Holding

The determination of standby charges is a tariff matter within the exclusive jurisdiction of the State Electricity Regulatory Commission under Section 22(1)(a) and (c) of the Maharashtra Electricity Regulatory Commissions Act, 1998, and any post‑1998 notice to enhance charges under the 1948 Act has no legal effect.

Summary

BSES Ltd., a distribution licensee, and Tata Power Co. Ltd. (TPC), a bulk licensee, disputed the amount BSES should pay for a 275 MVA standby power facility provided by TPC, which itself paid charges to the Maharashtra State Electricity Board (MSEB) for a 550 MVA standby capacity. The State Government had earlier directed BSES to pay 50% of TPC's standby charges, but after the Maharashtra Electricity Regulatory Commission (MERC) was constituted, the parties were directed to refer the dispute to MERC. MERC formulated a payment formula without the Chairman’s participation, leading both parties to appeal. The High Court set aside MERC’s order and remitted the matter for de novo consideration, also directing BSES to pay 50% of the standby charges during the pendency. On appeal, the Supreme Court held that the determination of standby charges is a tariff issue within MERC’s jurisdiction under Section 22(1)(a) and (c) of the Maharashtra Electricity Regulatory Commissions Act, 1998, and that any notice to enhance charges under the Electricity (Supply) Act, 1948, is ineffective post‑1998 Act. The Court affirmed the High Court’s remand and dismissed the appeals.

Issues considered

The extent of MERC’s jurisdiction to determine the amount payable for standby power charges under the Maharashtra Electricity Regulatory Commissions Act, 1998.
Whether the notice issued by TPC under the Sixth Schedule of the Electricity (Supply) Act, 1948, to enhance standby charges is legally effective after the enactment of the Electricity Regulatory Commissions Act, 1998.
Whether the procedure adopted by MERC in formulating the payment formula complied with the statutory requirement of a quorum and fairness.

Legislation cited

Electricity Regulatory Commissions Act, 1998s. 29, s. 45, s. 52
Electricity (Supply) Act, 1948s. 57, s. 57A, s. 57B, s. Sixth Schedule

Subjects

standby facilitytariff determinationelectricity regulatory commission jurisdictionnotice of charge enhancementprocedural fairnessde novo remandinterconnectionbulk licenseedistribution licensee

Judgment

A BSES LTD.
v.
M/S. TATA POWER CO. LTD. AND ORS.

B
OCTOBER 17, 2003

[R.C. LAHOTI AND G.P. MATHUR, JJ.]
----
Maharashtra Regulat01y Commissions Act, 1998-Sections 22(1)
and 29-Electricity (Supply) Act, 1948-Third proviso to Para 1 of VJ
Schedule, Sections 57 and 57A-Standby facility of electric supply-
C Provided by State Electricity Board to Bulk licensee-Agreement to
provide standby facility to distribution licensee by bulk licensee out of the
reserved standby capacity-Notice by State Electricity Board to enhance
the charges for the facility-subsequent notice by bulk licensee under 1948
Act to distribution licensee to enhance the charges-Dispute between the
D two licensees regarding determination ofthe amount-Decision by State--
Powers to adjudicate the dispute, conferred upon Commission due to
enactment of 1998 Act-Formula for payment of charges for the facility
devised by Commission without following the procedure-High Court
remitted back the proceedings for de nova consideration-Adjudication of
Commission questioned-On appeal, held: The determination of the
E charges of standby facility falls within the jurisdiction of the Commission
because such determination falls within £he purview of Section 22(1) (a)
and (c)-Since the notice to enhance the charges was given under 1948
Act, and subsequent to 1998 Act, the notice has no legal effect-
Proceedings rightly remitted back to Commission for de novo consideration
F because procedure adopted by Commission was not fair.
•
Respondent company was electricity generating company and
bulk licencee. Pursuant to an agreement. Maharashtra State Electricity
Board (MSEB) provided standby facility of 550 MYA to respondent
company. Further the appellant company and the respondent company
G ware interconnected with each other anci respondent company provided
appellant company standby supply of 275 MVA out of the reserved
standby capacity, and appellant company was to pay a certain amount
to respondent company. MSEB served a notice to respondent company
intimating intention to enhance charges for the standby facility.
H Respondent company served notice under third proviso to Para 1 of
932
BSES LTD. v. MIS TATA POWER CO. LTD. 933

sixth Schedule to Electricity (Supply) Act, 1948 on appellant company A
for enhancement of charges of standby facility of 275 MV A. As a result
dispute arose between the two companies. State Government passed an
• order dated 22.3.2000 directing the appellant company to pay respondent
company the standby charges at the rate of 50% of the amount. In the
meantime Maharashtra Electricity Regulatory Commission and B
Government conferred upon the Commission, powers to adjudicate
upon the dispute u/s 22(2)(n) of Electricity Regulatory Commissions
Act, 1998. Government thereafter inform.eel the parties that its decision
dated 22.3.2000 would be put to hold till the decision of the Commission.
The Commission devised .a .formula for determination of payment of
charges for standby facility which was to be paid by appellant company C
to respondent company. But the formula was worked out only by two
members of the Commission in meetings with the consultants and
without participation of the Chairman of the Commission. Majority of
the Commission decided the petition of the appellant company
determining the amount, while the Chairman gave a dissenting order. D
Appellant as well as respondent companies filed appeals. Both the
appeals were allowed by High Court and the proceedings were
remitted back to the Commission for de nova consideration. However,
High Court directed the appellant company to pay 50% of standby
charges for the period during pendency of the proceedings before the E
Commission.

In appeal to this court respondent company contended that the
dispute regarding sharing of standby charge is not an issue of tariff,
but is a dispute relating to sharing of the charges and hence does not
come within the purview of the Commission under section 22(1) of the F
Act; that the dispute had already been decided by the State Government,
hence the date on which the power under section 22(2){n) was
conferred upon the Commission there was no dispute existing between
the parties, and therefore, the Commission had no jurisdiction to
decide the petition of appe,llant company; that since respondent G
company was providing half of the standby facility to appellant
company, logically appellant· company should pay half of the said
amount; that since the decision of State Government was put on hold
till the decision of the Commission, the same would revive after
decision of the Commission; that appellant company having not H
934 SUPREME COURT REPORTS [2003] SUPP. 4 S.C.R.
,,c >
~_i;;:
A challenged the order of State Government, was fully bound by it.

Dismissing the appeals, the Court

B
HELD : 1. The charges paid for standby arrangement whereby a
fixed quantity of electrical energy was guaranteed to respondent and
---
appellant companies at thefr desire, is bound to constitute a component
of the price which they would be charging from their consumers towards
the cost of electrical energy actually consumed by them. The
determination or quantification of the amount which is payable for this
kind of standby arrangement made in favour of respondent company
c and appellant company would in reality mean determination of the price
or charges for wholesale or bulk supply of electricity. It will, therefore,
clearly fall within the expression "determine the tariff for electricity,
wholesale, bulk, grid or retail" as used in Section 22(1) (c) and also in the
expression "regulate power purchase... including the price at which the
_+.
D power shall be procured from the generating companies..." as used in
Section 22(1) (a) of Maharashtra Rtgulatdry Commissions Act, 1998.
Therefore, the determination or quantification of the amo.unt which
appellant company has to pay to respondent company falls within the
jurisdiction of the State Commission under- Section 22 of the Act. This
legal position is also reflected by Section 29 of the Act which confers an
E
overriding power and clearly lays down that notwithstanding anything /.

contained in any other law the tariff for supply of electricity, wholesale,
bulk or retail shall be subject to the provisions of the Act and shall be
determined by the State Commission. This clearly ousts the jurisdiction
of any other authority to determine the tariff. Therefore, the State
F Government did not have the authority or jurisdiction on 22.3.2000 to
determine or quantify. the charges which appellant company had to pay
to respondent company under the terms of the license granted to the
former as this was subsequent to the formation of the Maharashtra
Electricity Regulatory Commission. (949-E-H, 950-A-D]
G :--.
2. Notice to enhance the charges given by respondent company,
which was subsequent to the enforcement of the Act, can have no legal
effect. Notice by respondent company to enhance the c'1arges of
standby facility provided to appellant company having been g~ven
under Sixth Schedule (paragraph 1, 3rd proviso) of Electricity (Supply)
H
BSES LTD. v. MIST ATA POWER CO. LTD. 935

Act, 1948, the enhanced charges become effective and operative after A
expiry of 60 days of notice. In view of Section 29 Electricity Regulatory
Commissions Act, 1998, the tariff for intra-State transmission of
electricity and tariff for supply of electricity in wholesale, bulk or retail
has to be determined by the Electricity Regulatory Commissions of the· .
State and a licensee cannot by its unilateral action enhance the charges. B
The provisions of the Act have an overriding effect by virtue of Section
29 of the Act and, therefore, any provisions of Electricity (Supply) Act,
1948, which are inconsistent with the Act would cease to apply and
consequently the provisions of Sixth Schedule of the said Act can have
no application now. The Sixth Schedule has been made by virtue of
Section 57 and 57 A of the Electricity (Supply) Act, 1948 and Section C
57A contemplates constitution of a Rating Committee by the State
Government to examine licensee's charges for the supply of electricity.
Section 29(6) of the Act specifically lays down that notwithstanding
anything contained in Section 57 A and 57B of the Electricity (supply)
Act, 1948, no Rating Committee shall be constituted after the date of D
the commencement of the Act. The effect of Section 29 and the
Regulations framed thereunder is that it is no longer open to a licensee
or utility to unilaterally increase the tariff. The tariff can be enhanced
only after approval of the Commission and charging of an enhanced
tariff which has not been approved by the Commission will amount to E
commission of an offence. [950-D-H, 951-A-B]

3. In substance, the dispute is as to what should be paid by appellant
company to respondent company for the standby facility provided by it.
... The strict and narrow interpretation sought that since sharing of standby F
charges between respondent and appellant companies is not a matter
relating to determination of tariff, so as to oust the jurisdiction of the
Commission cannot be accepted as it will defeat the very object of enacting
the Electricity Regulatory Commissions Act. (951-F-G]

4. If it is accepted that in view of the language used in the order G
dated 5.12.2000, the Governments earlier order dated 22.3.2000 stood
revived after the decision of the Commission, it would lead to queer
results as after the decision of the Commission two conflicting and
contrary orders viz., the order of the State Government dated 22.3.2000
and the order of the Commission would come into force. This can never H
936 SUPREME COURT REPORTS [2003] SUPP. 4 S.C.R.
A be the intention of the State Government The effect of the order dated
5.12.2000 was that the earlier order dated 22.3.2000 would no longer
be operative and the decision of the Commission would govern the

B
situation. Even otherwise, after the enforcement of the Act it is the
Commission which has the jurisdiction to decide the controversy and
not the State Government. [953-B-D]
-
5. The procedure adopted by the Commission was not fair and
proper inasmuch as the Chairman did not participate in the meetings
which other two members had with the Consultants, whereunder a
formula was devised. Under Regulation 21 of Central Electricity
C Regulatory Commission, the quorum for proceedings before the
Commission shall be three. In these circumstances, the High Court was
perfectly justified in remitting the matter to the Commission for
de novo consideration and no exception can be taken to such a course
of action. [954-D-FJ
D 1 .•

6. An interim arrangement is normally made on a prima facie
consideration of the matter and on broad principles without examining
the matter in depth. Regulation 101 ofthe Central Electricity Regulatory
Commission provides that the Commission may normally dispose of
the petitions finally within six months of admission. Since the order of
E High Court is only by way of interim arrangement and the Commission
is expected to decide the dispute finally within a short period, it is not
proper to interfere with the order made by the High Court in this
regard. After the decision of the Commission, the equities can be

F
adjusted and the excess amount paid by any party can be refunded to
it along with appropriate interest or can be adjusted in future bills.· ..
[955-G-H, 956-A-C)

CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 8360-
8361 of 2003.

G From the Judgment and Order dated 3.6.2003 of the Bombay High
Court in M.E.R.C.A. Nos. I. and 2/2002 in M.E.R.C. Case No. 7 of 2000.

WITH

C.A. Nos. 8362-8363 of 2003.
H
- BSES LTD. v. MIS TATA POWER CO. LTD. [G.P. MATHUR, J.] 937

Altaf Ahmed and Mukul Rohtagi, Additional Solicitor Generals, A
Kapil Sibal, J.J. Bhat, Dr. F.S. Nariman, P. Chidambaram, Iqbal Chagla,
T.R.Andhiyarujina, Thushad Cooper, D.J. Kakalia, Ms. Anjali Chandurkar,
Syed Naqvi, Ms. Manali Singhal, Ms. Aziza Abdul Latif Khatri, Darius
Khambatta, Shrikant Daijode, Prateek Jalan, R.N. Kamajawala, Subhash
Sharma, Ms. Ruby Singh Ahuja, Ms. Meghna Sati, Ms. Pragya Baghel, Ms. B
Manik Karanjawala, Ms. Ramni Taneja, Rajiv Nanda, Ms. Alpana Dhake,
P.H. Parekh, E.R. Kumar, Ms. V. Satni, Sanand Ramakrishnan for the
appearing parties.

The Judgment of the Court was delivered by
c
G.P. MATHUR, J. : Leave granted.

These appeals, by special leave, have been preferred against the
judgment and order dated 3.6.2003 of Bombay High Court in MERC
Appeal No.I of2002 (The Tata Power Company v. BSES Ltd. & Ors.) and D
MERC Appeal No.2 of 2002 (BSES Ltd & Ors. v. The Tata Power
Company) which had been preferred under Section 27 of the Electricity
Regulatory Commissions Act, 1998 (hereinafter called "the Act") challenging
the order dated 7.12.2001 of Maharashtra Electricity Regulatory Commission
(for short 'the Commission'). E

2. The Tata Power Company Ltd. (for short 'TPC') is a generating
company within the meaning of Sub-section 4A of Section 2 and a bulk
licensee within the meaning of Sub-section (3) of Section 2 of the
Electricity (Supply) Act, 1948. An agreement was arrived at between F
Maharashtra State Electricity Board (for short 'MSEB') and TPC in or
about March, 1985, whereby TPC was provided 300 MV A standby facility
from MSEB and it was further agreed that in view of the growing
requirement of the city of Bombay, the said standby facility would stand
enhanced by a quantum of 50 MV A per year. This standby facility
increased to 550 MV A by the year 1990 and payment for the same was G
to be made irrespective of the fact whether electricity was drawn or not
and if electricity was drawn, actual payment for the same was to be made
over and above the standby charges. In the year 1990, it was agreed that
the annual increase in the standby facility would no longer be operational
and henceforth TPC would be entitled to avail of and pay for the standby H
938 SUPREME COURT REPORTS [2003] SUPP. 4 S.C.R.

A facility of only 550 MVA. This agreement was reduced in writing by way
of letter dated 6. 7.1990 addressed by MSEB to TPC.

3. The Bombay Suburban Electric Supply Company (for short
'BSES') had been granted a distribution licence in the year 1926 which
B was amended in the year 1976 to enable it to become a generator of
electricity in order to take care of enhanced demand in the city of Bombay.
The licence was further amended on 30.5.1992 and it contained a clause
requiring BSES to execute suitable interconnection with the system ofTPC
with the approval of Central Electricity Authority, New Delhi. A meeting
was held between TPC and BSES on 29.6.1992 regarding technical/
c commercial aspect of said interconnection. It was agreed that as TPC
already had an arrangement with MSEB whereby standby facility was
provided to it, similar standby facility may be provided to BSES from the
standby capacity reserved by TPC with MSEB and appropriate sharing of
charges could be worked out. The power plant established by BSES at
D Dahanu became operational in 1995 and with effect from August 1995 it
started supplying power to the city of Bombay as per the conditions of
the licence.

4. Due to dispute on commercial terms between TPC and BSES the
E interconnection was not established for a long time though techni&.1
arrangements had been made. The Maharashtra Government appointed a
Committee under the chairmanship of Principal Secretary, Energy, of
which representatives of MSEB, TPC and BSES were members. After
taking into account the recommendation of the Committee the Government
of Maharashtra on 19 .1.1998 directed TPC and BSES to interconnect with
F one another and further directed TPC to provide to BSES standby supply
of 275 MV A. It was further directed that BSES would pay Rs.3.5 crores
per month to TPC for such standby facility. It was also mentioned in the
order that standby charges were based upon existing tariffs of TPC and
BSES and the same may be reviewed during tariff revision in future. An
G agreementjn that regard was thereafter executed between TPC and BSES
on 31.1.1998 and the interconnection between the two systems was
established on 14.2.1998.

5. The MSEB was charging an amount of Rs.24. 7 5 crores per month
H from TPC for providing the standby facility of 550 MV A. On 31.8.1998
BSES LTD. v. MIS TATA POWER CO. LTD. [G.P. MATHUR, J.] 939
...
MSEB served a notice on TPC intimating its intention to enhance the A
charges for this standby facility from Rs.24.75 crores to Rs.30 crores per
month with effect from 1.12.1998. The TPC then gave a notice dated
30.9.1998 to BSES of its intention to enhance the charges for the standby
facility of 275 MVA provided by it from Rs.3.5 crores per month to
Rs. l 5.125 crores per month with effect from 1.12.1998 .. The notices were B
given under the.. third proviso to para 1 of Sixth Schedule to Electricity
(Supply) Act, 1948, which lays down that licensee shall not enhance the
charges for the supply of electricity until after the expiry of a notice in
writing of not less than sixty clear days of its intention to so enhance the
charges. On account of the notice given by TPC for increasing charges C
of standby supply of 275 MVA, a dispute arose and a meeting was
convened on 4.3.1999, wherein the Deputy Chief Minister, Government
of Maharashtra and representatives of both the sides were present. The
• Deputy Chief Minister though advised both the parties to settle the issue
amicably between themselves without referring to the Government but at
the same time issued certain directions, namely, BSES should share Rs.9 D
crores out ofRs.22 crores additional standby charges levied by MSEB upon
TPC for the period 1.12.1998 to 3 l.3. l 999 and the issue regarding sharing
of standby charges for the period 1.4.1999 onwards be referred to a
Committee to be constituted by the State Government. The Government
of Maharashtra thereafter constituted a Committee on 27.5 .1999 to study E /
certain issues including that of standby charges to be paid by BSES to TPC
and to submit a report. Shortly, thereafter a notification was issued on
5.8.1999 constituting the Maharashtra Electricity Reg~latory Commission
(for short 'the Commission'). Tht: Committee constituted by the Government
of Maharashtra on 27.5.1999 in its meeting held on 2.5.2000 resolved that F
in view of constitution of the Commission the question of payment of
standby charges could only be determined by the Commission and
accordingly resolved that the said issue be referred to the Commission for
determination. An intimation in this regard was also sent to the respective
parties. However, the Government of Maharashtra passed an order on
22.3.2000 whereby BSES was directed to pay standby charges to TPC at G
the rate of 50 per cent of the amount of standby charges payable by TPC
to MSEB. This was done on the basis that MSEB was providing standby
facility of 550 MV A to TPC and as TPC was providing standby facility
of 275 MVA to BSES, it should pay half of the said amount. The order
further provided that for the period 1.12.1998 to 31.3 .1999 BSES should H
940 SUPREME COURT REPORTS (2003] SUPP. 4 S.C.R.
A pay Rs.9 crores as standby charges to TPC. BSES was not satisfied with
the aforesaid order of the Government and _made repeated requests for
review of the same and lastly on 6.10.2000, it sent a detailed letter to the
Government requesting for reconsideration of the matter.

6. The Government of Maharashtra issued a notification on 27 .10.2000
B conferring upon the Commission powers to adjudicate upon the disputes
and differences between licensees and utilities and to refer the matter for
arbitration as provided in clause (ri) of Sub-section (2) of Section 22 of
the Electricity Regulatory Commissions Act, 1998. The Government
wrote a letter to TPC on 30.10.2000 informing that in view of conferment
C of power under Section 22(2)(n) of the Act upon the Commission the
dispute regarding the standby charges between TPC and BSES has to be
submitted to the said Commission. Thereafter, BSES filed a petition
before the Commission for resolution of dispute regarding the charges for
standby facility of 275 MVA provided to it by TPC and the petition was
D registered as Case No.7 of 2000. On 5.12.2000, the Government of
Maharashtra informed TPC and BSES that its earlier order dated 22.3.2000
is being put on hold till the decision of the Commission is given.

7. After considering the submissions made by the representatives for
E the parties, the Commission decided the petition filed by BSES by the
order dated 7.12.2001. ·The main part of the order was written by two
Members of the Commission who directed as under :

l. BSES shall make payment of Rs.77.06 crores together with
interest thereon at the rate then applicable with effect from
F 1.4.2000 to TPC within four weeks from the date of the order
for the year 1999-2000. While making payments due credit
shall be made for the amounts paid by them.

2. The TPC shall, in tum, pay the balance amount remaining
out of Rs.363 crores due as standby charges together with
G interest due thereon at the rate then applicable to MSEB for
the year 1999-2000 within a week thereafter and close the
matter so far as the year 1999-2000 is concerned.

3. Based on the principles outlined in the order, calculations
H for the year 2000-2001 should also be made and payments

/
BSES LTD. v. MIS TATA POWER CO. LTD. [G.P. MATHUR, J.] 941

effected suitably by BSES and TPC so that the dues to the A
MSEB in respect of standby charges are settled for the past
period within three months from the date of the order.

4. For the current financial year 2001-2002 such calculations
will not be possible till the close of the year, whereafter only B
the cost and other relevant accounting details will become
available. In terms of the minutes of the order passed by
Bombay High Court on 19 .3.2001 in Writ Petition No.31 of
200 I filed by TPC against BSES, it had undertaken to
deposit Rs.8.25 crores per month with the Commission on
the 15th day of each month until the Commission disposed C
of the petition finally and subject to such adjustments, as
may be necessary, as a result thereof. On the same analogy
for the year 2001-2002, BSES should pay to TPC Rs.IO
crores per month (Rs.119.06 crores divided by 12) as their
share of standby charges till such time the calculations are D
made and consequential adjustment is made.

8. The Chairman of the Commission gave a separate and dissenting
order and he arrived at a different amount.
E
9. Both BSES and TPC were not satisfied with the order passed by
the Commission and accordingly preferred separate appeals before the
Bombay High Court which have been decided by a common judgment and
order dated 3 .6.2003 which is the subject matter of challenge in the present
appeals. The High Court allowed both the appeals and set aside the orders F
passed by the Commission and the proceedings have been remitted back
to the Commission for de novo consideration and decision in accordance
with law in the light of the observations made in the order. It has been
directed that during the pendency of the proceedings before the Commission
for the period from I. 7 .2003, BSES shall pay to TPC 50 per cent of the
standby charges that are payable by TPC to MSEB for the standby facility G
provided to it. It has also been directed that TPC shall pay to MSEB 50
per cent of the standby charges payable by it to MSEB for ~tandby facility
of 550 MVA and shall also promptly make over to MSEB the amount paid
to it by BSES pursuant to the order. So far as the arrears of standby I
. charges are concerned, it has been directed that 80 per cent of the said H:
942 SUPREME COURT REPORTS [2003] SUPP. 4 S.C.R.
A amount shall be paid by BSES to TPC and the TPC shall immediately pay
that amount to MSEB. The remaining 20 per cent of amount of arrears
shall be paid by TPC to MSEB. The question of interest on the amount
of arrears has been left open to be considered by the Commission.

B I 0. The TPC in its appeal has assailed the order of the High Court
in remitting the matter back to the Commission for de nova consideration.
Shri F.S. Nariman, learned senior counsel for TPC has submitted that the
dispute regarding sharing of standby charges for providing 275 MVA
standby facility to BSES by TPC is not an issue of tariff, but is a dispute
relating to sharing or apportionment of the charges being paid by TPC to
C MSEB for providing the former with a standby facility of 550 MV A and,
therefore, it does not come within the purview of the Commission under
sub-section (1) of Section 22 of the Act. It has been urged that under the
terms of the licence granted by the Government to BSES and as amended
in 1992, the Government continues to have the jurisdiction to decide any
D kind of dispute. The Maharashtra Government had decided the dispute
vide order dated 22.3.2000 and when the powers under Section 22(2)(n)
of the Act were conferred upon the Commission on 27.10.2000, there was
no existing dispute between the parties regarding the share of the parties
as the same had already been decided and consequently, the Commission
E had no jurisdiction to .entertain the petition filed by BSES. It has further
been contended that the standby facility is essential for every generator of
electricity and since TPC was providing standby facility of275 MVA to
BSES out of the standby facility of 550 MV A being provided by MSEB
to TPC, then logically BSES should pay half of the said amount. Lastly,
it has been urged that the order passed by the State Government on
F 5.12.2000, whereby it was communicated to the parties that the order of
the Government dated 22.3.2000 is being put on hold till the Commission's
decision is given, would cease to be operative after the decision of the
Commission and consequently the order dated 22.3 .2000 would revive and
would bind the parties. It has also been urged that the BSES having not
G challenged the order of the State Government dated 22.3.2000 by taking
appropriate proceedings, it was fully bound by it and consequently it
should pay standby charges to TPC on the same rate on which TPC pays
standby charges to MSEB for 550 MVA standby facility to it.

H 11. Shri Kapil Sibal, learned senior counsel for BSES, has submitted
BSES LTD. v. MIS TATA POWER CO. LTD. [G.P. MATHUR, J.] 943

that the dispute between the parties was essentially relating to detennination A
of tariff which squarely falls within the jurisdiction of the Commission
under Section 22 of the Act. The Electricity Regulatory Commissions Act
had come into force on 25.4.1998 and Maharashtra Regulatory Commission
had been constituted on 5.8.1999 and after constitution of the Commission,
it was the said body alone which had the jurisdiction to decide the dispute B
and the State Government had no authority to pass the order dated
22.3.2000 and, therefore, said order was wholly without jurisdiction and
was not binding upon BSES. Learned counsel has also submitted that the
order dated 5.12.2000 passed by the State Government by which its earlier
order dated 22.3.2000 was put on hold till the decision of the Commission, C
cannot be interpreted to mean that the said order will stand revived and
become operative after the dispute had been decided by the Commission
as it will lead to a very queer situation. Learned counsel has also urged
that in the facts and circumstances of the case, the order passed by the
High Court in so far as it has remitted the proceedings back to the
Commission for de novo consideration is perfectly justified and calls for D
no interference.

12. In order to appreciate the contention raised by the learned counsel
for the parties, it is necessary to briefly examine the provisions of the Act.
The rapidly growing demand for energy brought about by economic E
liberalization has created enonnous problems. To overcome these problems
and other issues facing the power sector, the Government of India
organized two Conferences of Chief Ministers to discuss the whole gamut
of issues in the power sector and the outcome of these meetings was the
adoption of the Common Minimum National Action Plan for Power.
Under this action plan it was considered necessary to create a Regulatory F
Commission as a step to arrest deteriorating condition of the State
Electricity Boards and to make plans for the future developments. The
Administrative Staff College, Hyderabad to whom the Ministry of Power
assigned the task of studying the restructuring needs of the system, strongly
recommended the creation of independent Electricity Commissions, both G
at the Centre and the States to give effect (o the aforesaid recommendations.
The Electricity Regulatory Commissions Bill was thereafter introduced in
the Parliament. The Objects and Reasons of the Act show that the main
function of the State Electricity Regulatory Commission shall be (i) to
detennine the tariff for electricity, wholesale, bulk, grid and retail; (ii) to H
944 SUPREME COURT REPORTS [2003] SUPP. 4 S.C.R.
A determine the tariff payable for use of the transmission facilities; and (iii)
to regulate power purchase and procurement process of the transmission
utilities, etc. The changed scenario may give rise to problems of highly
complex and technical nature between the generator, supplier and distributor
. of energy, which can be better resolved by technically qualified people who
B may constitute the aforesaid Regulatory Commission. They will have the
additional advantage of taking assistance from consultants, experts and
professional persons. Therefore, it w'ill be proper to interpret the Act in a
broad manner and not in a narrow or restrictive sense in so far as the
jurisdiction of the Commission is concerned, so that the purpose for which
C the Act has been enacted may be achieved.

Chapter V of the Act deals with Powers And Functions of the State
Commission and Sub-section (I) of Section 22 therein reads as under :

Section 22. Functions of State Commission
D
(I) Subject to the provisions of Chapter III, the State Commission
shall discharge the following functions, namely:-

(a) to determine the tariff for electricity, wholesale, bulk, grid
E or retail, as the case may be, ill the manner provided, in
Section 29; ·. I

(b) to determine the tariff payable for the use of the transmission
facilities in the manner provided in Section 29;

F (c) to regulate power purchase and procurement process of the
transmission utilities and distribution utilities including the
price at which the power shall be procured from the generating
companies, generating stations or from other sources for
transmission, sale, di~tribution and supply in the State;
G
(d) to promote competition, 1 efficiency and economy in the
activities of the electricity industry to achieve the objects and
purpo!les of ~his Act.>
. .. "
Sub~sections (I) and (2) of Section 29 read as under :
H '' ( ''
BSES LTD. v. MIS TATA POWER CO. LTD. [G.P. MATHUR, J.] 945

Section 29 Determination of tariff by State Commission A
(I) Notwithstanding anything contained in any other law, the
tariff for intra-State transmission of electricity and the tariff for
supply of electricity, grid, wholesale, bulk or retail, as the case
may be, in a State (hereinafter referred to as the tariff), shall be B
subject to the provisions of this Act and the tariff shall be
determined by the State Commission of that State in accordance
with the provisions of this Act.

[Provided that in Sttlte or Union territories where Joint Electricity
R'egulatory Commission has been constituted, such Joint Electricity C
Regulatory Commission shall determine different tariff for each
of the participating States or Union territories.]

(2) The State Commission shall determine by regulations the
terms and conditions for the fixation to tariff, and in doing so, D
shall be guided by the following, namely:-

(a) the principles and their applications provided in sections 46,
57 and 57A of the Electricity (Supply) Act, 1948 (54 of
1948) and the Sixth Schedule thereto;
E
(b) in the case of the Board or its successor entities, the
principles under section 59 of the Electricity (Supply) Act,
1948 (54 of 1948);

(c) that the tariff progressively reflects the cost of supply of F
electricity at an adequate and improving level of efficiency;

(d) the factors which would encourage efficiency, economical
use of the resources, good performance, optimum investments,
and other matters which the State Commission considers
appropriate for the purpose of this Act; G
(e) the interests of the consumers are safeguarded and at the
same time, the consumers pay for the use of electricity in a
reasonable manne\ based on the average cost of supply of
~~ . H
946 SUPREME COURT REPORTS (2003] SUPP. 4 S.C.R.

A (f) the electricity generation, transmission, distribution and
supply are conducted on commercial principles;

(g) national power plans formulated by the Central Government.

13. Sub-section (2) of Section 22 empowers the State Government to
B confer by notification in the Official Gazette various functions upon the
State Commission which are enumerated from clauses (a) to (p) in the said
sub-section. One of the function which can be conferred under clause (n)
is to adjudicate upon the dispute and differences between the licensees and
utilities and to refer the matter for arbitration.
c
14. Section 58 of the Act empowers the State Commission to make
Regulations consistent with the Act and the Rules made thereunder to carry
out the purposes of the Act. Clause (d) of Sub-section (2) of this Section
lays down that Regulation may provide the manner in which charges for
D energy may be determined under Sub-section (2) of Section 29.

15. Maharashtra Electricity Regulatory Commission (Conduct of
Business) Regulations, 1999 framed under the aforesaid provision also
have a bearing on the controversy in dispute and Regulations 72, 73, 78,
79, 80, 82 and 83 which are relevant are being reproduced below :
E
72. (1) No generating Company, except that which has entered
into or otherwise has a composite scheme for generation and saie
of electricity in more than one State, shall charge their customers
any tariff for supply of electricity without the general or specific
F approval of such tariff by the Commission.

(2) No utility shall fix any tariff for intra-state transmission,
distribution or supply of electricity and term£ and conditions for
the supply of electricity, without the general or specific approval
of the Commission:
G
Provided that the existing tariff being charged by generating
companies shall continue to be charged after the date of effect of
these regulations for such period as may be specified by a
notification, without prejudice to the powers of the Commission
H to take up any matter relating to tariff falling within the scope of
BSES LTD. v. MIS TATA POWER CO. LTD. [G.P. MATHUR, J.] 947

Section 22 of the Act. A

73. Any generating company proposing to enter into any
agreement for supply of electricity between the generating company
and any buying party shall get the approval of the Commission
for the tariff before entering into such contracts. B

78. Utilities, who are required to get their tariff approved by the
Commission, shall evolve tariff proposals based on the terms and
conditions as may be notified by the Commission and shall submit
the same for approval, in accordance with the procedure prescribed C
by the Commission.

79. All petitions for approval of tariff (generation, transmission,
distribution and supply) and terms and conditions of supply shall
be made strictly in accordance with regulations and procedures as
may be prescribed by the Commission and shall also be in D
conformity with the requirements relating to petitions as prescribed
in Chapter II of these Regulations.

80. The Commission may approve the proposed tariff on such
stipulations as may be considered appropriate and as may be E
specified in the Order.

82. The utilities concerned shall publish the tariff as approved
by the Commission in the manner as may be prescribed. The tariff
so published shall be in force from the date specified in the said F
publication not being earlier than the date of such publication and
shall be in force until any amendment is approved by the
Commission and published.

83. Any utility found to be charging a tariff different from the
one approved by the Commission shall be deemed to have not G
complied with the directions of the Commission and shall be liable
to penalties under Section 45 of the Act, without prejudice to any
other penalty to which it may be liable under any other Act. Any
excess charge of tariff by any utility in any year shall be dealt with
as per the directions of the Commission. H
948 SUPREME COURT REPORTS [2003] SUPP. 4 S.C.R.
A 16. The word "tariff' has not been defined in the Act. "Tariff' is a
cartel of commerce and normally it is a book of rates. It will mean a ·
schedule of standard prices or charges provided to the category or
categories of customers specified in the tariff. Sub-section (1) of Section
22 clearly .Jays down that the State Commission shall determine the tariff
B for electricity (wholesale, bulk, grid or retail) and also for use of
transmission facilities. It has also the power to regulate power purchase of
the distribution utilities including the price at which the power shall be
procured from the generating companies for transmission, sale, distribution
and supply in the State. 'Utility' has been defined in Section 2(1) of the
Act and it means any person or entity engaged in the generation,
C transmission, sale, distribution or supply, as the case may be, of energy.
Section 29 lays down that the tariff for intra-State transmission of
electricity and tariff for supply of electricity, wholesale, bulk or retail in
a State shall be subject to the provisions of the Act and the tariff shall be
determined by the State Commission. Sub-section (2) of Section 29 shows
D that terms and conditions for fixation of tariff shall be determined by
Regulations and while doing so, the Commission shall be guided by the
factors enumerated in clauses (a) to (g) thereof. The Regulations referred
to earlier show that generating companies and utilities have to first
approach the Commission for approval of their tariff whether for generation,
E transmission, distribution or supply and also for terms and conditions of
supply. They can charge from their customers only such tariff which has
been approved by the Commission. Charging of a tariff which has not been
approved by the Commission is an offence which is punishable under
Section 45 of the Act.. The provisions of the Act and Regulations show
F that the Commission has the exclusive power to determine the tariff. The
tariff approved by the Commission is final and binding and it is not
permissible for the licensee, utility or any one else to charge a different
tariff.

17. There is a sound logic for conferment of such a power on the
G Electricity Regulatory Commission. Hitherto the supply of electricity was
being made by only one body, namely, State Electricity Boards which
being an instrumentality of the State and functioning under the control of
the State Government were not likely to enhance the tariff in an exorbitant
or arbitrary manner. In fact, Electricity Boards of many States in the
H country were running on huge losses. The Electricity Regulatory
BSES LTD. v. MIS TATA POWER CO. LTD. [G.P. MATHUR, J.] 949

Commissions Act, 1998 has been enacted to enhance the generation of A
electricity and improve efficiency by bringing in private operators. If a
licensee (who may be private operator) after getting the licence for supply
of electricity in a particular area increases the tariff arbitrarily, the
consumers will have no option but to pay the same. In order to guard
against such an eventuality, provision has been made that while granting B
a licence conditions may be imposed and further no tariff can be
implemented unless the same has been approved by the Commission.

18. Electricity is not a commodity which may be stored or kept in
reserve. It has to be continuously generated and it is so continuously
generated electricity which is made available to consumers. Any generator C
of electricity has to have some alternate arrangement to fall back upon in
the event of its generating machinery coming to a halt. The standby
arrangement for 550 MVA made by TPC was for the purpose that in the
event its generation fell short for any reason, it will be able to immediately .
draw the aforesaid quantity of power from MSEB. Similarly, the arrangement D
entered into by BSES with TPC ensured the former of immediate
availability of 275 MV A power in the event of any breakdown or stoppage
of generation in its Dahanu generation facility. Heavy investment is.
required for generation of power. For this kind of a guarantee and
availability of power, TPC had to pay charges for the same to MSEB. This E
payment was in addition to the charges or price which the TPC had to pay
to MSEB for the actual drawal of electric'al energy. The same is the case
with BSES qua TPC. The charges paid for this kind of an arrangement
whereby a fixed quantity of electrical energy was guaranteed to TPC and
BSES at their desire, is bound to constitute a component of the price which F
they (BSES and TPC) would be charging from their consumers towards
the cost of the electrical energy actually consumed by them. The
determination or quantification of the amount which is payable for this kind
of standby arrangement made in favour of TPC and BSES would in reality
mean determination of the price or charges for wholesale or bulk supply
of electricity. It will, therefore, clearly fall within the expression "determine G
the tariff for electricity, wholesale, bulk, grid or retail " as used in sub-
clause (a) of Sub-section (1) of Section 22 and also in the expression
"regulate power purchase ..... including the price at which the power shall
be procured from the generating companies ...... " as used in sub-clause (c)
of sub-section ( 1) of Section 22. Therefore, the determination or H
950 SUPREME COURT REPORTS [2003] SUPP. 4 S.C.R.
A quantification of the amount which BSES has to pay to TPC falls within
the jurisdiction of the State Commission under Section 22 of the Act. This
legal position is also reflected by Section 29 of the Act which confers an
overriding power and clearly lays down that notwithstanding anything
contained in any other law the tariff for supply of electricity, wholesale,
B bulk or retail shall be subject to the provisions of the Act and shall be
determined by the State Commission. This clearly ousts the jurisdiction
of any other authority to determine the tariff. lt may be noted here that
the Act came into force on 25.4.1998 and Maharashtra Electricity Regulatory
Commission was formed on 5.8.1999. Therefore, it is not possible to accept
the contention of Shri Nariman that the State Government had the authority
C or jurisdiction on 22.3.2000 to determine or quantify the charges which
BSES had to pay to TPC under the terms of the license granted to the
former as this was subsequent to the formation of the Maharashtra
Electricity Regulatory Commis~ion.

D 19. Shri Nariman has submitted that TPC gave a notice on 30.9.1998
of their intention to enhance the charges of standby facility provided to
BSES from Rs.3 .5 crores to Rs.15 .125 crores per month and this notice
having been given under Sixth Schedule (paragraph 1, 3rd proviso) of the
Electricity (Supply) Act, 1948, the enhanced charges became effective and
E operative after expiry of 60 days of notice i.e. with effect from 1.2.1998.
The submission is that by operation of law the charges for standby facility
stood revised and enhanced with effect from 1.12.1998. In our opinion,
the contention raised has no substance. The legal position has undergone
a complete change with the enforcement of the Electricity Regulatory
Commissions Act, 1998. In view of Se~tion 29 of the Act, the tariff for
F intra-State transmission of electricity and tariff for supply of electricity in
wholesale, bulk or retail has to be determined by the Electricity Regulatory
Commission of the State and a licensee cannot by its unilateral action
enhance the charges. The provisions of the Act have an overriding effect
by virtue of Section 52 of the Act and, therefore, any provisions of
G Electricity (Supply) Act, 1948, which are inconsistent with the Act would
cease to apply and consequently the provisions of Sixth Schedule of the
said Act can have no application now. The Sixth Schedule has been made
by virtue of Section 57 and 57A of the Electricity (Supply) Act, 1948 and
Section 57A contemplates·constitution of a Rating Committee by the State
H Government to examine licensee's charges for the supply of electricity.
BSES LTD. v. MIS TATA POWER CO. LTD. [G.P. MATHUR, J.] 951

Section 29 (6) of the Act specifically lays down that notwithstanding A
anything contained in Section 57A and 57B of the Electricity (Supply) Act,
1948, no Rating Committee shall be constituted after the date of the
commencement of the Act. The effect of Section 29 and the Regulations
framed thereunder is that it is no longer open to a licensee or utility to
unilaterally increase the tariff. The tariff can be enhanced only after B ,
approval of the Commission and charging of an enhanced tariff which has
not been approved by the Commission will amount to commission of
an offence. Therefore, the notice to enhance the charges given by TPC,
which was subsequent to the enforcement of the Act, can have no legal
effect.
c
20. Shri Nariman has also submitted that even assuming that the
standby charges are a matter relating to tariff as the same are passed on
to the consumers, but the sharing of standby charges between TPC and
BSES is not a matter relating to determination of tariff and, therefore, the
Commission can have no jurisdiction to enter into such an exercise under D
Section 22 of the Act. The submission proceeds on an assumption that the
dispute relates to sharing of standby charges. In fact, the whole case of
BSES is that they are under no obligation to share the charges which are
being paid by TPC to MSEB for providing them with standby facility. It
may be noted that the standby facility of 300 MV A was provided to TPC E
in the year 1985 which gradually rose to 550 MV A in the year 1990. The
licence of BSES was amended in 1992 whereunder for the first time it was
provided that they should interlink with the system of TPC and ultimately
their systems were interlinked on 14.2.1998 in pursuance of the order
passed by the Government of Maharashtra on 19.1.1998. The question F
of payment of standby charges by BSES to TPC has, therefore, arisen for
the first time in 1998 which is almost 13 years after TPC started paying
standby charges to MSEB. In substance, the dispute is what should be paid
by BSES to TPC for the standby facility provided by it. The strict and
narrow interpretation sought to be placed by the learned counsel so as to
oust the jurisdiction of the Commission cannot be accepted as it will defeat G
the very object of enacting the Electricity Regulatory Commissions Act.

21. It may be mentioned here that both TPC and MSEB always treated
the charges for standby facility as a matter relating to tariff. TPC gave
a notice to Government of Maharashtra and MSEB on 30.7.1996 for H
952 SUPREME COURT REPORTS [2003] SUPP. 4 S.C.R.

A revision of tariff, where they themselves described the enhancement of
demand charges made by MSEB for standby facility as "revision of tariff".
The charges for standby facility· given by them to BSES were also
described as "tariff'. MSEB gave a notice to TPC on 31.8.1998 where
the demand charges for 550 MV A were described as "tariff for bulk
B supply". Again the notice given by Ti>C on 30.8.1998 of their intention
to increase the charges for standby facility given to BSES from Rs.3.5
crores to Rs.15 .125 crores was described by them as "revision of tariffs".
In the correspondence exchanged amongst TPC, MSEB and BSES the
charges for standby facility haYe been described as a matter relating to
C "tariff'. TPC filed a petition before the Commission on 18.l 0.1999
regarding their dispute of standby charges with BSES and the subject of
application/petition was described as "Revision in Tariff'. The relevant
part thereof is being extracted below :

" ....... We are advised that the matter be submitted to Maharashtra
D Electricity Regulatory Commission (MERC) since the tariff and
inter-connected issue of quantum of standby and charges is now
to be determined by the MERC. We are accordingly, referring
this matter to you by submitting a copy of the notice of Tariff
Revision.
E
The 60 days Notice of tariff revision commences from 1st October
1999 and ends on 30th November, 1999. The new tariff is
applicable only for 4 months in the current financial year, i.e. from
1st December 1999 to 30th March 2000. Hence, is the urgency
F to obtain a timely decision to ensure that the Companies earn
reasonable return for the current year.

G

The tariff has been formulated after considering available date on
necessary expenses listed in the Sixth Schedule to earn Reasonable
Return by the Licensee. A major item of this expenditure pertains
H to the quantum of standby required by TEC and the connected
BSES LTD. v. MIS TATA POWER CO. LTD. [G.P. MATHUR, J.] 953

charges payable to MSEB. The issue of standby charges is vitally A
inter-connected with the tariff revision process. Hence, making
such realistic assumptions as possible, the proposal for tariff
revision has been worked out."

22. The contention ofShri Nariman that in view of the language used J3
in the order dated 5.12.2000, the Government's earlier order dated
22.3.2000 stood revived after the decision of the Commission, has hardly
any merit. If such a contention is accepted, it would lead to queer results
as after the decision of the Commission two conflicting and contrary orders
viz., the order of the State Government dated 22.3.2000 and the order of
the Commission would come into force. This can never be the intention C
of the State Government. The effect of the order dated 5.12.2000 was
that the earlier order dated 22.3.2000 would no longer be operative and
the decision of the Commission would govern the situation. Even otherwise
as discussed earlier, after the enforcement of the Act it is the Commission
which has the jurisdiction to decide the controversy and not the State D
Government.

23. Several reasons have been given by the High Court for remitting
the matter to the Commission for a de novo consideration. The Commission
devised a formula for determination of the charges for standby facility E
which was to be paid by BSES to TPC. Both the sides complained before
the High Court that before adopting the formula they were not given an
opportunity to place their point of view before the Commission for arriving
at a just formula and they were not informed about the exact nature of the
formula which was being adopted. The order of the Com;issfon shows that
for working out the formula it had appointed consultants. Two members F
of the Commission had several meetings with the consultants and thereafyer
the formula was worked out. But the Chairman of ilie Commission. was
not present in these meetings. In his dissenting order the Chairm~ has
recorded as under :
G ..
Para 60. I have had the opportunity to peruse in detail the
draft of an order approved and circulated by my
colleagues in the Commission, and I am appending
a separate dissenting note, in view of my disagreement
with them in regard to their calculations. B
954 SUPREME COURT REPORTS [2003] SUPP. 4 S.C.R.

A Para 63. As is reflected in paragraph 50 of the order of my
colleagues, the order itself is bas~d on the report of
the Consultants and the calculations shown in their
report. In this behalf, I understand that my colleagues
have had several meetings with the consultants and
B it is on the basis of the. working that has been
provided by my colleagues that the report has been
compiled .................................................................... .

Para 64. I am afraid that I was not informed of any of the
meetings that my colleagues had with the Consultants,
c nor was I advised of any minutes of the said
meetings till the draft order was circulated. In the
circumstances, since the BSES' share that was
purported to have been communicated by the
Commission, it cannot be deemed to be or considered
D to be a communication made by the Commission,
unless the communication was considered by all the
Members of the Commission. It would tantamount
to only two of the Members taking upon themselves
the liberty to communicate the same."
E
24. The facts mentioned above clearly show that the procedure
adopted by the Commission was not fair and proper inasmuch as the
Chairman did not participate in the meetings which other two members had
with the Consultants;whereunder a formula was devised. Under Regulation
2 Ii,t the qtlonim for proceedings before the Commission shall be three. In
F these circumstances, the High Court was perfectly justified in remitting the
matter to the'Commission for de novo consideration and no exception can
be taken to such a 4eourse of action.

25. BSES is aggrieved only against the interim arrangement made by
G the High Court, whereby it has been directed to pay 50 per cent of the
standby charges that are payable by TPC to MSEB for its standby facility
of 550 MVA. Shri.Kapil Sibal, learned senior counsel for BSES, has
submitted that the State Government had, on the basis of the recommendation
made by the Committee, passed an order on 19 .1.1998 directing BSES to
H pay Rs. 3.5 crores per month to TPC when the liability of TPC to MSEB
BSES LTD. v. MIS TATA POWER CO. LTD. [G.P. MATHUR, J.] 955'

was Rs. 24. 75 crores per month. This shows that the State Government did A
not apportion the liability of BSES as half of that of TPC. He has also
submitted that TPC sells 35 per cent of the power generated by it to BSES
and consequently a portion of this burden of Rs. 24,75 crores which TPC '
is liable to pay to MSEB is passed on by it to the consumers of BSES.
Therefore, BSES cannot be saddled with liability to pay half of the amount B
only on the ground that it has been provided with a standby facility of275
MV A which is half of the standby facility provided by MSEB to TPC.
Learned counsel has also submitted that at best there can be some kind of
a sharing on the amount which TPC has to pay to MSEB over and above
Rs. 24. 75 crores but up to the extent of the aforesaid amount the liability
ofBSES cannot exceed Rs. 3.5 crores. Shri Sibal has also assailed the order C
of the High Court on the ground that while making the interim arrangement
for equal sharing of standby charges, reliance has been placed on the order
of the State Government dated 22.3.2000, though the High Court itself has,
in the earlier part of the judgment, held the said order to be without
jurisdiction. Shri Chidambaram, learned senior counsel appearing for TPC, D
has, on the other hand, submitted that the order passed by the
State Government on 19 .1.1998, whereby BSES was directed to pay
Rs. 3.5 crores out of the liability of Rs. 24.75 crores of TPC towards
MSEB, was only a pro tern arrangement, as the order itself mentioned that
this was subject to revision in tariff. Therefore, the said order has no legal E
sanctity and cannot bind TPC in any manner. He has also submitted that
with effect from 1.4.1999 TPC has only paid half of the standby charges
to MSEB and, therefore, the burden of the entire amount has not been
passed on to the consumers. Shri Altaf Ahmad, Addi. Solicitor General,
appearing for MSEB has submitted that the TPC owes a huge amount to F
MSEB and the interim arrangement made by the High Court should not
be changed or altered in a manner which may prejudicially affect the
interest of MSEB.

26. An interim arrangement is normally made on a prima facie
consideration of the matter and on broad principles without examining the G
matter in depth. The matter has been remitted to the Commission by the
High Court by the judgment and order dated 3.6.2003 and a period of
nearly three and a half months has already elapsed. Regulation 101 of the
Central Electricity Regulatory Commission provides that the Commission
may normally dispose of the petitions finally within six months of H
956 SUPREME COURT REPORTS [2003] SUPP. 4 S.C.R.

A admission. The State Commissions are also expected to follow this time
limit for disposal of petitions. Since the order made by the High Court is
only by way of interim arrangement and the Commission is expected to
decide the disputes finally within a short period, we do not consider it
proper to interfere with the order made by the High Court in this regard.
B After the decision of the Commission, the equities can be adjusted and the
excess amount paid by any party can be refunded to it along with
appropriate interest or can be adjusted in future bills.

27. The Appeals are accordingly dismissed with costs. The
Maharashtra Electricity Regulatory Commission is directed to decide the
C dispute expeditiously, preferably within three months of presentation of a
certified copy of this order before it. While passing the final order, the
Commission will also make a direction regarding the liability of the parties
keeping in view the deposits made by them as a result of the interim
arrangement made by the High Court.
D
K.K.T. Appeals dismissed.