NON-REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS. 5775-5780 OF 2007

UTTAR PRADESH POWER CORPORATION LTD.                         ...APPELLANT.

        VERSUS

N.T.P.C. LTD. & ORS.                         ..RESPONDENTS.

WITH

C.A.Nos. 725-730 of 2008

J U D G M E N T

ANIL R. DAVE, J.

1.        Delay condoned.

2. At the request of the learned counsel appearing for the parties,  

all these appeals are heard together as similar issues are involved in  

all  these  appeals.   Central  Electricity  Regulatory  Commission  

(hereinafter referred to as the ‘Central Commission’) had determined  

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tariff  for  generation and sale  of  electricity  generated by  different  

units  of  the  respondent-National  Thermal  Power  Corporation  

Limited  for the period  commencing from 1st April,  2001 to 31st  

March, 2004 and for some other periods. The tariff so determined  

was challenged by the respondent before the Appellate Tribunal for  

Electricity by filing several appeals.  The said appeals and Review  

Petition were decided by different orders and all such orders have  

been challenged in the aforesaid appeals filed before this Court.

Though,  the  issues  involved  are  similar,  for  the  sake  of  

convenience, wherever facts have been referred to in this judgment,  

we have taken the same from Civil Appeal No. 5775 of 2007.

3.     Thus, the main issue involved in all these appeals is with regard  

to determination of tariff for electricity generated and sold by the  

respondent,  namely,  NTPC,  which  is  a  government  company  

incorporated under the Companies Act, 1956.  

4.      Generation  of  electricity  is  regulated  by  the  government  

authorities.  The respondent has several power plants in the country  

and electricity is generated at those power plants.  The electricity so  

generated  is  sold  to  several  State  Electricity  Boards.   There  are  

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regulations  which  determine  the  price  at  which  the  electricity  

generated by the respondent is to be sold to State Electricity Boards  

and  the  electricity  so  generated  is  transmitted  to  the  ultimate  

consumers through the State Electricity Boards.   The generation and  

sale of electricity by the respondent is regulated under the provisions  

of Electricity Act,  2003 and prior to enactment of the aforestated  

Act,  it  was  regulated  by  the  Central  Commission  under  the  

Provisions  of  Electricity  Regulatory  Commissions  Act,  1998  

(hereinafter referred to as “the Act”).  The said Act came into force  

with effect  from  25th April,  1998 and prior  thereto the tariff  for  

generation  and  sale  of  electricity  was  determined  by  the  Central  

Government  under  the  Provisions   of  the  Electricity  Supply  Act  

1948.   Under the said provisions,  the  Central Government  used to  

issue tariff notifications from time to time for determining the tariff,  

i.e.  the rate at which electricity generated by the respondent was to  

be sold to the State Electricity Boards.   

5. The Central Government had issued Tariff Notification dated  

30th April, 1994  determining tariff  for the generation and sale of  

electricity  from  the  Kawas  Gas  Power  Station  for  the  period  

commencing  from  1st January,  1993  to  31st March,  1998.  

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Thereafter,   another   Notification dated 21st December,  2000 was  

issued whereby  it was directed that the conditions incorporated in  

notification dated 30th April, 1994 would continue to be  applicable  

even  for  period  commencing  from 1st April,  1998 to  31st March,  

2001.   We are also concerned with determination of  tariff for the  

aforestated  period and for other  periods  in  respect  of  some other  

plants of the respondent.

6. The  tariff  so  determined  was  subject  matter  of  the  present  

litigation  before the Central  Commission and the Tribunal.   The  

respondent  was  aggrieved  by  the  determination  of  tariff  and,  

therefore,  the order determining tariff  had been challenged by the  

respondent  before  the  Tribunal.   The  final  order  passed  by  the  

Tribunal with regard to the determination of tariff was reviewed in  

pursuance  of  a  Review Petition  filed  by  the  respondent.   Orders  

passed in the Review Petition as well as original order passed by the  

Tribunal are subject matter of these appeals.

7.   In the said review petition as well as in the orders passed by  

the  Tribunal,  the issues were with regard to some of the factors,  

which ultimately decide the amount of tariff, namely, calculation of  

interest  on  loan  capital,   calculation  of  the  loan  capital,   non-

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inclusion of value of fuel like Naphtha and other liquid fuel while  

determining  working  capital,  etc..   Several  factual  aspects  were  

considered by the Tribunal  while  coming to the  final  conclusion.  

Equity capital, borrowed capital, revenue expenditure in the nature  

of fuel, etc. are of vital importance for determining the tariff.  After  

considering all these relevant factual aspects, based on accounting  

principles,  the Tribunal finally  decided the appeal.  

8.  We have heard the learned counsel  appearing for the parties on  

the subject of  determination of tariff.  The issues were with regard  

to necessary  ingredients of cost to be considered for the purpose of  

determination of  tariff  to be charged by the  power plants of the  

respondent  in  the  matter  of  sale  of  electricity  to  different  State  

Electricity  Boards.   The  issues  involved  are  also  with  regard  to  

calculation of interest  forming part of the tariff.

9.   For the purpose of determining tariff for generation and sale of  

electricity by the generating stations of the respondent,  cost  can be  

broadly divided into fix charges and energy charges.  It also contains  

the amount of interest paid   on the capital employed  as the capital  

employed in  all  electricity  generating  power  plants  is  very  huge.  

The issues with regard to determination of interest as well as capital  

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are some of the most important issues which were  decided by the  

Tribunal.

10.    Upon hearing the learned counsel for the parties and upon  

perusal of the record, we find that several factual issues with regard  

to  calculation  of  capital  employed  are  involved  in  these  appeals.  

The issues are not only based on the principles on which the amount  

of interest and the  energy charges are to be  determined but they  

also depend upon certain other   technical and factual aspects.

11.        Our  attention was drawn to the judgment delivered by this  

Court  in  the  case  of   WEST  BENGAL  ELECTRICITY  

REGULATORY COMMISSION  v.    CESC LTD  .  reported  in  

(2002) 8 SCC 715  and more  particularly  to Para 102 of the same  

judgment,  which reads as under:

“102. We notice that the Commission constituted under   Section 17 of the 1998 Act is an expert body and the  determination  of  tariff  which has  to  be  made  by  the  Commission involves a very highly technical procedure,   requiring  working  knowledge  of  law,  engineering,   finance,  commerce,  economics  and  management.  A  perusal  of  the report  of  ASCI as  well  as  that  of  the   Commission abundantly proves this fact. Therefore, we  think it  would be more appropriate and effective  if  a   statutory appeal is provided to a similar expert body, so   that  the  various  questions  which  are  factual  and  technical that arise in such an appeal, get appropriate   consideration  in  the  first  appellate  stage  also.  From  

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Section 4 of the 1998 Act,  we notice that the Central   Electricity Regulatory Commission which has a judicial   member  as  also  a  number  of  other  members  having   varied  qualifications,  is  better  equipped  to  appreciate   the  technical  and  factual  questions  involved  in  the  appeals  arising  from  the  orders  of  the  Commission.   Without meaning any disrespect  to the Judges of  the   High Court, we think neither the High Court nor the  Supreme  Court  would  in  reality  be  appropriate   appellate forums in dealing with this type of factual and   technical  matters.  Therefore,  we recommend that  the   appellate  power  against  an  order  of  the  State   Commission under the 1998 Act  should be conferred  either  on  the  Central  Electricity  Regulatory   Commission or on a similar body. We notice that under   the Telecom Regulatory Authority of India Act, 1997 in   Chapter IV, a similar provision is made for an appeal to   a Special Appellate Tribunal and thereafter a further   appeal to the Supreme Court on questions of law only.   We  think  a  similar  appellate  provision  may  be  considered to make the relief of appeal more effective.”

12. Looking to the  observations made  by  this  Court   to  the  

effect that the Central Commission constituted under Section 3 of  

the Act is an expert  body which has been entrusted with the task of  

determination of tariff and  as determination of tariff involves highly  

technical procedure requiring not only working  knowledge of law  

but  also  of  engineering,  finance,  commerce,  economics  and  

management,  this Court was  firmly of the view that the issues with  

regard to determination of  tariff  should be left  to the said expert  

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body and ordinarily  High Court  and even  this  Court  should  not  

interfere  with the determination of tariff.   

13. Looking to the aforestated legal position and in view of the  

technical  aspect  involved  in  the  impugned  order   with  regard  to  

determination  of  tariff,  which  we  prima  facie  find  to  have  been  

determined in a just and proper manner, we are  of the view  that the  

conclusion arrived at  by the Tribunal in the impugned orders do not  

appear  to  be  unreasonable  or  unjustified  and  therefore,  in  our  

opinion the impugned orders require no interference  by this Court  

and, therefore,  all these appeals are dismissed with no order as to  

costs.  

                ………..………… …......................J.                                                 (Dr. MUKUNDAKAM  SHARMA)

                     ………...........................................J.                                                  (ANIL R. DAVE)

New Delhi September  14,   2011.   

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