''. It G
means any deviations beyond this limit alone shall be adjusted. It is extremely
clear from the further sentence that what is to be adjusted is "the deviations
beyond the limit of 7 .2% on the upper side and 4.8% on the lower side, i.e.,
if the deviation goes below 4.8%, say, upto 4% then the O&M factor would
be considered in respect of .8% deviation because that is the deviation H
428 SUPREME COURT REPORTS (2007) 5 S.C.R.
A contemplated by the clause. ffthe meaning contemplated by the appellants
-
is to be given, it would do harm to the unambiguous language of the clause.
Plain and simple meaning of the provision, in our opinion, admits of, no
doubt, in the sense that it would be only the deviation "beyond the limit" of
1.2% which would be available for adjustment. In that sense there would a
cushion between the two points, namely, 7.2% on the upper side and 4.8%
B on the lower side. That is precisely provided by the words "any deviation
beyond this limit". The words "beyond this limit" would, in our opinion, , ,..
signify the extent of deviation that is to be taken into consideration and that
is required to be "adjusted."
C 18. The Rule of literal interpretation has been explained by this Court
time and again. In Omba/ika Das & Anr. v. Hulisa Shaw, [2002] 4 SCC 539,
this Court unequivocally declared as under: -
"Resort can be had to the legislative intent for the purpose of
interpreting a provision of law, when the language employed by the
D legislature is doubtful or susceptible of meanings more than one.
However, when the language is plain and explicit and does not admit
of any doubtful interpretation, the Supreme Court cannot, by reference
to an assumed legislative intent, expaud the meaning of an expression
employed by the legislature and therein include such category of
persons as the legislature has not chosen to do."
E
19. Similar note was struck by this Court in Keshavji Ravji & Co. v. CIT,
[1990] 2 SCC 231] where Three Judge Bench went on to observe:
"As long as ther~ is no ambiguity in the statutory language, resort
to any interpretative process to unfold the legislative intent become
F impermissible. The supposed intention of the legislature cannot then
be appealed to whittle down the statutory language which is otherwise
unambiguous. If the intendment is not in the words used it is nowhere
else. The need for interpretation arises when the words used in the
statute are, on their own terms, ambivalent and so not manifest the
intention of the legislature."
G
20. Without burdening the authorities we may only refer to the verdict ,).
by the Privy Council in Pakala Narayanasami v. Emperor, AIR (1939) PC 47
where Lord Atkin had declared that "when the meaning of the words is plain,
it is not the duty of co:irts to busy themselves with supposed intentions".
....
H The law has been consistent eversince then in more than half a dozen
TAMIL NADU STATE ELECTRICITY BOARD~·. CENTRAL ELECTRICITY REGULATORY COMMISSION (V.S. SIRPURKAR, J.1429
decisions. A
21. Thus in our opinion, since the language of Regulation 2.7(d)(iv) is
absolutely clear so as to take into consideration only the deviations beyond
the limit, i.e., above 7.2% or below 4.8% for the purposes of adjustment, there
will be no question of adjusting the full deviation between 6% to the percentage
beyond 7.2% or below 4.8%. It is more than clear from the language that any B
deviation between 4.8 to 7.2 has to be absorbed by utilities/beneficiaries. In
that view we would have to reject the argument on behalf of the learned
counsel for the appellants that we would have to search for any logic and
hold that the full difference between the actual upswing and downswing point
and 6% would be available for adjustment. It is not the task of this Court C
to find out or search for the wisdom of legislature. We are concerned with
the interpretation only. For the same reasons we cannot accept the argument
that the word "adjust" should be read to mean "accommodate". There is no
reason for doing so. We do not agree to hold that the literal interpretation
would be illogical, unprincipled and impracticable as, in our opinion, the
learned counsel have not been able to suggest so. We, therefore, fully agree D
with the order passed by the Appellate Authority and confirm the same.
22. In view of the above, the appeals are dismissed without any order
as to costs.
S.K.S. Appeals dismissed. E
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