WEST BENGAL ELECTRICITY REGULATORY COMMISSIONversusHINDALCO INDUSTRIES LTD. & ORS.

                       [2010] 5 S.C.R. 108


A         WEST BENGAL ELECTRICITY REGULATORY
                        COMMISSION
                              v.
            HINDALCO INDUSTRIES LTD. & ORS.
               (Civil Appeal No. 805 of 2008)
B                        APRIL 22, 2010
      [B. SUDERSHAN · REDDY AND SURINDER SINGH
                       NIJJAR, JJ.]

c      Electricity Act, 2003 - Wheeling charges for a particular
  period - Challenged in appeal - During the period, not a
  single unit of energy was wheeled - Maintainability of the
  appeal questioned - Tribunal without considering the issue
  of maintainability, decided the appeal on merit - Held: Issue
D regarding maintainability needed consideration - Matter
  remitted to the Tribunal for consideration of all the issues
  afresh.

      Respondent No. 1 challenged the determination of
  wheeling charges for the year 2005-2006. Tribunal for
E Electricity directed the appellants to re-determine the
  wheeling charges. Hence the present appeals.

        Allowing the appeals and remitting the matter to the
    Tribunal, the Court ·
F
      HELD: The Tribunal has failed to consider the
  objection raised by the appellants with ret;ard to the
  maintainability of the appeal filed by respondent No.1 ;·
  before the Tribunal. Respondent No.1 has sought to
  challenge the wheeling charges for the year 2005-06.
G During the year 2005-06 not a single unit of energy was
  wheeled by respondent No.1 and therefore no wheeling
  charges were paid/payable. Therefore, the appeal filed by
  respondent No.1 was at best of an academic interest

H                              108
  WEST BENGAL ELECTRICITY REGULATORY COMMISSION v.       109
              HINDALCO INDUSTRIES LTD.

only, as at the relevant point of time when the appeal was      A
filed before the Tribunal, the wheeling charges for the
year 2006-07 had already been determined. It was also
mentioned that the wheeling charges for 2006 were not
challenged in the appeal before the Tribunal. In any event,
since respondent No.1 had not wheeled any power                 B
during the period 2005-06, it did not have to pay any
wheeling charges in the first place. Thus, the appeal
ought to have been dismissed as having become
infructuous. The maintainability of the appeal was an
important issue which needed consideration by the               c
Tribunal. It would be in the interest of justice to remand
the matter back to the Tribunal for fresh consideration of
all the issues after faking into consideration the factual
and legal submissions made by the appellant. [Paras 10,
11 and 12.l (114-F-H; 115-A, C-E]                               D
    CIVIL APPELLATE JURISDICTION: Civil Appeal No. 805'
of 2008.

   , From the Judgment & Order dated 31.3.2007 of the
Learned Appellate Tribunal for Electricity in Appeal No. 3 of   E
2007 ..
                           WITH

C.A. No. 3341 of 2008. ·
                                                                F
    Shanti Bhushan, Pratik Dhar, C.K. Rai, Malini Poduvai,
Sanjeev Kapoor, Avinash Menon (for Khaitan & Co.) for the
Appellant

     S. Ganesh, R.K. Sanghi, Dimple Murria, Shivani Sanghi,     G
Anil KumarTandale for the Respondents.

    The Judgment of the Court was delivered by

    SURINDER SINGH NIJJAR, J. 1. In these two appeals
the appellants are aggrieved by the order passed by the         H
    110        SUPREME COURT REPORTS                 [2010] 5 S.C.R.

A Appellate Tribunal for Electricity (hereinafter referred to as 'the
  Tribunal') in Appeal No.3/2007 dated October 31, 2007. The
  present Appeal No. 805 of 2008 is at the instance of West
  Bengal Electricity Regulatory Commission (hereinafter referred
  to as 'the Commission'). Appeal No.3341/2008 has been filed
B by the Calcutta Electricity and Supply Company Limited
  (hereinafter referred to as 'CESC').

      2. We propose to decide the two appeals by this common
  judgment as they arise out of the aforesaid common order
C passed by the Tribunal.

         3. The controversy between the parties revolves around the
    methodology, criteria/formula that has to be applied in
    determining the wheeling charges in accordance with the
    applicable Rregulations framed under the Electricity Act 2003.
D
          4. We may notice here the skeletal facts which are
    necessary for the purpose of disposal of these two appeals.
    HINDALCO Industries Limited, formerly known as Indian
    Aluminum Company Limited (hereinafter referred to as
E   respondent No.1) has an aluminum and copper products factory
    at Belurmath in West Bengal within the distribution licence area
    of CESC. It had an existing Contract Demand Agreement for
    8.5 MW with CESC drawing power at the voltage of 33 KV
    through dedicated lines from the Belurmath receiving Sub-
    station of CESC. For this purpose, respondent No.1 has
F   installed a 33 KV Sub-Station at its premises. It has a captive
    power plant at Hirakud, Orissa. On 31.10.2003 respondents
    filed an application under Section 9 and 42 of the Electricity Act,
    2003 before the Commission seeking permission for open
    access to wheel surplus captive power of an approximately 9
G   MW from its power plant to its Belur factory. The distance
    between the captive power plant at Hirakud, Orissa and
    Belurmath plant in West Bengal is about 555 kilometers, out of
    which 550 kilometers falls within the jurisdiction of West Bengal
    State Electricity Board (for short WBSEB), OPTCL and Eastern
H   Region. We may also notice here that out of these five



           /
  WEST BENGAL ELECTRICITY REGULATORY COMMISSION v.         111
  HINDALCO INDUSTRIES LTD. [SURINDER SINGH NIJJAR, J.]

kilometers, respondent No.1 had at its own cost put up 2 A
kilometers long dedicated transmission line, thus using only 3
kilometer~ of the CESC network. Respondent No.1 paid
wheeling charges for transmission of power at the rate of 9.57
paise per unit for 550 kilometers. However, in respect of
remaining five kilometers, which also fall within the State of B
West Bengal, respondent No.1 has to pay wheeling charges
at the rate of 83.54 paise/kWh as fixed by tne Appellate
Commission by its order dated 21.11.2005. In its order dated
21.11.2005 the Commission had observed as follows:

           "26.0. Thereafter, actual of working of open access C
    should follow, naturally depending-upon availability of
    capacity as laid down in the Regulations on open access.
    Payments of various charges I fees should follow the
    provisions of the Regulations dealing with fees, charges
    and formats. There are still two items on which specific D
    orders from the Commission will be required. The first one
    concerns the quantum I rate of additional surcharge, while
    the second one concerns the wheeling charge which·will
    have to be determined by the Commission in terms of
    Regulation 14.3(b) and Regulation 14.5(b) respectively of E
    the West Bengal Electricity Regulatory Commission (Terms
    and Conditions for Open Access) Regulations, 2005. We
    have since determined the wheeling charges applicable to
    CESC Limited for the year 2005-06 based on factors like
    distribution network cost, units saleable by the distribution F
    licensee to its consumers, units to be wheeled by the open
    access customer etc. and the same has worked out to
    83.54 paise per kWh. This will be revised appropriately,
    needless to add, by the Commission every year."
                                                                 G
     5. Aggrieved by the aforesaid order, respondent No.1
challenged the same before the Tribunal by way of an appeal
being Appeal No.1/2006. The aforesaid appeal was allowed
by the Tribunal by its order dated 11.7.2006. The impugned
order of the Commission was quashed and set aside. The
                                                                 H
    112     SUPREME COURT REPORTS                    [2010] 5 S.C.R.


A   matter was remanded back to the Commission for a fresh
    determination of wheeling charges with the following
    observations:

          "35. It follows that in calculating wheeling charges for the
          distribution system or associated facilities are to be
B
          assessed on applicable distribution network cost, units
          saleable and units wheeled by all open access customers
        . in the network. The learned counsel for appellant contends
          that as per CERC (Open Access in Inter-State
          Transmission) Regulations and WBERC (Terms &
c         Conditions for Open Access -Schedule of Charges, Fees
          & Formats for Open Access) Regulation, the wheeling
          charges of the Distributing system should be 0.25 time for
          short term open access. However, we find from Para 26.0
          of the order appealed against, there is no detailed
D         discussion in this respect except holding that 83.54 paisa/
          kWh shall be the wheeling charges. No particulars been
          disclosed is the main grievance and Regulations
          governing wheeling charges have not been applied
          correctly. The second respondent has stated in its
E         submission that the WBERC determined the wheeling
          charges in case of WBSEB for 2005-06 at the rate of 56
          paisa/kWh and a copy also was filed. In the circumstances
          with respect to fixation of wheeling charges the matter
          deserves to be remitted back to WBERC for fresh
F         consideration in the light of the relevant Rules and affording
          opportunity to appellant. The authority shall take note of the
          fact that open access within the Distribution area of CESC
       · is applied to a distance of 5 KM and out of 5 KM, 2 KM
          distance is appellant's dedicated transmission line put up
G         at its costs."

         6. Upon remand, the matter was again heard, and decided
    by the Commission vide order dated 16.11.2006. By this order
    the Commission sought to demonstrate and detail the
    methodology for determining the wheeling charges payable by
H
  WEST BENGAL ELECTRICITY REGULATORY COMMISSION v.        113
  HINDALCO INDUSTRIES LTD. [SURINDER SINGH NIJJAR, J.]

respondent No.1. The wheeling charges were re-determined by      A
the Commission at 83.54 paisa per KWH. Again being
aggrieved by the aforesaid order, respondent No.1 impugned
the same before the Tribunal by way of Appeal No.3/2007.

     7. We may notice here that in both the matters before the B
Tribunal, respondent No.1 had challenged the determination of
wheeling charges for the year 2005-06. Initially, respondent No.1
had challenged the order passed by the Commission on
21.11.2005 in Appeal No.1/2006. By order dated 11.7.2006
Appeal No.1/2006 was allowed and the matter was remanded
back to the Commission for fresh determination of wheeling C
charges. It was observed that there was no detailed discussion
in the order which would throw light upon the manner and
methodology behind determination of wheeling charges. The
grievance made by respondent No.1 which was noticed by the
Tribunal was that "no particular wheel disclosed is the main D
grievance and regulation governing wheeling charges have not
been applied correctly."

      8. Taking note of the aforesaid observations, the
Commission re-determined the wheeling charges. It is the case    E
of the appellants herein that wheeling charges had been
correctly re-determined on the basis of the total distribution
network cost as mandated under the Commission (Terms and                 I
Conditions for Open Access -Schedule of Charges, Fees &              :
Formats for Open Access) Regulations, 2005; the West Bengal      F
Electricity Regulatory Commission (Terms and Conditions for
Open Access) Regulations 2005 as well as the West Bengal
Electricity Regulatory Commissions (Terms and Conditions of
Tariff) Regulations, 2005.

     9. It is claimed by the appellants that the formula/ G
methodology/criteria for determining wheeling charges has to
be in terms of form 1.27 attached to the Tariff Regulations,
2005. In spite of the clear and categorical statutory provisions
contained in the applicable regulations, the appellants have
been wrongly directed by the Tribunal to re-determine the H
    114      SUPREME COURT REPORTS                 (2010) 5 S.C.R.


A   wheeling charges on the basis of applicable network of 33
    KVW distribution system on which the electricity is being rolled
    by respondent No.1. The appellants had laid considerable
    emphasis on the submissions that the determination of
    wheeling charges based on the interpretation directed by the
B   Tribunal would be ex facie contrary to the scheme contemplated
    under the applicable regulations framed_ under the Electricity
    Act, 2003 governing determination o(wheeling charges. A
    combined reading of all the applicable regulations, according
    to the appellants, leads to the irresistible conclusion that for
c   determining wheeling charges total distribution cost of the
    network and not the voltage-wise cost would be the determining
    factor. The interpretation made by the Tribunal, if accepted,
    would render the regulation framed by the appellant otiose. The
    Tribunal incorrectly understood and interpreted the expressions
    applicable distribution network as the distribution network cost
0
    which is to be determined at the relevant voltage level.

         10. At this stage we need not decide any of the issues
    raised by the appellants as, in our opinion, the appeals have
    to be allowed on the short ground that the Tribunal has failed
E   to consider the objection raised by the appellants with regard
    to the maintainability of the appeal filed by respondent No.1,
    before the Tribunal.

        11. Both the appellants had categorically stated before the
F Tribunal that respondent No.1 has sought to challenge the
  wheeling charges for the year 2005-06 as determined by the
  Tribunal in the order dated 16.11.2006. During the year 2005-
  06 not a single unit of energy was wheeled by respondent No.1
  and therefore no wheeling charges were paid/payable.
  Therefore, the appeal filed by respondent No.1 herein was at
G best of an academic interest only, as at the relevant point of
  time when Appeal No.03/2007 was filed the wheeling charges
  for the year 2006-07 had already been determined. It was also
  mentioned that for reasons best known to respondent No.1
  herein the wheeling charges for 2006 were not challenged in
H
  WEST BENGAL ELECTRICITY REGULATORY COMMISSION v.            115
  HINDALCO INDUSTRIES LTD. [SURINDER SINGH NIJJAR, J.)

the appeal before the Tribunal. In any event since respondent        A
No.1 haJ not wheeled any power during the period 2005-06, it
did not have to pay any wheeling charges in the first place.
Thus, the appeal ought to have been dismissed as having
become infructuous. It is emphasised by the counsel for the
appellant that detailed written notes were submitted before the      B
Tribunal during the course of hearing in Appeal No.3/2007.
Thereafter also written submissions were filed detailing the
scope of the issues before the Tribunal. Copies of these written
submissions have been placed before us as an annexure to
the grounds of appeal.                                               c
      12. The specific submission made by the appellant with
regard to the maintainability of the appeal was an important
issue which needed consideration by the Tribunal. Numerous
issues, which have been raised in these appeals on merits,
were also raised before the Tribunal which seem to have              D
escaped the notice of the Tribunal rendering its decision
vuln~rable. In our opinion, it would be in the interest of justice
to remand the matter back to the Tribunal for fresh consideration
of all the issues after taking into consideration the factual and
legal submissions made by the appellant. In view of the above        E
both the appeals succeed and are allowed. The order passed
by the Tribunal is set aside. The appeals are remanded back
to the Tribunal to be decided afresh on merits, in accordance
with law preferably within a period of three months of the receipt
of a certified copy of this order.                                   F

     13. Appeals are allowed as indicated above with no order
as to costs.

K.K.T.                                        Appeals allowed.