CERC Has Regulatory Powers U/S 79 Electricity Act Which Is Not Limited To Only Adjudicatory Orders: Supreme Court

The Supreme Court held that the Central Electricity Regulatory Commission (CERC) has regulatory powers under Section 79 of the Electricity Act, 2003 which is not limited to only adjudicatory orders, but also includes administrative functions.

The Court held thus in a Civil Appeal filed by Power Grid Corporation of India Limited against the Judgment of the Madhya Pradesh High Court, Indore Bench which admitted the Writ Petitions of the Madhya Pradesh Power Transmission Company Limited (MPPTCL).

The two-Judge Bench of Justice J.B. Pardiwala and Justice R. Mahadevan observed, “The regulatory powers provided to the CERC under Section 79 are of ad hoc nature and are required to be exercised by the CERC in context of the specific circumstances of the parties before it. The rationale for provision of such ad hoc powers by the Act, 2003 is to ensure that regulatory gaps, if any, that may be discovered on a case-to-case basis, are filled or removed. Therefore, there is no doubt in our mind that the CERC is enabled to exercise its regulatory powers by way of orders under Section 79 and the purview of Section 79 is not limited to only adjudicatory orders but includes within its scope administrative functions as well.”

The Bench said that a reading of the Electricity Act would indicate that it makes no distinction between the regulatory and adjudicatory functions vested in and conferred upon the CERC, which is a quasi-judicial body enjoined to regulate and administer the subject of electricity generation, transmission and distribution.

Senior Advocate M.G. Ramachandran appeared on behalf of the Appellant while Advocate General (AG) Prashant Singh appeared on behalf of the Respondents.

Brief Facts

The Appellant was a Government of India Undertaking constituted for the purpose of undertaking inter-State transmission of electricity. By virtue of being a central transmission utility, the Appellant was a deemed transmission licensee in terms of Section 38 of the Electricity Act. The Respondent i.e., MPPTCL was the State Transmission Utility and intra-State transmission licensee in the State of Madhya Pradesh. A dispute arose between the Appellant and Respondent in respect of implementation of the “Western Region System Strengthening Scheme XIV (WRSS-XIV) and Western Region Strengthening Scheme XVI (WRSS-XVI)” respectively by the Appellant. The transmission assets were implemented by the Appellant at the Indore sub-station upon the specific request of the Respondent.

In this regard, the parties planned and approved the WRSS-XIV in its 37th Standing Committee Meeting on Power System Planning of Western Region held in 2014 and WRSS-XVI in the 38th Standing Committee Meeting for the Western Region in 2015. The construction and commissioning of the intra-State transmission line by the Respondent was delayed and such delay constrained the Appellant to file a Petition before the CERC. The CERC noted that the Appellant had attributed the entire time-overrun in case of the instant assets to the Respondent who delayed the commissioning of the downstream intra-State assets that were supposed to be operational at the same time as the transmission assets to be commissioned by the Appellant. Being aggrieved, CERC went to the High Court which affirmed that despite the availability of an alternative remedy, a Writ Petition can be entertained. As it admitted the Petition, the Appellant challenged this before the Apex Court.

Reasoning

The Supreme Court in view of the above facts, noted, “We affirm that in a situation where transmission charges accrue before the assets are operationalized due to a non-condonable delay on part of one of the utilities in charge of putting the transmission element into use, the cost of transmission cannot be put on the beneficiaries or consumers through the Point of Connection (POC) mechanism.”

The Court was of the view that even though the Orders under Section 79 may not always be limpid as regards the matters where CERC is exercising its regulatory functions yet this cannot be the reason to conclude that the CERC passes all Orders in its capacity as an adjudicator.

“… though the CERC’s orders dated 21.01.2020 and 27.01.2020 respectively were for determination of tariff, yet the order granting liberty to the aggrieved appellant to claim compensation from the defaulting party is a consequence of a regulatory lacuna in the 2014 Tariff Regulations and therefore, is an instance of regulation of tariff between the parties”, it added.

The Court further said that since the CERC was not adjudicating the issue of delay between the parties but was only regulating the consequences of the delay to the commissioning of the transmission elements, there was no requirement for a specific prayer in this regard.

“As a natural corollary, there was also no occasion for the respondent no. 1 to be afforded an opportunity to be heard at that stage. In our considered view, any dispute pertaining to the levy of transmission charges incurred before the concerned transmission assets were put to use, would arise only upon the appellant raising bills to the respondent no. 1 in this regard. In such a scenario, it cannot be said that there was a contravention of the principles of natural justice by the CERC”, it also noted.

The Court observed that since the regulatory powers under Section 79(1) are of an ad hoc nature and are not of general application, the Orders thereunder are made appealable under Section 111.

Conclusion

“… there was no occasion for the High Court to admit the writ petition of the respondent no. 1. … the High Court committed an egregious error in passing the impugned judgment. We are left with no other option but to set aside the impugned judgment and order dated 25.02.2021 passed by the High Court and dismiss both the writ petitions. In the result, the appeals succeed and are hereby allowed”, concluded the Court.

Before parting with the Judgment, the Court clarified that the CERC is empowered to order for imposition of transmission charges on the party to whom delay is attributable.

“… We are of the opinion that APTEL is the appropriate authority to look into the merits of the matter should the respondent no. 1 choose to prefer an appeal before APTEL under Section 111 of the Act, 2003”, it added.

Accordingly, the Apex Court allowed the Appeal and set aside the High Court’s Judgment.

Cause Title- Power Grid Corporation of India Limited v. Madhya Pradesh Power Transmission Company Limited & Ors. (Neutral Citation: 2025 INSC 697)

Appearance:

Appellant: Senior Advocate M.G. Ramachandran, AORs Pramod Dayal, Advocates Shubham Arya, Poorva Saigal, Nikunj Dayal, Reeha Singh, Pallavi Saigal, Shirin Gupta, Aneesh Bajaj, and Srishti Khindaria.

Respondents: AG Prashant Singh, Senior Advocate Sudhanshu S, AORs Arjun Garg, Shirish K. Deshpande, Advocates Kriti Gupta, Sagun Srivastava, Saaransh Shukla, Rucha Pravin Mandlik, Mohit Goutam, Apoorv Sharma, Harish Ahmad, Pranjal Chapalgaonkar, and Gautami Yadav.

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