The Hon’ble Supreme Court of India in its recent judgement in Power Grid Corporation of India Limited v. Madhya Pradesh Power Transmission Company Limited & Ors.¹clarified the distinction between the powers of Central Electricity Regulatory Commission (“CERC”) under S.79 and S.178 of the Electricity Act, 2003 (“Act”).

The Appellant entered into an agreement with Respondent No. 1 in pursuance of Western Region System Strengthening Schemes, Respondent No. 1 was to construct and commission intra-state transmission line from Indore sub-station coinciding with the timeline of completion of works by the Appellant. Upon delay therein, the Appellant approached the CERC under Regulation 4(3) of the Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2014 (“2014 Regulations”) for approval of Commercial Operation Date (“COD”) of its transmission system, determination and billing of transmission charges and tariff respectively for the established transmission facilities.

The CERC approved the COD as proposed by the Appellant and granted liberty to the Appellant to claim compensation from Respondent No. 1, since the delay was attributable to Respondent No. 1. It was also held that the transmission charges of all assets would be borne by Respondent No. 1 from COD till one day before actual charging of downstream system.

Respondent No. 1 challenged the orders passed by CERC before the High Court inter alia on the ground that there is no provision for claiming compensation in the 2014 Regulations nor in the agreement and therefore CERC has acted beyond the powers vested in it. The High Court admitted the writ petition.

The Court observed that S.79 of the Act empowers CERC to regulate and adjudicate specific matters, such as inter-state transmission and tariff determination, etc. while S.178 allows it to enact regulations in respect of the same. The Court then referred to its judgments in PTC India Limited v. CERC² and Energy Watchdog v. CERC³, observing that the regulatory powers of CERC under S.79 are not contingent on existing regulations under S.178. In the absence of specific provisions, CERC is not precluded from passing orders, in exercise of powers under S.79(1), between the parties before it and the same are appealable under S.111 of the Act.

The Court then referred to the judgement in Power Grid Corpn. Of India Ltd. v. Punjab State Power Corpn. Ltd.⁴, andAppellate Tribunal for Electricity (“APTEL”) judgement in Nuclear Power Corporation of India Limited v. CERC⁵ and observed that there was no contractual clause to determine the consequence of delay. There are no regulations under S.178 in respect of transmission charges payable before a transmission element becomes operational and there is a prohibition on imposing liability of delayed payments on beneficiaries. In light of the above it was held that the CERC aimed to fill a regulatory lacuna and its orders were not adjudicatory in nature. The Supreme Court, therefore, allowed the appeals and set aside the High Court's order, clarifying that the CERC orders are appealable under S.111 of the Act.

By - Ansh Mittal