Supreme Court of India
TRANSMISSION CORPORATION OF ANDHRA PRADESH LIMITEDversusM/S RAIN CALCINING LIMITED & OTHERS
- Citation
- 2019 INSC 1300
- Decided
- 29 November 2019
- Disposal
- Appeal(s) allowed
Holding
APERC is empowered by Sections 11 and 26 of the Andhra Pradesh Electricity Reforms Act, 1998 to fix wheeling and grid support charges, and the doctrine of promissory estoppel does not apply to the 1997‑1998 Government Orders.
Summary
The Supreme Court examined three sets of appeals filed by Transmission Corporation of Andhra Pradesh Ltd. (APTRANSCO) against orders of the Andhra Pradesh Electricity Regulatory Commission (APERC) fixing wheeling charges, grid support charges, and the continuation of incentives for non‑conventional energy. The Court held that under Sections 11 and 26 of the Andhra Pradesh Electricity Reforms Act, 1998, APERC has the statutory power to determine both wheeling and grid support charges as part of tariff fixation. It further ruled that the Government Orders of 1997‑1998 did not create an unequivocal promise and therefore the doctrine of promissory estoppel could not be invoked to compel the Commission to maintain those incentives. The Court also emphasized that tariff orders are legislative in nature and not subject to ordinary judicial interference. Consequently, the High Court and APTEL orders were set aside and the APERC orders were restored.
Issues considered
- The competence of APERC to fix wheeling charges under the Andhra Pradesh Electricity Reforms Act, 1998.
- The competence of APERC to fix grid support charges under the same Act.
- Whether the Government Orders of 18‑Nov‑1997 and 22‑Dec‑1998 creating incentives for non‑conventional energy are binding on the Commission under the doctrine of promissory estoppel.
- The scope of judicial review of tariff determinations made by a regulatory commission.
Legislation cited
- Andhra Pradesh Electricity Reforms Act, 1998s. 11, s. 12, s. 15, s. 21(3), s. 26
- Companies Act, 1956s. 394(2)
- Electricity Act, 2003s. 111, s. 62, s. 65, s. 78(A)
- Electricity Regulatory Commissions Act, 1998
- Electricity (Supply) Act, 1948s. 57, s. 57-A
Subjects
wheeling chargesgrid support chargestariff fixationpromissory estoppelregulatory commissionelectricity lawjudicial reviewAndhra Pradesh Electricity Reforms Act
Judgment
474 [2019]
SUPREME COURT 17 S.C.R. 474
REPORTS [2019] 17 S.C.R.
A TRANSMISSION CORPORATION OF
ANDHRA PRADESH LIMITED
v.
M/S RAIN CALCINING LIMITED & OTHERS
B (Civil Appeal No. 4569 of 2003)
NOVEMBER 29, 2019
[ARUN MISHRA, M. R. SHAH AND B. R. GAVAI, JJ.]
Andhra Pradesh Electricity Reforms Act, 1998: ss.11, 26 –
Competence of APERC (Commission) to determine Wheeling
C
Charges – s.11 primarily deal with the generation, transmission,
and distribution – These three processes suggest that s.11 does
include in its ken the power to fix the wheeling charges relating
to the generation, transmission, distribution, supply, and utilization
of electricity – The distribution is not possible without transmission
D – The Commission is the regulator for transmission and, therefore,
has the power to fix the wheeling charges – Under 1999
Regulations, various agreements have also been amended, and
there is plenary power to prescribe the tariff and charges
concerning Transmission and Bulk Supply or Distribution and
Retail Supply as provided in Regulation 45-A(2) – Under
E
Regulation 45-A(8), upon hearing the licensee and such other
parties, the Commission make an order and notify the licensee of
its decision on the revenue calculations and tariff proposals, as
provided in s.26(5) of the Reforms Act, 1998 – Thus, the
Commission can exercise the power of fixation of such charges,
F which power is legislative – There is no question of attracting the
equitable principles of promissory estoppel, as there was no
unequivocal promise in this case, and statutory provision can make
inroad and supersede the contracts – Electricity (Supply) Act, 1948
– Andhra Pradesh Electricity Regulatory Commission (Business
Rules of the Commission), Regulations, 1999.
G
Andhra Pradesh Electricity Reforms Act, 1998: Competence
of Commission to determine Grid Support Charges – Commission
by order dated 8.2.2002 held that Grid Support Charges would
be payable at the rate of 50% of prevailing demand charges on
the differential of CPP capacity and CMD – Propriety – Held:
H
474
TRANSMISSION CORP. OF ANDHRA PRADESH LTD. v. 475
M/S RAIN CALCINING LTD. & OTHERS
Under s.11 read with s.26 of the Reforms Act, 1998, all fixed A
charges under the distribution and Grid Support Charges are
leviable only at the instance of a distribution company, and the
Commission has the powers to determine it.
Andhra Pradesh Electricity Reforms Act, 1998: Whether
Government Orders issued on 18.11.1997 and 22.12.1998, by the B
Andhra Pradesh Government, extending specific incentives to the
producers of electricity from non-conventional energy resources,
are binding and Doctrine of Promissory Estoppel against the
Government and Commission was bound to give effect to them –
Held: Plea of promissory estoppel is not attracted, as there was
no unequivocal promise – The Regulatory Commission had power C
of reviewing the tariff and incentives – There was no unequivocal
commitment to the respondent/purchasers/generators/developers to
bind the State for all times to come – There was no definite,
unambiguous representation, hence plea of estoppel was not
attracted. D
Andhra Pradesh Electricity Reforms Act, 1998: Object of
enactment – Discussed.
Andhra Pradesh Electricity Reforms Act, 1998: APTRANSCO
– Constitution and functions – Discussed.
E
Administrative Law: Judicial review – Tariff determination
by APERC (Commission) –Scope of interference – Held: Once the
expert body has determined specific tariffs, it is not for the Court
to interfere ordinarily in such matters – In the instant case, the
determination of tariff by the Commission was proper and did not
suffer from any infirmity or illegality – The Commission made an F
elaborate discussion for arriving at the figure – The recovery
network charges, tariff structure, and the question of wheeling
charges in cash or kind were also considered – Interference not
called for.
Allowing the appeals, the Court G
HELD:
1. IN RE: COMPETENCE OF APERC TO DETERMINE
WHEELING CHARGES
1.1 Section 11 of the Reforms Act, 1998 deals with the H
476 SUPREME COURT REPORTS [2019] 17 S.C.R.
A functions of the Commission. Under Section 11(1)(a), the
Commission shall aid and advise in matters concerning
electricity generation, transmission, distribution and supply in
the State. Section 11(1)(b) empowers the Commission to
regulate the working of the licensees and to promote their
working in an efficient, economical, and equitable manner. The
B
Commission under Section 11(1)(c) has the power to issue
licences in accordance with the provisions of the Act. Section
11(1)(d) also empowers the Commission to promote efficiency,
economy, and safety in the use of the electricity. Under Section
11(1)(e), the Commission has the power to regulate the purchase,
C distribution, supply, and utilization of electricity, the quality of
service, the tariff, and charges payable. The wheeling charges
are part of tariff, and the provisions of Section 11 are inclusive
and primarily dealing with the generation, transmission, and
distribution. These three processes suggest that Section 11
does include in its ken the power to fix the wheeling charges
D
relating to the generation, transmission, distribution, supply, and
utilization of electricity. The licensee is required to submit a
calculation of annual expected aggregate revenue, and the
Commission has the power to fix the tariff for the licensees that
would include the licence f or transmission also. The
E Commission, while fixing the wheeling charges, has to act upon
the settled principles as specified in the order and in consonance
with the provisions contained in Sections 11, 15, and 26. [Paras
34, 35, 36] [509-F-H; 501-A-D-E]
Ashok Soap Factory v. Municipal Corporation of Delhi
F (1993) 2 SCC 37 : [1993] 1 SCR 124 ; Pawan Alloys
& Casting Pvt. Ltd., Meerut v. U.P. State Electricity
Board (1997) 7 SCC 251 : [1997] 3 Suppl. SCR 266
; Oil and Natural Gas Commission v. Association of
Natural Gas Consuming Industries of Gujarat, (1990)
Supp. SCC 397 : [1990] SCR 157 ; Rohtas Industries
G Ltd. v. Chairman, Bihar State Electricity Board (1984)
Supp. SCC 161 : [1984] SCR 59 – relied on.
1.2 The Andhra Pradesh Electricity Regulatory
Commission (Business Rules of the Commission), Regulations,
1999 were framed in exercise of powers conferred by Section
H 9, Sub-Section 2 and Section 54, Sub-Section (2)(a) of the
TRANSMISSION CORP. OF ANDHRA PRADESH LTD. v. 477
M/S RAIN CALCINING LTD. & OTHERS
Reforms Act, 1998 and they were amended by Regulations of A
2000. The Regulations reflect a broad spectrum of powers and
various functions relating to fixation of the tariff. As per
Regulation 45-A of the Regulations, 2000, inserted by
amendments to Chapter IV-A of the Conduct of Business
Regulations, it is open to the Commission to fix a tariff. Under
B
regulations, various agreements have also been amended, and
there is plenary power under the regulations to prescribe the
tariff and charges concerning Transmission and Bulk Supply or
Distribution and Retail Supply as provided in Regulation 45-A(2).
Under Regulation 45-A(8), it is clear that upon hearing the
licensee and such other parties as the Commission considers C
appropriate and upon making such other inquiry, the
Commission shall make an order and notify the licensee of its
decision on the revenue calculations and tariff proposals, as
provided in section 26(5) of the Reforms Act, 1998. The
commission can exercise the power of fixation of such charges,
D
which power is legislative. The statutory contracts have been
superseded by the regulations which have been made. No
estoppel is created. It was not the subject matter of policy
reserved for the Government under section 12 of the Reforms
Act, 1998. As per section 26(5), the exercise of fixation of
charges can be done. There is no violation of principles of E
natural justice as the objections were invited, and the licensees
were heard. There is no question of attracting the equitable
principles of promissory estoppel, as there was no unequivocal
promise in this case, and statutory provision can make inroad
and supersede the contracts. [Paras 39, 45-47, 54] [502-D-E;
F
509-E-F; 512-D-H; 513-A; 516-A-B]
PTC India Limited v. Central Electricity Regulatory
Commission, (2010) 4 SCC 603 : [2010] 3 SCR 609
– relied on.
Indian Aluminium Company v. Kerala State Electricity G
Board, (1975) 2 SCC 414 : [1976] 1 SCR 70 ; Gujarat
State Financial Corporation v. Lotus Hotels Pvt. Ltd.,
(1983) 3 SCC 379 ; Motilal Padampat Sugar Mills Co.
Ltd. v. State of Uttar Pradesh & Ors., (1979) 2 SCC
409 : [1979] 2 SCR 641 ; Pawan Alloys & Casting
Pvt. Ltd., Meerut v. U.P. State Electricity Board & Ors., H
478 SUPREME COURT REPORTS [2019] 17 S.C.R.
A (1997) 7 SCC 251 : [1997] 3 Suppl. SCR 266 ;
Andhra Pradesh Electricity Regulatory Commission v.
R.V.K. Energy Private Limited & Anr., (2008) 17 SCC
769 : [2008] 9 SCR 579 ; Binani Zinc Limited v.
Kerala State Electricity Board & Ors., (2009) 11 SCC
244 : [2009] 4 SCR 636 ; Adani Power (Mundra) Ltd.
B
v. Gujarat Electricity Regulatory Commission & Ors.
AIR 2019 SC 3397 – held inapplicable.
Karnataka Power Transmission Corporation Ltd. v.
Amalgamated Electricity Co. Ltd., (2001) 1 SCC 586 :
[2000] 5 Suppl. SCR 695 – Distinguished.
C
1.3 The High Court could not have interfered with the
findings on merits taken by the experts without entering into
the various aspects considered by the Commission. The High
Court has not gone into various reasons, and the details
considered by the Commission and once the expert body has
D determined specific tariffs, it is not for the courts to interfere
ordinarily in such matters. The determination is proper and does
not suffer from any infirmity or illegality. The Commission has
made an elaborate discussion for arriving at the figure. The
recovery network charges, tariff structure, and the question of
E wheeling charges in cash or kind have also been considered.
[Para 61] [519-B-D]
1.4 The use of the system cannot be isolated from losses
in the system as they form an integral part of the system. All
persons using the system should bear the system losses,
F whether technical or non-technical. Incidentally, the terms of a
licence issued by APTRANSCO and DISCOMS specifically
refer to deliver such electricity, adjust losses of electricity to a
designated point. Technical losses in the system to be taken
into account as these are also an integral part of the system. It
is an integrated system where the electricity is supplied on
G displacement basis rather than direct conveyance of the
particular electricity which is generated, the technical losses up
to the voltage level at which the electricity is delivered along
cannot be measured. The technical losses of the total system
need to be taken into account as it is impossible to determine
H from which source electricity is being supplied to which
TRANSMISSION CORP. OF ANDHRA PRADESH LTD. v. 479
M/S RAIN CALCINING LTD. & OTHERS
particular customer. The electricity from all sources gets A
combined in the system and loses its identity. As investment in
the system has also been made, it was evident that requisite
charges have to be paid. [Para 62] [519-E-G]
2. IN RE : GRID SUPPORT CHARGES
Grid Code is the basis for levy of the Grid Support B
Charges, which came to be approved by the Commission on
26.5.2001. The same is also reflected in the impugned order.
Thus, in case of installation of another CPP, that would be an
additional load on the grid, and there is no embargo for setting
up additional grid CPP in the form of expansion as grid acts as C
cushioning. Under section 11 read with section 26 of the
Reforms Act, 1998, all fixed charges under the distribution and
Grid Support Charges are leviable only at the instance of a
distribution company, and the Commission has the powers to
determine it. In the agreements also there is a power where the D
Board could have fixed the Grid Support Charge unilaterally, but
because of Reforms Act, 1998 came to be enacted, the application
was filed in the Commission. After that, the Commission has
passed the order in accordance with the law. There is no fault
in the same. Thus, the order of the Commission concerning the
E
Grid Support Charges is upheld. [Para 64] [520-C-F]
3. IN RE : INCENTIVES TO NON-CONVENTIONAL
ENERGY
3.1 The Government Order dated 18.11.1997, encourages
renewable energy/non-conventional energy sources. The F
Government decided to provide specific incentives. The
Government issued another GO MS No.112 dated 22.12.1998,
making precise clarification that the benefits shall be available
only to the power projects where fuel used is from non-
conventional energy sources, which are of the nature of G
renewable sources of energy. The Scheme shall be watched for
three years. After that, the State Electricity Board shall come
up with suitable proposals for the continuance of incentives in
the present form or modified form. [Paras 66-67] [521-B-H; 522-
A]
H
480 SUPREME COURT REPORTS [2019] 17 S.C.R.
A 3.2 The Commission had passed the tariff orders dated
22.3.2005 and 23.3.2006 for the years 2004-05, 2005-06, and
2006-09. The APTEL was not correct in allowing the appeals
and holding that effect of the policy decisions dated 18.11.1997
and 22.12.1998, which had a statutory flavor, had not been taken
B away by the provisions contained in the Electricity Act, 2003 and
that the Doctrine of Promissory Estoppel is attracted, though
the Commission has the power to regulate wheeling charges.
To consider the applicability of Promissory Estoppel, it has to
be seen whether these Government Orders contained an
unequivocal commitment to extend benefits. On the contrary,
C the benefit was confined only to three years. The Commission
under the provisions of the Reforms Act, 1998 extended it from
time to time and the last such extension came to an end on
28.7.2001. The Commission decided not to extend the benefit
by the impugned order determining the tariff. [Paras 68, 69]
D [522-B-F]
3.3 This Court in Transmission Corporation of Andhra
Pradesh Limited case considered G.O. MS dated 18.11.1997 and
22.12.1998, in which APERC undertook the review of tariff
applicable to the producers of electricity from non-conventional
E energy resources. In the year 2003, the Commission undertook
a further review of the tariff. The Commission by order dated
20.3.2004, reduced the amount of tariffs. The Regulatory
Commission had power of reviewing the tariff and incentives.
There was no unequivocal commitment to the respondent/
purchasers/ generators/ developers to bind the State for all times
F
to come. There was no definite, unambiguous representation,
hence plea of estoppel was not attracted. [Para 70] [522-G-H;
523-C-D]
3.4 Section 65 of the Electricity Act, 2003, provides that
if State Government requires grant of any subsidy to any
G
consumer in the tariff determined by the State Commission under
Section 62, the State Government shall, notwithstanding, any
direction which may be given under Section 108, pay, in advance
and in such manner as may be specified, the amount to
compensate the person affected by the grant of subsidy in the
H manner the State Commission may direct. Subsidy/incentive is
TRANSMISSION CORP. OF ANDHRA PRADESH LTD. v. 481
M/S RAIN CALCINING LTD. & OTHERS
governed by Section 65, and the Government has not issued any A
such direction to continue the incentives in the form of subsidy.
It was open to the Government to do so because of the order
passed by the Commission, but it has not extended such benefit.
No command can be given to State to grant subsidy. Thus, the
order of APTEL based on the Doctrine of Promissory Estoppel
B
for continuing the benefit of Government Orders dated
18.11.1997 and 22.12.1998, cannot be said to be in accordance
with the law. [Paras 71, 72] [526-B-E]
Transmission Corporation of Andhra Pradesh Limited
& another v. Sai Renewable Power Private Limited &
others, (2011) 11 SCC 34 : [ 2010] 8 SCR 636 – relied C
on
K. Ramanathan v. State of Tamil Nadu, AIR 1985 SC
660 : (1985) 2 SCC 116 : [1985] 2 SCR 1028 ; V.S.
Rice and Oil Mills v. State of Andhra Pradesh AIR
1964 SC 1781 : [ 1964] SCR 456 ; Deepak Theatre, D
Dhuri v. State of Punjab, AIR 1992 SC 1519 ; D.K.
Trivedi & Sons v. State of Gujarat, AIR 1986 SC
1323 : 1986 SCR 479 – referred to
Case Law Reference
E
[1993] 1 SCR 124 relied on Para 28
[1990] SCR 157 relied on Para 28
[1984] SCR 59 relied on Para 28
[1985] 2 SCR 1028 referred to Para 29
F
AIR 1992 SC 1519 referred to Para 29
[1986] SCR 479 referred to Para 29
[2010] 3 SCR 609 relied on Para 33
[1964] SCR 456 referred to Para 48 G
[1976] 1 SCR 70 held inapplicable Para 49
[2000] 5 Suppl. SCR 695 Distinguished Para 50
(1983) 3 SCC 379 held inapplicable Para 54
[1979] 2 SCR 641 held inapplicable Para 54 H
482 SUPREME COURT REPORTS [2019] 17 S.C.R.
A [1997] 3 Suppl. SCR 266 held inapplicable Para 54
[2008] 9 SCR 579 held inapplicable Para 54
[2009] 4 SCR 636 held inapplicable Para 56
AIR 2019 SC 3397 held inapplicable Para 57
B [2010] 8 SCR 636 relied on Para 70
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 4569
of 2003.
From the Judgment and Order dated 18.04.2003 of the High
Court of Judicature, Andhra Pradesh at Hyderabad in C.M.A. No. 1025
C of 2002.
With
Civil Appeal Nos. 5085, 5084, 5052, 5083, 5079, 5057, 5053, 5066,
5064, 5068, 5054, 5071, 5056, 5077, 5063, 5055, 5080, 5062, 5073, 5069,
5081, 5076, 5059, 5065, 5067, 5075, 5058, 5082, 5061, 5072, 5070, 5074,
D 5060, 5078, 7093, 7103, 7085, 7086, 7080, 7090, 7079, 7084, 7088, 7104,
7091, 7089, 7041, 7083, 7092, 7087, 7042, 7102, 7043-7078, 8969, 8970,
8971, 8974, 8978, 8972, 8976, 8975, 8977, 10125-10132 of 2003, 1945,
1946-1947 of 2004, 7029-7062 of 2008.
V. Giri, B. Adhinarayana Rao, Parag Tripathi, C. S. Vaidyanathan,
E C. R. Sridharan, Sr. Advs., Nishant Sharma, Rakesh K. Sharma,
Matrugupta Mishra, Ms. Pratiksha Chaturvedi, Ms. Sharmila Upadhyay,
Y. Raja Gopala Rao, C. Gunaranjan, Sourjya Das, VRN Prasanth,
Sridhar Potaraju, Ms. Shiwani Tushir, Ms. Shweta Parihar, Ms. G. Usha
Sri, Lalltaksh Joshi, Manu Nair, Kuber Dewan, Ms. Suvarna Kashyap,
S. S. Shroff, Ms. Jayati Parashar, Ishan Narain, Rajan Narain, Gopal
F Choudhary, Ms. Liz Mathew, Ms. Sonali Jain, Navnee R. (for M/s.
MCLM & Co.), K. V. Mohan, K. V. Balakrishnan, Rahul Kumar
Sharma, Matrugupta Mishra, Ms. Pratiksha Chaturvedi, Mrs. Sarla
Chandra, Ms. Bina Madhavan (for M/s. Lawyer’s Knit & Co.),
Vishwajit Singh, Mahesh Agarwal, Ankur Saigal, Rishi Agrawal, Rajesh
Kumar, E. C. Agrawala, G. Ramakrishna Prasad, A. V. Rangam, Buddy
G Ranganadhan, Ms. Stuti K., V. G. Pragasam, Mrs. D. Bharathi Reddy,
Nikhil Swami, Ms. Divya Swami, Mrs. Prabha Swami, Vikas Mehta,
Venkateswara Rao Anumolu, Tushar Jain, Alok Shankar, Pukhrambam
Ramesh Kumar, Umesh Kumar Khaitan, Ms. K. Mamatha Choudary,
Hitendra Kumar Rath, Ramakrishna Nookala, Pallav Mongia, Abhinav,
H Advs. for the appearing parties.
TRANSMISSION CORP. OF ANDHRA PRADESH LTD. v. 483
M/S RAIN CALCINING LTD. & OTHERS
The Judgment of the Court was delivered by A
ARUN MISHRA, J.
1. There are three batches of appeals; most of the questions are
common, which arise for consideration. In the first batch of appeals,
the question arises for consideration concerning the levy of wheeling
charges by the appellant – Transmission Corporation of Andhra Pradesh B
Limited (APTRANSCO). In the second batch of appeals, the question
arises for consideration regarding the competence of the APTRANSCO
to levy the grid support charges. Admittedly, the outcome of the third
batch of appeals depends on the outcome of the first batch of appeals.
In the third batch of appeals, the question arises for consideration as C
to continuance of incentives in respect of wheeling charges granted as
per Government Order issued during the year 1997-1998, had to be
continued, and whether Commission had the power to review them.
2. After independence, the electricity generation, distribution and
transmission, and other related activities were undertaken by the Andhra D
Pradesh State Electricity Board (APSEB). After the amendment in 1991
in Electricity (Supply) Act, 1948 (Act of 1948), when liberalization was
made in the electricity sector, then APSEB entered into agreements
with Private Generators.
3. The Andhra Pradesh State Legislature enacted Andhra E
Pradesh Electricity Reforms Act, 1998 (the Reforms Act, 1998). The
Governor reserved the same for the assent of the President under Article
254 of the Constitution. The Andhra Pradesh Electricity Regulatory
Commission (APERC) was constituted under the Reforms Act, 1998
on 31.3.1999, which started functioning with effect from 3.4.1999.
F
4. Under the provisions of the said Act, the transmission and
distribution and generation were separated, and APTRANSCO came
to be established. The Act received the Presidential assent on
21.10.1998 and was published in the Official Gazette on 29.10.1998.
On 1.2.1999, the Reforms Act, 1998, was brought into force, and
APTRANSCO succeeded APSEB in regards to transmission, G
distribution, and supply of electricity.
5. The APERC granted License No.1/2000 to APTRANSCO on
31.1.2000, to deal with transmission and bulk supply of electricity.
License No.2/2000 was given to APDISCOMS for carrying out
distribution function in terms of Section 15 of the Reforms Act, 1998. H
484 SUPREME COURT REPORTS [2019] 17 S.C.R.
A The licenses granted were subject to the terms and conditions, which
required the Licensees to file ARR Proposals to be submitted every
year before 31st December, based on the expected revenue calculation
and tariffs. Subsequently, four DISCOMS were created on 31.3.2000,
which were enjoined with the function of the distribution of electricity.
The transmission of electricity is carried out over long distances at extra-
B
high voltage levels from generating stations to urban load centres, while
the distribution of electricity is carried out at below 33 KV, 11 KV level.
6. The infrastructure, i.e., transmission lines, State grid,
equipment, systems of APSEB, came to be held by APTRANSCO.
The higher voltage systems were vested in the APTRANSCO and the
C
lower voltage of APDISCOMs.
7. The APTRANSCO filed Aggregate Revenue Requirement
(ARR) for the year 2001-2002, before the Commission set up under
the Reforms Act, 1998. On 30.12.2000, each of the Distribution
Companies (DISCOMs), along with APTRANSCO, filed their
D
respective joint ARR applications. On 17.1.2001, the APTRANSCO
filed Tariff Proposal for the year 2001-02, for its transmission and bulk
supply business and jointly with each DISCOM proposal for distribution
and rental supply business. The Tariff Proposal also contained a
proposal for levy of wheeling charges on persons using the electricity
E system of licensee in the State. The APTRANSCO proposed a
wheeling charge of Rs.1 per Kwh for energy it transmitted through its
network. On 24.3.2001, the Commission decided to consider the issue
relating to determination of wheeling charges and directed
APTRANSCO to file necessary applications and information in this
regard. On 24.3.2002, the Commission determined that the wheeling
F
charges for the year 2002-2003 effective from 1.4.2002 would be Paise
50 per Kwh for energy it transmitted through its network. Besides,
wheeling charges of 28.4 percent of energy input by the project
developer into the licensee’s grid being the system loss was also to be
factored. The order of the Commission was questioned before the High
G Court and the High Court by the impugned judgment and order dated
18.4.2003, allowed the appeal, setting aside the order dated 24.3.2002
of the Commission. Hence, the APTRANSCO and APERC are in
appeals.
8. In the case set up by APTRANSCO, it is stated that the
H reason for carrying out bulk transmission of power at extra high voltages,
TRANSMISSION CORP. OF ANDHRA PRADESH LTD. v. 485
M/S RAIN CALCINING LTD. & OTHERS [ARUN MISHRA, J.]
is for reduction of the Technical Losses (T&D Losses or Aggregate A
Technical Losses) in the transmission system, which are inevitable,
which means that at lower voltage (in distribution), the AT Losses are
more for the same quantum of power transmitted. The Technical
Losses depend on the distance/length of the transmission lines, i.e.,
directly proportional to the distance of transmission. Apart from that,
B
there are commercial losses in low tension or distribution network side
due to pilferage/theft of power inter alia by direct tapping, meter
tampering, which also contribute to financial losses to DISCOMs. Thus,
total losses are designated as AT&C Losses.
9. It is also the case set up by the APTRANSCO that HT (High
Tension or High Voltage) consumers are industrial consumers connected C
to the grid at various high voltage level and avail the power drawn from
the utility as well as from other sources by way of wheeling, now called
as Open Access.
10. Before Reforms Act, 1998, the wheeling charges were
governed by the respective Government Orders, for example, the G.O. D
MS No.93 dated 18.11.1997 as amended by G.O. MS No.112 dated
22.12.1998, dealt with wheeling charges for non-conventional energy
sources, such as Biomass, Bagasse, Mini-Hydel, Wind, Solar. The G.O.
MS No.116 dated 5.8.1995 as amended by G.O. MS No.152 dated
29.11.1995, dealt with wheeling charges applicable for Mini-Power E
Plants set up by private sector and under Memorandum of
Understandings signed with AP Gas Power Corporation (APGPCL) for
wheeling of power to its captive consumers it specified the wheeling
charges to them for the applied voltage level, i.e., 132 KV, 33 KV, 11
KV, etc., and also the distance of transmission.
F
11. The incentive/concessional wheeling charges allowed in
Government Orders mentioned above were to be reviewed by the State
Government in the year 2000, but by the time the APERC was
constituted, which was vested with the function of tariff determination
in terms of Section 26 of the Reforms Act, 1998.
G
12. In the second batch of appeals, the question involves as to
grid support charges, which are levied on the HT consumers, who have
rated Contracted Maximum Demand (CMD) and Captive Power Plant
(CPP) capacity to meet their demands. When private Generators came
into existence, these consumers derated CMD from the APTRANSCO
network and obtained the remaining demand from private Generators H
486 SUPREME COURT REPORTS [2019] 17 S.C.R.
A (these Generators are respondents in wheeling charges batches). After
such deration, the service of grid support became a component for
which APTRANSCO was required to be compensated as CPPs running
in parallel obtains benefits to keep the system and grid up and running,
it is important to invest and maintain the system periodically and the
grid support cannot be given free to a nexus of third party private
B
Generators and HT consumer. The significant benefit which a CPP
gets is in case of outage of CPP generator power is drawn from the
grid, and in case of tripping, the entire load is transferred on to the grid.
Such disturbance is catered by way of grid support and equipment
installed by the APTRANSCO/DISCOM and involves investment
C through public exchequer.
13. The grid support charges are not governed by any Government
Order or Incentive Scheme of the Government prior to Reforms Act,
1998, or after that. The grid code is the basis for the levy of the grid
support charges, which came to be approved by APERC on 26.5.2001.
D By way of levy of grid support charges, there is no restriction
whatsoever on the installation of additional CPPs. The additional CPPs
put an additional load on the grid, and corresponding charges are paid
towards grid support. There is no embargo for setting up additional
new CPPs. In case of expansion of industry, additional duty for
E additional units have to be paid as additional CPPs tantamount to
additional burden on grid and which further obtains additional service
from the grid, thus grid support charge is levied after taking into account
all sorts of supply agreements from DISCOMs/Third Party Generators.
The grid acts as a cushion/big buffer when the generation from CPP
is idled due to sudden outage in the load, thereby mitigating the forced
F tripping of the CPP, and this support is known as grid support and CPPs
running in parallel are known as running with Parallel Grid Support.
14. The Commission vide order dated 8.2.2002, held that grid
support charges would be payable at the rate of 50 percent of prevailing
demand charges on the differential of CPP capacity and CMD. The
G agreement entered into by the State Electricity Board provided in
clauses 9 and 10 that the Board could have fixed the grid support
charges unilaterally as agreed by these HT consumers. However, when
the Reforms Act, 1998 came into existence, APTRANSCO in the
interest of consumers applied to the Commission, and after hearing the
H objections, the Commission has passed the order on 8.2.2002. The High
TRANSMISSION CORP. OF ANDHRA PRADESH LTD. v. 487
M/S RAIN CALCINING LTD. & OTHERS [ARUN MISHRA, J.]
Court has set aside the order passed by the Commission. Hence, the A
appeals have been preferred by the APTRANSCO and APERC.
15. The third batch of appeals is concerned with the tariff orders
passed in the years 2004-05, 2005-06, and 2006-09, which have been
challenged by Non-Conventional Energy Developers and Gas Based
Developers. The APTRANSCO held the bulk supply license until 2005, B
and after that, APDISCOMs became the bulk suppliers. The APERC
passed the orders mentioned above in exercise of powers conferred
under Section 62 of the Electricity Act, 2003, and the appeals were
preferred before the APTEL under Section 111 of the Electricity Act,
2003. The issue is limited whether incentive as per the Government C
Orders of 18.11.1997 and 22.12.1998 to be continued in perpetuity, or
the Commission could have reviewed them.
16. The APERC was constituted under the Reforms Act, 1998,
and came to be treated as State Regulatory Commission under the
proviso to Section 82 of the Electricity Act, 2003. The functions of D
the State Commission are provided in Section 86 of the Electricity Act,
2003. One of them is to facilitate the intra-State transmission and
wheeling of electricity read with Section 62 of the Act, which inter
alia provides that the Appropriate Commission shall determine the tariff
in accordance with the provisions of the Act for transmission of the
E
electricity under Section 62(1)(b) and wheeling of electricity under
Section 62(1)(c).
17. In the first batch of appeals, it has been pointed by the
APTRANSCO that there are six categories of Generators.
(a) In the first category, eight Generators have pre-existing F
agreements entered into before the Reforms Act, 1998
as APERC was not in existence, and, in these
agreements, there was no clause providing tariff fixation
by APERC.
(b) Categories 2 to 5 are of those Generators who have G
agreements either post Reforms Act, 1998, or their
agreements have been amended and restated in terms
of Reforms Act, 1998. Thus, they are indisputably
governed by the Reforms Act, 1998, and tariff fixation
is in accordance therewith. H
488 SUPREME COURT REPORTS [2019] 17 S.C.R.
A (c) The last category is the ones who do not have any
agreement of wheeling charges with APSEB because
they are scheduled consumers of Generators/Developers,
each of them having an HT supply agreement with
APSEB. The Generators/Developers are either Gas
Based, Coke Based, Mini Hydel Power Plants, Non-
B
Conventional Plants.
18. The Government Order MS No.116 dated 5.8.1995, dealt with
fixation of wheeling charges. The permission was granted by the said
Government Order to set up a mini-power plant. Clause 4 provided
that the pricing arrangement is subject to fixation of tariff by the
C Regulatory Commission ultimately. Clause 5 provided that any duties
or taxes that may be imposed by the Government or by the State
Electricity Board, shall automatically apply to the Scheme. As per clause
8, the Scheme shall operate within the framework of the Electricity
(Supply) Act, 1948, and the Rules made thereunder. The said
D Government Order dated 5.8.1995 was amended vide Government
Order MS No.152 dated 29.11.1995. Para 4 of the Government Order
dated 29.11.1995 provided that wheeling charges may be collected from
the developers in kind and as a percentage of the energy delivered at
the interconnection point. The proposed rates of wheeling charges were
also specified.
E
19. The Government Order MS No.93 dated 18.11.1997, dealt
with wheeling charges for non-conventional energy sources. The
Government allowed uniform incentives to all projects based on the
renewal source of energy viz. Wind, Biomass, Co-generation, Municipal
Waste, and Mini Hydel.
F
20. On 22.12.1998, the Government amended Order MS No.93
dated 18.11.1997. It was decided that the incentives scheme shall be
watched for 3 years, and after that State Electricity Board shall come
up with suitable proposals concerning the continuance of the incentives.
G 21. The Commission, while determining the wheeling charges,
considered the assessment of the network charges and transmission
loss and various other factors included in the agreement in the post
Reforms Act, 1998 and pre-Reforms Act, 1998 scenario. The High
Court has held that the State Commission constituted under the Reforms
Act, 1998, has no power to levy charges for wheeling the energy
H generated by the Generating Companies to their consumers. It has also
TRANSMISSION CORP. OF ANDHRA PRADESH LTD. v. 489
M/S RAIN CALCINING LTD. & OTHERS [ARUN MISHRA, J.]
been held that under the Reforms Act, 1998, the powers of the A
Commission under the Reforms Act, 1998 are more like judicial function
exercisable by a Civil Court, but not legislative. The High Court has
also held that wheeling charges are irrational, illogical, and suffers from
serious infirmities. It has also been held that after the expiry of the
term of the agreement, the Government alone is competent to fix
B
wheeling charges since it is in the realm of the policy direction. The
agreements entered into by the State Electricity Board are statutory
agreements, and they are binding. The Commission has no power to
revise the wheeling charges under the guise of fixing tariff under Section
26 of the Reforms Act, 1998. The wheeling charges is a matter of
policy and not for the Commission to fix. The wheeling charges do C
not fall under Section 26 of the Reforms Act, 1998. It is not proper to
revise the wheeling charges like a tariff for the sale of energy. The
State Government, as well as the State Electricity Board, are bound
by the principles of promissory estoppel. The joint application filed by
APTRANSCO and DISCOMs was not maintainable. Any alteration
D
or modification can be made after due opportunity of hearing to the
affected persons. Since Government Companies were giving subsidy
to farmers of the State, it was not proper to impose wheeling charges.
IN RE: COMPETENCE OF APERC TO DETERMINE
WHEELING CHARGES
E
22. The first question for consideration is the competency of the
APERC to levy wheeling charges under the Reforms Act, 1998.
23. The Reforms Act, 1998 has been enacted with a view to
provide for the constitution of an Electricity Regulatory Commission,
restructuring of the electricity industry, rationalization of generation,
F
transmission, distribution and supply of the electricity avenues for
participation of private sector, taking measures conducive to the
development and management of the electricity industry in an efficient,
economic and competitive manner and for matters connected therewith
and incidental thereto. Section 2(a) defines “area of transmission” thus:
“2.(a) “area of transmission” means the area within which G
the holder of a transmission licence is for the time being authorised
by licence to transmit energy in accordance with the conditions
prescribed;”
“Transmission licence” has been defined under Section 2(o).
“Licence,” as defined in Section 2(d), means a licence granted under H
490 SUPREME COURT REPORTS [2019] 17 S.C.R.
A Section 15. The definition of “transmit” has been given under Section
2(p). Sections 2(d) and 2(p) are extracted hereunder:
“2.(d) “licence” means a licence granted under section 15 of
this Act;”
B 2.(p) “transmit” in relation to electricity, means the
transportation or transmission of electricity by means of a system
operated or controlled by a licensee which consists, wholly or
mainly, of extra high voltage and extra high tension lines and
electrical plant and is used for transforming and for conveying
and/or transferring electricity from a generating station to a sub-
C station, from one generating station to another or from one sub-
station to another or otherwise from one place to another;”
The APERC is constituted under Section 3. Section 5 deals with
the conditions of appointment as a member of the Commission. As
per Section 5(3)(a), persons who are considered for appointment as
D members must have experience of generation, transmission, distribution
or supply of electricity, manufacture, sale or supply of any fuel for the
generation of electricity and other matters specified therein. The
proceedings, powers, and functions of the Commission are dealt with
in Part-III of the Act. Section 10 deals with the powers of the
E Commission for the inquiry. The Commission has the power vested in
Civil Court under CPC while trying a suit in respect of matters as
specified in Section 10(1) and other provisions of Section 10. Section
11 deals with the functions of the Commission. The provisions of
Section 11(1) are inclusive, and certain functions have been specified
in clauses (a) to (l) of sub-Section 1 of Section 11, which are as under:
F
“11. (1) Subject to the provisions of this Act, the Commission
shall be responsible to discharge amongst others, the following
functions, namely:-
(a) to aid and advise, in matters concerning electricity
G generation, transmission, distribution and supply in the
State;
(b) to regulate the working of the licensees and to promote
their working in an efficient, economical and equitable
manner including laying down standards of performance
H for the licensees in regard to services to consumers;
TRANSMISSION CORP. OF ANDHRA PRADESH LTD. v. 491
M/S RAIN CALCINING LTD. & OTHERS [ARUN MISHRA, J.]
(c) to issue licences in accordance with the provisions of A
this Act and determine the conditions to be included in
the licences;
(d) to promote efficiency, economy, and safety in the use
of the electricity in the State including and in particular
in regard to quality, continuity, and reliability of service B
and enable to meet all such reasonable demands for
electricity;
(e) to regulate the purchase, distribution, supply and
utilisation of electricity, the quality of service, the tariff
and charges payable keeping in view both the interest C
of the consumer as well as the consideration that the
supply and distribution cannot be maintained unless the
charges for the electricity supplied are adequately levied
and duly collected;
(f) to promote competitiveness and progressively involve D
the participation of private sector, while ensuring fair
deal to the customers;
(g) to collect data and forecast on the demand and use of
electricity and to require the licensees to collect such
data and forecast; E
(h) to require licensees to formulate perspective plans and
schemes in co-ordination with others for the promotion
of generation, transmission, distribution, and supply of
electricity;
(i) to regulate the assets, properties, and interest in F
properties concerning or related to the electricity
industry in the State;
(j) to lay down a uniform system of accounts among the
licensees;
(k) to regulate the working of licensees and promote their G
working in an efficient economical and equitable manner;
and
(l) to undertake all incidental or ancillary things.”
(emphasis supplied) H
492 SUPREME COURT REPORTS [2019] 17 S.C.R.
A 24. Section 12 of the Reform Act, 1998 deals with the general
powers of the State Government regarding power to issue policy
directions on matters concerning electricity of the State, including overall
planning and coordination. Section 12 is extracted hereunder:
“12. (1) The State Government shall have the power to issue
B policy directions on matters concerning electricity in the State
including the overall planning and co-ordination. All policy
directions shall be issued by the State Government consistent with
the objects sought to be achieved by this Act and accordingly
shall not adversely affect or interfere with the functions and
C powers of the Commission including but not limited to
determination of the structure of tariffs for supply of electricity
to various classes of consumers:
(2) If any dispute arises between the Commission and the State
Government as to whether or not a question is a matter of policy
D or whether a policy direction issued by the State Government
adversely affects or interferes with the exercise of the functions
of the Commission, the same shall be referred by the State
Government to a retired judge of the Supreme Court in
consultation with the Chief Justice of the Supreme Court whose
E decision thereon shall be final and binding.
(3) The State Government shall be entitled to issue policy
directions concerning the subsidies to be allowed for supply of
electricity to any class or classes of persons or in respect of any
area in addition to the subsidies permitted by the Commission
F while regulating and approving the tariff structure provided that
the State Government shall contribute the amount to compensate
such concerned body or unit affected by the grant of the
subsidies by the State Government to the extent of the subsidies
granted. The Commission shall determine the amounts and the
G terms and conditions and time frame on which such amounts are
to be paid by the State Government.
(4) The State Government shall consult the Commission in relation
to any proposed legislation or rules concerning any policy
direction and shall duly take into account the recommendation
H by the Commission on all such matters.”
TRANSMISSION CORP. OF ANDHRA PRADESH LTD. v. 493
M/S RAIN CALCINING LTD. & OTHERS [ARUN MISHRA, J.]
25. The Constitution and functions of APTRANSCO are provided A
in Section 13. It is the primary function of APTRANSCO to determine
the electricity requirements. APTRANSCO shall own the extra high
voltage transmission system. The licence is required for transmission
and supply as per Section 14. Grant of licences by Commission is dealt
with in Section 15. Licensee can transmit electricity in a specified area
B
of transmission and supply the electricity in a specified area of supply,
including bulk supply to licensees or any person. Section 15(1) of the
Reforms Act, 1998 is extracted hereunder:
“15. (1) The Commission may on an application made in such
form and on payment of such fee, as may be prescribed, grant
C
a licence authorising any person to,-
(a) transmit electricity in a specified area of transmission;
or
(b) supply electricity in a specified area of supply including
bulk supply to licensees or any person.” D
26. Reorganization of State Electricity Board is dealt with in Part-
VII of the Reforms Act, 1998. Section 26 deals with the licensee’s
revenues and tariffs. Section 26(1) provides that each licence under
the Act has to observe methodologies and procedures specified by the
Commission from time to time in calculating the expected revenue from E
charges which it is permitted to recover according to the terms of its
licence and in designing tariffs to collect those revenues. As per Section
26(2)(a), the Commission shall be bound by the parameters provided
in the Sixth Schedule to the Electricity (Supply) Act, 1948 read with
Sections 57 and 57-A of the said Act and consider various factors as
F
enumerated in sub-Section 26(2)(b) and as provided in Section 26(2)(c)
the interest of the consumers. In case it departs from the specified
parameters in the Sixth Schedule to the Electricity (Supply) Act, 1948,
while determining the licensees’ revenue and tariffs, it shall record the
reasons thereof in writing. Section 26 is extracted hereunder:
G
“26. (1) The holder of each licence granted under this Act shall
observe the methodologies and procedures specified by the
Commission from time to time in calculating the expected revenue
from charges which it is permitted to recover pursuant to the
terms of its licence and in designing tariffs to collect those
revenues. H
494 SUPREME COURT REPORTS [2019] 17 S.C.R.
A (2) The Commission shall subject to the provisions of sub-section
(3) be entitled to prescribe the terms and conditions for the
determination of the licensee’s revenue and tariffs by regulations
duly published in the Official Gazette and in such other manner
as the Commission considers appropriate:
B Provided that in doing so the Commission shall be bound by the
following parameters:—
(a) the financial principles and their applications provided
in the Sixth Schedule to the Electricity (Supply) Act,
1948 read with sections 57 and 57-A of the said Act;
C (b) the factors which would encourage efficiency, economic
use of the resources, good performance, optimum
investments performance of licence conditions and other
matters which the Commission considers appropriate
keeping in view the salient objects and purposes of the
D provisions of this Act; and
(c) the interest of the consumers.
(3) Where the Commission, departs from factors specified in the
Sixth Schedule of the Electricity (Supply) Act, 1948 while
determining the licensees’ revenues and tariffs, it shall record the
E reasons therefor in writing:
(4) Any methodology or procedure specified by the Commission
under sub-section (1), (2), and (3) above shall be to ensure that
the objectives and purposes of the Act are duly achieved.
(5) Every licensee shall provide to the Commission in a format
F
as specified by the Commission at least 3 months before the
ensuing financial year full details of its calculation for that
financial year of the expected aggregate revenue from charges
which it believes it is permitted to recover pursuant to the terms
of its licence and thereafter it shall furnish such further
G information as the Commission may reasonably require to assess
the licensee’s calculation. Within 90 days of the date on which
the licensee has furnished all the information that the Commission
requires, the Commission shall notify the licensee either—
(a) that it accepts the licensee’s tariff proposals and
H revenue calculations; or
TRANSMISSION CORP. OF ANDHRA PRADESH LTD. v. 495
M/S RAIN CALCINING LTD. & OTHERS [ARUN MISHRA, J.]
(b) that it does not consider the licensee’s tariff proposals A
and revenue calculations to be in accordance with the
methodology or procedure in its licence and such notice
to the licensee shall,—
(i) specify fully the reasons why the Commission
considers that the licensee’s calculation does not B
comply with the methodology or procedures
specified in its licence or is in any way incorrect,
and
(ii) propose a modification or an alternative calculation
of the expected revenue from charges, which the C
licensee shall accept.
(6) Each holder of a supply licence shall publish in the daily
newspaper having circulation in the area of supply and make
available to the public on request the tariff or tariffs for the supply
of electricity within its licensed area and such tariff or tariffs shall D
take effect only after seven days from the date of such
publication.
(7) Any tariff implemented under this section, -
(a) shall not show undue preference to any consumer of
electricity, but may differentiate according to the E
consumer’s load factor or power factor, the consumer’s
total consumption of energy during any specified period,
or the time at which supply is required; or paying
capacity of category of consumers and need for cross-
subsidisation;
F
(b) shall be just and reasonable and be such as to promote
economic efficiency in the supply and consumption of
electricity; and
(c) shall satisfy all other relevant provisions of this Act and
the conditions of the relevant licence. G
(8) The Commission also shall endeavour to fix tariff in such a
manner that, as far as possible, similarly placed consumers in
different areas pay similar tariff.
(9) No tariff or part of any tariff required by sub-section (6) may
be amended more frequently than once in any financial year H
496 SUPREME COURT REPORTS [2019] 17 S.C.R.
A ordinarily except in respect of any changes expressly permitted
under the terms of any fuel surcharge formula prescribed by
regulations. At least three months before the proposed date for
implementation of any tariff or an amendment to a tariff the
licensee shall provide details of the proposed tariff or amendment
to a tariff to the Commission, together with such further
B
information as the Commission may require to determine whether
the tariff or amended tariff would satisfy the provisions of sub-
section (7). If the Commission considers that the proposed tariff
or amended tariff of a licensee does not satisfy any of the
provisions of sub-section (7), it shall, within 60 days of receipt
C of all the information which it required, and after consultation with
the Commission Advisory Committee and the licensee, notify the
licensee that the proposed tariff or amended tariff is unacceptable
to the Commission, and it shall provide to the licensee an
alternative tariff or amended tariff which shall be implemented
by the licensee. The licensee shall not amend any tariff unless
D
the amendment has been approved by the Commission.
(10) Notwithstanding anything contained in sections 57-A and 57-
B of the Electricity (Supply) Act, 1948, no Rating Committee shall
be constituted after the date of this enactment and the
Commission shall secure that licensees comply with the provisions
E of their licences regarding their charges for the sale of electricity
(both wholesale and retail) and for the connection to and use of
their assets or systems in accordance with the provisions of this
Act.
Explanation:-
F
In this section,-
(a) “the expected revenue from charges” means the total revenue
which a licensee is expected to recover from charges for the
level of forecast supply used in the determination under sub-
section (5) above in any financial year in respect of goods or
G services supplied to customers pursuant to a licensed activity;
and
(b) “tariff” means a schedule of standard prices or charges for
specified services which are applicable to all such specified
services provided to the type or types of customers specified in
H the tariff notification.”
TRANSMISSION CORP. OF ANDHRA PRADESH LTD. v. 497
M/S RAIN CALCINING LTD. & OTHERS [ARUN MISHRA, J.]
Explanation attached to Section 26 makes it clear that tariff means A
a schedule of standard prices or charges for specified services that are
applicable to all such specified services provided to the type or types
of customers specified in the tariff notification.
27. It is submitted on behalf of the appellants – APTRANSCO,
Commission that transmission is regulated under the Reforms Act, 1998. B
The decision of the High Court is contrary to the provisions contained
in Sections 11 and 13 and other provisions of Reforms Act, 1998. The
Commission has the power to determine the tariff. Under the Reforms
Act, 1998, certain powers are a combination of adjudicatory and
inquisitorial, and some are legislative.
C
28. The tariff fixation is generally a legislative function as held
in Ashok Soap Factory v. Municipal Corporation of Delhi, (1993)
2 SCC 37 thus:
“29. Apart from that the fixation of tariff is a legislative function
and the only challenge to the fixation of such levy can be on the D
ground of unreasonableness or arbitrariness and not on
demonstrative grounds in the sense that the reasons for the levy
of charge must be disclosed in the order imposing the levy or
disclosed to the court, so long as it is based on objective criteria.”
With respect to tariff fixation as legislative function reference E
has also been made to decisions of this Court, in Pawan Alloys &
Casting Pvt. Ltd., Meerut v. U.P. State Electricity Board, (1997) 7
SCC 251, Oil and Natural Gas Commission v. Association of Natural
Gas Consuming Industries of Gujarat, (1990) Supp. SCC 397,
Rohtas Industries Ltd. v. Chairman, Bihar State Electricity Board, F
(1984) Supp. SCC 161.
29. The Commission exercises the powers of a regulator. This
Court has considered the concept of regulatory power in various
decisions, namely, K. Ramanathan v. State of Tamil Nadu, AIR 1985
SC 660 = (1985) 2 SCC 116; V.S. Rice and Oil Mills v. State of G
Andhra Pradesh, AIR 1964 SC 1781; Deepak Theatre, Dhuri v. State
of Punjab, AIR 1992 SC 1519; and D.K. Trivedi & Sons v. State of
Gujarat, AIR 1986 SC 1323. This Court has also held in the decisions
mentioned above that regulatory powers are extensive, and they include
whatever needs to be done for achieving the objects and purposes of
the Act. H
498 SUPREME COURT REPORTS [2019] 17 S.C.R.
A 30. It is further submitted on behalf of APTRANSCO that cost
is involved in the maintenance, operation, upgradation, and transmission
of electricity through the transmission and distribution system and
network, for which infrastructure has to be created. Losses take place
during transmission, which has to be accounted for, and transition loss
is the loss of the system and has to be borne by the respondents.
B
31. Whereas, respondents submitted that in the case of drawl of
the contract before 1998, APERC could not have gone into as it did
not have jurisdiction in those cases. Even otherwise, where the
agreements have been amended or entered after the Reforms Act, 1998,
the Commission has no power to fix the wheeling charges as that is
C
not explicitly provided under the provisions of the Reforms Act, 1998.
32. It was submitted on behalf of the licensees that proviso to
Section 82(1) of the Electricity Act, 2003 provides for State Commission
thus:
D “82. Constitution of State Commission.- (1) Every State
Government shall, within six months from the appointed date, by
notification, constitute for the purposes of this Act, a Commission
for the State to be known as the (name of the State) Electricity
Regulatory Commission:
E Provided that the State Electricity Regulatory Commission,
established by a State Government under section 17 of the
Electricity Regulatory Commissions Act, 1998 (14 of 1998) and
the enactments specified in the Schedule, and functioning as such
immediately before the appointed date shall be the State
Commission for the purposes of this Act and the Chairperson,
F
Members, Secretary, and officers and other employees thereof
shall continue to hold office, on the same terms and conditions
on which they were appointed under those Acts:
Provided further that the Chairperson and other Members of the
State Commission appointed, before the commencement of this
G
Act, under the Electricity Regulatory Commissions Act, 1998 (14
of 1998) or under the enactments specified in the Schedule, may,
on the recommendations of the Selection Committee constituted
under sub-section (1) of section 85, be allowed to opt for the
terms and conditions under this Act by the concerned State
H Government.”
TRANSMISSION CORP. OF ANDHRA PRADESH LTD. v. 499
M/S RAIN CALCINING LTD. & OTHERS [ARUN MISHRA, J.]
On the strength of the provisions mentioned above, it was A
submitted that actions of the State Commission, as notified under the
Electricity Regulatory Commission Act, 1998 (for short, “the Central
Act”), would be saved to the extent they are not inconsistent with the
provisions of the Electricity Act, 2003. Since APERC is the not State
Commission under the Central Act, it cannot be held to possess the
B
jurisdiction to levy wheeling charges. It is the State Commission which
has the relevant authority under the Electricity Act, 2003. Section
22(1)(b) of the Central Act, specifically provide that State Commission
is required to determine the tariff payable for the use of the transmission
facilities in the manner provided in Section 29. Section 29(2) requires
that the State Commission shall determine by regulation the terms and C
conditions for the fixation of the tariff. Thus, the emphasis has been
laid on the aspect that APERC’s order is not at par with a regulation
which is necessary as per the Central Act. The APERC did not possess
jurisdiction to levy wheeling charges and in any event, not by way of
passing an order in the absence of regulation. The APERC has erred
D
in saddling the generators with the costs of distribution since the
generators supplying electricity to scheduled consumers do not utilize
the distribution networks. Therefore, without prejudice to the submission
that the wheeling charges under the agreement could not be disturbed,
the determination of wheeling charges qua electricity wheeled by
generators of electricity for transmission to their scheduled consumers E
should only be based on the transmission charges. Transmission loss
is also amounted to 8 percent out of 28.4 percent system losses, the
rest being the distribution losses. In Section 11(e) of the Reforms Act,
1998 the words “generation” and “transmission” are conspicuously
missing. Whereas Section 22(1)(b) of the Electricity Regulatory
F
Commissions Act, 1998, speaks explicitly of the determination of tariff
payable for the use of transmission facilities by the State Commission
to be constituted under the Central Act. There is no such provision in
the Reforms Act, 1998.
33. According to licensees under the Central Act, the State
Commission is vested with the power to determine the tariff payable G
for the use of transmission facilities. Reliance has been placed on PTC
India Limited v. Central Electricity Regulatory Commission, (2010)
4 SCC 603, wherein this Court has laid down in the context of
determination of tariff under the Electricity Act, 2003, that only
Regulations made under the said Act could override the existing H
500 SUPREME COURT REPORTS [2019] 17 S.C.R.
A contractual relationship, which cannot be done only on the basis of an
order of the Commission. It is contended that till date no regulations
as required under Section 54(k) of the Reforms Act, 1998 have been
framed, though Schedule V provided parameters of fixation of the
wheeling charges under Section 43 of the Act of 1948, this Section had
been rendered inapplicable as per Section 56(iii)(vi) of the Reforms Act,
B
1998. The guiding principles of a general or special order are absent
in the Reforms Act, 1998. Under Section 15(4)(a) read with Section
15(5) of the Reforms Act, 1998, the tariff would have to be determined
by mutual agreement, not by way of tariff order. The concluded
agreements cannot be covered by the expression “enter into” used in
C Section 24(4) of the Reforms Act, 1998.
34. In our opinion, the Commission constituted under the Reforms
Act, 1998, has the power to determine the wheeling charges. We are
not at all impressed by the submission raised by learned Senior Counsel
appearing on behalf of respondents-Companies. The State Commission
D constituted under the Reforms Act, 1998 has the power to deal with
the transmission. The expression “area of transmission” is defined
under Section 2(a). Grant of transmission licenses by the Commission
is dealt with in Section 15. The “licensee” or “licence holder” is a
person holding a licence under Section 14 to transmit or supply energy,
including APTRANSCO, as defined under Section 2(e). “Transmission
E licence” means a licence granted under Section 15(1)(a), and “transmit”
has also been defined in Section 2(p). The Commission has extensive
and pervasive power to deal with the transmission.
35. Section 11 of the Reforms Act, 1998 deals with the functions
of the Commission. Under Section 11(1)(a), the Commission shall aid
F and advise in matters concerning electricity generation, transmission,
distribution and supply in the State. Section 11(1)(b) empowers the
Commission to regulate the working of the licensees and to promote
their working in an efficient, economical, and equitable manner. Thus,
it has to act as a Regulator in the matter of working on the licensees.
G The Commission under Section 11(1)(c) has the power to issue licences
in accordance with the provisions of the Act. Section 11(1)(d) also
empowers the Commission to promote efficiency, economy, and safety
in the use of the electricity. Under Section 11(1)(e), the Commission
has the power to regulate the purchase, distribution, supply, and utilization
of electricity, the quality of service, the tariff, and charges payable. The
H wheeling charges are part of tariff, and the provisions of Section 11
TRANSMISSION CORP. OF ANDHRA PRADESH LTD. v. 501
M/S RAIN CALCINING LTD. & OTHERS [ARUN MISHRA, J.]
are inclusive and primarily dealing with the generation, transmission, and A
distribution. These three processes suggest that Section 11 does include
in its ken the power to fix the wheeling charges relating to the
generation, transmission, distribution, supply, and utilization of electricity.
The distribution is not possible without transmission. Section 13 deals
with APTRANSCO and the works connected with it. Licensing of
B
transmission and supply are dealt with in Section 14 for transmitting
electricity and supply of electricity. It provides that license is necessary
unless exemption is granted under the Electricity Act, 1948.
36. Section 26 of the Reforms Act, 1998, provides that each
licensee holding license, granted under the Act, shall observe the
methodologies and procedures specified by the Commission from time C
to time in calculating the expected revenue. The Commission shall
subject to the provisions of Section 26(3), be entitled to prescribe the
terms and conditions for the determination of the licensee’s revenue
and the tariffs and for that it may also frame the regulation and the
Commission shall be bound by the parameters of financial principles D
and their applications provided in the Sixth Schedule to the Electricity
Act, 1948 read with Sections 57 and 57-A. Thus, the licensee is
required to submit a calculation of annual expected aggregate revenue,
and the Commission has the power to fix the tariff for the licensees
that would include the licence for transmission also. The Commission,
while fixing the wheeling charges, has to act upon the settled principles E
as specified in the order and in consonance with the provisions contained
in Sections 11, 15, and 26.
37. The ‘tariff’ means the amount that the licensee is permitted
to recover from its tariff in any financial year, as determined by the
Commission in accordance with the provisions of section 26. In the F
terms of licence, ‘tariff ’ has been dealt with in Clause 22.3 as
under: -
“a) The amount that the Licensee is permitted to recover
from its tariffs in any financial year is the amount that
the Commission determines in accordance with the G
provisions of section 26 of the Act.
b) The Licensee shall establish a tariff as approved by the
Commission, for the Licensee’s Transmission and Bulk
Supply Business and shall calculate its charges in
accordance with this Licence, the Regulations, the H
502 SUPREME COURT REPORTS [2019] 17 S.C.R.
A orders of the Commission and other requirements
prescribed by the Commission from time to time.
c) Save as otherwise directed by the Commission, the
Licensee may publish a combined tariff for its
Transmission and Bulk Supply Business reflecting the
B tariff charges and the other terms and conditions
contained in the approved tariffs referred to in
Paragraph 22.3(b).”
38. As to the question of fixing of wheeling charges, the High
Court has erred in holding that the Commission has no power to fix
C
the wheeling charges. It is the regulator for transmission, and
considering the various provisions mentioned above, it is apparent that
the Commission had the power to fix the wheeling charges.
39. The Andhra Pradesh Electricity Regulatory Commission
D (Business Rules of the Commission), Regulations, 1999 (for short, “the
1999 Regulations”), have been framed in exercise of powers conferred
by Section 9, Sub-Section 2 and Section 54, Sub-Section (2)(a) of the
Reforms Act, 1998 and they have been amended by Regulations of
2000. The Regulations reflect a broad spectrum of powers and various
functions relating to fixation of the tariff. Regulation 45-A deals with
E expected revenue from charges and tariff proposals. Regulation 45-B
deals with the fuel surcharge adjustment formula. The submission raised
on behalf of respondents that the Commission could not fix wheeling
charges when there was no regulation in vogue. Be that as it may.
The section itself provides the guidelines apart from the fact that
F regulation also exists.
40. Concerning the concluded contract, it has been submitted on
behalf of APTRANSCO that Clause 15 of the Contract dealt with
subsequent Governmental actions. Wheeling of energy has been dealt
with under Clause 2 of the Modified Power Wheeling and Purchase
G Agreement entered into between Andhra Pradesh State Electricity
Board and licensee before 1998. As per Clause 2.4, compensation for
the provisions of Firm Wheeling Service, the Board shall be entitled to
deduct from the wheeled energy, the applicable wheeling charges, and
the charges shall be 15 percent to 20 percent of the wheeled energy.
H Following is the Clause 2.4:
TRANSMISSION CORP. OF ANDHRA PRADESH LTD. v. 503
M/S RAIN CALCINING LTD. & OTHERS [ARUN MISHRA, J.]
“2.4 As compensation for the provisions of Firm Wheeling A
Service, the Board shall be entitled to deduct from the wheeled
Energy the applicable wheeling charge, which charges shall be
fifteen percent (15%) of the wheeled energy for scheduled
consumers receiving power at a voltage of 132 KV and above,
seventeen and one half percent (17.55) of the Wheeled Energy
B
for scheduled Consumers receiving power at a voltage of less
than 132 KV and greater than 1 KV and twenty percent (20%)
of the Wheeled Energy for scheduled consumers receiving power
at a voltage of 11 KV. The wheeling charges payable under this
paragraph 2.4 shall be the sole and exclusive consideration
payable to the Board for the provisions of Firm Wheeling C
Service.”
Modified Power Wheeling and Purchase Agreement had been
entered into by the Board and the licensee in the exercise of statutory
power, and the Commission has the power to fix the tariff and charges.
41. A Constitution Bench of this Court in PTC India Ltd. v. D
Central Electricity Regulatory Commission (supra), has held that
tariff fixation under the Electricity Act, 2003, is a legislative function in
its character. Section 178 of the said Act deals with the making of
Regulation by the Central Commission under the authority of subordinate
legislation. The same is broader than section 79 (1), which enumerated E
the regulatory function of the Central Commission in specified areas.
A regulation under section 178, as a part of the regulatory framework,
intervenes and even overrides the existing contracts between the
regulated entities since it casts a statutory obligation on the regulated
entities to align their existing and future contracts with the said
regulation. F
This court further observed that in the absence of regulation, the
Commission has the power of fixation of the tariff. It is not dependent
upon the framing of the regulation. This Court has laid down thus:
“25. The 2003 Act contains separate provisions for the G
performance of dual functions by the Commission. Section 61 is
the enabling provision for framing of regulations by the Central
Commission; the determination of terms and conditions of the
tariff has been left to the domain of the Regulatory Commissions
under Section 61 of the Act whereas actual tariff determination
by the Regulatory Commissions is covered by Section 62 of the H
504 SUPREME COURT REPORTS [2019] 17 S.C.R.
A Act. This aspect is very important for deciding the present case.
Specifying the terms and conditions for determination of tariff is
an exercise which is different and distinct from actual tariff
determination in accordance with the provisions of the Act for
the supply of electricity by a generating company to a distribution
licensee or transmission of electricity or wheeling of electricity
B
or retail sale of electricity.
26. The term “tariff” is not defined in the 2003 Act. The term
“tariff” includes within its ambit not only the fixation of rates but
also the rules and regulations relating to it. If one reads Section
61 with Section 62 of the 2003 Act, it becomes clear that the
C Appropriate Commission shall determine the actual tariff
following the provisions of the Act, including the terms and
conditions which may be specified by the appropriate Commission
under Section 61 of the said Act. Under the 2003 Act, if one
reads Section 62 with Section 64, it becomes clear that although
D tariff fixation like price fixation is legislative in character, the same
under the Act is made appealable vide Section 111. These
provisions, namely, Sections 61, 62, and 64, indicate the dual
nature of functions performed by the Regulatory Commissions
viz. decision-making and specifying terms and conditions for tariff
determination.
E
*** *** ***
55. To regulate is an exercise which is different from making of
the regulations. However, making of a regulation under Section
178 is not a precondition to the Central Commission taking any
F steps/measures under Section 79(1). As stated, if there is a
regulation, then the measure under Section 79(1) has to be in
conformity with such regulation under Section 178. This principle
flows from various judgments of this Court, which we have
discussed hereinafter. For example, under Section 79(1)(g), the
Central Commission is required to levy fees for the purpose of
G the 2003 Act. An order imposing regulatory fees could be passed
even in the absence of a regulation under Section 178. If the
levy is unreasonable, it could be the subject-matter of challenge
before the appellate authority under Section 111 as the levy is
imposed by an order/decision-making process. Making of a
H regulation under Section 178 is not a precondition to passing of
TRANSMISSION CORP. OF ANDHRA PRADESH LTD. v. 505
M/S RAIN CALCINING LTD. & OTHERS [ARUN MISHRA, J.]
an order levying a regulatory fee under Section 79(1)(g). A
However, if there is a regulation under Section 178 in that regard
then the order levying fees under Section 79(1)(g) has to be in
consonance with such regulation.
*** *** ***
B
57. One must keep in mind the dichotomy between the power
to make a regulation under Section 178 on the one hand and the
various enumerated areas in Section 79(1) in which the Central
Commission is mandated to take such measures as it deems fit
to fulfil the objects of the 2003 Act. Applying this test to the
present controversy, it becomes clear that one such area C
enumerated in Section 79(1) refers to fixation of trading margin.
Making of a regulation in that regard is not a precondition to the
Central Commission exercising its powers to fix a trading margin
under Section 79(1)(j), however, if the Central Commission in
an appropriate case, as is the case herein, makes a regulation D
fixing a cap on the trading margin under Section 178 then
whatever measures the Central Commission takes under Section
79(1)(j) have to be in conformity with Section 178.
58. One must understand the reason why a regulation has been
made in the matter of capping the trading margin under Section E
178 of the Act. Instead of fixing a trading margin (including
capping) on a case-to-case basis, the Central Commission thought
it fit to make a regulation which has a general application to the
entire trading activity which has been recognised, for the first
time, under the 2003 Act. Further, it is important to bear in mind
F
that making of a regulation under Section 178 became necessary
because a regulation made under Section 178 has the effect of
interfering and overriding the existing contractual relationship
between the regulated entities. A regulation under Section 178
is in the nature of a subordinate legislation. Such subordinate
legislation can even override the existing contracts including G
power purchase agreements which have got to be aligned with
the regulations under Section 178 and which could not have been
done across the board by an order of the Central Commission
under Section 79(1)(j).
*** *** *** H
506 SUPREME COURT REPORTS [2019] 17 S.C.R.
A 66. While deciding the nature of an order (decision) vis-à-vis a
regulation under the Act, one needs to apply the test of general
application. On the making of the impugned 2006 Regulations,
even the existing power purchase agreements (PPA) had to be
modified and aligned with the said Regulations. In other words,
the impugned Regulations make an inroad into even the existing
B
contracts. This itself indicates the width of the power conferred
on CERC under Section 178 of the 2003 Act. All contracts
coming into existence after making of the impugned 2006
Regulations have also to factor in the capping of the trading
margin. This itself indicates that the impugned Regulations are
C in the nature of subordinate legislation. Such regulatory
intervention into the existing contracts across the board could
have been done only by making regulations under Section 178
and not bypassing an order under Section 79(1)(j) of the 2003
Act. Therefore, in our view, if we keep the above discussion in
mind, it becomes clear that the word “order” in Section 111 of
D
the 2003 Act cannot include the impugned 2006 Regulations made
under Section 178 of the 2003 Act.
71. This judgment in Jagdamba Paper Industries (P) Ltd. v.
Haryana SEB, (1983) 4 SCC 508, is important from another
angle also. It indicates that regulations under Section 79 of the
E 1948 Act were to be in the nature of subordinate legislation,
therefore, all contracts had to be in terms of such regulations.
In the present case also, if one examines the terms and conditions
of the licences, power to fix trading margin is expressly
contemplated by such terms. The said judgment further held that
F the Board is a statutory authority and has to act within the
framework of the 1948 Act. If the act of the Board is not in
consonance or in breach of some statutory provisions of law, rule,
or regulation, it is always open to challenge in a petition under
Article 226 of the Constitution.
79. Applying the above judgments to the present case, it is clear
G
that fixation of the trading margin in the inter-State trading of
electricity can be done by making of regulations under Section
178 of the 2003 Act. Power to fix the trading margin under
Section 178 is, therefore, a legislative power and the notification
issued under that section amounts to a piece of subordinate
H legislation, which has a general application in the sense that even
TRANSMISSION CORP. OF ANDHRA PRADESH LTD. v. 507
M/S RAIN CALCINING LTD. & OTHERS [ARUN MISHRA, J.]
existing contracts are required to be modified in terms of the A
impugned Regulations. These Regulations make an inroad into
contractual relationships between the parties. Such is the scope
and effect of the impugned Regulations, which could not have
taken place by an order fixing the trading margin under Section
79(1)(j). Consequently, the impugned Regulations cannot fall
B
within the ambit of the word “order” in Section 111 of the 2003
Act.
*** *** ***
92. (i) In the hierarchy of regulatory powers and functions under
the 2003 Act, Section 178, which deals with making of regulations C
by the Central Commission, under the authority of subordinate
legislation, is wider than Section 79(1) of the 2003 Act, which
enumerates the regulatory functions of the Central Commission,
in specified areas, to be discharged by orders (decisions).
(ii) A regulation under Section 178, as a part of regulatory D
framework, intervenes and even overrides the existing contracts
between the regulated entities inasmuch as it casts a statutory
obligation on the regulated entities to align their existing and future
contracts with the said regulation.”
(emphasis supplied) E
42. The regulations which came up for consideration in the case
of PTC India Ltd. (supra) are extracted hereunder:
“CENTRAL ELECTRICITY REGULATORY COMMISSION
NOTIFICATION F
New Delhi, 23-1-2006
No. L-7/25(5)/2003-CERC.—Whereas the Central Electricity
Regulatory Commission is of the opinion that it is necessary to
fix trading margin for inter-State trading of electricity. G
Now, therefore, in exercise of powers conferred under Section
178 of the Electricity Act, 2003 (36 of 2003), and all other powers
enabling it in this behalf, and after previous publication, the Central
Electricity Regulatory Commission hereby makes the following
Regulations, namely— H
508 SUPREME COURT REPORTS [2019] 17 S.C.R.
A 1. Short title and commencement.—(1) These Regulations may
be called the Central Electricity Regulatory Commission (Fixation
of Trading Margin) Regulations, 2006.
(2) These Regulations shall come into force from the date of their
publication in the Official Gazette.
B 2. Trading Margin.—The licensee shall not charge the trading
margin exceeding four (4.0) paise/kWh on the electricity traded,
including all charges, except the charges for scheduled energy,
open access, and transmission losses.
Explanation.—The charges for the open-access include the
C transmission charge, operating charge, and the application fee.
A.K. Sachan, Secy.”
43. Under Regulation 42 of the 1999 Regulations, the Commission
has the power to frame model conditions for the supply of power to be
D adopted by the licensee. Regulation 42 of the 1999 Regulations is
extracted hereunder:-
“42. Model conditions of supply of power
1). (i) The Commission may check, from time to time, the model
conditions of supply to be adopted by the licensee, with such
E variations as the Commission may direct, and the licensee shall
furnish to the Commission the finalised conditions of supply for
approval.
(ii) The licensee shall always keep in his office an adequate
number of printed copies of the sanctioned conditions of supply
F and shall, on demand, sell such copies to any applicant at a price
not exceeding normal photocopying charges.
2). (i) The Commission may pass such orders as it thinks fit in
accordance with section 28 to 31 of the Act for the contravention
or the likely contravention of the licence terms or conditions by
G the licensee.
(ii) Subject to the provisions of Section 28 to 31 of the Act and
the procedure prescribed therein, the Commission may follow as
far as possible the general procedure prescribed in Chapter II
of these Regulations in dealing with a proceeding arising out of
H a contravention or likely contravention by a licensee.”
TRANSMISSION CORP. OF ANDHRA PRADESH LTD. v. 509
M/S RAIN CALCINING LTD. & OTHERS [ARUN MISHRA, J.]
44. The Commission also has the power to amend licenses A
granted under Regulation 45 of the 1999 Regulations. Regulation 45 is
extracted hereunder:
“45. Amendment of the licence granted
(1) Application by the licensee or the local authority
B
concerned for alteration or amendment to the terms and
conditions of the licence granted in terms of Section 19
of the Act shall be made in such form as may be
directed for the purpose by the Commission. The
application shall be supported by affidavit as provided
in Chapter II of the Regulations. C
(2) Unless otherwise specified in writing by the Commission,
each application for amendment or alteration in the
licence shall be accompanied by a receipt of such fee
as the Commission may require, paid in the manner
directed by the Commission. D
(3) Unless otherwise specified in writing by the Commission,
the procedure prescribed in these Regulations for grant
of licence, in so far it can be applied, shall be followed
while dealing with an application for amendment or
alteration of the licence.” E
45. The Regulations of 1999 have been amended in the year 2000
by the first amendment Regulations, 2000. As per Regulation 45-A of
the Regulations, 2000, inserted by amendments to Chapter IV-A of the
Conduct of Business Regulations, it is open to the Commission to fix a
tariff. The same is extracted hereunder: F
45-A. Expected revenue from charges and tariff proposals:
(1) Subject to the provisions of the Act, each year, at the time
required by the licence or otherwise as may be directed by the
Commission, each licensee (Transmission and Bulk Supply or
Distribution and Retail Supply, as the case may be) shall file with G
the Commission, in the format as may be specified by the
Commission, statements containing calculation for the ensuing
financial year the expected aggregate revenue from charges
under its currently approved tariff and the expected cost of
providing services. H
510 SUPREME COURT REPORTS [2019] 17 S.C.R.
A (2) If a Licensee carries on more than one business, namely,
Transmission and Bulk Supply or Distribution and Retail Supply,
the statement referred to in clause (1) above shall be given
separately for each of the separate businesses of the licensee
and in such manner in respect of each such business as the
Commission may direct.
B
(3) The statements referred to in clause (1) above shall contain
the following details:
(i) the licensee’s demand forecast by customer or consumer
category for the ensuing financial year and the basis of
C the forecast;
(ii) a calculation of expected aggregate revenue that would
result from the above demand during the same period
under the currently approved tariff by customer or
consumer category;
D
(iii) a calculation of the licensee’s estimated costs of
providing the service required by the level of demand
indicated in sub-clause (i) above for each customer or
consumer category during the same period calculated
in accordance with the financial principles and their
E applications in the Sixth Schedule to the Electricity
(Supply) Act, 1948 or such other principles the
Commission may prescribe from time to time;
(iv) The licensee’s proposal to deal with the divergence
between the expected aggregate revenue and the
F expected cost of services including proposal, if any, for
revised tariff to be charged in the ensuing year, the
proposed scheme for reduction in losses, changes in the
tariff structure for any specific category of consumer;
(v) In case the Licensee carries on any business or services
G other than those licensed under the Act, the Licensee
shall give separate revenue and expense statements
together with such details as the Commission may require
in respect of such business or services; and
(vi) Such other information as the Commission may direct
H from time to time.
TRANSMISSION CORP. OF ANDHRA PRADESH LTD. v. 511
M/S RAIN CALCINING LTD. & OTHERS [ARUN MISHRA, J.]
(4) The licensee shall furnish to the Commission such additional A
information, particulars, and documents as the Commission may
require from time to time after such filing of revenue calculations
and tariff proposals.
(5) The Commission may, from time to time, issue guidelines for
filing statement of revenue calculations and tariff proposals, and B
unless waived by the Commission, the licensee shall follow such
guidelines issued by the Commission.
(6) Unless otherwise directed by the Commission, the
Commission shall hold a proceeding on the revenue calculations
and tariff proposals given by the licensee and may hear such C
persons as the Commission may consider appropriate for making
a decision on such revenue calculations and tariff proposals.
(7) The procedure of hearing on the revenue calculations and
tariff proposals of the licensee shall be in the manner as the
Commission may decide from time to time. D
(8) Upon hearing the licensee and such other parties as the
Commission considers appropriate and upon making such other
inquiry, the Commission shall make an order and notify the
licensee of its decision on the revenue calculations and tariff
proposals, as provided in subsection (5) of section 26 of the Act. E
(9) While making an order under clause (8) above or at any time
thereafter, the Commission may direct the publication of the tariff
that the licensee shall charge the different consumers or
customers and categories thereof in the ensuing financial year.
(10) The licensee shall publish the tariff or tariffs approved by F
the Commission in the newspapers having circulation in the area
of supply as the Commission may direct from time to time. The
publication shall, besides such other things as the Commission
may require, include a general description of the tariff
amendment and its effect on the classes of the consumers. G
(11) The tariffs so published under clause (10) above shall
become the notified tariffs applicable in the area of supply and
shall take effect only after such number of days as the
Commission may direct, which shall not be less than seven days,
from the date of first publication of the tariffs. H
512 SUPREME COURT REPORTS [2019] 17 S.C.R.
A (12) The licensee shall raise bills for the energy supplied or
transmitted or services rendered to the consumers in accordance
with the notified tariff.
(13) No tariff determined and notified as above may be amended
more frequently than once in any financial year except that tariff
B rates shall be adjusted in accordance with any fuel surcharge
adjustment formula incorporated in the tariff with the approval
of the Commission. Provided that the consequential orders which
the Commission may issue to give effect to subsidy the State
Government may provide under Sections 12 (3) and/or 27 (1) of
the Act shall not be construed as amendment of tariff notified.
C The Licensee shall, however, give appropriate adjustments in the
bills to be raised on the consumers for the subsidy amount in the
manner the Commission may direct.”
(emphasis supplied)
D 46. Under regulations, various agreements have also been
amended, and there is plenary power under the regulations to prescribe
the tariff and charges concerning Transmission and Bulk Supply or
Distribution and Retail Supply as provided in Regulation 45-A(2).
47. Fuel Surcharge Adjustment Formula has been given in
E Regulation 45-B and Subsidies under Regulation 45-C. Under
Regulation 45-A(8), it is clear that upon hearing the licensee and such
other parties as the Commission considers appropriate and upon making
such other inquiry, the Commission shall make an order and notify the
licensee of its decision on the revenue calculations and tariff proposals,
as provided in section 26(5) of the Reforms Act, 1998. Thus, on the
F strength of the decision in PTC India Ltd. (supra), it is clear that the
contracts which were entered into stand superseded under the Reforms
Act, 1998, by the regulations framed in the year 1999 as amended in
the year 2000. Thus, the submission raised on behalf of the licensees
that the concluded contracts are binding and estoppel was created and
G concerning the power of regulatory Commission to determine the
wheeling charges is untenable. The commission can exercise the power
of fixation of such charges, which power is legislative. The statutory
contracts have been superseded by the regulations which have been
made. No estoppel is created. It was not the subject matter of policy
reserved for the Government under section 12 of the Reforms Act,
H 1998. As per section 26 (5), the exercise of fixation of charges can
TRANSMISSION CORP. OF ANDHRA PRADESH LTD. v. 513
M/S RAIN CALCINING LTD. & OTHERS [ARUN MISHRA, J.]
be done. There is no question of the applicability of promissory estoppel. A
There is no violation of principles of natural justice as the objections
were invited, and the licensees were heard.
48. In V.S. Rice and Oil Mills v. State of Andhra Pradesh,
AIR 1964 SC 1781, this Court has dealt with the question of the validity
of an agreement entered into for the supply of electricity under specified B
rates for ten years and exercise of regulatory powers to increase the
rate under the statute enacted after the agreement was upheld. The
relevant portion is extracted hereunder:
“21. That takes us to the next question as to whether the
impugned notified orders are invalid because they contravene the C
provisions of Articles l9(l)(f) and (g) of the Constitution. The
impugned orders have been notified by virtue of the power
conferred on the respondent by Section 3(l) and may, therefore,
be treated as law for the purpose of Article 19. We may also
assume in favour of the appellants that the right to receive the
supply of electricity at the rates specified in the agreements is a D
right which falls within Article 19(i)(f) or (g). Even so, can it be
said that the impugned notified orders are not reasonable and in
the interests of the general public? That is the question which
calls for an answer in dealing with the present contention. It is
true that by issuing the impugned notified orders, the respondent E
has successfully altered the rates agreed between the parties for
their respective contracts and that, prima facie, does appear to
be unreasonable. But, on the other hand, the evidence shows that
the tariff which was fixed several years ago had become
completely out of date and the reports made by the Accountant-
General from time to time clearly indicate that the respondent F
was supplying electricity to the appellants at the agreed rates even
though it was incurring loss from year to year. Therefore, it cannot
be said that the impugned notified orders were not justified on
the merits. The prices of all commodities and labour charges
having very much increased; meanwhile, a case had certainly G
been made out for increasing the tariff for the supply of electrical
energy. But it would not be possible to hold that the restriction
imposed on the appellants’ right by the increase made in the rates
is reasonable and in the interests of the general public solely
because the impugned orders have saved the recurring loss
incurred by the respondent under the contracts. If such a broad H
514 SUPREME COURT REPORTS [2019] 17 S.C.R.
A and general argument were accepted, it may lead to unreasonable
and even anomalous consequences in some cases. This question,
however, has to be considered from the point of view of the
community at large; and thus considered, the point which appears
to support the validity of the impugned orders is that these orders
were passed solely for the purpose of assuring the supply of
B
electrical energy and that would clearly be for the good of the
community at large. Unless prices were increased, there was risk
that the supply of electrical energy may itself have come to an
end. If the respondent thought that the agreements made with
the appellants were resulting in a heavy loss to the public treasury
C from year to year, it may have had to consider whether the supply
should not be cut down or completely stopped. It may well be
that the respondent recognised its obligation to the public at large
and thought that supplying electrical energy to the consumers who
were using it for profit-making purposes, at a loss to the public
exchequer would not be reasonable and legitimate, and it
D
apprehended that the legislature may well question the propriety
or wisdom of such a course; and so, instead of terminating the
contracts, it decided to assure the supply of electrical energy at
a fair price, and that is why the impugned notified orders were
issued. We ought to make it clear that there has been no
E suggestion before us that the prices fixed by the impugned
notified orders are, in any sense, unreasonable or excessive, and
it is significant that even the revised tariff has to come into
operation prospectively and not retrospectively. Therefore, having
regard to all the circumstances, in this case, we are disposed to
hold that the change made in the tariff by the notified orders must
F
be held to be reasonable and in the interests of the general
public.”
49. Licensees have relied upon Indian Aluminium Company v.
Kerala State Electricity Board, (1975) 2 SCC 414, dealing with the
power of the State Electricity Board under section 49 (1) to fix the
G
tariff which did not enable the Board to nullify an agreement entered
into by it as permitted under section 49 (3) thereof. In our opinion, the
power of fixation of tariff under section 49 (1) of the Electricity Supply
Act of 1948 and agreement entered into under section 49 (3) are
different connotations. The provisions of the Reforms Act, 1998,
H empower the Commission to fix tariffs and charges for transmission,
TRANSMISSION CORP. OF ANDHRA PRADESH LTD. v. 515
M/S RAIN CALCINING LTD. & OTHERS [ARUN MISHRA, J.]
distribution, and the like. The entire power is given to the Commission, A
and the Constitution Bench of this Court has held in PTC India Ltd.
(supra) that once regulations have been framed, they make an inroad
into the concluded contract also. Thus, the decision is of no help. Section
49 (3) of the Electricity Supply Act, 1948 authorises the Board to fix
different tariffs to supply electricity. The question in the present case
B
is different.
50. Reliance has been placed on the decision of this court in
Karnataka Power Transmission Corporation Ltd. v. Amalgamated
Electricity Co. Ltd., (2001) 1 SCC 586, in which section 394 (2) of
the Companies Act, 1956 relating to rights and entitlement, obligations
and commitments of the transferee company by virtue of scheme of C
arrangements sanctioned by the Companies Court. It was held that
the transferee company becomes legally bound and obliged to discharge
all commitments. The decision is distinguishable and is based upon
different provisions dealing with a different situation.
51. The arguments raised by respondents that the policy decision D
of the State Government has force of direction in terms of section 78
(A) of the Electricity Supply Act, 1948, in order to promote and develop
such generation, in pursuance to the guidelines issued by the Central
Government in view of international treaties and conventions to which
India is a party. It was further urged that the Central Government has
taken a decision to invite private participation to augment energy E
generation, and there is a thrust on the development of renewable
energy. The State Government had the power under section 12 of the
Reforms Act, 1998 also, and the policy decision binds the Commission.
52. The submission is stated to be rejected as policies are always
subject to legislative interventions, and once the State Government has F
made statutory provision, it has to prevail, and we find that no such
policy was contemplated to continue for all the times to come. The
policy has culminated into the Reforms Act, 1998 itself, and the same
indicates the obligations of the Government for reforms displayed in
the statutory form for establishment of Commission and separation of
distribution and transmission. Reforms have been made only because G
of the policies, and once they found statutory expression, they are bound
to be followed.
53. A submission was also raised concerning vested rights and
concluded contracts that have already taken care of by the decision of
PTC India Limited (supra) and discussion mentioned above. H
516 SUPREME COURT REPORTS [2019] 17 S.C.R.
A 54. There is no question of attracting the equitable principles of
promissory estoppel for which reliance has been placed on Gujarat
State Financial Corporation v. Lotus Hotels Pvt. Ltd., (1983) 3 SCC
379, Motilal Padampat Sugar Mills Co. Ltd. v. State of Uttar
Pradesh & Ors., (1979) 2 SCC 409, Pawan Alloys & Casting Pvt.
Ltd., Meerut v. U.P. State Electricity Board & Ors., 1997 (7) SCC
B
251, Andhra Pradesh Electricity Regulatory Commission v. R.V.K.
Energy Private Limited & Anr., (2008) 17 SCC 769, where the law
laid down, cannot be said to be applicable in this case. There was no
unequivocal promise in this case, and statutory provision can make
inroad and supersede the contracts.
C
55. Submissions were raised concerning the repugnancy of the
Reforms Act, 1998. We find that once the Reforms Act, 1998 has been
enacted, it has to prevail, and vires of provisions have not been
questioned. The submissions raised concerning the repugnancy, on
merits, have no legs to stand given the provisions contained in the
D Reforms Act, 1998. The question of repugnancy rightly had also not
been raised before High Court and cannot be raised in this Court as
an afterthought.
56. Reliance has also been placed on Binani Zinc Limited v.
Kerala State Electricity Board & Ors., (2009) 11 SCC 244, on the
E following observations:
“31. The State Electricity Boards are entitled to frame tariff in
terms of the provisions contained in the 1948 Act. The tariff so
framed is legislative in character. The Board, as a statutory
authority, is bound to exercise its jurisdiction within the four
F corners of the statute. It must act in all fields, including the field
of framing tariff by adopting the provisions laid down in the 1948
Act or the Rules and the Regulations framed thereunder.”
In Binani Zinc Limited (supra), the Court has dealt with the
power of the Electricity Board and observed that tariff has to be fixed
G within the four corners of the statute. There is no dispute with the
proposition mentioned above, but it does not help the respondents on
the merits of the case concerning powers and jurisdiction of the
Commission under Reforms Act, 1998.
57. Concerning the interpretation of the agreement, reliance has
H been placed on Adani Power (Mundra) Ltd. vs. Gujarat Electricity
TRANSMISSION CORP. OF ANDHRA PRADESH LTD. v. 517
M/S RAIN CALCINING LTD. & OTHERS [ARUN MISHRA, J.]
Regulatory Commission & Ors., AIR 2019 SC 3397, in which this Court A
has observed that clauses in the agreement ought to be given a plain,
literal, and grammatical meaning of the expression. There is no dispute
with the proposition mentioned above, however, the provisions of the
Reforms Act, 1998 are clear, candid, and empowers the Commission
to determine the charges.
B
58. The High Court has also held that joint applications were not
maintainable. The APTRANSCO held Licence No.1/2000 for
transmission and bulk supply and as per clause 20 read with clause 22,
it is incumbent upon the APTRANSCO to refer the table of tariffs or
even system charges/losses incurred under the system. Thus, a joint
C
application is nothing, but an obligation under the licence, and no
prejudice has been caused by submitting the joint application. Thus, the
decision of the High Court, to the contrary, is found to be meritless.
The issue of maintainability of joint application has also been dealt with
by the Commission elaborately.
D
59. The reason given for holding the joint application to be
maintainable is that there is an integrated transmission distribution
system in the State. The system is entirely owned and controlled by
the APSEB initially, and after reforms, it has come into control of
APTRANSCO till 31.3.2001. The present application is the first of its
kind for the determination of applicable wheeling charges to the E
transmission distribution system. The objection is technical, and in case
joint petitions are maintained, it has no adverse effect so long in
substance as the Commission has decided to proceed to determine the
issue relating to transfer DISCOMS and representative units and has
determined tariffs which are fair to the consumers availing the wheeling F
services. The approach of the Commission, thus, could not be faulted
by the High Court. Therefore, the decision of the High Court in this
regard is also faulty and unsustainable.
60. Coming to merits of fixation of charges, while passing the
order, the Commission has fixed the wheeling charges thus: G
9.12 The wheeling charge leviable from 01.04.2002 for the F.Y.
2002-2003 is accordingly worked out as below.
Calculation of Wheeling Charges for 2002-03:
a) In cash : H
518 SUPREME COURT REPORTS [2019] 17 S.C.R.
A
Particular of Expenditure Amt. Rs.Crs.
Wages and salaries 490.65
Administration and General Expenses 105.20
Repairs and Maintenance 185.66
B
Rent Rates and Taxes 5.13
Approved Loan interest 5609.31
Security deposit interest 31.37
Legal Charges 0.97
C
Audit and other fees 2.23
Depreciation 508.59
Other Expenses 39.30
Contribution to staff pension and gratuity. 64.95
D Contribution to Contingency Reserve 21.45
Sub Total of Expenditure 2015.81
Reasonable Return 82.37
Total Gross Revenue Required 2098.18
E Less Non-Tariff Income 529.86
NET REVENUE REQUIREMENT 1568.32
Million Units (Gross) 41954
Network Charges including reasonable
F
37 ps/ kwh return (1568.32 Crs
41954 MU
Wheeling Charges (External) 3 ps/kwh (Based on
Information)
G Balancing and ancillary Charges 10 ps/ kwh
Total Wheeling Charges in ps/ unit. 50 ps/ kwh
(Total of
above three
charges)
H
TRANSMISSION CORP. OF ANDHRA PRADESH LTD. v. 519
M/S RAIN CALCINING LTD. & OTHERS [ARUN MISHRA, J.]
b) In-kind: A
In addition, wheeling charges in kind of 28.4 % of energy input
by the project developer into the Licensee’s grid being the system
loss are leviable.”
61. The High Court could not have interfered with the findings B
on merits taken by the experts without entering into the various aspects
considered by the Commission. Thus, the finding on merits as to the
determination of charges being illegal and improper in any manner,
cannot be said to be sustainable. The High Court has not gone into
various reasons, and the details considered by the Commission and once C
the expert body has determined specific tariffs, it is not for the courts
to interfere ordinarily in such matters. We find the determination to be
proper and do not suffer from any infirmity or illegality. The Commission
has made an elaborate discussion for arriving at the figure mentioned
above. The recovery network charges, tariff structure, and the question
D
of wheeling charges in cash or kind have also been considered. Various
relevant factors have been taken into consideration. The nature of the
arrangement between APTRANCO and DISCOMS and inter se
DISCOMS has been considered while deciding issue No.4.
62. The use of the system cannot be isolated from losses in the E
system as they form an integral part of the system. All persons using
the system should bear the system losses, whether technical or non-
technical. Incidentally, the terms of a licence issued by APTRANSCO
and DISCOMS specifically refer to deliver such electricity, adjust losses
of electricity to a designated point. Technical losses in the system to
F
be taken into account as these are also an integral part of the system.
It is an integrated system where the electricity is supplied on
displacement basis rather than direct conveyance of the particular
electricity which is generated, the technical losses up to the voltage level
at which the electricity is delivered along cannot be measured. The
technical losses of the total system need to be taken into account as it G
is impossible to determine from which source electricity is being supplied
to which particular customer. The electricity from all sources gets
combined in the system and loses its identity. As investment in the
system has also been made, it was evident that requisite charges have
to be paid. H
520 SUPREME COURT REPORTS [2019] 17 S.C.R.
A IN RE: GRID SUPPORT CHARGES
63. With respect to Grid Support Charges, it has been conceded
by the learned counsel for the parties that the decision in the aforesaid
batch of matters as to wheeling charges has to govern grid support
charges as we have upheld the order of the Commission with respect
B to wheeling charges, the order of the High Court has to be set aside.
64. Any Government Order or Incentive Scheme does not govern
the Grid Support Charges. Grid Code is the basis for levy of the Grid
Support Charges, which came to be approved by the Commission on
26.5.2001. The same is also reflected in the impugned order. Thus, in
C case of installation of another CPP, that would be an additional load on
the grid, and there is no embargo for setting up additional grid CPP in
the form of expansion as grid acts as cushioning. The Grid Support
Charges can be levied, and the order dated 8.2.2002 of the Commission
is, thus on the parity of the reasonings, has to be upheld considering
the provisions of Section 21 (3) of the Reforms Act, 1998. Under
D section 11 read with section 26 of the Reforms Act, 1998, all fixed
charges under the distribution and Grid Support Charges are leviable
only at the instance of a distribution company, and because of the
discussion above, the Commission has the powers to determine it. In
the agreements also there is a power where the Board could have fixed
E the Grid Support Charge unilaterally, but because of Reforms Act, 1998
came to be enacted, the application was filed in the Commission. After
that, the Commission has passed the order in accordance with the law.
We find no fault in the same. Thus, the order of the Commission
concerning the Grid Support Charges has to be upheld. The judgment
and order of the High Court are liable to be set aside concerning
F wheeling charges as well as Grid Support Charges.
IN RE: INCENTIVES TO NON-CONVENTIONAL
ENERGY
65. The question involved in the third batch of appeals is whether
G incentives to be continued to the non-conventional energy. The tariff
orders were passed in the years 2004-05, 2005-06, and 2006-09 by the
APERC in exercise of the power conferred under Section 62 of the
Electricity Act, 2003. The appeals were preferred before the APTEL
under Section 111 of the Electricity Act, 2003. The main question for
consideration was whether Government Orders issued on 18.11.1997
H and 22.12.1998, by the Andhra Pradesh Government, extending specific
TRANSMISSION CORP. OF ANDHRA PRADESH LTD. v. 521
M/S RAIN CALCINING LTD. & OTHERS [ARUN MISHRA, J.]
incentives to the producers of electricity from non-conventional energy A
resources, are binding and Doctrine of Promissory Estoppel against the
Government and Commission was bound to give effect to them.
66. The Government Order dated 18.11.1997, encourages
renewable energy/non-conventional energy sources. The Government
decided to provide specific incentives, thus: B
“The Government, after careful examination of the
recommendations and with a view to encourage generation of
electricity from renewable sources of energy hereby allow the
following uniform incentives to all the projects based on
renewable sources of energy viz. Wind, Biomass, Co-generation, C
Municipal Waste, and Mini Hydel:
Sl.No. DESCRIPTION
1. Power Purchase Price Rs.2.25/-
2. Escalation 5% per annum with 1997-98 D
as base year and to be
revised on 1st April of every
year up to the year 2000
A.D.
3. Wheeling Chargers 2% E
4. Third-Party sales Allowed at a tariff not lower
than H.T. Tariff of A.P.S.E.
Board.
5. Banking Allowed upto 12 months
F
(a) Captive Allowed throughout the year
Consumptionon 2% banking charges
(b) Third party sale Allowed on 2% banking
charges from August to
March
G
This order issues with the concurrence of Finance & Planning
(Fin.) Department vide their U.O. No.46291/351/EBS-EFES&T/
97, dated 18.11.1997.”
67. The Government issued another GO MS No.112 dated
22.12.1998, making precise clarification that the benefits shall be H
522 SUPREME COURT REPORTS [2019] 17 S.C.R.
A available only to the power projects where fuel used is from non-
conventional energy sources, which are of the nature of renewable
sources of energy. The Scheme shall be watched for three years. After
that, the State Electricity Board shall come up with suitable proposals
for the continuance of incentives in the present form or modified form.
B 68. The Commission had passed the tariff orders dated 22.3.2005
and 23.3.2006 for the years 2004-05, 2005-06, and 2006-09. The
APTEL vide impugned judgment and order has allowed the appeals and
has held that effect of the policy decisions dated 18.11.1997 and
22.12.1998, which had a statutory flavor, had not been taken away by
the provisions contained in the Electricity Act, 2003. The policy has
C
created vested rights in favour of entrepreneurs, and these vested rights
could not have been taken away. The rights created by GOMS No.93
dated 18.11.1997, would continue to operate until and unless they are
withdrawn in accordance with law. The Doctrine of Promissory
Estoppel is attracted, though the Commission has the power to regulate
D wheeling charges. It needed to address the question. The Commission
has lost sight of the spirit behind G.O. MS Nos.93 and 112, dated
18.11.1997 and 22.12.1998, respectively. Aggrieved by the decision of
APTEL, the APTRANSCO has preferred the appeals.
69. To consider the applicability of Promissory Estoppel, it has
E to be seen whether the aforementioned Government Orders contained
an unequivocal commitment to extend benefits. On the contrary, the
benefit was confined only to three years. The Commission under the
provisions of the Reforms Act, 1998 extended it from time to time and
the last such extension came to an end on 28.7.2001. The Commission
decided not to extend the benefit by the impugned order determining
F
the tariff.
70. This Court in Transmission Corporation of Andhra
Pradesh Limited & another v. Sai Renewable Power Private Limited
& others, (2011) 11 SCC 34, has considered the abovementioned G.O.
MS dated 18.11.1997 and 22.12.1998, in which APERC undertook the
G
review of tariff applicable to the producers of electricity from non-
conventional energy resources. In the year 2003, the Commission
undertook a further review of the tariff. Contrary to the expectations
of the producers of electricity from non-conventional energy resources,
the Commission vide order dated 20.3.2004, has reduced the amount
H of tariffs. The producers from non-conventional energy resources
TRANSMISSION CORP. OF ANDHRA PRADESH LTD. v. 523
M/S RAIN CALCINING LTD. & OTHERS [ARUN MISHRA, J.]
challenged this order before the APTEL, which vide order dated A
2.6.2006, declared the order dated 20.3.2004 of the Commission as
valid. One of the grounds raised before the Tribunal was that purchase
price of 2.25 per unit was fixed based on the Central Government letter
dated 7.9.1993 and Andhra Pradesh abovementioned G.O. MS.
Therefore, the Commission could not back out from the promise made
B
in these Government communications. The plea found favour with the
Tribunal. The Tribunal’s order dated 2.6.2006 was challenged in the
appeals, which were decided by this Court. One of the issues before
this Court was whether the Commission was estopped from passing
an order, which would be contrary to the provisions of the Government
communications dated 7.9.1993, 18.11.1997, and 22.12.1998. The C
appeals were allowed by this Court, and this Court held that the Tribunal
fell in error of law in concluding that Regulatory Commission had no
powers either in law or otherwise of reviewing the tariff and so-called
incentives. There was no unequivocal commitment to the respondent/
purchasers/ generators/ developers to bind the State for all times to
D
come. There was no definite, unambiguous representation, hence plea
of estoppel was not attracted. This Court has observed:
“68. In addition to the statutory provisions and the judgments
aforereferred, we must notice that all the PPAs entered into by
the generating companies with the appropriate body, as well as
the orders issued by the State in GOMs Nos. 93 and 112, in turn, E
had provided for review of tariff and the conditions. The Tribunal
appears to have fallen in error of law in coming to the conclusion
that the Regulatory Commission had no powers either in law or
otherwise of reviewing the tariff and so-called incentives. Every
document on record refers to the power of the authority/ F
Commission to take a review on all aspects including that of the
tariff.
74. Again, vide GOMs No. 112 dated 22-12-1998, referring to
the extension of all these uniform incentives, certain amendments
were carried out to GOMs No. 93 dated 18-11-1997. Clause 2 G
of this order referred that the operation of the incentive scheme
shall be watched for a period of three years and at the end of
three years the Electricity Board shall come up with suitable
proposals for review for further continuance of the incentives in
that form, or to be modified suitably. Keeping these guidelines in
mind, the State of Andhra Pradesh vide GOMs No. 93 dated 18- H
524 SUPREME COURT REPORTS [2019] 17 S.C.R.
A 11-1997, while referring to the guidelines issued by the
Government of India for promotional and fiscal incentives, noticed
the various representations which were received from the non-
conventional energy developers for extension of benefits as afore
referred in relation to all non-conventional energy resources
uniformly.
B
80. On the basis of this factual matrix, the respondents claimed
that the State Government and the Regulatory Commission both
were bound to continue the incentives as were provided to them
in furtherance of the letters and orders of the Central as well as
the State Governments discussed above. They have a legitimate
C right to expect that these incentives were to be continued
indefinitely in the same manner, and the authorities concerned
are estopped from altering the rates and/or imposing the condition
of no sale to third parties. We are unable to find any merit in
this contention. In our view, the Tribunal has erred in law in
D treating these inter se letters and guidelines between the
Government of India, State Government and the Commission/the
State Electricity Board as unequivocal commitments to the
respondent/purchasers/generators/developers so as to bind the
State for all times to come. For the principle of estoppel to be
attracted, there has to be a definite and unambiguous
E representation to a party which then should act thereupon and
then alone, the consequences in law can follow.
81. In the present case, the policy guidelines issued by the Central
Government were the proposals sent to the State Government,
which the State Government accepted to consider, amend or alter
F as per their needs and conditions and then make efforts to
achieve the objects of encouraging non-conventional energy
generators and purchasers to enter into this field. These are the
matters, which will squarely fall within the competence of the
Regulatory Commission/the State Electricity Board at the relevant
points of time. Besides that, there was no definite and clear
G
promise made by the authorities to the developers that would
invoke the principle of promissory estoppel. Undoubtedly, to
encourage participation in the field of generation of energy through
non-conventional methods, some incentives were provided, but
these incentives under the guidelines, as well as under the PPAs
H signed between the parties from time to time, were subject to
TRANSMISSION CORP. OF ANDHRA PRADESH LTD. v. 525
M/S RAIN CALCINING LTD. & OTHERS [ARUN MISHRA, J.]
review. In any case, the matter was completely put at rest by A
the order of 20-6-2001 and the PPAs voluntarily signed by the
parties at that time, which had also provided such stipulations. If
such stipulations were not acceptable to the parties, they ought
to have raised objections at that time or at least within a
reasonable time thereafter. The agreements have not only been
B
signed by the parties, but they have been fully acted upon for a
substantial period. We have already referred to various statutory
provisions where the Regulatory Commission is entitled to
determine the tariff. In this situation, we are unable to agree with
the view taken by the Tribunal that the Regulatory Commission
had no jurisdiction and that fixation of tariff does not include C
purchase price for buy-back of the generated power.
82. The principle of promissory estoppel, even if it was applicable
as such, the Government can still show that equity lies in favour
of the Government and can discharge the heavy burden placed
on it. In such circumstances, the principle of promissory estoppel D
would not be enforced against the Government as it is primarily
a principle of equity. Once the ingredients of promissory estoppel
are satisfied, then it could be enforced against the authorities,
including the State, with very few extraordinary exceptions to
such enforcement. In the United States, the doctrine of
E
promissory estoppel displayed remarkable vigour and vitality, but
it is still developing and expanding. In India, the law is more or
less settled that where the Government makes a promise knowing
or intending that it would be acted upon by the promisee and in
fact the promisee has acted in reliance of it, the Government may
be held to be bound by such promise.” F
(emphasis supplied)
71. Concerning aforesaid Government Orders dated 18.11.1997
and 22.12.1998, this Court already held that plea of promissory estoppel
is not attracted, and there was no unequivocal promise. We are of the
G
opinion that there was no material change in the facts and circumstances
of the case to attract the plea of promissory estoppel based on
Government orders mentioned earlier. The Tribunal has passed an order,
by which it had temporarily extended the period to 24.7.2001. In the
impugned order dated 24.3.2002, the objection raised of the non-
conventional energy developers regarding wheeling charges was dealt H
526 SUPREME COURT REPORTS [2019] 17 S.C.R.
A with and it was stated that non-conventional energy have to pay the
wheeling charges without discrimination and it was also stated that if
Government wants to pay any subsidy, it may pass fresh order to
compensate the licensee. The Government has, after that, never given
any subsidy, for subsidy care is taken by the statutory provision
contained in the Electricity Act, 2003. Section 65 of the Electricity Act,
B
2003, provides that if State Government requires grant of any subsidy
to any consumer in the tariff determined by the State Commission under
Section 62, the State Government shall, notwithstanding, any direction
which may be given under Section 108, pay, in advance and in such
manner as may be specified, the amount to compensate the person
C affected by the grant of subsidy in the manner the State Commission
may direct. Subsidy/incentive is governed by Section 65, and the
Government has not issued any such direction to continue the incentives
in the form of subsidy. It was open to the Government to do so because
of the order passed by the Commission, but it has not extended such
benefit. No command can be given to State to grant subsidy.
D
72. Thus, we find that the order of APTEL based on the Doctrine
of Promissory Estoppel for continuing the benefit of Government Orders
dated 18.11.1997 and 22.12.1998, cannot be said to be in accordance
with the law. The order of APTEL is liable to be set-aside, and that
passed by the APERC has to be restored.
E
73. Resultantly, we have to allow the appeals. The judgment and
order passed by the High Court relating to wheeling charges and grid
support charges and that passed by the APTEL regarding continuance
of incentive as per G.O. MS dated 18.11.1997 and 22.12.1998, are set
aside. The appeals are allowed, and the orders passed by APERC are
F restored. No costs.
Devika Gujral Appeals allowed.
G
H
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