Non-Reportable

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

Civil Appeal No.2228/2020 (@ Diary No  .24669   of   2019)

SAI WARDHA POWER GENERATION LIMITED.   .... Appellant(s)

Versus

THE TATA POWER COMPANY LIMITED DISTRIBUTION & ORS.                          

…. Respondent (s)  

W I T H

Civil Appeal No  .5049   of   2019

J U D G M E N T

L. NAGESWARA RAO, J.

1. The question that arises for our consideration in these

Appeals  is  whether  Tata  Power  Company  Limited-

Distribution  (hereinafter,  ‘TPC-D’)  is  entitled  to  levy

wheeling  charges  for  the  power  supplied  to  Hindustan

Petroleum  Corporation  Limited  (hereinafter,  ‘HPCL’)  and

wheeling charges for the power sourced from Sai Wardha

Power  Generation  Limited  (hereinafter,  ‘SWPGL’)  through

open  access.   The  Maharashtra  Electricity  Regulation

Commission  (hereinafter,  ‘the  Commission’)  allowed  the

petition filed by HPCL and held that TPC-D is not entitled to

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levy  wheeling  charges.   Consequently,  the  Commission

directed TPC-D to refund the amounts collected from HPCL,

in the form of wheeling charges.  The Appellate Tribunal for

Electricity allowed the appeal filed by TPC-D and set aside

the  order  of  the  Commission.    Aggrieved  thereby,  the

SWPGL and HPCL have filed the above Appeals.   

2. Tata Power  Company Limited (TPC) was granted an

integrated  licence  for  supply  of  electricity  under  the

provisions  of  the Indian Electricity  Act,  1910.   HPCL has

been receiving electricity from TPC on its 22 kV distribution

network  since  1955.   In  2005,  HPCL  augmented  its  oil

refining  facility  by  installing  additional  units.    HPCL

requested TPC to supply additional power to feed its load

requirement of 70 MW on 100 per cent redundancy basis.

The  supply  was  required  to  be  enhanced  to  extra  high

voltage  (EHV)  level.   A  power  supply  agreement  was

executed between TPC and HPCL on 20th October, 2005 for

providing  power  supply  of  110  kV  to  HPCL’s  expansion

project at Chembur.  The actual supply of 70 MW power

started in the year 2008 after the construction of 2x110 kV

facility and the requisite regulatory approvals.  

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3. In  the  meanwhile,  as  per  the  directions  of  the

Commission,  TPC  trifurcated  its  assets  and  segregated

them  into  different  entities  for  generation,  transmission

and distribution  for  the purpose of  accounting  and tariff

determination  in  the  year  2006.   The  Commission

determined  separate  tariffs  for  Tata  Power  Company

Limited-Generation,  Tata  Power  Company  Limited-

Transmission and Tata Power Company Limited-Distribution

businesses for the first time on 03.10.2006.   Thereafter,

separate  tariffs  were  determined  by  the  Commission  for

Tata  Power  Company  Limited-Generation,  Tata  Power

Company  Limited-Transmission  and  Tata  Power  Company

Limited-Distribution.  While  approving  the  request  for

construction of 2x110 kV lines for power supply of 70 MW

to HPCL on 16.10.2007, the Commission directed TPC that

the other consumers in the vicinity may also be supplied

power from the 2x110 kV distribution lines.   By the tariff

order  dated  04.06.2008,  the  Commission  permitted  the

capitalization  of  the  2x110  kV  distribution  lines  in  the

books of accounts of TPC-D.  Undisputedly, HPCL has been

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paying wheeling charges i.e. charges for the right to use of

the distribution network since 2008.

4. In  the  year  2014,  TPC filed  applications  before  the

Commission  for  grant  of  transmission  licence  and

distribution licence under  the Electricity  Act,  2003.    On

17.04.2014, a representation was made by TPC classifying

2x110 kV lines as part of the transmission system and 33

kV and lower lines as part of the distribution system.   The

Commission granted Transmission Licence No. 1 of 2014 to

Tata Power Company-Transmission (TPC-T) on 14.08.2014.

HPCL applied to  TPC-D on 04.11.2015 for  availing 21.02

MW short term open access for getting power as a group

active  user  from SWPGL which  was  approved by  TPC-D.

HPCL executed a power purchase agreement with SWPGL

on 08.07.2016 with  partial  supply  of  electricity  on  open

access.  HPCL sought approval of TPC-D for the use of its

distribution network.  

5. On 10.10.2016, TPC-T filed an application before the

Commission  for  amendment  of  the  transmission  licence

No.1  of  2014.   TPC-T stated in  the said  application that

inclusion  of  the  2x110  kV  lines  in  its  network  is  an

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inadvertent  error  as  the  lines  were  always  part  of  the

distribution system.  Thereafter,  HPCL filed a petition on

13.04.2017 before the Commission for a declaration that

TPC-D was not entitled to levy and collect wheeling charges

and wheeling losses  on the supply  of  electricity  through

open access on the 110 kV Trombay - HPCL lines 1 and 2

including  the  feeder  lines.   The  Commission  passed  an

order  on  12.03.2018 allowing  the  petition  filed  by  HPCL

holding that TPC-D is not entitled to levy wheeling charges.

The said order was set aside by the Tribunal on 22.03.2018.

In  the  meanwhile,  the  Commission  disallowed  the

application filed by the TPC Transmission for modification of

Transmission  Licence  No.  1  of  2014  by  an  order  dated

01.08.2018.   The Appellate Tribunal set aside the order of

the  Commission  dated  01.08.2018,  disallowing  the

application for modification of the transmission license, and

remanded the matter back for fresh consideration.   

6. The  petition  filed  by  HPCL  was  allowed  by  the

Commission by holding that 2x110 kV Trombay - HPCL lines

are part  of  the transmission system of TPC-T as per the

transmission licence issued on 14th August, 2014.  As long

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as the lines remained part of the transmission licence, the

TPC-D  cannot  claim  wheeling  charges  as  a  distribution

licensee.    The  submission  on  behalf  of  the  TPC-D  that

2x110  kV  lines  should  be  considered  as  its  distribution

assets was rejected by the Commission on the ground that

extra high voltage network of 66 kV and above have to be

treated  as  part  of  the  transmission  network.    The

Commission held that the wheeling charges of TPC-D was

determined only for 11/22/33 kV lines.  On the basis of the

principle  of  segregation  between  HT  and  EHT  levels  in

Maharashtra,  the  Commission  held  that  EHV  feeders

emanating from the Trombay generating station squarely

fall within the definition of transmission lines under Section

2 (72) of the Electricity Act, 2003.  The Commission relied

upon the Central Electricity Authority (Technical Standards

for  Construction  of  Electrical  Plants  and  Electric  Lines)

Regulations,  2010  (hereafter  referred  to  as  the  ‘CEA

Regulations,  2010’)  which  demarcate  distribution  and

transmission boundaries on the basis of voltage levels.   As

per the CEA Regulations 2010, voltage levels from 0.415 kV

to 33 kV are included under the distribution head and 66

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kV to 765 kV AC and 500 kV DC voltage levels are included

under  transmission  head.    On  the  basis  of  the  above

findings, the Commission allowed the petition filed by HPCL

and directed TPC-D to refund the amounts collected from

HPCL on the said count.  

7. The Appellate Tribunal framed two principal issues for

consideration which are as follows:

“Issue No.1: Whether the 110 kV HPCL feeders

are part of the Distribution system of TPC-D or can

qualify  as  transmission  lines  in  terms  of  the

statutory  framework  and  in  the  facts  of  the

present case?  

Issue No.2: Whether  the  erroneous

submission  of  TPC-T  regarding  110  kV  HPCL

feeders in  the transmission licence No.1 exempt

HPCL from payment of wheeling charges?”  

8.  By  placing  reliance  on  an  earlier  judgment  of  the

Tribunal  dated  14.12.2012  in  Orissa  Power  Transmission

Corporation  Limited  vs.  Orissa  Electricity  Regulatory

Commission in Appeal No.30 of 2012, the Tribunal held that

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the 110 kV HPCL feeders from Trombay Generation Station

Bus-Bar  to  HPCL  installation  at  its  premises  for  use  of

electricity  are  an  essential  part  of  the  TPC  Distribution

system.   The  Tribunal  observed that  these  feeders  from

their inception were being used for supplying electricity to

HPCL.   The  Tribunal  was  also  of  the  view  that  an

arrangement  for  stepping  down  electricity  at  consumers

installation cannot be treated as a ‘sub-station’ as defined

in  Section  2  (69)  of  the  Electricity  Act.   Following  the

judgment in OPTCL, the Tribunal observed that there is no

embargo  that  the  distribution  network  of  a  distribution

licensee  cannot  include  a  line  of  110  kV  voltage  level.

Issue No.2 was also answered in favour of  TPC-D.   The

Tribunal declared that 110 kV feeders are integral part of

the distribution network of TPC-D and that on the basis of

voltage defined in the CEA Regulations 2010, the status of

the  licence  cannot  be  changed  from  distribution  to

transmission.  The Tribunal directed the Commission to re-

determine the wheeling charges at  EHT level  110 kV by

accepting the submission of HPCL that it was made to pay

higher wheeling charges.   

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9. We  have  heard  Mr.  Anand  K.  Ganesan,  learned

counsel for SWPGL, Mr. Varun Pathak, learned counsel for

HPCL and Mr. Maninder Singh, learned Senior Counsel for

TPC-D.

10. TPC-D raised a preliminary objection relating to the

maintainability of the appeal filed by SWPGL on the ground

that it lacks locus standi.   According to TPC-D, the dispute

essentially is between HPCL and TPC-D.  SWPGL which has

stopped supplying power to HPCL on 30.09.2017 cannot be

permitted  to  challenge  the  order  passed  by  the

Commission.    HPCL  has  filed  an  appeal  against  the

judgment of the Tribunal which has to be adjudicated on

merits.  Therefore, we have heard the learned counsel for

SWPGL as well.

11. It was contended on behalf of HPCL that 110 kV HPCL

line is a transmission line.  The metering for HPCL is done

at  TPC-D  sub-station  which  is  admittedly  a  transmission

asset.   As  a  matter  of  fact,  the  sale  of  electricity  is

completed at the TPC-D sub-station.   It was argued that on

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behalf of HPCL that a consumer can be connected directly

to  a  transmission  network.   HPCL  submitted  that  the

judgment of the Tribunal in OPTCL is erroneous. Inclusion of

2x110 kV lines in the transmission assets by TPC-D is  a

factor  that  cannot  be  ignored  while  deciding  the

entitlement  of  TPC-D  to  impose  wheeling  charges  by

treating  the  2x110  kV  lines  as  part  of  the  distribution

system.   

12. It was submitted on behalf of the SWPGL that there is

no  prohibition  or  bar  in  the  Electricity  Act  preventing  a

consumer from being directly connected to the network of

a transmission licensee.  Undisputedly, 2x110 kV Trombay -

HPCL lines have been declared to be part of transmission

assets by TPC-T.  The plea of inadvertence taken by TPC-D

has  to  be  rejected  in  view  of  availability  of  abundant

material.    SWPGL  referred  to  the  roll  out  plan  of  the

distribution network made by TPC which deals  only  with

lines  upto  33  kV.   According  to  SWPGL,  the  capital

investment plans of distribution network also include only

11 kV and 33 kV voltage level lines.  The learned counsel

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appearing for SWPGL submitted that the order of the APTEL

is liable to be set aside.   

13. On behalf of the TPC-D, it was argued that trifurcation

took place in the year 2005 and since then, tariff was being

determined  separately  for  transmission  and  distribution.

HPCL has been paying wheeling charges till 2018.   There is

no doubt that HPCL was receiving electricity from TPC-D’s

distribution network  since 1955.  Reliance was placed on

the tariff order dated 04.06.2008, wherein the Commission

permitted  capitalization  of  2x110 kV distribution  lines  in

books of accounts of TPC-D.       It was argued on behalf of

TPC-D  that  no  transmission  charges  have  ever  been

demanded  or  recovered  for  110  kV  assets.   It  was

contended that the application filed for amendment of the

transmission licence ought to have been decided by the

Commission  before  taking  up  the  instant  dispute.    A

detailed submission was made on the network roll out plan

to  submit  that  the  plan  was  qua a  broad  basis  of

consumers  who  are  connected  at  11kV/22kV/33kV  and

lower voltage levels.   It  was submitted that the network

rolls  out plan was only  towards development of  network

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backbone which is generally at levels below 33 kV.  It was

further urged on behalf of the TPC-D that the 110 kV lines

were always treated as a distribution asset and it was only

due  to  inadvertence  that  they  were  included  in  the

transmission license in 2014.        

      14. The  basis  for  the  order  of  the  Commission  dated

12.03.2018, allowing the petition filed by the HPCL is two-

fold.    Firstly,  the  Commission  held  that  transmission

licence was granted to TPC-T on 14.08.2014, in which the

two110 kV Trombay - HPCL lines were shown as a part of

TPC-T.   The Commission observed that as long as the lines

remained part  of  the transmission licence,  TPC-D cannot

claim wheeling charges.  The Commission further observed

that  HPCL  is  directly  connected  to  110  kV  transmission

system in terms of TPC-T’s transmission licence and not to

the  distribution  network  of  TPC-D.   The  Commission

remarked  that  mere  filing  of  a  petition  by  TPC-T  for

amendment  of  its  transmission  licence  does  not  entitle

TPC-D to levy wheeling charges.   The Commission further

referred to the submission of TPC-D in case No.47 of 2016

that the assets of TPC-D do not include any part of TPC’s

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transmission network.    The submission of TPC-D relating

to the inadvertent error in showing 2x110 kV lines in the

transmission network was rejected.  

15. Secondly,  the  Commission  relied  upon an E-mail  of

the  Maharashtra  State  Load  Despatch  Centre  (MSLDC)

dated  11.12.2015  addressed  to  SWPGL  in  which  it  was

stated that no wheeling charges can be levied on HPCL as

it was connected at 110 kV level.  The Commission referred

to  the  CEA  Regulations,  2010  and  Central  Electricity

Authority’s Manual on Transmission Planning Criteria) 2013

and  Maharashtra  Electricity  Regulatory  Commission

(Transmission Open Access) Regulations, 2016 to hold that

all lines up to 33 kV shall be part of the distribution system

and those above 33 kV form part of transmission lines.   

16. The order  of  the Commission was set  aside by the

Tribunal. The Tribunal observed that 2x110 kV HPCL feeder

was being used for supplying electricity since inception and

hence it is an integral part of TPC-D system.    By placing

reliance on a  judgment in  OPTCL,  the Tribunal  held  that

HPCL  cannot  receive  power  supply  directly  from  TPC-T.

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The Tribunal further held that there is no embargo on the

inclusion of the 2x110 kV lines in the distribution network

and distribution can be undertaken at high voltage levels

forming high voltage distribution system.   While answering

the second point,  the Tribunal  held that a consumer can

directly  be  connected  to  the  works  of  a  transmission

licensee.  However, in the instant case, HPCL was paying

wheeling charges from a long time to TPC-D.  Hence, the

2x110 kV lines are part of the distribution system of TPC-D.

Further,  the  Technical  Regulations  framed  by  the  CEA

defining level of voltage for distribution and transmission

heads were held to be generic in nature by the Tribunal.   

17. Admittedly,  separate  licenses  for  transmission  and

distribution to TPC-T and TPC-D respectively were granted

in 2014.  There is no dispute that TPC-T included the 2x110

kV lines in its transmission assets.   The network roll  out

plan submitted by TPC-D included lines upto 33 kV in its

distribution network.  An application was filed by TPC-T for

amendment  of  the  licence  which  is  pending  before  the

Commission,  following the remand by the Tribunal.   The

Tribunal did not advert to the application filed by TPC-T for

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amendment of the transmission licence.  The Tribunal also

did not refer to its order by which it set aside the order of

the Commission disallowing the application for amendment

of the transmission license and remanded the matter back

to  the  Commission.  The  Tribunal  committed  an  error  in

ignoring the existing transmission licence of TPC-T before

coming to a conclusion that 2x110 kV lines are part of the

distribution network.   The Tribunal ought to have directed

the Commission to adjudicate the application filed by TPC-T

for amendment of the transmission licence.  Thereafter, the

Tribunal  should  have  decided  an  appeal,  if  any,  filed

against the decision of the Commission on the application

for amendment before taking up the appeal filed by TPC-T

against  the  order  of  Commission  dated  12.03.2018.  The

Tribunal  stressed  on  the  fact  that  HPCL  was  receiving

power from TPC-D from a very long time for which reason,

the  2x110  kV  lines  should  form  part  of  the  distribution

system of the TPC-D.   The Tribunal was wrong in not taking

note of the application filed by TPC-T for amendment of its

transmission  licence  in  which  the  2x110  kV  lines  were

included in the transmission network.  Till the transmission

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licence of TPC-T is not modified, the 2x110 kV lines form

part  of  the transmission network of  TPC-T.   The Tribunal

could not have held that 2x110 kV lines should be included

in the distribution system of TPC-D.   

18. The  CEA  Regulations  2010,  the  Maharashtra

Electricity  Regulatory  Commission  (Transmission  Open

Access) Regulations, 2016 and the Maharashtra Electricity

Regulatory  Commission  (Distribution  Open  Access)

Regulations,  2016  provide  for  demarcation  between  the

transmission and distribution boundaries  on  the basis  of

voltage.  The Tribunal erred in ignoring the said Regulations

while  holding  that  2x110  kV  lines  are  part  of  the

distribution system.   

19. We  are  of  the  opinion  that  the  judgment  of  the

Tribunal  is  required to  be set  aside and that  the matter

should  be  remanded  back  for  fresh  consideration.

Therefore,  we  are  not  expressing  any  opinion  on  the

findings recorded by the Tribunal on interpretation of the

provisions of the Electricity Act, 2003.  As a matter of fact,

the transmission licence issued to TPC-T includes 2x110 kV

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lines as part of the transmission system. Therefore, it is not

open to TPC-T to contend that 2x110 kV line is a part of the

distribution system of TPC-D till the transmission licence is

modified.  It is essential that the application filed by TPC-T

for amendment of its transmission licence is decided first.

If the application filed for amendment by TPC-T is allowed

and reaches finality, the 2x110 kV lines will not form part

of  the  transmission  network.   On the other  hand,  if  the

application  of  TPC-T  for  amendment  of  its  licence  is

rejected, TPC-D cannot have a case for seeking inclusion of

2x110  kV  lines  in  its  distribution  system  for  imposing

wheeling charges on HPCL.   

20. Therefore,  we  direct  the  Commission  to  decide  the

application  filed  by  TPC-T  for  amendment  of  the

transmission licence issued in the year 2014 expeditiously

and not later than a period of two months from the date of

resumption of work after the lockdown due to Corona Virus

is lifted.   The appeal, if any, filed by the aggrieved party

shall  be decided by the Tribunal within a period of three

months from the date of filing.   Thereafter, the Tribunal

shall take up Appeal No.84 of 2018.

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21. For  the  aforementioned  reasons,  we  set  aside  the

judgment of the Tribunal and remit Appeal No.84 of 2018 to

the Tribunal for fresh adjudication.   

 ................................J.                                                 [L. NAGESWARA RAO]

                                                  ................................J.                                                               [DEEPAK GUPTA]

New Delhi, April 03, 2020.

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