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Reportable

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 9193 OF 2012

Power Grid Corporation of India Ltd.      … Appellant

VERSUS

Punjab State Power Corporation Ltd. And Others     … Respondents

WITH

         CIVIL APPEAL NO. 9302 of 2012

J U D G M E N T

Prafulla C. Pant, J.

These  appeals  preferred  under  section  125  of  

Electricity  Act,  2003  are  directed  against  orders  dated  

02.07.2012  and  08.11.2012  respectively,  passed  by  

Appellate Tribunal for Electricity, New Delhi (for short “the  

Tribunal”),  whereby Appeal  No.  123 of  2011 was allowed  

and Review Petition No. 09 of 2012 filed against that order  

was dismissed by the Tribunal, and matter was remanded  

back to Central Electricity Regulatory Commission (CERC)

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for redetermination of date of commercial operations (COD)  

of 400 KV Barh-Balia double circuit transmission?

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2. The issue involved in the present case is as to:-

Whether the new transmission line charged from one  

end by the transmission licensee without switchgear,  

protection system and metering  arrangement  (not  in  

the scope of works of the transmission licensee) at the  

other end could not have been commissioned for the  

purpose  of  raising  transmission  charges  against  the  

beneficiaries in the light of second Proviso to clause (c)  

of  Regulation  2  of  Central  Electricity  Regulatory  

Commission  (Terms  &  Conditions  of  Tariff)  

Regulations, 2009 (for short “Regulations, 2009”)?

3. We have heard Learned Counsel  for  the parties  and  

perused the papers on record.

4. Brief facts of  the case are that appellant Power Grid  

Corporation  of  India  (for  short  “Power  Grid”)  is  a  

transmission licensee who constructed 400 KV Barh-Balia  

double  circuit  transmission.  Punjab  State  Power  

Corporation  Ltd.  (respondent  No.  1)  is  one  of  the

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beneficiaries who is a successor-in-interest of Punjab State  

Electricity  Board.  Appellant  had  entered  into  contractual  

agreement,  i.e  Bulk  Power  Transmission  Agreement  with  

respondent No. 1 and other beneficiaries for providing the  

service  of  transmission  lines.  National  Thermal  Power  

Corporation  (NTPC)  was  constructing  a  Super  Thermal  

Power  Station  at  Barh  in  the  State  of  Bihar.  The  

construction  of  the  Sub-station  including  the  switchgear  

and protection system at the Barh end was within the scope  

of work undertaken by NTPC.  It is pleaded by the appellant  

that  it  had  duly  constructed  and  completed  the  work  

assigned to it by 30th June, 2010.  It is further pleaded that  

the  line  was  duly  charged  with  all  reactors  and  battery  

chargers in service and auxiliary supply was available and  

the system was running.  

5. On 01-10-2010 the appellant filed a petition (No. 267  

of  2010)  before  CERC  for  determination  of  transmission  

tariff  for  the  period  from  01-07-2010  to  31-03-2014.  

Admittedly the petition was heard by CERC on 25-01-2011,

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and  till  that  date  respondent  No.  1  had  not  raised  any  

objection.  The  matter  was  reserved  for  the  Judgment.  

Thereafter,  respondent  No.  1  appears  to  have  filed  an  

affidavit stating that that line was not operational. CERC,  

vide  order  dated  29-04-2011  decided  the  tariff  for  Barh-

Balia  line  w.e.f  01-07-2010,  payable  by  beneficiaries.  

Aggrieved by said order respondent No. 1 filed the appeal  

(No. 123 of 2011) before the Tribunal and pleaded that since  

condition of trial operation and regulatory services were not  

fulfilled, as such, the Central Commission erred in declaring  

the tariff w.e.f. 01-07-2010. The Tribunal accepted the plea  

of respondent No. 1, and remanded the matter. Hence, these  

appeals.

6. Before further discussion we think it just and proper  

to  quote  the  relevant  provision  contained  in  Regulations,  

2009  for  the  just  decision  of  the  case.  Clause  (12)  of  

Regulation 3 defines ‘date of commercial operation’ (COD) as  

under:-

“(12).  ‘Date  of  Commercial  Operation’  of  ‘COD’ means

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(a) In  relation  to  a  unit  or  block  of  the  thermal  generating  station,  the  date  declared  by  the  generating  company  after  demonstrating  the  maximum continuous rating (MCR) or the installed  capacity  (IC)  through  a  successful  trial  run  after  notice  

(b)to  the  beneficiaries,  from  0000  hour  of  which  scheduling process as per the Indian Electricity Grid  Code (IEGC) is fully implemented, and in relation to  the  generating  station  as  a  whole,  the  date  of  commercial operation of the last unit or block of the  generating station;

(c) In relation to a unit of hydro generating station, the  date declared by the generating company from 0000  hour  of  which,  after  notice  to  the  beneficiaries,  scheduling  process  in  accordance  with  the  Indian  Electricity  Grid  Code  is  fully  implemented,  and  in  relation to the generating station as a whole, the date  declared  by  the  generating  company  after  demonstrating peaking  capability  corresponding to  installed capacity of the generating station through a  successful trial run, after notice to the beneficiaries:

Note

1. In case the hydro generating station with pondage or  storage is not able to demonstrate peaking capability  corresponding  to  the  installed  capacity  for  the  reasons  of  insufficient  reservoir  or  pond  level,  the  date of commercial operation of the last unit of the  generating station shall be considered as the date of  commercial operation of the generating station as a  whole,  provided that  it  will  be mandatory for  such  hydro  generating  station  to  demonstrate  peaking  capability  equivalent  to  installed  capacity  of  the

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generating  unit  or  the  generating  station  as  and  when such reservoir/pond level is achieved.  

2. In  case  of  purely  run-of-river  hydro  generating  station  if  the  unit  or  the  generating  station  is  declared  under  commercial  operation  during  lean  inflows period  when the  water  is  not  sufficient  for  such demonstration, it shall be mandatory for such  hydro  generating  station  or  unit  to  demonstrate  peaking capability equivalent to installed capacity as  and when sufficient inflow is available.

(d)In  relation  to  the  transmission  system,  the  date  declared  by  the  transmission  licensee  from  0000  hour of which an element of the transmission system  is  in  regular  service  after  successful  charging  and  trial operation:

Provided that the date shall be the first day  of  a  calendar  month  and  transmission  charge  for  the  element  shall  be  payable  and its availability shall be accounted for,  from that date:

Provided further that in case an element of  the  transmission  system  is  ready  for  regular  service  but  is  prevented  from  providing  such  service  for  reasons  not  attributable  to  the  transmission licensee,  its  suppliers  or  contractors,  the  Commission  may  approve  the  date  of  commercial operation prior to the element  coming into regular service.”

7. The  language  in  the  above  definition  is  clear  and  

unambiguous.  We  agree  with  the  Tribunal  that  COD  of

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transmission lines  can be  achieved only  on fulfillment  of  

following three conditions:-

(i) The line has been charged successfully,  

(ii) Its  trial  operation has been successfully  carried out,  

and  

(iii) It is in regular service.

8. It  is contended on behalf  of  the appellant that what  

has  been  misinterpreted  by  the  Tribunal  is  the  second  

Proviso of clause (12) of Regulation 3 which provides that  

where transmission system is ready for regulatory services  

but  prevented  from providing  the  service  for  reasons  not  

attributable  to  the  transmission licensee,  the commission  

has the power to approve the date of commercial operation  

prior  to  element  coming  into  regular  service.   It  is  not  

disputed  in  the  present  case  that  Barh  Sub-station  was  

being constructed by NTPC, and Power Grid cannot be made  

to suffer as nothing was attributable to it.

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9. On the other hand, on behalf of respondent No. 1 it is  

argued that the transmission line cannot be said to have  

been  completed  unless  switchgear  and  other  connected  

works are also completed, as provided in the definition of  

“transmission lines”.

10. We  have  considered  the  rival  submissions.   Sub-

section (72) of Section 2 of Electricity Act, 2003 defines the  

word “transmission lines”, which reads as under: -

“2(72)  “transmission  lines”  means  all  high  pressure cables and overhead lines (not  being  an essential part of the distribution system of a  licensee)  transmitting  electricity  from  a  generating station to another generating station  or a sub-station, together with any step-up and  step-down transformers, switch-gear and other  works necessary to and used for the control of  such  cables  or  overhead  lines,  and  such  buildings or part thereof as may be required to  accommodate  such  transformers,  switch-gear  and other works.”

11. From the above definition, it is clear that switchgear  

and  other  works  are  part  of  transmission  lines.  In  our  

opinion, Regulation 3 (12) of the Regulations, 2009 cannot  

be  interpreted  against  the  spirit  of  the  definition  of

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“transmission lines” given in the statute.  It is evident from  

record that it is not a disputed fact that switchgear at Barh  

end of Barh-Balia line for protection and metering were to  

be installed by NTPC and the same was not done by it when  

transmission line was completed by the appellant. As such  

the appellant might have suffered due to delay on the part  

of  NTPC  in  completing  the  transmission  lines  for  some  

period.   But  beneficiaries,  including  respondent  No.  1,  

cannot  be  made  liable  to  pay  for  this  delay  w.e.f.  

01.07.2010 as the energy supply line had not started on  

said date.

12. We are apprised at the bar that meanwhile during the  

pendency  of  these  appeals,  in  compliance  of  the  interim  

order, after hearing all the concerned parties, C.E.R.C. has  

decided the matter on 30-06-2015, and transmission line  

has  been  now  declared  successfully  charged  w.e.f.  

01-09-2011 and the commercial operation has started on  

said date.  However, the order dated 30-06-2015 passed by  

CERC is stated to be operative subject to decision of this

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Court  in  the  present  appeals,  due  to  the  interim  order  

passed by this court.

13. Since we are in agreement with the Tribunal that in  

the  present  case,  respondent  No.  1 and the  beneficiaries  

could  not  have  been made  liable  to  pay  the  tariff  before  

transmission line was operational, we find no infirmity in  

the impugned order. Therefore, the appeals are liable to be  

dismissed.  Accordingly,  both  the  appeals  are  dismissed  

without  prejudice  to  the  right  of  the  appellant,  if  any,  

available to it under law, against NTPC.  There shall be no  

order as to costs.       

…………………..J.  [Ranjan Gogoi]

  …………………..J.

[Prafulla C. Pant]

New Delhi; March 03, 2016.