Holding

CERC possesses exclusive, plenary power to frame and revise tariffs, but retrospective salary arrears cannot be incorporated into a tariff after the tariff order has become final and the statutory period has elapsed.

Summary

The dispute concerned whether the National Thermal Power Corporation (NTPC) could have the arrears of salary revision for its employees, payable with retrospective effect from 1997, included in the tariff for its Korba and Dadri power stations for the years 1997-2000. NTPC filed tariff applications in 2001, later amended in 2002, but the Central Electricity Regulatory Commission (CERC) dismissed the revisions, holding that the tariff order was already in force and the claim was barred by res judicata and limitation. The Appellate Tribunal allowed NTPC's appeal, directing that the arrears be reimbursed in the forthcoming tariff period, which U.P. Power Corporation challenged. The Supreme Court held that CERC has exclusive, plenary jurisdiction to frame and revise tariffs, can act suo motu, and must act within a reasonable time; however, the claim for retrospective salary costs should have been raised during the tariff period and could not be revisited after five years. Consequently, the Court allowed the appeals, setting aside the Appellate Tribunal’s order and affirming that the arrears could not be incorporated into the tariff.

Issues considered

The scope of CERC's jurisdiction to revise tariffs and incorporate retrospective employee cost adjustments.
Whether the principle of res judicata and limitation periods apply to tariff revision applications.
Whether CERC can exercise suo motu jurisdiction to revisit tariff orders beyond the statutory period.
The applicability of Regulation 2.7(d)(iv) of the 2001 Regulations to NTPC's claim.

Legislation cited

Code of Civil Procedure, 1908s. 11
Electricity Act, 2003
Electricity Regulatory Commission Act, 1998s. 11, s. 13, s. 28, s. 37, s. 51, s. 55
Electricity (Supply) Act, 1948

Subjects

tariff revisionCentral Electricity Regulatory Commissionoperation and maintenance expensesres judicatalimitation periodregulatory jurisdictionpower sectorsalary revisionappellate tribunalsuo motu jurisdiction

Judgment

[2009] 3 S.C.R. 1060

A U.P. POWER CORPORATION LTD. t~
II.
NATIONAL THERMAL POWER CORPORATION LTD.
AND ORS.
(Civil Appeal No. 111 O of 2007)
B MARCH 3, 2009
[S.B. SINHA, LOKESHWAR SINGH PANTA AND
B. SUDERSHAN REDDY, JJ.]

c Electricity Regulatory Commission Act, 1998:

s. 13 - Central Electricity Regulatory Commission -
Power to regulate tariff - Factors to be taken into account -
Operation and Maintenance expenses - Increase in salary
of employees of generating company (NTPC) consequent
D
upon revision of pay scales - HELO: Central Commission has
exclusive jurisdiction to frame tariff - For this purpose, actual
cost required for payment to employees being part of
Operation and Maintenance cost could fall for determination
(Jy Central Commission.
E
Central Electricity Regulatory Commission (Conduct of
Business) Regulations, 1999:

Regulations 92, 93, 116 and 117 - Revision of tariff - ...
F HELD: In exercising such jurisdiction, Central Commission
must act within reasonable time - Application should have
been filed within the period during which tariff.order was in force
- Besides, although provisions of s. 11 CPC are not
applicable, but general principles of res judicata may be
applicable - NTPC was aware of impending revision of pay
G
scales and had provisionally implemented it in part -
Appellate Tribunal erred in holding that increase in salary with .
retrospective effect could have been a subject matter for
determination of tariff in another period - Electricity Regulatory

H 1060
U.P. POWER CORPORATION LTD. v. NATIONAL THERMAL 1061
POWER CORPORATION LTD. AND ORS.

Commission (Terms and Conditions of Tariff) Regulations, A
~-~ 1
2001: Regulation 7. 2(d)(i) and (iv) - Code of Civil Procedure,
1908 - s.11 - Res judicata - Limitation.

The respondent-Corporation (NTPC), pursuant to
revision of salary of its employees w.e.f. 1.7.1997, filed B
petition before the Central Electricity Regulatory
Commission for revision of tariff for its stations at Korba
~ (Chattisgarh) and Dadri (UP) for.the years 1997-98 to
4
1999-2000, taking into account its liability towards arrears
of salary of its employee from 1.7.1997. The Central
Commission after taking into consideration the data
c
provided by NTPC including for the year 2000-2001 and
the provisions made during the years 1997-98 to 1999-
2000 towards anticipated revised costs therefore,
determined the operational and financial norms for the
; generating stations of the Corporation which was D
~
inclusive of employees' costs. NTPC filed revision
applications in the year 2005 in respect of Korba and
Dadri power stations claiming allowances of actual
revised costs incurred by it on account of arrears paid
in 2000-2001. The Commission dismissed the revision E
applications. The appeals of NTPC were allowed by the
Appellate Tribunal holding that amounts of arrears paid
'( by NTPC on 2000-2001 on account of employees cost be
,,. considered in tariff fixation for reimbursement, as
admissible by the Regulations, in the forthcoming tariff F
period. Aggrieved, the U.P. Power Corporation Ltd. filed
the appeals.

Allowing the appeals, the Court

HELD: 1.1. It is well-settled that the Central Electricity G
Regulatory Commission has the exclusive jurisdiction to
->j
A frame not only tariff but also to make any amendment,
alterations and additions in. regard thereto. [Para 28)
[1077-D]
H
1062 SUPREME COURT REPORTS [2009] 3 S.C.R.

A 1.2. Making of a tariff is a continuous process. It can
be amended or altered by the Central Commission, if any
occasion arises therefor. The said power can be
exercised not only on an application filed by the
generating companies but by the Commission also on its
s own motion.Regulations 92 and 94 of the Central
Electricity Regulatory Commission (Conduct of
Business) Regulations, 1999 do not restrict the power of
the Central to make additions or alterations in the tariff.
[Para 36] [1084-C-D]
c 1.3. The Central Commission has a plenary power. Its
inherent jurisdiction is saved. The provisions of the
Electricity Regulatory Commission Act, 1998 do not put
any restriction on the Central Commission in the matter
of exercise of such a jurisdiction. [Para 35] [1083-H; 1084-
D A-B]

1.4. The concept of regulatory jurisdiction provides
for revisit of the tariff. It is now a well-settled principle of
law that a subordinate legislation validly made becomes
E a part of the Act and should be read as such. [Para 43]
[1087-G-H]

Bank of New South Wales v. Commonwealth (1948) 76
CLR 1; Oeepak Theatre v. State of Punjab 1992 Supp (1)
SCC 684; State of U.P. v. Maharaja Dharmander Prasad
F Singh (1989) 2 SCC 505; V.S. Rice and Oil Mills v. State of
AP. (1964) 7 SCR 456; T.N. State Electricity Board v. Central
Electricity Regulatory Commission and Others (2007) 7 SCC
636; Hotel & Restaurant Assn. and Another v. Star India (P)
Ltd. and Others (2006) 13 SCC 753; K. Ramanathan v. State
G of Tamil Nadu (1985) 2 SCC 116; Central Power Distribution
Co. and Others v. Central Electricity Regulatory Commission
(2007) 8 SCC 197 and UP. State Electricity Board, Lucknow
v. City Board, Mussoorie and Others (1985) 2 SCC 16,
referred to.
H
U.P. POWER CORPORATION LTD. v. NATIONAL THERMAL 1063
POWER CORPORATION LTD. AND ORS .
.._, 1
2.1. Revision of a tariff must be distinguished from a A
review of a tariff order. Whereas Regulation 92 of the 1999
Regulations provides for revision of tariff, Regulations
110 to 117 also provide for extensive power to be
exercised by the Central Commission in regard to the
proceedings before it. [Para 33] [1083-A-B] B

" ~
2.2. The Commission, apart from entertaining an
application for review filed by a party, may exercise its suo
motu jurisdiction. While the Central Commission exercises
a suo motu jurisdiction, the period of limitation prescribed
in Regulation 103 shall not apply. There cannot, however,
c
by any doubt whatsoever that while exercising such
jurisdiction, the Central Commission must act within a
reasonable time. Furthermore, the statute does not
provide for the manner in which a petition is to be filed
\ D
before the Central Commission or the manner in which
the tariff order is to be passed or revision or non-revision
thereof. [Para 37] [1084-F-H]

3.1. There cannot be any doubt whatsoever that
while a tribunal or a court exercises adjudicatory .power, E
, although provisions of s.11 of the Code of Civil
Procedure, 1908 are not applicable, but the general
,> principles of res judicata may be applicable. [Para 34]
[1083-C-D]

Sri Bhavanarayanaswamivari Temple v. Vadapalli
F
Venkata Bhavanarayana Charyu/u (1970) 1 SCC 673; Bharat
Barrel and Drum Manufacturing Co. Pvt. Ltd. v. Bharat Barrel
Employees Union (1987) 2 SCC 591; Vijayabai and Others
v. Shriram Tukaram and Others (1999) 1 SCC 693; Forward
Construction Co. and Others v. Prabhat Manda/ (Regd.), G
~
·-JI
Andheri and Otliers (1986) 1 SCC 100 and K. V. George v.
Secretary to Government, Water and Power Department,
Trivandrum and Another (1989) 4 SCC 595, referred to.

3.2. Respondent-NTPC was already aware of the H
1064 SUPREME COURT REPORTS [2009] 3 S.C.R.

A impending revision of scales of pay and had implemented
the same in part, albeit, on a provisional basis. It is not
known as to why it filed applications for tariff
determination for its generating stations at Korba and
Dadri on 28.05.2001 and 8.06.2001, respectively. Not only
B that the amended applications did not contain the details
of the prescribed data, a sheet with data of year 2000-
2001, which was not a part of Form 16, was inserted at a
later stage. Amended applications were filed only on
30.01,.2002 and 7.02.2002. The year 2000-01 was not the
c relevant year for the said purpose. [Para 46) [1092-F-H;
1093-A]

3.3. There cannot be any doubt whatsoever that for
the purpose of making tariff the acb,1al costs required for
payment to the employees being a part of the operation I
D and maintenance cost including a sum of Rs. 55 crores,
which were to be paid by way of extra amount, could fall
for determination by the Central Commission. But, such
an application ordinarily could have been filed within the
period during which the tariff order was in force. [Para 47)
E [1093-A-BJ

3.4. The appellate tribunal erred in holding that
increase in the salary with retrospective effect could have '
been a subject matter for determination of tariff in another
F period. The claim of the respondent-Corporation was not
justified as the Central Commission should not have
been asked to revisit the tariff after five years and when
everybody had arranged its affairs. [Para 48) [1093-C, DJ
3.5. Regulation 2.7 (d)(iv) of the 2001 Regulations
G clearly provides that applications must be entertained
only in the event any situation arose within the purview
thereof and not at any point of time. If NTPC were aware
that they were to incur an additional expenditure of Rs.
55/- crores, they could have preferred an appeal before
H the Central Commission. It is stated that appeals were
U.P. POWER CORPORATION LTD. v. NATIONAL THERMAL 1065
POWER CORPORATION LTD. AND ORS.

preferred on other issues but not on this one. [Para 49] A
[1093-E-F]
4.1. Framing of tariff is made in several stages. The
generating companies get enough opportunity not only
at the stage of making of tariff but at a later stage also to
8
put forth its case including the amount it has to spend
on operation and maintenance expenses as also
escalation at the rate of 10% in each of the base year. It
cannot be permitted to re-agitate the said question after
passing of many stages. Furthermore, the direction of the
tribunal that the additional costs may be absorbed in the C
new tariff was not correct. Some persons who are
consumers during the tariff year in question may not
continue to be the consumers of the appellant. Some new
consumers might have come in. There is no reason as
to why they should bear the brunt. Such quick-fix attitude D
is not contemplated as framing of forthcoming tariff was
subject to fresh regulations and not the old regulations.
[Para 50] [1090-F-H; 1094-A-B]
4.2. It is true that the jurisdiction of the appellate E
tribunal is wide. It is also an expert tribunal and, thus, it
can interfere with the finding of the Central Commission
both on fact as also on law. But, the instant case was not
one where the appellate tribunal should have interfered
with the order of the Central Commission. [Para 52 and
53] [1094-D-E] F

Union of India and Another v. Cynamide India Ltd. and
Another (1987) 2 SCC 720; Shri Sitaram Sugar Company·
Limited and Another v. Union of India and Others (1990) 3
SCC 223, held inapplicable. G
Cellular Operators Association of India and Others v.
Union of India and Others (2004) 8 SCC 524, referred.to.
Case Law Reference:
(1970) 1 sec 673 referred to para 34 H
1066 SUPREME COURT REPORTS [2009] 3 S.C.R.

i '-~
A (1987) 2 sec 591 referred to para 34

(1999) 1 sec 693 referred to para 34

(1986) 1 sec 100 referred to para 34

(1989) 4 sec 595 referred to para 34
B
(1948) 76 CLR 1 referred to para 44

1992 Supp (1) sec 684 referred to para 45

(1989) 2 sec 505 referred to para 45
c
(1964) 7 SCR 456 referred to para 45

(2007) 1 sec 636 referred to para 45
(2006) 13 sec 753 referred to para 45 ~

D t
(1985) 2 sec 116 referred to para 45
(2001) 8 sec 191 referred to para 45
(1985) 2 sec 16 referred to para 45

E! (1987) 2 sec 120 held inapplicable para 52
(1990) 3 sec 223 held inapplicable para 52
(2004) 8 sec 524 referred to para 52 '
CIVIL APPELLATE JURISDICTION: Civil Appeal No.1110
F
of 2007.

From the Judgment and Order dated 07.09.2006 of the
Appellate Tribunal for Electricity, New Delhi in Appeal No.195
of 2005.
~
WITH "
Civil Appeal No. 1138 of 2007, 1152 of 2007, 1327 of 2007
and 1112 of 2007.

H
U.P. POWER CORPORATION LTD. v. NATIONAL THERMAL 1067
POWER CORPORATION LTD. AND ORS.
')> ~
Sunil Gupta, Pradeep Misra and Manoj Kumar Sharma for A
the Appellant.

M.G. Ramachandran, K.V. Mohan, K.V. Balakrishana,
Anand K. Ganesan, Swapna Sheshadri, Vivek Kishore, Ruchi
Gour Narula, Sangeeta Bharati, G. Umapathy, Rakesh K.
B
Sharma, Raj Kumar Mehta, Sarvodaya Lakshmi, R. Nedumaran
• and Suresh Chandra Tripathi for the Respondent.

The Judgment of the Court was delivered by

S.B. SINHA, J. 1. These appeals involving similar c
questions of law and fact were taken up for hearing together
and are being disposed of by this common judgment.

2. We may, however, notice the fact of the matter from Civil
' ~ Appeal No.1110 of 2007.
D
3. The question which arises for consideration herein is as
to whether the amount required to be paid by the first
respondent National Thermal Power Corporation (for short 'the
Corporation') towards revision of scales of pay of its employees
in terms of the recommendations made by the High Level E
Committee constituted under the Chairmanship of Justice S.
~ Mohan with retrospective effect from 1st January, 1997 can be
;
a subject matter of revision in tariff for the tariff years 1997-1998
; 1998 - 1999 and 1999 - 2000.
F
4. The Parliament with a view to provide for establishment
of a Central Electricity Regulatory Commission and State
Electricity Regulatory Commissions, rationalization of electricity
tariff, transparent policies regarding subsidies, promotion of
efficient and environmentally benign policies and for matters
connected therewith or incidental thereto, enacted the Electricity G
.""I • Regulation Commissions Act, 1998 (for short 'the 1998 Act').
It came into force with effect from 9th June, 1998.

Pursuant to or in furtherance of the provisions thereof the
H
1068 SUPREME COURT REPORTS (2009) 3 S.C.R.

A Central Electricity Regulatory Commission (in short the Central
Commission) was established in terms of sub-section (1) of
Section 3 of the 1998 Act. Indisputably the powers and
functions of the Commission are extensive being contained in
Section 13 of 1998 Act i.e. :
B "(a) to regulate the tariff of generating companies owned
or controlled by the Central Government;

(b) to regulate the tariff of generating companies, other
than those owned or controlled by the Central Government
c specified in clause (a), if such generating companies enter
into or otherwise have a composite scheme for generation
and sale of electricity in more than one State;

(c) to regulate the inter-State transmission of energy
D including tariff of the transmission utilities;

(d) to promote competition, efficiency and economy in the
activities of the electricity industry;

(e) to aid and advise the Central Government in the
E formulation of tariff policy which shall be-

(i) fair to the consumers; and

(ii) facilitate mobilisation of adequate resources for the '
power sector;

(f) to associate with the environmental regulatory agencies
to develop appropriate policies and procedures for
environmental regulation of the power sector;

(g) to frame guidelines in matters relating to electricity tariff;
G
(h) to arbitrate or adjudicate upon disputes involving
generating companies or transmission utilities in regard
to matters connected with clauses (a) to (c) above;

H
U.P. POWER CORPORATION LTD. v. NATIONAL THERMAL 1069
POWER CORPORATION LTD. AND ORS. [S.B. SINHA, J.]

(i) to aid and advise the Central Government on any other A
matter referred to the Central Commission by that
Government."

5. A regulatory Commission not only makes Regulations
but in view of its extensive powers BUT ALSO in-charge of B
implementation thereof. It furthermore in the event of any dispute
or difference arising between several players involved in the
framing of tariff for the consumers of electrical energy has also
an adjudicatory role to play.

6. We are in this batch of appeals are concerned with the C
power of the Central Commission to make tariff and to revise
the same at the instance of a generating company. Before,
however, adverting to the said questions, we may notice certain
undisputed facts.
D
7. National Thermal Power Corporation Ltd. is a public
sector undertaking employed in generation of electrical energy
at different parts of India. It has a Thermal Power Station at
Korba in the State of Chhatisgarh and Gas Power Station in
Dadri in the State of Uttar Pradesh.
E
8, U.P. Power Corporation Ltd. is also a public sector
undertaking constituted upon bifurcation of U.P. Electricity Board
in terms of the provisions of the U.P. Electricity Regulatory

- Commission Act, 1998.

9. Indisputably the Central Commission only had, at the
F

relevant time, jurisdiction to make tariff for the generating
companies.

10. The matter relating to generation, transmission, supply
and distribution of electrical energy in different States used to G
be governed by the Electricity (Supply) Act, 1948. With a view
to bring reforms in the power sector and to meet shortages in
the power supply, the Central Government as also the various
State Governments, adopted liberalisation policies for industrial
economy so as to enable them to attract investment from H
1070 SUPREME COURT REPORTS [2009] 3 S.C.R.

A various parts of the country as also from abroad.
' .
11. The Parliament, with a view to give effect to the
aforesaid policy decision, as noticed hereinabove, enacted
1998 Act. Parliament, we may place on record, with a view to
consolidate the laws relating to generation, transmission,
B
distribution , trading and use of electricity and generally for
taking measures conducive to development of electricity
industry, promoting competition therein, protecting interest of
consumers and supply of electrictty to all areas, rationalization
c of electricity tariff, ensuring transparent polices, regarding
subsidies, promotion of efficient and environmentally benign
polices, constitution of Central Electricity Authority, Regulatory
Commission and establishment of Appellate Tribunal and for
matters connected therewith or incidental thereto, enacted the
Electricity Act, 2003. It came into force with effect from 10th
D June, 2003. ~
....
12. On or about 25th September, 1999 the Government
of India issued guidelines for revision of salary to the
employees of the Public Sector Undertakings with effect from
E 1st July, 1997, wherefor, as noticed earlier, a High Powered
Committee headed by Justice Mohan was constituted.
·'
13. It is stated that the Corporation made provisions in its
budget for the relevant years and paid arrears of revised salary
with effect from 1st January, 1997 to the Executive in July, 2000
F and to the Supervisor and Workmen from April, 2001 and
March, 2001 respectively.

14. The Corporation had asked the Central Commission
to frame tariff in respect of the electricity generated by it
G wherefor it filed Petition Nos.30/2001 and 44/2001 for
determination of tariff for its stations at Korba and Dadri. The
Central Commission, upon consideration of the factors placed
before it and upon hearing all concerned, including the parties
hereto, determined the operational and financial norms
~

-
H applicable, inter alia, for the generating stations of the NTPC
U.P. POWER CORPORATION LTD. v. NATIONAL THERMAL 1071
POWER CORPORATION LTD. AND ORS. [S.B. SINHA, J.)

....- ~ which was inclusive of employee's costs. In the said order the
Central Regulatory Commission dealt with all aspects of the
A

operation and maintenance expenses after setting up the norms
for such determination.

15. As stated earlier the revision of salary of NTPC
B
employees was revised in terms of the recommendations of the
High Level Committee. The said revision was given effect to
on and from w.e.f. 1st January, 1997 but was implemented
• during·the period 2000-2001.

16. The tariff order was made by Central Regulatory c
Commission for Korba and Dadri on 6th August, 2003 wherefor
the data provided by NTPC were taken into consideration in
terms of Regulation 2.7(d}(i) including the provisions made
during three years 1997-1998 to 1999-2000 towards
~ anticipated revised costs therefor. D
J.,
17. Indisputably alongwith the said data, datas for the year
1

2000-2001 were also produced.

18. It filed a review petition before the Central Regulatory
Commission during various periods in respect of its Korba and E
Dadra projects on 1st October, 2003. However, it did not lay
any claim in respect of actual revised costs for the years 1997-
1998, 1998-1999 and 1999-2000.
>
19. Central Regulatory Commission in exercise of its suo F
motu jurisdiction passed an order in proceeding being No.196
of 20045 to inquire into the actual escalation factor which was
found to be less than 6%. Before the Commission certain other
issues were also raised. However, on or about 25th April, 2005
and 26th July, 2005 revision applications were filed in respect G
of Korba and Dadri Fower Stations claiming allowance of
't
~
actual revised costs incurred by the Corporation on account of
arrears of paid in 2000-2001.
21. The Commission dismissed the said applications by
H
1072 SUPREME COURT REPORTS (2009] 3 S.C.R.

A orders dated 11th August 2005 and 19th October, 2005 inter
alia, opining :
1
.....
(i) "It needs to be noted that in terms of the
Commission's order dated 21.12.2000 fresh
revision of O&M base charges after determination
B
of tariff is not warranted based on the actual
expenses".

(ii) "From the details extracted at Para 10 above, it can '
be seen that revision of salary of the employee,
c executives, supervisors and other workmen was
notified during July 2000 to April 2001 and the
arrears on that account were also paid during the
same period. Therefore, the complete employee

D
cost data on account of revision of pay and
allowances was available with the petitioner during
April, 2001. When the application for determination "
...
of tariff were filed on 8.6.2001, the data in this
regard could be placed before the Commission by
the petitioner. Further, the petitioner had filed
E amended petitions during January/ February 2002
in all these cases. The Petitioner did not
incorporate the actual data of employee cost in the
amended petitions as well".

(iii) "Under Order 2 Rule 2 of the Code of Civil
F Procedure (the Code) every suit is to include the
whole of the claim to which the party is entitled to
make in respect of the cause of action but a party
may relinquish any portion of his claim. However,
where the party omits to sue in respect of any claim
G or intentionally relinquishes any portion of his claim,
he cannot afterwards sue in respect of the portion rl
~
so omitted or relinquished".

(iv) "After deciding the tariff, the Commission cannot
H
U.P. POWER CORPORATION LTD. v. NATIONAL THERMAL 1073
POWER CORPORATION LTD. AND ORS. [S.B. SINHA, J.)

,,. revisit the matter covered in the tariff orders, which A
have acquired finality".

(v) " ... On consideration of this, the employee cost
indicated by the petitioner for the years 1997-98
,.>(
and 1998-99 (excluding incentive and ex-gratia), B
even though beyond the admissible limit of 20%
was considered for normalization ... "
f

(vi) " ... the question of exclusion of these expenses
cannot be re-agitated in the present proceedings
as they are barred by th.e principle of res- c
judicata ... ".

(vii) "... the tariff approved is the complete package.

22. It, however, appears that an application of the
'> D
·~ electricity generating station of the Corporation at Rihand was
filed for revision of the tariff being Petition No. 38 of 2001 in
respect of the tariff period 2001-2004 having regard to the fact
that further amount was to be paid by the NTPC to its
employees for the purpose of implementation of the
recommendations of Justice Mohan Committee, relying on or E
.. on the basis of the leave granted, the Corporation filed I.A. No.
9 of 2006 to place on record the impact of revision of wages
w.e. f. 1st January, 1997 on the employee costs for the
t
generating station and the Corporate office expenses for the
years 1995-1996 to 2000-2001, which was allowed. F

23. Appellant before us contends that Rihand decision is
not applicable in the instant case as therein the original tariff
order was yet to come into force. And the said application was
filed for revision of tariff and considered in view of the G
statements made by the Corporation itself in the earlier round
.,, " of the proceeding ..

24. The Corporation aggrieved by and dissatisfied with the
orders of the Commission dated 11th August, 2005 and 19th
H
1074 SUPREME COURT REPORTS [2009] 3 S.C.R.

A October, 2005 filed appeals before the Appellate Tribunal. By
reason of the impugned judgment and order dated 7th
.... ,
September, 2006 the said appeals have been allowed,
directing :-

B
"amounts of arrears paid by the appellant in the year
2000-2001 on account of employees cost, incurred in the
....
respective years, be considered in the tariff fixation for re-
imbursement, as admissible by the Regulations in the
forthcoming tariff period in a manner that tariff shock, if any,
to the respondents is minimized."
c
25. Appellant is, thus, before us.

26. Mr. Sunil Gupta, learned senior counsel appearing on
behalf of the appellant would urge :-
D (i) The Central Regulatory Commission had no " '

jurisdiction in terms of 1998 Act or 2003 Act or the
Regulations made thereunder to entertain and carry
out revision in the tariff order on the basis of
purported subsequent events or otherwise.
E
(ii) In view of 2001 Regulations framed under Section
28 of 1998 Act even while undertaking the original
tariff determination proceedings the Commissioner
had no jurisdiction to consider any data of 2000-
F 2001 for narrative operation and maintenance
expenses beyond the statutorily stipulated 5 years,
viz., 1995-1996 to 1999-2000.

(iii) Keeping in view the fact that the Corporation were
supposed to have filed all materials in respect of
G its case for framing tarrif and failure, if any, on its
part to bring some materials showing the financial
impact arising out of the implementation of the 6th
. .
Pay Commission vis-a-vis the recommendation of
the High Powered Committee could not have been
H
U.P. POWER CORPORATION LTD. v. NATIONAL THERMAL 1075
POWER CORPORATION LTD. AND ORS. [S.B. SINHA, J.]

the basis for a review, particularly, having regard to A
the fact that the claim was barred by limitation.

(iv) The operational and financial norms fixed in terms
of circular dated 21st December, 2000 are not
relevant or enforceable in the wake of enforcement
8
of the statutory Regulations, 2001 framed under
Section 28 of the Act which had come into force on
26th March, 2001.

(v) Assuming the Central Regulatory Commission's
order dated 21st December, 2008 i.e. the C
Operational & Financial Norms, to be relevant and
enforceable, as thereby the said order permitted
that 'more than normal' Operational and
Maintenance expenses should be sought as
compensation on a case by case basis by means D
of a separate petition and hearing of all concerned,
without reflecting it in the norms founded on the five
years, 1995-1996 to 1999-2000, the impugned
judgment cannot be sustained. Such petition/plea
could be filed before the Tariff order could be E ·
issued. The permission would not mean that
separate petition could be filed after the passing of
the Tariff Order.

(vi) In any event the delay caused in filing the
application should have been taken into F
consideration by the Tribunal for the purpose of
exercising its discretionary jurisdiction.

(vii) Provisional expenses having already been
considered by the Central Commission while G
framing tariff, no actual expenses for the year 2000-
2001 could have been taken into consideration as
thereby a duplication would be caused, which is not
contemplated in law.
H
1076 SUPREME COURT REPORTS [2009] 3 S.C.R.

i
'
A (viii) The Tariff Order being a complete package and
which having not been challenged or appealed
against, any application for review or revision was
not maintainable.

(ix) The Appellate Tribunal had committed a serious
B error in so far as it took into consideration the
Rihand case where Interlocutory Application was
entertained in a case of Original Tariff Order itself
and thus could not have been relied upon.

c (x) The Tribunal's order providing for relief by way of
reimbursement in the forthcoming tariff period is
contrary to the scheme of the Act.

(xi) The Appellate Tribunal although has wide
'
jurisdiction but it, without sufficient or cogent "
D
reasons, should not have interfered with the order
of the Central Regulatory Commission.

27. Mr. Ramachandran, learned counsel appearing on
behalf of respondent No.2, on the other hand, urged :
E
(i) Central Regulatory Commission had the requisite
jurisdiction to review the tariff, having regard to the
powers contained in the Regulations.

(ii) Sufficient and cogent reasons for revision of the
F costs in the first instance, having been assigned and
all material facts having been taken into
consideration by the Appellate Tribunal, no
exception can be taken to the impugned judgment.

G (iii) It is incorrect to contend that the Appellate Authority
,,
had made inconsistent observations in the
impugned order.

(iv) As in the case of Rihand the actual costs paid by
respondent No.1 for meeting its obligations was
H
U.P. POWER CORPORATION LTD. v. NATIONAL THERMAL 1077
POWER CORPORATION LTD. AND ORS. [S.B. SINHA, J.]
. ;
~

granted, there was no reason as to why the same A
principle should not have been applied in the case
of Korba and Dadri, particularly when it was not
denied or disputed that the Corporation had to incur
a sum of Rs.55 crores towards arrears of salary.
B
(v) Some delay might have been caused in filing the
application but the same by itself should not have
been a ground for rejecting the application in toto
as the Tribunal had not granted any interest on the
actual amount and merely granted the carrying
costs.
c
28. Power and/ or jurisdiction of the Central Commission
to frame tariff and/ or carry out revision thereof is not in dispute.
,, It is in fact a well-settled that the Central Commission has the
J.,
exclusive jurisdiction to frame not only tariff but also any D
amendment, alterations and additions in regard thereto.

29. The Central Commission in terms of the 1998 Act as
also the Regulations framed thereunder exercise diverse
powers. It exercises legislative power, power of enforcement E
of the Regulations as also the adjudicatory power. Each of its
functions although are separate and distinct but may be
i
overlapping. The power of the Central Commission is
. extensive.

30. The Central Commission in exercise of its jurisdiction F
under Section 55 of the 1998 Act framed regulations known as
the Central Electricity Regulatory Commission (Conduct of
Business) Regulations, 1999 (for short "the 1999 Regulations").

Chapter V of the 1999 Regulations deals with tariff G
,. regulations. Regulations 92, 93, 94 read as under:
' ...
"92. The Commission on its own on being satisfied that
there is need to review the tariff of any utility shall initiate
the process of revision in accordance with the proaedure
as may be prescribed. The proceedings for suo inoto H
1078 SUPREME COURT REPORTS (2009] 3 S.C.R.

A review of the tariff shall be the same as set out in Chapter
II of these Regulations.

93. Review of orders of the Commission on tariff will be
entertained strictly in accordance with the relevant
regulations governing review as contained in the relevant
B
regulation herein.

94. The utilities shall submit periodic returns as may be
prescribed containing operational and cost data to enable
the Commission to monitor the implementation of its order
c and reassess the bases on which Tariff was approved."

Chapter VII of the 1999 Regulations deals with
Miscellaneous Matters. The 1999 Regulations expressly confer
a power of review on the Central Commission in terms of ~

D Regulation 103 thereof. For the aforementioned purpose, the •
Central Commission may not only exercise its jurisdiction suo
motu but it may review a decision even if an application is filed
within a period of sixty days of making of any decision, direction
or order.
IE Regulation 110 empowers the Central Commission to
issue orders and practice directions in regard to the
implementation of the Regulations and procedure to be ·
followed and various matters which the Commission has been
empowered by these regulations to specify or direct.
F Regulations 111 and 112 read as under:

"111. Nothing in these Regulations shall be deemed to limit
or otherwise affect the inherent power of the Commission
to make such orders as may be necessary for ends of
G justice or to prevent the abuse of the process of the
Commission. ~
#

112. Nothing in these Regulations shall bar the
Commission from adopting in conformity with the
provisions of the Act,. a procedure, which is at variance
H
U.P. POWER CORPORATION LTD. v. NATIONAL THERMAL 1079
POWER CORPORATION LTD. AND ORS. [S.B. SINHA, J.)

~
,> with any of the provisions of these Regulations, if the A
Commission, in view of the special circumstances of a
matter or class of matters and for reasons to be recorded
in writing, deems it necessary or expedient for dealing with
such a matter or class of matters."
B
31. The Central Commission also in exercise of its power
conferred upon it by Section 28 of the 1998 Act framed
' regulations known as the Central Electricity Regulatory
Commission (Terms & Conditions of Tariff) Regulations, 2001
(for short "the 2001 Regulations").
c
- The 2001 Regulations came into force with effect from
1.04.2001. It was to remain in force for a period of three years,
unless reviewed or extended by the Central Commission.
Regulation 1.11 of the 2001 Regulations was framed for
,..
~.
removal of doubts. It was clarified that the norms prescribed D
therein were the ceiling norms only and the same shall not
preclude the generating company and other beneficiaries from
agreeing to improved norms.

Regulation 1.4 of the 2001 Regulations reads as under:
E
"1.4. The generation tariff under these Regulations shall
be determined station-wise and transmission tariff
,>
shall be determined line-wise, sub-station-wise, as
the case may be, and aggregated to regional tariff..
F
Provided that a utility may file a petition for fixation
of tariff in respect of the completed units/systems."

Chapter II of the 2001 Regulations provides for thermal
power generating stations. "Operation and Maintenance
Expenses" has been defined as under: G
~

• "'Operation and Maintenance Expenses' or 'O&M' - In
relation to a period means the expenditure incurred in
operation and maintenance of the generating station
including manpower, spares, consumables, insurance and H
1080 SUPREME COURT REPORTS [2009] 3 S.C.R.

A overheads."

Regulation 2.4 of the 2001 Regulations provides for the
norms of operation. Regulation 2.4(viii) provides for the period
of stabilization and explanations in the following terms:

B "(viii) Stabilization period

Stabilization period commencing from the date of
commercial operation shall be reckoned as follows

c (a)

(b)
Thermal (coal/lignite) station - 180 days.

Open cycle gas and Naphtha based station - 90
---
days.

D (c) Combined cycle gas and Naphtha based station - ~

90 days

Explanations:-

1. For the purpose of calculating the tariff, the
E operating parameters, i.e. 'Station Heat Rate',
'Secondary Fuel Oil Consumption' and 'Auxiliary
Consumption' shall be determined on the basis of
actuals or norms, whichever is lower.
'
F Regulation 2.7 of the 2001 Regulations provides for
payment of capacity (fixed) charges; Clause (c) whereof deals
with return on equity in the following terms:
"(c) Return on Equity :

G Return on equity shall be computed on the paid up
and subscribed capital and shall be 16 per cent of o(

such capital. •

Explanation:-
H
U.P. POWER CORPORATION LTD. v. NATIONAL THERMAL 1081
POWER CORPORATION LTD. AND ORS. [S.S. SINHA, J.]

~ Premium raised by the Generating Company while issuing A
~
share capital and investment or internal resources created
out of free reserve of the existing utility, if any, for the
funding of the project, shall also be reckoned as paid up
capital for the purpose of computing the return on equity,
provided such premium amount and internal resources are B
actually utilized for meeting the capital expenditure of the
generating station and forms part of the approved financial
package as set out in the techno-economic clearance
accorded by the Authority or approved by an appropriate
independent agency, as the case may be." c
"Operation and Maintenance expenses including
insurance" is dealt with in Clause (d} of Regulation 2,7 of the
2001 Regulations; Clauses (i) and (iv) whereof reads as under:

(d) Operation and Maintenance expenses including D
insurance

(i) Operation and Maintenance expenses including
insurance (hereinafter referred to as O&M
expenses) for the existing stations of NTPC and E
NLC which have been in operation for 5 years or
more in the base year of 1999-2000, shall be
derived on the basis of actual 0 & M expenses,
t
excluding abnormal O&M expenses, if any, for the
years 1995-96 to 1999-2000 duly certified by the
F
statutory auditors.

The average of actual O&M expenses for the year
1995-96 to 1999-2000 considered as O&M
expenses for the base year 1997-98 shall be
escalated twice at the rate of 10 percent per annum G
to arrive at O&M expenses for the base year 1999-
2000 as given below:

BO&Mi2000i =AVO&M x (1.10)2
H
1082 SUPREME COURT REPORTS [2009] 3 S.C.R.

A Where BO&Mi2000 =Base level O&M expenses
f'or 1999-2000 for 1th generating station.

The Base O&M expenses for the year 1999-2000
shall be further escalated at the rate of 6 per cent
per annum to arrive at permissible O&M expenses
B
for the relevant year.

xxx xxx xxx
(iv) The escalation factor of 6 per cent per annum
c 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 per cent of the above notified escalation
factor of 6 per cent (which works out to be 1.2
D percentage points on either side of 6 per cent)

E
shall be absorbed by the utilities/beneficiaries. In
other words if the escalation factor computed from
the observed data lies in the range of 4.8 to 7.2 per
cent, this variation should be absorbed by the
utilities. Any deviations beyond this limit shall be
1
adjusted on the basis of the actual escalation factor
arrived at by applying a weighted price index of CPI
for industrial workers (CPl-IW) and an inde~ of
select components of WPI (WPIOM) as per formula
given in note below clause (v) herein below, for
F which the utility shall approach the Commission
with a petition."
32. While exercising its power of review so far as
alterations or amendment of a tariff is concerned, the Central
G Commission stricto sensu does not exercise a power akin to
Section 114 of the Code of Civil Procedure or Order XLVll, Rule
1 thereof. Its jurisdiction, in that sense, as submitted by Mr.
Gupta, for the aforementioned purposes would not be barred
in terms of Order 11, Rule 2 of the Code of Civil Procedure or
H
U.P. POWER CORPORATION LTD. v. NATIONAL THERMAL 1083
POWER CORPORATION LTD. AND ORS. [S.B. SINHA, J.]

the principles analogous thereto. A

33. Revision of a tariff must be distinguished from a review
of a tariff order. Whereas Regulation 92 of the 1999
Regulations provides for revision of tariff, Regulations 110 to
117 also provide for extensive power to be exercised by the
B
Central Commission in regard to the proceedings before it.

33. Having regard to the nature of jurisdiction of the
Central Commission in a case of this nature, we are of the
opinion that even principles of res judicata will have no
application. c
34. There cannot be any doubt whatsoever that while a
tribunal or a court exercises adjudicatory power, although
provisions of Section 11 of the Code of Civil Procedure are
not applicable but the general principles of res judicata may be D
applicable as has been held by this Court in a consolidation
matter in Sri Bhavanarayanaswamivari Temple v. Vadapal/i

r Venkata Bhavanarayana Charyulu [(1970) 1 SCC 673, para
8], in a labour matter in Bharat Barrel and Drum Manufacturing
. Co. Pvt. Ltd. v. Bharat Barrel Employees Union [(1987) 2 SCC
591, paras 9 to 11], in a rent control matter in Vijayabai and
E

Others v. Shriram Tukaram and Others [(1999) 1 SCC 693,
para 14], in a writ petition in Forward Construction Co. and
Others v. Prabhat Manda/ (Regd.), Andheri and Others [(1986)
1 SCC 100, para 20], and in an arbitration proceeding in K. V.
George v. Secretary to Government, Water and Power
F
Department, Trivandrum and Another (1989) 4 SCC 595,
para 16], whereupon strong reliance has been placed by Mr.
Gupta, but such a question does not arise herein.

Moreover, such a point having never been raised before G
the Central Commission or the appellate tribunal, we are of the
opinion that even otherwise the said argument should not be
permitted to be raised before us for the first time.

35. The Central Commission, as indicated hereinbefore,
H
1084 SUPREME COURT REPORTS [2009] 3 S.C.R.

A has a plenary power. Its inherent jurisdiction is saved. Having • •
regard to the diverse nature of jurisdiction, it may for one
purpose entertain an application so as to correct its own
mistake but in relation to another function its jurisdiction may
be limited. The provisions of the 1998 Act do not put any
B restriction on the Central Commission in the matter of exercise
of such a jurisdiction. It is empowered to lay down its own
procedure.

36. Regulations 92, 94, 103 and 110 of the 1999
Regulations confer a wide power upon the Central Commission.
C They are to be exercised in different circumstances. Whereas
Regulations 92 and 94 are to be exercised in regard to Chapter
V, Regulations 103 and 110 apply in regard to cases where
Regulations 92 and 94 would not have any application.

D Regulations 92 and 94, in our opinion, do not restrict the
power of the Central Commission to make additions or
alterations in the tariff. Making of a tariff is a continuous process.
It can be amended or altered by the Central Commission, if any
occasion arises therefor. The said power can be exercised not
E only on an application filed by the generating companies but
by the Commission also on its own motion.

37. Assuming that Regulation 103 of the 1999 Regulations
would be applicable in a case of this nature, the same also
confers a wide jurisdiction. The Commission, apart from
F entertaining an application for review on an application filed by
a party, may exercise its suo motu jurisdiction. While the Central
Commission exercises a suo motu jurisdiction, the period of
limitation prescribed in Regulation 103 shall not apply. There
cannot, however, by any doubt whatsoever that while exercising
G such jurisdiction, the Central Commission must act within a
reasonable time. Furthermore, the statute does not provide for
the manner in which a petition is to be filed before the Central
Commission or the manner in which the tariff order is to be
passed or revision or non-revision thereof.
H
U.P. POWER CORPORATION LTD. v. NATIONAL THERMAL 1085
POWER CORPORATION LTD. AND ORS. [S.B. SINHA, J.]

·• ' 38. Section 28 of the 1998 Act empowers the Central A
Commission to determine the terms and conditions for fixation
of tariff.

39. We are unable to accept the contention of Mr. Gupta
that the operational and financial norms dated 21.12.2000 were B
not relevant. The Central Government itself recognized the need
to adjust the Operation and Maintenance Expenses based on
' 1 normative expenses after the actual are available in its order
dated 21.12.2000 which was the principal order laying down
norms therefor holding inter alia as under:
c
"4.3.6 The Commission is convinced that linking the base
level O&M expenses to the capital cost is not appropriate
as there are unresolved issues of measurement of the
capital cost itself. Thus, the efficacy of the base on the
basis of capital cost is questionable. The approach D
adopted in this order is based on following tenets :
1 The base level of O&M should not be computed as
a given proportion of capital cost but should be
derived on the basis of actual O&M expenses in the
E
last five years after ironing out the spikes and
abnormalities in the yearwise data.
~
~
2 Any abnormal expenses incurred by utilities in
operating and maintaining their plants should not get
reflected in the norms but should be dealt with F
separately on a case by case basis through
separate petitions. This will provide an opportunity
to all the stakeholders to assess the merit of claims
on the basis of these expenses in a transparent
way." G

Thereafter, in para 4.3.12 of the aforesaid order, the
Central Commission held as under:

H
1086 SUPREME COURT REPORTS [2009) 3 S.C.R.

A ''The regulated entities shall include in their Tariff petition 1
details of yearwise actual O&M cost data for the last five
years duly certified by Statutory Auditors."

Both the aforementioned provisions must be read together
and not in isolation.
B
40. The order dated 21.12.2000 passed by the Central
Commission formed the basis of the 2001 Regulations, which
is clear from the following observations made in the said order:

c "1.1.2 As per Section 28 of the ERC Act the Commission
is required to determine by regulations the terms and
conditions for fixation of tariff under clauses (a), (b) and
(c) of Section 13. Section 37 of the ERC Act stipulates that
the Commission shall ensure transparency while
D exercising its powers and discharging its functions.
'
xxx xxx xxx
1.1.3 The Commission assumed the jurisdiction under
Section 13(a) and (b) as referred to above w.e.f. 15th May,
E 1999. This was the date from which, as per the provisions
of Section 51 of the ERC Act, the Central Government
notified the deletion of Section 43A(2) of the Electricity
(Supply) Act, 1948 (ES Act), in respect of tariff of
companies falling under Sections 13(as) and (b) of the ...
F ERC Act. Section 43A(2) which deals with the terms and
conditions for sale of power by generating companies to
State Electricity Boards was in force until that date.
Consequent to the deletion of Section 43A(2) new sets of
-
terms and conditions were required to be notified under
G the provisions of Section 28 of the ERC Act, as they now
fall under the tariff jurisdiction of the Commission.

xxx xxx xxx
1.4. Applicability and effective date :
H
U.P. POWER CORPORATION LTD. v. NATIONAL THERMAL 1087
POWER CORPORATION LTD. AND ORS. [S.B. SINHA, J.]
)'
' 1.4.1 The terms and conditions as will be notified, shall, A
apply to all utilities covered under Section 13(a) (b) and
(c) of the ERC Act unless specifically stated otherwise .....

xxx xxx xxx
10.2 This order has to be read along with our orders on B
petitions 85/2000 and 86/2000 on operational norms for
"' , hydro power stations and for inter state transmission
respectively. This order along with the order dated 4th
January, 2000 on Availability Based Tariff read with our
order on review petition No.13/2000 on availability based c
tariff will constitute the frame work for notifications on terms
and conditions of tariff to be regulated under Section
13(a)(b) and (c) of the ERC Act. Separate notifications
shall be issued by the Commission incorporating the
i- findings in accordance with section 28 of the ERC Act, D
1998."

41. It was contended by Mr. Ramachandran that actual
expenses for 2001-2002 were not available and the normative
expenses for the last five years were only available and there
E
was an unexpected abnormal increase.

~ There was, thus, in our opinion, enough justification for filing
~ the application for review of the tariff.

42. While considering the question of jurisdiction vis-a-vis F
the applicability of the operational and financial norms, it is not
for us to consider as to whether such separate petition should
have been filed. We would, however, consider the question as
to whether such an application for permission should have been
filed within a reasoncl,;e time or not a little later. G
43. The concept of regulatory jurisdiction provides for
revisit of the tar;ff. It is now a well-settled principle of law that a
subordinate legislation validly made becomes a part of the Act
and should be read as such.
H
1(!)88 SUPREME COURT REPORTS (2009] 3 S.C.R.

1
A 44. There cannot be any doubt whatsoever that the word '
'regulation' in some quarters is considered to be unruly horse.

In Bank of New South Wales v. Commonwealth [(1948)
7(3 CLR 1] Dixon, J. observed that the word "control" is an
unfortunate word of such wide and ambiguous import that it has
B
been taken to mean something weaker than "restraint",
something equivalent to "regulation". •
45. But, indisputably, the regulatory provisions are required
to be applied having regard to the nature, textual context and
c situational context of each statute and case concerned. The
power to regulate may include the power to grant or refuse to
grant the licence or to require taking out a licence and may also
include the power to tax or exempt from taxation. It implies a
power to prescribe and enforce all such proper and reasonable
t
D rwles and regulations as may be deemed necessary to conduct
the business in a proper and orderly manner. It also incl~des
the authority to prescribe the reasonable rules, regulations or
conditions subject to which the business may be permitted or
may be conducted. [See Deepak Theatre v. State of Punjab
E 1,992 Supp (1) SCC 684 at 687]. Even otherwise the power of
regulation conferred upon an authority with the obligations and
functions that go with it and are incidental to it are not spent or ~

exhausted with the grant of permission. [See State of U.P. v.
Maharaja Dharmander Prasad Singh (1989) 2 SCC 505] In
F that sense, the power of Central Commission stricto sensu is
not a judicial power.

This Court in V.S. Rice and Oil Mills v. State of A.P.
[(1964) 7 SCR 456] held:

G "Then it was faintly argued by Mr Setalvad that the power
to regulate conferred on the respondent by Section 3(1)
cannot include the power to increase the tariff rate; it would
include the power to reduce the rates. This argument is
entirely misconceived. The word "regulate" is wide enough
H
U.P. POWER CORPORATION LTD. v. NATIONAL THERMAL 1089
POWER CORPORATION LTD. AND ORS. [S.B. SINHA, J.]

to confer power on the respondent to regulate either by A
increasing the rate, or decreasing the rate, the test being
what is it that is necessary or expedient to be done to
maintain, increase, or secure supply of the essential
articles in question and to arrange for its equitable
distribution and its availability at fair prices ... " B

Recently, this Court in T.N. State Electricity Board v.
Central Electricity Regulatory Commission and Others
[(2007) 7 sec 636], whereupon counsels for both the parties
relied upon, upon consideration of the provisions of Section 28 C
of the 1998 Act, opined as under:

"... A bare glance of the above quoted section suggests
that CERC would formulate regulations for providing terms
and conditions for fixation of tariff under Clauses (a), (b)
and (c) of Section 13. The power for making the D
regulations is to be found in Section 55 of the 1998 Act.
Accordingly, CERC has formulated the Regulations which
are called the Central Electricity Regulatory Commission
(Conduct of Business) Regulations, 1999 ... "
E
It was furthermore held:

"12. The appellate authority has clearly erred in giving a
literal interpretation to the said provision, namely, Clause
2.7(d)(iv). Learned counsel urged that the appellate
authority was bound to discern the true intendment of the F
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. Learned counsel
Shri Sunil Gupta further argued that the rule was manifestly G
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
H
1090 SUPREME COURT REPORTS [2009] 3 S.C.R.

A meant for the convenience of all concerned which included
both administrative as well as financial convenience.
According to both the counsel the intention behind the rule
was that CERC should not be exposed to the tedious
exercise of review and readjustment of tariff already fixed
B 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 literal interpretation, the utilities
could not have been deprived of the full benefits if the O&M
c 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

D
charge on the basis of the full difference between the
actual upswing point and the 6%. According to the learned
counsel this was the only intendment of the rule."

In Hotel & Restaurant Assn. and Another v. Star India (P)
•
Ltd. and Others [(2006) 13 sec 753], in regard to the role of
TRAI as a regulator, this Court said:
E
"55. TRAI exercises a broad jurisdiction. Its jurisdiction is
not only to fix tariff but also laying down terms and
conditions for providing services. Prima facie, it can fix
norms and the mode and manner in which a consumer
F would get the services.

56. The role of a regulator may be varied. A regulation
may provide for cost, supply of service on non-
discriminatory basis, the mode and manner of supply
making provisions for fair competition providing for a level
G playing field, protection of consumers' interest, prevention
of monopoly. The services to be provided for through the
cable operators are also recognised. While making the
regulations, several factors are, thus required to be taken
into account. The interest of one of the players in the field
H
U.P. POWER CORPORATION LTD. v. NATIONAL THERMAL 1091
POWER CORPORATION LTD. AND ORS. [S.B. SINHA, J.]

would not be taken into consideration throwing the interest A
of others to the wind."

In K. Ramanathan v. State of Tamil Nadu [(1985) 2 SCC
116], this Court held:

"18. The word "regulation" cannot have any rigid or inflexible B
meaning as to exclude "prohibition". The word "regulate"
is difficult to define as having any precise meaning. It is a
word of broad import, having a broad meaning, and is very
comprehensive in scope. There is a diversity of opinion
as to its meaning and its application to a particular state C
of facts, some courts giving to the term a somewhat
restricted, and others giving to it a liberal, construction. The
different shades of meaning are brought out in Corpus
Juris Secundum, Vol. 76 at p. 611:
D
" 'Regulate'is variously defined as meaning to adjust; to
adjust, order, or govern by rule, method, or established
mode; to adjust or control by rule, method, or established
mode, or governing principles or laws; to govern; to govern
by rule; to govern by, or subject to, certain rules or E
restrictions; to govern or direct according to rule; to control,
govern, or direct by rule or regulations.
-'(

'Regulate' is also defined as meaning to direct; to direct
by rule or restriction; to direct or manage according to
certain standards, laws, or rules; to rule; to conduct; to fix F
or establish; to restrain; to restrict."

See also: Webster's Third New International Dictionary,
I
'
Vol. 11, p. 1913 and Shorter Oxford Dictionary, Vol. II, 3rd
Edn., p. 1784." " G
'
In Central Power Distribution Co. and Others v. Central
Electricity Regulatory Commission [(2007) 8 SCC 197], this
Court held:

"22.3. As already noticed, the Central Commission has the H
1092 SUPREME COURT REPORTS [2009] 3 S.C.R.

A power and function to evolve commercial mechanism such
as imposition of UI charges to regulate and discipline. It
is well settled that a power to regulate includes within it the
power to enforce ... "

In U.P. State Electricity Board, Lucknow v. City Board,
8
Mussoorie and Others [(1985) 2 SCC 16], this Court held:

C
"... It only provides that the Grid Tariff shall be in accordance
with any regulations made in this behalf. That means that
ifthere were any regulations, the Grid Tariff should be fixed
in accordance with such regulations and nothing more. We
-
are of the view that the framing of regulations under
Section 79 (h) of the Act cannot be a condition precedent
for fixing the Grid Tariff... "

0 The 2001 Regulations, however, show that it had a limited
duration, viz., three years.

46. The Government of India issued guidelines for revision
for the employees of the Central Public Sector undertakings as
far back on 25.09.1999 with effect from 1.04.1997. It has not
E been denied or disputed that the respondent No. 1
-
implemented the revision and paid arrears of salaries with effect
from 1.04.1997 to executives, workmen and supervisors, r-
respectively during the years 2000-2001 by orders dated
6.07.2000, 2.03.2000 and 19.04.2001, respectively.
F
They were already aware of the impending revision of
scale of pay and had implemented in part, albeit, on a ....,..
provisional basis. We fail to understand as to why it had filed
applications for tariff determination for its generating stations
G at Korba and Dadri on 28.05.2001 and 8.06.2001,
respectively. Not only that the amended applications did not •
contain the details of the prescribed data, a sheet with data of
year 2000-2001, which was not a part of Form 16, was inserted
at a later stage. Amended applications were filed only on
H 30.01.2002 and 7.02.2002. The year 2000-01 was not the
U.P. POWER CORPORATION LTD. v. NATIONAL THERMAL 1093
POWER CORPORATION LTD. AND ORS. [S.B. SINHA, J.]
y
relevant year for the aforementioned purpose. A

47. There cannot be any doubt whatsoever that for the
purpose of making tariff the actual costs required for payment
to the employees being a part of the operation and
maintenance cost including a sum of Rs. 55 crores, which were B

--
/
~
to be paid by way of extra amount, could fall for determination
by the Central Commission. But, such an application ordinarily
could have been filed within the period during which the tariff
order was in force.

48. It is difficult to agree with the opinion of the appellate c
tribunal that increase in the salary with retrospective effect could
have been a subject matter for determination of tariff in another
period. In a fact situation obtaining herein, we are of the
.....
,
opinion that the claim of the respondent - corporation was not
justified as the Central Commission should not have been D
asked to revisit the tariff after five years and when everybody
had arranged its affairs.

49. Regulation 2.7 (d)(iv) of the 2001 Regulations clearly
provides that applications must be entertained only in the event
E
any situation arose within the purview thereof and not at any
· point of time. If the respondent No. 1 was aware that they were
l
--. to incur an additional expenditure of Rs. 55/- crores, they could
have preferred an appeal before the Central Commission. We
have been informed at the bar that the appeals were preferred
F
on other issues but not on this one.

50. Framing of tariff is made in several stages. The
generating companies get enough opportunity not only at the
stage of making of tariff but may be at a later stage also to put
forth its case including the amount it has to spend on operation G
' and maintenance expenses as also escalation at the rate of
10% in each of the base year. It cannot, in our opinion, be
permitted to re-agitate the said question after passing of many
stages. Furthermore, the direction of the tribunal that the
additional costs may be absorbed in the new tariff, in our H
1094 SUPREME COURT REPORTS [2009] 3 S.C.R.

A opinion, was not correct. Some persons who are consumers
during the tariff year in question may not continue to be the
consumers of the appellant. Some new consumers might have
come in. There is no reason as to why they should bear the
brunt. Such quick-fix attitude, in our opinion, is not contemplated
B as framing of forthcoming tariff was put subject to fresh
regulations and not the old regulations.

51. We are not oblivious of the fact that in the Rihand Case,
• •
the Central Commission allowed the application of the
respondent, but, therein a provision was made therefor in the
c original tariff order itself. Respondent No. 1 had filed a separate
I.A. claiming the impact of arrears paid by it in 2000-2001
towards the years 1997-'1998 to 1999-2000.

52. We, therefore, on the aforementioned ground alone are -
~

D of the opinion that it was not a fit case where the appellate
tribunal should have interfered with the order of the Central
Commission.

53. Although on the~ question of jurisdiction the Central
Commission might not have been correct, before parting with
E
this case, we may, however, also notice a submission of Mr.
Gupta that the appellate tribunal should not ordinarily interfere
with an order of the Central Commission. We do not agree. The
jurisdiction of the appellate tribunal is wide. It is also an expert
tribunal and, thus, it can interfere with the finding of the Central
l

-
f Commission both on fact as also on law. Both the Central
Commission as also the appellate tribunal being expert, we do
not see how the decisions of this Court in Union of India and
Another v. Cynamide India Ltd. and Another [( 1987) 2 SCC
7201 and Shri Sitaram Sugar Company Limited and Another
G v. Union of India and Others [(1990) 3 SCC 223) would be r

applicable.

In Cellular Operators Association of India and Others v.
Union of India and Others [(2004) 8 SCC 524), this Court held:
H
-. U.P. POWER CORPORATION LTD. v. NATIONAL THERMAL 1095
POWER CORPORATION LTD. AND ORS. [S.B. SINHA, J.)

'l "TDSAT was required to exercise its jurisdiction in A
terms of Section 14-A of the Act. TDSAT itself is an expert
body and its jurisdiction is wide having regard to sub-
section (7) of Section 14-A thereof. Its jurisdiction extends
to examining the legality, propriety or correctness of a
direction/order or decision of the authority in terms of sub- B
section (2) of Section 14 as also the dispute made in an
~
application under sub-section (1) thereof. The approach of
-- the learned TD SAT, being on the premise that its
jurisdiction is limited or akin to the power of judicial review
is, therefore, wholly unsustainable. The extent of jurisdiction c
of a court or a tribunal depends upon the relevant statute.
TDSAT is a creature of a statute. Its jurisdiction is also
conferred by a statute. The purpose of creation of TDSAT
has expressly been stated by Parliament in the amending
...... Act of 2000. TDSAT, thus, failed to take into consideration
D
the amplitude of its jurisdiction and thus misdirected itself
in law."
54. For the reasons aforementioned, the appeals are
allowed with costs. Counsel's fee assessed at Rs. 50,000/- in
each case. E
RP. Appeals allowed.
'f