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REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 5139 OF 2019 (Arising out of SLP (C) No.8432 of 2017)

M/S Star Wire (India) Vidyut Pvt. Ltd. & Anr.  ..…Appellant(s)  

Versus

Haryana Electricity Regulatory Commission ….Respondent(s)

J U D G M E N T

A.M. Khanwilkar, J.

1. Leave granted.  

2. This appeal takes exception to the judgment and order of the

High Court of Punjab and Haryana at Chandigarh passed in C.W.P.

No.25337 of 2015 (O & M) dated 23rd  November, 2016. The

appellants had challenged the fourth amendment to Haryana

Electricity Regulatory Commission (Terms and Conditions for

determination of Tariff from Renewable Energy Sources, Renewable

Purchase Obligation and Renewable Energy Certificate) Regulations,

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2010 (for short, “principal Regulations”) published vide

notification dated 12th  August, 2015 (for short, “impugned

Amended Regulations”) which sought to amend the principal

Regulations. The appellants had also challenged the order passed

by the respondent­Commission dated 4th  August, 2015, in

furtherance whereof, the impugned Amended Regulations were

framed by the appropriate authority for revision of norms for

determination of generic tariff for the second control period

beginning from 1st April, 2013.  

3. The appellants had set up a 9.90 MW independent Biomass

Power Plant,  which was declared commercially operational on 3rd

May, 2013. The principal Regulations were notified on 3rd February,

2011, providing for the norms and parameters for determination of

tariff for various renewal energy project developers. As per

Regulation 4 of the principal Regulations, the first control period of

three years was to end on 31st March, 2013. The third proviso of

Regulation 4 posits that in case, the regulations for the next control

period were not notified after the expiry of the first control period,

the tariff norms  as  per these regulations (principal  Regulations)

would continue to apply until notification of the revised regulations,

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subject to adjustments as per the revised regulations. As the first

control period had already ended, the appropriate authority

initiated suo motu proceedings for revision of tariff and issued draft

fourth amendment to the principal Regulations, seeking to amend

Regulation 4 and including Regulation 5 of the principal

Regulations. This draft amendment was issued on 29th December,

2014. Pursuant thereto, the concerned parties submitted their

response. After giving opportunity to all concerned, the Commission

proceeded to pass an order dated 4th August, 2015, which attempts

to analyse and adjudicate all  the  issues raised by the concerned

parties.  On  the  basis  of the  said  order, the impugned Amended

Regulations came to be notified. The effect whereof was to deny the

applicability of tariff norms adjustments to the appellant No.1,

which had commenced its commercial operations on 3rd May, 2013.

The said amendment  has been given  prospective effect qua the

appellants. It has made classification between the projects

commissioned/to be commissioned in  financial years 2013­14 on

the one hand and 2014­15, 2015­16 and 2016­17 on the other,

without  any  intelligible  differentia  or  any rational  basis therefor.

Neither the principal Regulations nor the impugned Amended

Regulations envisage classification on the basis of commissioning of

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renewable energy projects in a particular financial year during the

same control period. Similarly, the regulations do not envisage

determination of separate tariff on such differentiation. Indeed, the

authority has been invested with power to determine project specific

tariff under Regulation 6. In the present case, however, the power

exercised by the Commission is indisputably with reference to

Regulation 4 namely, to determine a generic tariff  for the control

period commencing from 1st April, 2013 and ending with financial

year 2016­17 i.e. 31st March, 2017, for a period of 4 years.  

4. In this back drop, the appellants filed writ petition and prayed

for the following reliefs:  

“PRAYER It is therefore most respectfully prayed that this Hon’ble Court may graciously be pleased to:

a. Issue an appropriate writ under Article 226/227 of the Constitution of India for issuance of, order or direction in the nature of Certiorari for setting aside the Impugned Notification dated 12.08.2015 (Annexure P­ 1) and the Impugned Order dated 04.08.2015 (Annexure P­2) passed by the Respondent to the extent the same seeks to apply the revised regulations with effect from the date of the Impugned Notification; and  

b. Issue an appropriate writ under Article 226/227 of the Constitution of India for issuance of, order or direction in the nature of  Mandamus  directing the Respondent to apply the revised regulations on and from the date of commencement  of the  Second  Control  Period i.e. with effect from 01.04.2013; and

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c. Issue an appropriate writ under Article 226/227 of the Constitution of India for issuance of, order or direction in the nature of  Mandamus  directing the Respondent to publish the revised tariff after adjusting the same as per the revised regulations from the  first  day of the Second Control Period i.e. 01.04.2013, and to further allow carrying cost on the overdue amounts; and

d. Issue an appropriate interim  direction granting  ad­ interim ex­parte  stay of operation of the Impugned Notification dated 12.08.2015 (Annexure P­1) and the Impugned Order dated 04.08.2015 (Annexure P­2) passed by the Respondent; and  

e. Dispense with serving advance notice upon the Respondent; and  

f. Costs of the Writ Petition be awarded to the Petitioners; and  

g. Dispense with filing of certified copies/true typed copies of Annexures P­1 to P­10, and the photo/typed copies of the Annexures may kindly taken on record and the requirement of filing typed/certified copies thereof be dispensed with; and  

h. Pass such other  order(s)  as  this  Hon’ble  Court  may deem fit and proper in the facts of the case.”  

5. The appellants raised almost thirty grounds as articulated in

the writ petition, in support of the reliefs claimed by them. They

have attempted to demonstrate as to how the amended regulations

were arbitrary,  unreasonable,  capricious and discriminatory.  The

respondent refuted the stand taken by the appellants by filing

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elaborate counter affidavit and mainly relied on the order passed by

the Commission dated 4th August, 2015, which was the foundation

for the amendment of the relevant provisions of the principal

Regulations. The reply affidavit filed by the respondents before the

High Court runs into about 60 typed pages (forming part of volume

II of the paper book). Accordingly, the writ petition proceeded before

the Division Bench of the  High Court. The  High Court in the

impugned judgment has noted that the appellants had raised only

two contentions, as can be discerned from  paragraph 6 of the

impugned judgment. The same reads thus:

 “6. The grievance of the petitioners is two fold. Firstly with the issuance of notification of the Amended Regulations  on 12.8.2015, there  would be different treatment for the  persons  operating in the same control period; namely, who had commissioned their  projects in  the year  2013­14 and  the persons, who had commissioned thereafter, the control period being same i.e. for the years from 2013­14 to 2016­17. Further, it was submitted that out of the control period prior to the date of notification of the Amended Regulations only financial year 2013­14 has been isolated for different treatment, which is discriminatory. How any of alleged Regulation is affecting the petitioner was not specifically pointed out.”

We would proceed on the basis that this was the limited argument

canvassed  before the  High Court  during the  hearing  of the  writ

petition. However, what is intriguing to note is that even these two

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points have been disposed of  by the Division Bench of the High

Court in a most cursory manner without analysing the issues in

proper perspective, as can  be discerned from the discussion in

paragraph Nos.13 to 15 of the impugned judgment. The same reads

thus:  

“13. It is not in dispute that exercise for revision of the 2010 Regulations was not started six months before the expiry of the existing control period on 31.3.2013. The exercise was started only in the year 2015. Public hearing was held in which even the petitioner­company was represented. Vide order dated 4.8.2015, the Commission approved the proposed amendments  in the 2010 Regulations. The Amended Regulations in terms of the order passed by the Commission  were notified on 12.8.2015.  Regulation 1(2) of the Amended Regulations provides that the Regulations shall  be applicable  to all the Renewable Energy Projects Commissioned/to be commissioned from Financial Years 2013­14 to 2016­17, as the control period of four years was provided. Regulation 1(3) of the Amended Regulations provides that for the existing projects commissioned from Financial year 2013­14 onwards, the revised norms shall be applicable prospectively from the date of notification of the Amended Regulations unless otherwise provided in the Amended Regulations. For the period prior to the date of  notification,  existing norms as per the 2010 Regulations shall continue to be applicable. The Amended Regulations were to come into force from the date of publication in the official gazette. The Amended Regulation (4) provides that the second control period shall be of four years commencing from Financial year 2013­14. 3rd  proviso thereto provides that in case revised regulations for the next control period are not notified on or before the commencement of that period, the tariff norms as per the Amended Regulations shall continue to remain applicable, until notification of the revised regulations and the second control period shall be  deemed  to  have  been  extended  upto the  date  of notification of the regulations for the next control period.

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14. The contention raised by learned counsel for the petitioners that there is discriminatory application of regulations qua the petitioners’ company only because it started operation in the Financial year 2013­14, as compared to the other projects, which started functioning after Financial year 2013­14 is merely to be noticed and rejected. Though the control period is from the Financial Years 2013­14 to 2016­17, however, the Amended Regulations clearly provide that for the existing projects from Financial year 2013­14 onwards, the revised norms shall be applicable prospectively, from the date of notification of the Amended Regulations.  

15. As far as the second contention raised by learned counsel for the petitioners regarding application of the Amended Regulations in terms of 3rd

proviso to  Regulation  4 of the 2010  Regulations is concerned, it clearly provides that the existing norms, even for the period subsequent to the expiry of control period, shall be applicable till such time revised Regulations are notified. However, the same shall be subject to adjustments as per revised regulations. That would mean, adjustments, if any, are to be specifically provided for in the Amended Regulations for the period prior to the notification of Amended Regulations. Wherever special conditions have been provided for in the Amended Regulations for different years,  learned counsel for the petitioners did not point out how that prejudiced the petitioners. It is all matter of calculations for which facts were examined by the Commission while passing the order on 4.8.2015, on the basis of which, the Regulations were amended.”

As a matter of fact, paragraph 13 of the impugned judgment merely

notices some factual aspects. The reason which weighed with the

High Court to negative the issues agitated by the appellants can be

noticed only from paragraph Nos.14 and 15, which ex facie to so the

least is cryptic.

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6. Resultantly, the appellants have approached this Court by way

of present appeal. The main argument of the appellants is that the

principal Regulations which indeed, applied to the control period

from 3rd February, 2011 until 31st March, 2013, but envisaged that

the same would continue to remain applicable until notification of

the revised regulations is issued, subject to  adjustments  as  per

revised regulations. These regulations make no distinction on the

basis of commissioning of project on financial year basis during the

same  block  period or thereafter  until its application  during the

extended period. Rather, the control period referred to in Regulation

4  encompasses  all the  projects commissioned  during that  block

period and including extended period and must be treated alike. In

other words, the same generic tariff must apply to all the projects

commissioned during the relevant block period i.e. from 3rd

February, 2011 to 31st March, 2013 and until the issue of revised

regulations, subject to adjustments as per revised regulations.

Therefore, the amended regulations must be read  in  light  of the

principal Regulations. However, the amended regulations entail in

denying the applicability of the revised regulations to R.E. projects

commissioned  in FY 2013­14. Such as the appellant,  which was

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commissioned on 3rd May, 2013. The amended regulations are for

the second  control  period commencing from 1st  April,  2013 and

ending on 31st March, 2017 for a period of four years, of which the

first year has been defined as FY 2013­14. Despite this position, the

amended regulation 1(3) makes exception to the applicability of the

revised regulations to the projects commissioned during FY 2013­

14, by making it applicable prospectively from the date of

notification of the impugned  Regulations on 12th  August, 2015.

Whereas, the projects commissioned during 20014­15 and onwards

during the selfsame second control period referred to therein would

get the benefit of the revised regulations for the entire period from

the date  of  commissioning commercial  production,  without there

being any intelligible differentia. In other words, the appellants have

been denied benefit of the revised regulations for the period between

3rd May, 2013 to 12th August, 2015. The effect of such a provision is

to take away the benefit  which had  enured  to the  appellants in

terms of Regulation 4 of the principal Regulations, which predicates

that the tariff norms as per the principal Regulations shall continue

to  remain applicable  until  notification of the  revised regulations,

subject to adjustments as per the revised regulations. Resultantly,

the impugned Amended Regulations suffer from the vice of  hostile

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discrimination between persons similarly  placed namely,  projects

commissioned during the block of second control period governed

by the Amended Regulations, without any intelligible differentia. We

need not elaborate on other arguments which are either to buttress

the above­mentioned points or if we may say so, in the nature of

another shade of the same argument  with reference to factual

aspects relevant for examining the same. The sum and substance of

the  argument  is that the  appellants  have been denuded of their

right to get adjustments in the same  manner as extended to

projects commissioned in the same control period and despite the

stipulation in the third proviso of the Regulation 4 of the principal

Regulations. Inasmuch as, the impugned Amended Regulations

were notified on 12th August, 2015, therefore, the rights accrued to

the appellants in terms of  Regulation  4  would take effect from

commissioning of their project on 3rd  May, 2013 because the

principal Regulations were still applicable and in force. Taking away

that fructified right, is impermissible in law. Further, the impugned

Amended Regulations,  ex facie,  discriminates between the projects

commissioned during the same control  period  i.e.  second control

period from 1st April, 2013 till 31st March, 2017, by singling out the

projects commissioned in FY 2013­14. It is not open to make such

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classification in respect of projects commissioned during the same

control period. Further, there can be no two tariffs operating during

the same control period. In that, no express provision to prescribe

two sets of tariffs concerning the same control period is found in the

principal Regulations or the impugned Amended Regulations.

Therefore, classification sought to be done in the impugned

Amended Regulations, cannot be countenanced.  

7. Indeed, the respondents have vehemently supported the

impugned decision of the High Court and would contend that the

provisions engrafted in the impugned notification are manifestation

of the order passed by the Commission dated 4th August, 2015. The

Commission had elaborately analysed all aspects of the  matter

before passing the said order. In other words, the respondents have

drawn support from the analysis done by the Commission in the

suo moto proceedings initiated by it for revision of norms (for tariff

operation for the second control period commencing from 1st April,

2013). That order runs into over 100 typed pages and has analysed

the  necessity of revision vis­à­vis each  head to  be reckoned for

determination of tariff. The appellants had participated in the said

proceedings. However, the stand taken by the appellants did not

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commend to the Commission, as can be discerned from the

discussion in the order passed by it on 4th August, 2015. Further, it

was open to the appellants to approach the Commission by way of a

review if they had any reservation with regard to the view taken by

Commission in the said order. It was also open to the appellants to

file  appeal  against the  said  order.  However,  without resorting to

such remedies, the appellants chose to file writ petition and have

raised grounds which are untenable in light of the discussion

recorded by the Commission in its order dated 4th August, 2015. It

is certainly not a case of hostile discrimination considering the fact

that Commission has recorded tangible reasons as to  why the

applicability of the revised regulations  was required to  be  made

prospective in respect of projects commissioned during FY 2013­14.

It is urged that the exercise of power in framing regulations ­ be it

principal Regulations or impugned Amended Regulations ­ in terms

of  Section 61 read with Section 181 of the Electricity  Act,  2003

permits classification on the basis of the date of commissioning of

the  project  during  the  relevant  period and which may  inevitably

result in providing for two sets of tariffs during the same control

period. It is submitted that even though the impugned judgment of

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the High Court is brief, the conclusions reached therein are

unexceptionable and therefore, this appeal ought to be dismissed.  

8. After perusing the impugned judgment, we have no hesitation

in taking the  view  that the  High Court  has  committed  manifest

error or so to speak, failed to exercise jurisdiction vested in it for

adjudicating the relevant issues raised by the appellants. For, there

is hardly any intelligible discussion in the impugned judgment in

that regard. If we may say so, it is cryptic and cannot stand the test

of judicial scrutiny. We say so because, up to paragraph 9 of the

judgment the  High  Court has only reproduced the rival stand.

Paragraph  11 refers to the relevant  provisions.  Paragraph 12 is

mere narration of some facts concerning this case. Paragraph 13,

broadly refers to the purport of the provisions in the principal

Regulations and the impugned Amended Regulations. The

discussion with regard to the  merits of the challenge, can be

discerned only from paragraph Nos.14 and 15 reproduced hitherto.

Paragraph 14 even if fairly analysed, merely adverts to the

argument of discriminatory application of regulations qua the

appellant company and proceeds to reject the same. No logic can be

deduced as to why the Court was persuaded to reject the argument

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despite the multifaceted issues raised by the appellants. The second

sentence  in the said paragraph then proceeds to record that the

control period  may  be from  FY  2013­14 onwards,  however, the

impugned Amended Regulations envisage application of revised

norms to projects commissioned in FY 2013­14 prospectively from

the date of notification of the impugned Amended Regulations. In

other words, the High Court has not analysed the grounds of

challenge regarding the validity of the impugned Amended

Regulations and including the competency to frame such a

regulation, appropriately. Strikingly, the High Court then

straightaway proceeds to examine the second contention raised by

the  appellants in reference to the third  proviso in the  principal

Regulations providing for adjustments as per revised regulations.

The Court merely noted that the appellants failed to point out any

prejudice caused to them because  of exclusion from  the  benefit

flowing from the principal Regulations. The appellants, on the other

hand, have invited our attention to the specific grounds taken by

the appellants in the writ petition and also noted in the order of the

Commission dated 4th August, 2015 and additionally articulated in

the ground  No. B  of the special leave petition, giving comparative

chart indicating substantial disparity regarding the norms

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applicable as per principal Regulations and the impugned Amended

Regulations. In other words, the argument of prejudice was raised

by the appellants to the detail but the High Court has failed to deal

with the same, to say the least satisfactorily. Similarly, the detail

arguments regarding the validity of the impugned Amended

Regulations and the competency to frame such a regulation has not

been analysed by the High Court.  

9. Suffice it to  observe that the  discussion  in two paragraphs

(para 14 and 15), to say the least, is one of disposing of the writ

petition in  a  most casual and  cavalier  manner.  That cannot  be

countenanced. Having said this, we are of the considered opinion

that it would be appropriate to relegate the parties before the High

Court for fresh consideration of the writ petition on its own merits

in  accordance with  law.  We refrain  from expressing  any opinion

either  way on the  merits of the controversy or the grounds of

challenge regarding the impugned Amended Regulations. In other

words, the  High Court  must consider  all relevant aspects  of the

matter agitated by the appellants and deal with the same

appropriately in accordance with law.

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10. For completion of the record, we must note the decision of the

Constitution Bench of this Court in  PTC India Ltd. Vs. Central

Electricity Regulatory Commission, Through Secretary 1, which

has held that the challenge to the validity of the regulations can be

decided only in judicial review proceedings before the courts and

not by way of appeal or review. The appellants having invoked such

a remedy before  the High Court,  all  contentions available  to  the

appellants in that regard ought to have been adjudicated in proper

perspective. We agree with the appellants that the nature of

elaborate  order  passed by the  Commission on 4th  August,  2015,

which culminated with the framing of Amendment Regulations the

only remedy available to challenge the same is by way of  a writ

petition under Article 226/227 of the Constitution of India.              

11. Accordingly, this appeal is allowed. The impugned judgment

and order is set aside. The  CWP  No.285337 of 2015 (O&M) is

restored to  the  file  of the High Court to  its  original  number, for

being considered afresh by  the High Court on  its  own merits  in

accordance with law. All pending applications are disposed of. No

order as to costs.  

1 (2010) 4 SCC 603

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     ……………………………..J       (A.M. Khanwilkar)

     ……………………………..J       (Ajay Rastogi)

New Delhi; July 2, 2019.