Holding

The Central Electricity Regulatory Commission has plenary jurisdiction to impose Availability Based Tariff and Unscheduled Interchange charges, and its suo moto order is valid; the appeal is dismissed.

Summary

The Central Power Distribution Co. challenged a suo moto order of the Central Electricity Regulatory Commission (CERC) that imposed Availability Based Tariff (ABT) and Unscheduled Interchange (UI) charges on the Simhadri thermal station of NTPC, alleging lack of jurisdiction and violation of natural justice. The Supreme Court examined whether CERC could regulate grid discipline, specify grid code, and levy UI charges under the Electricity Act, 2003, and whether the order fixing a prospective implementation date required a hearing. It held that sections 79(1)(a) and 79(1)(h) of the 2003 Act give CERC plenary power over centrally owned generating companies and over grid code, making ABT and UI charges within its regulatory competence. The Court also found that the order was not an adjudicatory decision but a policy implementation step, and that the appellants had previously participated in the policy formulation, so no breach of natural‑justice principles occurred. Consequently, the appeal was dismissed and the CERC order upheld.

Issues considered

Whether the application of Availability Based Tariff (ABT) and Unscheduled Interchange (UI) charges, which are not expressly part of tariff under Regulation 15, are beyond the jurisdiction of CERC.
Whether the CERC order dated 4 July 2005, passed suo moto and ex parte, is non‑est and violative of natural justice.
Whether ABT and UI charges can be implemented under the Electricity Act, 2003 in the absence of a specific statutory provision authorising UI charges.
Whether CERC can exercise its powers over a generating station (Simhadri SPTS) that supplies power only to a single state, a matter traditionally within the domain of the State Electricity Regulatory Commission.

Legislation cited

Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2004s. Regulation 15
Electricity Act, 1948s. 28, s. 79(J)(a), s. 79(J)(h)
Electricity Act, 2003s. 28, s. 29, s. 33, s. 78(2)(g), s. 79(1)(a), s. 79(1)(h), s. 86(1)(f)
Electricity Regulatory Commissions Act, 1998

Subjects

Availability Based TariffUnscheduled Interchange chargesgrid disciplineelectricity regulationnatural justiceCERC jurisdictionPower sector law

Judgment

)

A CENTRAL POWER DISTRIBUTION CO. AND ORS.
v.
CENTRAL ELECTRICI1Y REGULATORY COMMISSION AND ANR.

AUGUST 17, 2007

B [H.K. SEMA AND LOKESHWAR SINGH PANTA, JJ.]

Electricity Act, 1948 : ss. 79(J)(a),(h) and 28-Central c;ommission
ordering application of Availability Based Tariff (ABT) to Simhadri thermal
C station of NTPC-Jurisdiction of Central Commission to pass such an order,
challenged-Held : Central Commission has plenary power to regulate Grid
discipline-Maintenance of Grid discipline, envisaged under Grid Code, is
regulated by mechanism of ABT and UJ charges-Hence Central Commission
rightly exercised its jurisdiction-Electricity Regulatory Commissions Act,
1998-Central Electricity Regulatory Commission (Terms and conditions of
D Tari.IJ) Regulations, 2004-Regulation 15.

Administrative law: Principles of natural justice-Suo moto ordet by
Central Commission-By order dated 4.1.2000, Central Commission
introduced ABT in phased manner-In terms of schedule, ABT scheme in
respect ofSimhadri SPTS was made applicable w.ef 1. 12.2005-0n 4. 7.2005,
E Central Commission suo moto ordered application of ABT to Simhadri SPTS
w.ef 1.12.2005-Appellant challenged the order on the ground that it was
passed suo moto and ex parte and was thus non est-Held : Appellant only
challenged the order fixing a prospective date for implementation ofABT and
not an order deciding rights and obligation-Having accepted the decision
F taken on 4. 1.2000 without any demur, appellants not permitted now to say
that implementation of scheme without hearing them is violation of principle
of natural justice or bad or non est-Electricity Regulatory Commissions Act,
1998-Central Electricity Regulatory Commission (Terms and conditions of
Tariff) Regulations, 2004-Regulation 15-Electricity Act, 1948-ss.
79(J)(a),(h) and 28.
G
The Availability Based Tariff (ABl) was introduced in regard to number
of generating stations of NTPC and other Central Sector generating stations
under the orders of the CERC. Prior to the introduction of ABT, the fixed
charges were payable by the purchasers based on the units of electricity

H 1064
CENTRAL POWER DISTRIBUTION CO.,.. CENTRAL ELECTRICITY REGULATORY COMMISSION 1065

actually drawn by them. The scheme offixed charges liability based on drawls A
allowed the purchasers of electricity to draw electricity from the Grid at their
pleasure with no control. This led to the Grid Frequency to vacillate which
cause grid collapse and blackouts in the entire region besides affecting the
equipments of all generations, other electricity utilities and also the
consumers. This has been a serious prejudice to public interest.
B
After the constitution of Central Commission under the Electricity
Regulatory Commissions Act, 1998, the Government of India referred the
matter of introduction of ABT to the Central Commission. The State
Electricity Boards including Andhra Pradesh State Electricity Board (the
predecessor of the appellants) were part of the Regional and National Task C
Forces constituted by the Government of India and also participated in the
deliberation before the Central Commission. Pursuant to aforesaid consensus
reached, the Central Commission considered the matter extensively in its
order dated 4.1.2000 which spoke about introduction of ABT in a phased
manner. However Commission in view of request of Powergrid/CTU to stagger
the implementation of ABT so as to make satisfactory arrangements before D
implementation issued a schedule. The ABT scheme in respect of Simhadri
SPTS thermal station was made applicable w.e.f. 1.12.2005.

The Central Electricity Regulatory Commission (CERC) suo moto
ordered the application of Availability Based Tariff (ABl) to Simhadri SPTS
thermal station of the NTPC with effect from 1.12.2005. On 4.7.2005, the E
appellant challenged the said order before Appellate Tribunal which was
dismissed. Hence present.appeal.

The questions which have arisen for consideration in the present appeal
are: Whether the application of Availability Based Tariff (ABl) in relation to F
Unscheduled Interchange (UI) charges, which otherwise is not a component
of tariff in terms of Regulation 15 of the Central Electricity Regulatory
Commission (Terms and Conditions of Tariff) Regulations, 2004 are beyond
the jurisdiction of the CERC; As such the impugned order passed by the
Appellate Tribunal for Electricity has completely ignored the fact that the
CERC order, which was passed suo moto and ex parte, is non est and without G
jurisdiction; Can the ABT as established and provided in the order of the
CERC by its order dated 4.1.2000 be implemented under the provisions of
Electricity Act, 2003, particularly when there is no provision under the statute
that allows the CERC to levy VI Charges; and whether in the present facts
and circumstances as regards the Simhadri SPTS thermal station of the H
1066 SUPREME COURT REPORTS [2007) 8 S.C.R.

A NTPC which admittedly supplies power to the State Grid and has no connection
with the management of the National Grid, the CERC in such circumstances
can exercise, particularly when matters relating to the State Grid falls within
the role and function of the State Electricity Regulatory Commission.

Dismissing the appeal and answering the questions raised in the appeal
B in negative, the Court
HELD: 1. The Simadhri Station is owned and controlled by the NTPC
which is a Government oflndia undertaking. S.79(l)(a) of the Electricity Act,
2003 contemplates that the Central Commission has jurisdiction over
generating companies owned or controlled by the Central Government In view
C thereof, the provisions under s.86 cannot be applied for. NTPC station. The
various sections under the Electricity Act would clearly show beyond any doubt
the powers of Central Commission and jurisdiction in regard to the grid, the
scheduling and despatch. Under s.79(1)(h) the Central Commission has the
power to specify Grid Code. It also provides that the function of the State
D Commission to specify State Grid Code under s.86(1)(f) should be consistent
with the Grid Code specified by the Central Commission and therefore the
power of the State Commission is subservient to the power of the Central
Commission. Sub-section (1) ofs.28 deals with the function ofRLDC (Regional
Load Despatch Centre) to ensure integrated operation of the power system in
the concerned region. The term power system is of wide import. It is not
E confined to inter State Transmission Lines but extends to even supply lines,
distribution, main service lines etc. However, sub-section (3) of s.28 deals with
duties of RLDC using the expression within the region or in the region.
Obviously it includes both Inter State and Intra State lines and is not restricted
to inter State lines. The scheme of the Electricity Act is that RLDC is required
p to follow the principles, guidelines and methodologies specified by the Central
Commission and all persons including the distribution licensees like the
appellants are required to follow the directions ofRLDC. RLDC can enforce
such directions through SLDC. In turn SLDC is required to follow the
directions ofRLDC. Having regard to the aforesaid mentioned provisions of
law the contention that the Central Commission has no jurisdiction to deal
G with grid discipline in regard to single State beneficiary station, has no merit.
[Paras 17, 18 and 19] [1073-E, F, G, H; 1074-A, B, D, E)

2.1. The application of ABT and imposition of Unscheduled Interchange
(UI) charges are essential part of the Functions of the Central Commission
H under s.79(l)(h) of the Electricity Act, 2003. The maintenance of Grid
CENraAl POWER DISTRIBUTION CO. " CENTRAL ELECTRICITY REGULA TORY COMMISSION 106 7

discipline envisaged under the Grid Code is regulated by the mechanism of A
ABT and UI charges. There is no basis for the appellant to contend that unless
something is a part of Tariff the Central Commission cannot exercise powers
and functions. The ABT and UI charges are commercial mechanism to control
the utilities in scheduling, dispatch and drawl and the UI charges are tariff
or charges payable for deviations. Thus there is no ambiguity in respect of B
the jurisdiction of the Central Commission. [Para 22) [1075-D, E, F)

2.2. The circumstances under which the order of the Central
Commission was made, the previous orders passed by the Central Commission
and the fact that the order challenged by the Appellant was only an order fixing
a prospective date for implementation of ABT in the case of generating station C

- supplying to single state and not an order deciding the right or obligations.
It is therefore not correct for the appellants to say that the Order was passed
ex-parte or suo moto in violation of any principles of natural justice or
otherwise the order is bad or non est. After the order of the Central
Commission was passed, the second respondent and the State Load Dispatch
Centre (SLDC) in the State of Andhra Pradesh had deliberated on the steps D
to be taken for implementation. The SLDC was acting on behalf of the
appellants. The appellants and SLDC did not raise any objection or otherwise
plead any difficulty in the implementation of the ABT and UI mechanism at
the relevant time. Even now, except for pleading hyper-technicalities, the
appellants have not shown any legal prejudice they suffer on account of the E
implementation of ABT for the Simhadri generating station of NTPC. The
question of law has been raised mechanically without any factual bearing or
implication. (Para 23) (1075-G, H; 1076-A, B, CJ

2.3. The Central Commission has the power and function to evolve
commercial mechanism such as imposition of UI charges to regulate and p
discipline. It is well settled that a power to regulate includes within it the
power to enforce. (Para 24) (1076-D)

lndu Bhusan v. Rama Sunderi, AIR (1970) SC 228; K. Ramanathan v.
State of Tamil Nadu, (1985) 2 SCC 116; V.S. Rice and Oil Mills v. State of
Andhra Pradesh, AIR (1964) SC 1781; Deepak Theatre, Dhuri v. State of G
Punjab, (1992) Supp.I SCC 684, relied on.

2.4. in the facts and circumstances as alluded, and as per the Scheme
of the Electricity Act, 2003, the Central Commission has the plenary power
to regulate the Grid, particularly in the context of the Grid being integrated
H
1068 SUPREME COURT REPORTS (2007) 8 S.C.R.

A and connected across the region comprising of more than one State. The State
Grid cannot be isolated and can be seen as independent from the region.
!Para 25) 11076-F)

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2104 of2006.

B From the Final Judgment and Order dated 3. l.2006 passed by the
Appellate Tribunal for Electricity New Delhi in Appeal No. 152/2005.

Jaideep Gupta, Sanjay Sen, Rana S. Biswas, Mirdul Chakrawarty, Ruchika Ji.._
Rathi and Sanjay Jain for the Appellants.

C M.G. Ramachandran, K.V. Mohan, K.V. Balakrishnan and Anand K.
Ganesan for the Respondents.
..
The Judgment of the Court was delivered by

H.K. SEMA, J. (1) This appeal is directed against the judgment and
D order dated 3.1.2006 passed by the Appellate Tribunal for Electricity (Appellate
Jurisdiction) in Appeal No.152 of 2005 whereby the Appellate Tribunal
dismissed the appeal filed by the appellants.

(2) The appellants challenged the order of the Central Electricity
Regulatory Commission (CERC) dated 4.7.2005 passed in petition No.67/2003
E (suo moto), whereby the CERC inter alia ordered the application of Availability
Based Tariff (ABT) to Simhadri SPTS thermal station of the National Thermal
Power Corporation (NTPC) with effect from December I, 2005.

(3) This appeal was admitted on 1.5.2006 to be heard on the following
F questions of law:

(A) Whether the application of Availability Based Tariff (ABT) in
relation to Unscheduled Interchange (UI) charges, which otherwise
is not a component of tariff in terms of Regulation 15 of the
Central Electricity Regulatory Commission (Tenns and Conditions
of Tariff) Regulations, 2004 and they are liable to be held as
G beyond the jurisdiction of the Central Electricity Regulatory
Commission (CERC)?

(B) As such the impugned order passed by the Appellate Tribunal for
Electricity has completely ignored the fact that the CERC order,
which was passed suo moto and ex parte, is non est and without
H
CENTRAL POWER DISTRIBUTION CO."· CENTRAL ELECTRICITY REGULATORY COMMISSION !H.K. SEMA. J.I } 069

jurisdiction? A
(C) Can the Availability Based Tariff as established and provided in
the order of the CERC by its order dated 4.1.2000 be implemented
under the provisions of Electricity Act, 2003, particularly when
there is no provision under the statute that allows the CERC to
levy Unscheduled Interchange Charges? and B
(G) whether in the present facts and circumstances as regards the
Simhadri SPTS thennal station of the National Thermal Power
Corporation (NTPC) which admittedly supplies power to the State
Grid and has no connection with the management of the National
Grid, can the CERC in such circumstances exercise, particularly C
when matters relating to the State Grid falls within the role and
function of the State Electricity Regulatory Commission?

FACTUAL BACKGROUND:

(4) This appeal has a chequered history leading to the pa~sing of the D
4th July, 2005 order by CERC. Avoiding prolixity, we may recite few facts.

WHAT IS ABT

(5) Before we proceed further, we may at this stage, highlight what is
ABT and the purpose of introduction of ABT. ABT was introduced in regard E
to number of generating stations of NTPC and other Central Sector generating
stations under the orders of the CERC. Prior to the introduction of ABT, the
fixed charges were payable by the purchasers based on the units of electricity
actually drawn by them. The scheme of recovery of fixed charges base<:I on
drawl of electricity was not considered appropriate and rationale particularly
from the point of view of Grid safety and security. The scheme of fixed F
charges liability based on drawls allowed the purchasers of electricity to draw
electricity from the Grid at their pleasure with no control. This Jed to the Grid
. Frequency to vasilate from 48.5 Hz to 51.5 Hz, whereas Grid Frequency was
required to be maintained ideally at 50 Hz and at the most, it should be within
optimum variations. The frequency exceeding the optimum variation was G
causing grid collapse and blackouts in the entire region besides affecting the
equipments of all generations, other electricity utilities and also the consumers.
This has been a serious prejudice to public interest.

(6) Before the introduction of ABT scheme it was deliberated at different
levels namely, by (a) consultants appointed by the Government of India to H
I 1

1070 SUPREME COURT REPORTS [2007] 8 S.C.R.

A inquire into and make recommendations; (b) National Task Force (NTF)
appointed by the Government of India; (c) Regional Task Forces again
appointed by the Government of India; and (d) Central Electricity Authority.

(7) After the constitution of Central Commission under the Electricity
Regulatory Commissions Act, 1998 (in short "the Act"), the Government of
B India referred the matter of introduction of ABT to the Central Commission.
The State Electricity Boards including Andhra Pradesh State Electricity Board
(the predecessor of the appellants herein) were part of the Regional and
National Task Forces constituted by the Government of India and also
participated in the deliberation before the Central Commission.
c
c (8) At the 7th meeting of the National Task Force (NTF) held on
8. 11. 1996 it was unanimously decided that availability based generation tariff
will be adopted and will be applied to all including future IPPs.

(9) Pursuant to the aforesaid consensus reached, the Central Commission
considered the matter extensively in its order dated 4. 1.2000 inter alia which
D
are as under:
'-.
u3. DISTINCTIVE FEATURES OF ABT
3.1 We shall now discuss the distinctive features of the proposed
ABT system. In order to understand the need and rationale behind
E the system, it is necessary to narrate the present problems in grid ·~
operation. Some of these as set out by Central Transmission
Utility (CTU) in its presentation before the Commission are:
"(i) Low frequency during peak load hours, with frequency going
down to 48.0 - 48.5 Hz for many hours every day.
F (ii) High frequency during off peak hours, with frequency going
up to 50.5 to 51 Hz for many hours every day.
(iii) Rapid and wide changes in frequency - I Hz change in 5 to
10 minutes, for many hours" every day.

G (iv) Very frequent grid disturbances, causing tripping of generating
stations, interruption of supply to large blocks of consuiners, and
disintegration of the regional grids."
""(

These wide frequency fluctuatiqns tend to cause serious damages
both at the generation and load ends, which are not perceived, and
!
;..
H have never been quantified or evaluated. Experts consider these
CENTRAL POWER DISTRIBUTION co. v. CENTRAL ELECTRICITY REGULATORY COMMISSION IH.K. SEMA. J.J I 071

fluctuations unacceptable all over the world. In India though the A
problems have been identified, no progress has been made in bringing
them under control. One important reason for this has been the absence
of direct incentives or penalties for the individual utilities responsible
for the problems. There has also been a general reluctance among all
concerned to introduce financial incentives or disincentives.
B
The CTU has stated that the resolution of these problems requires:

(i) Maximisation of generation during peak load hours and load
curtailment equal to the deficit in generation.

(ii) Backing down of generation to match the system load reduction C
during off peak hours, keeping the merit order of generation in
view."

WHAT IS UI (UNSCHEDULED INTERCHANGE)

(I 0) In addition to two charges, a third charge contemplated in the ABT
scheme is for the unscheduled interchange of power (UI charges). The UI D
charges are payable depending upon what is deviated from the schedule and
also subject to the grid conditions at that point of time. This element was
introduced to bring about the effective discipline in the system. Under this
system UI charges will be payable, if:

(i) a generator generates more than the schedule, thereby increasing E
the frequency;

(ii) a generator generates less than the schedule, thereby decreasing
the frequency;

(iii) a beneficiary overdraws power, thereby decreasing the frequency; p
(iv) a beneficiary underdraws power, thereby increasing the frequency."

(I I) It is thus clear from the above that UI charges are a commercial
mechanism to maintain grid discipline. The UI charges penalises whosoever
caused grid indiscipline, whether generator (NTPC) or distributor, is subject
to payment of UI charges who are not following the schedule. The UI charges G
are not payable if the appellants maintain their drawl of electricity consistent
with the schedule given by themselves. Therefore, there is no merit in the
contention of the appellants that the UI charges are by way of penalty.

(12) The order dated 4. l.2000 passed by the CERC is intended to H
\
)

1072 SUPREME COURT REPORTS (2007) 8 S.C.R.

A achieve .the following:-
(a) ABT is necessary for Grid discipline.

(b) .ABT is being introduced qua generating stations but is a method
to control all players, namely, generator, transmitter, distributors
and users.
B
(c) The concept ofABTwas accepted by all concemedincluding the
predecessor of the Appellants herein without any reservation or
conditions.
(d) The concept of ABT is not restricted in its application only to
c generating· stations supplying electricity to .more· than one State.
It is applicable equally to a generating st.ations supplying electricity
to one State only.
(e) The Order dated 4. 1.2000 does not make.any specific exclusion of
the generating stations supplying electricity to one State. There
D is no such observation in the Order dated 4. I .2000. The operative
part of the order dated 4.1.2000 which speaks about intr:oduction
of ABT in a phased manner for Multiple State beneficiaries
generating stations in different region cannot be inferred from the
above that the Central Commission had rejected. the concept of ,
ABT for single State beneficiary generation stations,
E
(13) However, the Commission in view of the request of Powergrid/CTU
to stagger the implementation of ABT so that they would be able to make
satisfactory arrangements before implementation, the following schedule for
implementation of ABT was issued:

F Southern Region - 1-4-2000

Eastern Region - 1-6-2000

Northern Region - l-8~2000
.
G Western Region - 1-10-2000

(14) The Commission has also decided that all other generating stations
owned by 'the Central Power Sector Utilities which arc supplying power to
only one beneficiary of the State be brought under the purview of ABT.
Simhadri SPTS (2 x 500 MW) was also brought under ABT scheme w.e.f.
H I.I2.2005. This would show that the AB1 scheme was implemented at the
CENTRAL POWER DISTRIBUTION co. v. CENTRAL ELECTRICITY REGULA TORY COMMISSION (H.K. SEMA. J.1 I073

request of Powergrid/CTU so that they would be able to make satisfactory A
arrangement before the implementation. It is clear that the ABT scheme was
implemented in a phased manner. The ABT scheme in respect of Simhadri
SPTS was made applicable w.e.f. 1.12.2005. It is therefore not correct to say
that Simhadri SPTS was kept out of the purview of the ABT scheme.

(15) The principal contention of the counsel for the appellants is founded B
on two grounds, (I) that the CERC did not have the jurisdiction to introduce
ABT for generating stations supplying power within the State of Andhra
Pradesh and (2) the CERC has failed to provide an opportunity of hearing to
the appellants whose interests have been adversely affected by the impugned
~ c
(16) It is submitted that the order dated 4.7.2005 passed by the Commission
in discharge of its power under Section 79(1)(a) of the Electricity Act, 2003
cannot be justified. It is further argued under Section 79( I)( c) the Central
Commission can only regulate inter-State transmission of electricity. It is
argued that Section 86(1Xc) of the Act confers the power of jurisdiction of D
facilitating intra-State transmission upon the State Regulatory Commission. It
is also argued that the UI charges in respect of Simhadri could have only been
imposed by the State Regulatory Commission, after due consultation with all
other generators in the State and the transmission utility who has the
responsibility to maintain the grid.
E
(I 7) In our view, the aforesaid contention is thoroughly misconceived.
Simadhri Station is owned and controlled by the NTPC which is a Government
of India undertaking. Section 79(1)(a) of the Act contemplates that the Central
Commission has jurisdiction over generating companies owned or controlled
by the Central Government. In view thereof, the provisions under Section 86 F
cannot be applied for NTPC station. The various sections under the Electricity
Act would clearly show beyond any doubt the powers of Central Commission
and jurisdiction in regard to the grid, the scheduling and despatch. Under
Section 79( I )(h) the Central Commission has the power to specify Grid Code.
It also provides that the function of the State Commission to specify State
Grid Code under Section 86(l)(f) should be consistent with the Grid Code G
specifieci by the Central Commission and therefore the power of the State
.v Commission is subservient to the power of the Central Commission. Section
2 (32) defines Grid as inter connected transmission lines. The expression used
inter connected has a significant meaning. Sub-section (I) of Section 28 deals
with the function of RLDC (Regional Load Despatch Centre) to ensure H
j
,~

1074 SUPREME COURT REPORTS [2007] 8 S.C.R.

A integrated operation of the power system in the concerned region. The tenn
. power system is of wide import. It is not confined to inter State Transmission
Lines but extends to even supply lines, distribution, main service lines etc.
However, sub-section (3) of Section 28 deals with duties of RLDC using the
expression "within the region" or "in the region". Obviously it includes both
'Inter State and 'Intra State' lines and is not restricted to inter State lines.
B Section 29 of the Act empowers the RLDC to give directions and exercise
such supervision and control to any person for ensuring stability of grid
operation. It also provides that the State Load Desptach Centre shall duly
enforce -sue~ directions. Sub-section (3) of Section 33 of the Act provides that .
the State Load Desptach Centre shall comply with the directions of the
C Regional Load Desptach Centre.
(l 8) A fascicule reading of the above provisions would clearly show
that the scheme of the Electricity Act is that RLDC is required to follow the
principles, guidelines and methodologies sp_ecified by the Central Commission
and all persons including the distribution licensees like the appellants herein
D are requfred to follow the directions ofRLDC. RLDC can enforce such directions
through SLDC. In tum SLDC is required to follow the directions of RLDC.

( 19) Having regard the aforesaid mentioned provisions of law the
contention that the Central Commission has no jurisdiction to deal with grid
discipline in regard to single State beneficiary station, in our view, has no
E merit. As already noticed ABT is to ensure discipline in the integrated system.
Further ABT is being introduced stationwise and it is the Central Commission
alone ":'ho has the jurisdiction particularly, in regard to generating stations of
NTPC, which is a Central Government, owned and controlled gene~ating
company.
F
ALLEGATION OF VIOLATION OP NATURAL JUSTICE

(20) Counsel for the appellants alleged that the order dated 4.7.2005 has
been passed by the Central Commission (suo moto) without hearing the
parties concerned, thereby the interests of the appellants have been adversely
G affected, by the impugned order. In our view, this contention is wholly
misconceived. As mentioned earlier, the Commission after consultation with
various agents and after threadbare discussion, a decision was taken by the
Commission on 4.1.2000 to introduce ABT scheme. The order dated 4.1.2000 ....
was passed after hearing all parties concerned including the predecessor
(State of Andhra Pradesh) of the appellants herein. The appellants step into
H the shoes of the State of Andhra Pradesh. A policy decision for the
f,

CENTRAL POWER DISlRIBUTION co.•.. CENTRAL ELECTRICln' REGULATORY COMMISSION fH.K. SEMA. J.f I 075

introduction of the ABT Scheme was taken on 4.1.2000 after consultation and A
threadbare discussion and after considering all pros and cons of the scheme.
The so called suo moto· order passed by the Central Commission by order
dated 4.7.2005 is only the implementation of the ABT in regard to all generating
stations of Central Public Sector supplying electricity to one State which was
only the implementation of the decision taken by order dated 4.1.2000. No
grievance has been raised by any generating stations including that of State B

- of Andhra Pradesh, the predecessor of the appellants herein to the decision
taken on 4.1.2000. Having accepted the policy decision taken on 4.1.2000,
without any demur, they are not now permitted to say that the implementation
of the scheme without hearing them is in violation of pri11c.iples of natural
justice. c
(21) For the reasons aforestated, we answer all the questions raised in
this appeal in the negative as hereunder:-

Question (A)
D
(22) The application of Availability Based Tariff and imposition of
Unscheduled Interchange (UI) charges are essential part of the Functions of
• J

the Central Commission under Section 79(l)(h) of the Electricity Act, 2003
which reads "to specify Grid Code having regard to the Grid Standards", and
Sub-section (2) of Section 28 read with Section l 78(2)(g) dealing with the
Central Commission's powers to frame Grid Code. The maintenance of Grid E
discipline envisaged under the Grid Code is regulated by the mechanism of
ABT and UI charges. There is no basis for the appellant to contend that
unless something is a part of Tariff the Central Commission cannot exercise
powers and functions. The ABT and UI charges are commercial mechanism
to control the utilities in scheduling, dispatch and drawl and the UI charges
p·
are tariff or charges payable for deviations. In the facts and circumstances
mentioned above the legal position is clear and there is no ambiguity in
respect of the jurisdiction of the Central Commission.

Question (B)
GO
(23) The circu1W1tances under which the order of the Central Commission
was made, the previous orders passed by the Central Commission and the fact
that the order challenged by the Appellant was only an order fixing a
prospective date for implementation of ABT in the case of generating fUation
supplying to single state and not an order deciding the right or obligations.
It is therefore not correct for the appellants to say that the Order was passed H
1076 SUPREME COURT REPORTS [2007) 8 S.C.R.

A ex-parte or suo moto in violation of any principles of natural justice or
otherwise the order is bad or non est. As mentioned above after the order of
the Central Commission was passed, the second respondent and the State
Load Dispatch Centre (SLDC) in the State of Andhra Pradesh had deliberated
on the steps to be taken for implementation. The SLDC was acting on behalf
B of the appellants. The appellants and SLDC <!id not raise any objection or
otherwise plead any difficulty in the implementation of the ABT and UI
mechanism at the relevant time. Even now, except for pleading hyper-
technicalities, the appellants have not shown any legal prejudice they suffer
on account of the implementation of ABT for the Simhadri generating station
of NTPC. The question of law has been raised mechanically without any
C factual bearing or implication.

Question (C)

(24) As already noticed, the Central Commission has the power and
function to evolve commercial mechanism such as imposition of UI charges
D to regulate and discipline. It is well settled that a power to regulate includes
within it the power to enforce. See !ndu Bhusan v. Rama Sunderi, AIR (I 970)
SC 228, K. Ramanathan v. State of Tamil Nadu, [1985] 2 SCC 116, V.S. Rice
and Oil Mills v. State of Andhra Pradesh, AIR (l 964) SC 1781 and Deepak
Theatre, Dhuri v. State of Punjab, [1992] Supp. I SCC 684.

E Question (G}

(25) In the facts and circumstances as alluded, and as per the Scheme
of the Electricity Act, 2003 mentioned above, the Central Commission has the
plenary power to regulate the Grid, particularly in the context of the Grid being
integrated and connected across the region comprising of more than one
F . State. The State Grid cannot be isolated and can be seen as independent from
the region.

(26) In the view that we have taken there is no merit in this appeal and
it is accordingly dismissed. No costs.

G D.G. Appeal dismissed