Implosion Or Explosion In Internal Or External Machinery Of Transformers Which Caused Fire: Supreme Court Dismisses Powergrid’s Plea Against CERC
The Supreme Court noted that it was only when the fire broke out and damaged the Inter-connecting Transformers (ICTs), did the authorities concerned diverted other transformers for replacement of the damaged transformers.
Justice Abhay S. Oka, Justice Ujjal Bhuyan, Supreme Court
The Supreme Court has dismissed the Civil Appeals filed by Powergrid Corporation of India Limited against the Central Electricity Regulatory Commission (CERC).
The Appeals filed under Section 125 of the Electricity Act, 2003 arose out of the common Order of the Appellate Tribunal for Electricity.
The two-Judge Bench of Justice Abhay S. Oka and Justice Ujjal Bhuyan observed, “… it can be seen that the proximate cause for the damage to the ICTs is the implosion/explosion in the internal/external machinery of the ICTs which caused fire. All the three ICTs became unserviceable due to the fire and had to be replaced by the appellant. Appellant has admitted that preventive maintenance and checks were done from time to time prior to the incident and everything was going fine.”
The Bench added that it was only when the fire broke out and damaged the Inter-connecting Transformers (ICTs), did the authorities concerned diverted other transformers for replacement of the damaged transformers.
AOR Pramod Dayal represented the Appellant while AOR Pradeep Misra represented the Respondents.
Brief Facts
At the relevant point of time, the Appellant-Powergrid was a central transmission utility responsible for establishing transmission assets of Inter-State Transmission Systems (ISTS), dealing with planning and transmission of electricity. Amongst others, it owned and operated two transmission systems in the northern region: Rihand I and Rihand II. Rihand I had three ICTs and Rihand II had four ICTs. In 2006, all three ICTs in the Rihand I transmission system failed and broke down. The same were burnt and damaged due to internal faults and considering that it was peak summer season with high anticipated load demand in Delhi, the transformers were required to be replaced immediately.
According to the Appellant, procurement of new transformers would have taken a long time, therefore, it was decided to temporarily take out one transformer each from Mainpuri and Kaithal sub-stations and to divert the same to Ballabgarh and Mandola. It was also decided to divert one transformer which was procured for Bahadurgarh sub-station to Mandola as commissioning at Bahadurgarh was scheduled later. Accordingly, transformers were restored and then the Appellant filed a Petition before the CERC for approval of the transmission charges for 3 replaced ICTs based on the Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2004. The CERC dismissed the said Petition and consequently, an Appeal was filed before the Appellate Tribunal. As the decision was not in favour of the Appellant, it moved to the Apex Court.
Reasoning
The Supreme Court in view of the above facts, noted, “The insurance reserve covered losses caused by events such as fire including by way of lightning, explosion/implosion, bush fires etc. with such losses being adjusted against the insurance reserve as per CERC’s guidelines upon actual occurrence. We thus find that there are no inclusions or exclusions with regard to loss caused by ‘fire’ nor does it include any exception to loss caused by fire.”
The Court also said that it is not the fire itself which damaged the ICT and that the loss caused to the Appellant by fire, whether by way of implosion or by way of explosion, would be covered by the policy as it covered all fires which caused loss without any exception and as all the three ICTs were operating until those got burnt.
“Therefore, the loss was caused due to fire because of which the ICTs became damaged beyond immediate repair. … the self-insurance policy of the appellant covered the cost of replacement of the damaged ICTs. Therefore, Appellate Tribunal was justified in directing the appellant to finance the net cost from the self-insurance fund reserve as part of the operation and maintenance charges”, it further held.
The Court was of the view that the question of issuing direction to the Member-Secretary, Northern Regional Power Committee (NRPC) for issuance of revised availability certificate for the transmission assets does not arise.
Accordingly, the Apex Court dismissed the Appeals and refused to interfere with the impugned Order.
Cause Title- Powergrid Corporation of India Limited v. Central Electricity Regulatory Commission & Ors. (Neutral Citation: 2025 INSC 626)
Appearance:
Appellant: AOR Pramod Dayal, Advocates Swapna Seshadri, Nikunj Dayal, Utkarsh Singh, and Sneha Singh Baghel.
Respondents: AOR Pradeep Misra, Advocates Daleep Dhyani, and Suraj Singh.
