Paragraph numbers below are the court’s original numbering, recovered from the source text.
33. Having regard to the nature of jurisdiction of the Central Commission in a case of this nature, we are of the opinion that even principles of res judicata will have no application. c
34. There cannot be any doubt whatsoever that while a tribunal or a court exercises adjudicatory power, although provisions of Section 11 of the Code of Civil Procedure are not applicable but the general principles of res judicata may be r applicable as has been held by this Court in a consolidation matter in Sri Bhavanarayanaswamivari Temple v. Vadapal/i Venkata Bhavanarayana Charyulu [(1970) 1 SCC 673, para 8], in a labour matter in Bharat Barrel and Drum Manufacturing . Co. Pvt. Ltd. v. Bharat Barrel Employees Union [(1987) 2 SCC 591, paras 9 to 11], in a rent control matter in Vijayabai and Others v. Shriram Tukaram and Others [(1999) 1 SCC 693, para 14], in a writ petition in Forward Construction Co. and Others v. Prabhat Manda/ (Regd.), Andheri and Others [(1986) 1 SCC 100, para 20], and in an arbitration proceeding in K. V. George v. Secretary to Government, Water and Power Department, Trivandrum and Another (1989) 4 SCC 595, para 16], whereupon strong reliance has been placed by Mr. Gupta, but such a question does not arise herein. Moreover, such a point having never been raised before the Central Commission or the appellate tribunal, we are of the opinion that even otherwise the said argument should not be permitted to be raised before us for the first time.
35. The Central Commission, as indicated hereinbefore, A has a plenary power. Its inherent jurisdiction is saved. Having regard to the diverse nature of jurisdiction, it may for one purpose entertain an application so as to correct its own mistake but in relation to another function its jurisdiction may be limited. The provisions of the 1998 Act do not put any B restriction on the Central Commission in the matter of exercise of such a jurisdiction. It is empowered to lay down its own procedure.
36. Regulations 92, 94, 103 and 110 of the 1999 Regulations confer a wide power upon the Central Commission. C They are to be exercised in different circumstances. Whereas Regulations 92 and 94 are to be exercised in regard to Chapter V, Regulations 103 and 110 apply in regard to cases where Regulations 92 and 94 would not have any application. Regulations 92 and 94, in our opinion, do not restrict the power of the Central Commission to make additions or alterations in the tariff. Making of a tariff is a continuous process. It can be amended or altered by the Central Commission, if any occasion arises therefor. The said power can be exercised not E only on an application filed by the generating companies but by the Commission also on its own motion.
37. Assuming that Regulation 103 of the 1999 Regulations would be applicable in a case of this nature, the same also confers a wide jurisdiction. The Commission, apart from F entertaining an application for review on an application filed by a party, may exercise its suo motu jurisdiction. While the Central Commission exercises a suo motu jurisdiction, the period of limitation prescribed in Regulation 103 shall not apply. There cannot, however, by any doubt whatsoever that while exercising G such jurisdiction, the Central Commission must act within a reasonable time. Furthermore, the statute does not provide for the manner in which a petition is to be filed before the Central Commission or the manner in which the tariff order is to be passed or revision or non-revision thereof. U.P. POWER CORPORATION LTD. v. NATIONAL THERMAL POWER CORPORATION LTD. AND ORS. [S.B. SINHA, J.] · • '
38. Section 28 of the 1998 Act empowers the Central Commission to determine the terms and conditions for fixation of tariff.
39. We are unable to accept the contention of Mr. Gupta that the operational and financial norms dated 21.12.2000 were not relevant. The Central Government itself recognized the need to adjust the Operation and Maintenance Expenses based on normative expenses after the actual are available in its order dated 21.12.2000 which was the principal order laying down norms therefor holding inter alia as under: "4.3.6 The Commission is convinced that linking the base level O&M expenses to the capital cost is not appropriate as there are unresolved issues of measurement of the capital cost itself. Thus, the efficacy of the base on the basis of capital cost is questionable. The approach adopted in this order is based on following tenets : The base level of O&M should not be computed as a given proportion of capital cost but should be derived on the basis of actual O&M expenses in the last five years after ironing out the spikes and abnormalities in the yearwise data. Any abnormal expenses incurred by utilities in operating and maintaining their plants should not get reflected in the norms but should be dealt with separately on a case by case basis through separate petitions. This will provide an opportunity to all the stakeholders to assess the merit of claims on the basis of these expenses in a transparent way." Thereafter, in para 4.3.12 of the aforesaid order, the Central Commission held as under: c [2009) 3 S.C.R. ''The regulated entities shall include in their Tariff petition details of yearwise actual O&M cost data for the last five years duly certified by Statutory Auditors." Both the aforementioned provisions must be read together B and not in isolation.
40. The order dated 21.12.2000 passed by the Central Commission formed the basis of the 2001 Regulations, which is clear from the following observations made in the said order: c "1.1.2 As per Section 28 of the ERC Act the Commission is required to determine by regulations the terms and conditions for fixation of tariff under clauses (a), (b) and ( c) of Section 13. Section 37 of the ERC Act stipulates that the Commission shall ensure transparency while exercising its powers and discharging its functions. xxx xxx xxx 1.1.3 The Commission assumed the jurisdiction under Section 13(a) and (b) as referred to above w.e.f. 15th May, 1999. This was the date from which, as per the provisions of Section 51 of the ERC Act, the Central Government notified the deletion of Section 43A(2) of the Electricity (Supply) Act, 1948 (ES Act), in respect of tariff of companies falling under Sections 13(as) and (b) of the ERC Act. Section 43A(2) which deals with the terms and conditions for sale of power by generating companies to State Electricity Boards was in force until that date. Consequent to the deletion of Section 43A(2) new sets of terms and conditions were required to be notified under the provisions of Section 28 of the ERC Act, as they now fall under the tariff jurisdiction of the Commission. xxx xxx xxx 1.4. Applicability and effective date : U.P. POWER CORPORATION LTD. v. NATIONAL THERMAL POWER CORPORATION LTD. AND ORS. [S.B. SINHA, J.] )' ' 1.4.1 The terms and conditions as will be notified, shall, apply to all utilities covered under Section 13(a) (b) and (c) of the ERC Act unless specifically stated otherwise ….. xxx xxx xxx 10.2 This order has to be read along with our orders on petitions 85/2000 and 86/2000 on operational norms for hydro power stations and for inter state transmission respectively. This order along with the order dated 4th January, 2000 on Availability Based Tariff read with our order on review petition No.13/2000 on availability based c tariff will constitute the frame work for notifications on terms and conditions of tariff to be regulated under Section 13(a)(b) and (c) of the ERC Act. Separate notifications shall be issued by the Commission incorporating the i- findings in accordance with section 28 of the ERC Act, 1998."
41. It was contended by Mr. Ramachandran that actual expenses for 2001-2002 were not available and the normative expenses for the last five years were only available and there was an unexpected abnormal increase. There was, thus, in our opinion, enough justification for filing the application for review of the tariff.
42. While considering the question of jurisdiction vis-a-vis the applicability of the operational and financial norms, it is not for us to consider as to whether such separate petition should have been filed. We would, however, consider the question as to whether such an application for permission should have been filed within a reasoncl,;e time or not a little later.
43. The concept of regulatory jurisdiction provides for revisit of the tar;ff. It is now a well-settled principle of law that a subordinate legislation validly made becomes a part of the Act and should be read as such. 1(!)88 (2009] 3 S.C.R. 1 '
44. There cannot be any doubt whatsoever that the word 'regulation' in some quarters is considered to be unruly horse. In Bank of New South Wales v. Commonwealth [(1948) 7(3 CLR 1] Dixon, J. observed that the word "control" is an B unfortunate word of such wide and ambiguous import that it has been taken to mean something weaker than "restraint", something equivalent to "regulation".
45. But, indisputably, the regulatory provisions are required to be applied having regard to the nature, textual context and c situational context of each statute and case concerned. The power to regulate may include the power to grant or refuse to grant the licence or to require taking out a licence and may also include the power to tax or exempt from taxation. It implies a power to prescribe and enforce all such proper and reasonable D rwles and regulations as may be deemed necessary to conduct t the business in a proper and orderly manner. It also incl~des the authority to prescribe the reasonable rules, regulations or conditions subject to which the business may be permitted or may be conducted. [See Deepak Theatre v. State of Punjab E 1,992 Supp ( 1) SCC 684 at 687]. Even otherwise the power of regulation conferred upon an authority with the obligations and functions that go with it and are incidental to it are not spent or exhausted with the grant of permission. [See State of U.P. v. Maharaja Dharmander Prasad Singh (1989) 2 SCC 505] In F that sense, the power of Central Commission stricto sensu is not a judicial power. This Court in V.S. Rice and Oil Mills v. State of A.P. [(1964) 7 SCR 456] held: "Then it was faintly argued by Mr Setalvad that the power to regulate conferred on the respondent by Section 3(1) cannot include the power to increase the tariff rate; it would include the power to reduce the rates. This argument is entirely misconceived. The word "regulate" is wide enough U.P. POWER CORPORATION LTD. v. NATIONAL THERMAL POWER CORPORATION LTD. AND ORS. [S.B. SINHA, J.] to confer power on the respondent to regulate either by increasing the rate, or decreasing the rate, the test being what is it that is necessary or expedient to be done to maintain, increase, or secure supply of the essential articles in question and to arrange for its equitable distribution and its availability at fair prices … " Recently, this Court in T.N. State Electricity Board v. Central Electricity Regulatory Commission and Others [(2007) 7 sec 636], whereupon counsels for both the parties relied upon, upon consideration of the provisions of Section 28 of the 1998 Act, opined as under: " … A bare glance of the above quoted section suggests that CERC would formulate regulations for providing terms and conditions for fixation of tariff under Clauses (a), (b) and (c) of Section 13. The power for making the regulations is to be found in Section 55 of the 1998 Act. Accordingly, CERC has formulated the Regulations which are called the Central Electricity Regulatory Commission (Conduct of Business) Regulations, 1999 … " It was furthermore held: "12. The appellate authority has clearly erred in giving a literal interpretation to the said provision, namely, Clause 2.7(d)(iv). Learned counsel urged that the appellate authority was bound to discern the true intendment of the provision and should have given it a meaningful interpretation, in that, the escalation factor should have been calculated keeping 6% as the base and it should not have been limited to the difference alone. Learned counsel Shri Sunil Gupta further argued that the rule was manifestly neutral rule founded on purely neutral considerations and while interpreting the same, the appellate court has divested itself with the logic thereof. Learned counsel buttressed his arguments by suggesting that the rule was c meant for the convenience of all concerned which included both administrative as well as financial convenience. According to both the counsel the intention behind the rule was that CERC should not be exposed to the tedious exercise of review and readjustment of tariff already fixed so long as the deviation was within 20% which was perceived to be the reasonable tolerance limit and that being the only objective behind the peculiar language of the rule, by adopting the literal interpretation, the utilities could not have been deprived of the full benefits if the O&M factor went below 20% of the escalation factor of 6%. Learned counsel very fairly submitted that in case the O&M factor went beyond the 20% by way of an upswing then the generating unit like NTPC was always justified to charge on the basis of the full difference between the actual upswing point and the 6%. According to the learned counsel this was the only intendment of the rule." In Hotel & Restaurant Assn. and Another v. Star India (P) Ltd. and Others [(2006) 13 sec 753], in regard to the role of TRAI as a regulator, this Court said: "55. TRAI exercises a broad jurisdiction. Its jurisdiction is not only to fix tariff but also laying down terms and conditions for providing services. Prima facie, it can fix norms and the mode and manner in which a consumer would get the services. 56. The role of a regulator may be varied. A regulation may provide for cost, supply of service on non- discriminatory basis, the mode and manner of supply making provisions for fair competition providing for a level playing field, protection of consumers' interest, prevention of monopoly. The services to be provided for through the cable operators are also recognised. While making the regulations, several factors are, thus required to be taken into account. The interest of one of the players in the field U.P. POWER CORPORATION LTD. v. NATIONAL THERMAL POWER CORPORATION LTD. AND ORS. [S.B. SINHA, J.] would not be taken into consideration throwing the interest of others to the wind." In K. Ramanathan v. State of Tamil Nadu [(1985) 2 SCC 116], this Court held: "18. The word "regulation" cannot have any rigid or inflexible meaning as to exclude "prohibition". The word "regulate" is difficult to define as having any precise meaning. It is a word of broad import, having a broad meaning, and is very comprehensive in scope. There is a diversity of opinion as to its meaning and its application to a particular state of facts, some courts giving to the term a somewhat restricted, and others giving to it a liberal, construction. The different shades of meaning are brought out in Corpus Juris Secundum, Vol. 76 at p. 611: " 'Regulate'is variously defined as meaning to adjust; to adjust, order, or govern by rule, method, or established mode; to adjust or control by rule, method, or established mode, or governing principles or laws; to govern; to govern by rule; to govern by, or subject to, certain rules or restrictions; to govern or direct according to rule; to control, govern, or direct by rule or regulations. 'Regulate' is also defined as meaning to direct; to direct by rule or restriction; to direct or manage according to certain standards, laws, or rules; to rule; to conduct; to fix or establish; to restrain; to restrict." See also: Webster's Third New International Dictionary, Vol. 11, p. 1913 and Shorter Oxford Dictionary, Vol. II, 3rd Edn., p. 1784." ' In Central Power Distribution Co. and Others v. Central Electricity Regulatory Commission [(2007) 8 SCC 197], this Court held: "22.3. As already noticed, the Central Commission has the power and function to evolve commercial mechanism such as imposition of UI charges to regulate and discipline. It is well settled that a power to regulate includes within it the power to enforce … " In U.P. State Electricity Board, Lucknow v. City Board, Mussoorie and Others [(1985) 2 SCC 16], this Court held: " … It only provides that the Grid Tariff shall be in accordance with any regulations made in this behalf. That means that ifthere were any regulations, the Grid Tariff should be fixed in accordance with such regulations and nothing more. We are of the view that the framing of regulations under Section 79 (h) of the Act cannot be a condition precedent for fixing the Grid Tariff … " The 2001 Regulations, however, show that it had a limited duration, viz., three years. 46. The Government of India issued guidelines for revision for the employees of the Central Public Sector undertakings as far back on 25.09.1999 with effect from 1.04.1997. It has not E been denied or disputed that the respondent No. 1 implemented the revision and paid arrears of salaries with effect from 1.04.1997 to executives, workmen and supervisors, respectively during the years 2000-2001 by orders dated 6.07.2000, 2.03.2000 and 19.04.2001, respectively. They were already aware of the impending revision of r- scale of pay and had implemented in part, albeit, on a . …,.. provisional basis. We fail to understand as to why it had filed applications for tariff determination for its generating stations G at Korba and Dadri on 28.05.2001 and 8.06.2001, respectively. Not only that the amended applications did not contain the details of the prescribed data, a sheet with data of year 2000-2001, which was not a part of Form 16, was inserted at a later stage. Amended applications were filed only on H 30.01.2002 and 7.02.2002. The year 2000-01 was not the U.P. POWER CORPORATION LTD. v. NATIONAL THERMAL POWER CORPORATION LTD. AND ORS. [S.B. SINHA, J.] y relevant year for the aforementioned purpose. 47. There cannot be any doubt whatsoever that for the purpose of making tariff the actual costs required for payment to the employees being a part of the operation and maintenance cost including a sum of Rs. 55 crores, which were to be paid by way of extra amount, could fall for determination by the Central Commission. But, such an application ordinarily could have been filed within the period during which the tariff order was in force. 48. It is difficult to agree with the opinion of the appellate c tribunal that increase in the salary with retrospective effect could have been a subject matter for determination of tariff in another period. In a fact situation obtaining herein, we are of the ….. opinion that the claim of the respondent – corporation was not justified as the Central Commission should not have been asked to revisit the tariff after five years and when everybody had arranged its affairs. 49. Regulation 2.7 (d)(iv) of the 2001 Regulations clearly provides that applications must be entertained only in the event any situation arose within the purview thereof and not at any l · point of time. If the respondent No. 1 was aware that they were to incur an additional expenditure of Rs. 55/- crores, they could have preferred an appeal before the Central Commission. We have been informed at the bar that the appeals were preferred on other issues but not on this one. 50. Framing of tariff is made in several stages. The generating companies get enough opportunity not only at the stage of making of tariff but may be at a later stage also to put forth its case including the amount it has to spend on operation and maintenance expenses as also escalation at the rate of 10% in each of the base year. It cannot, in our opinion, be permitted to re-agitate the said question after passing of many stages. Furthermore, the direction of the tribunal that the additional costs may be absorbed in the new tariff, in our A opinion, was not correct. Some persons who are consumers during the tariff year in question may not continue to be the consumers of the appellant. Some new consumers might have come in. There is no reason as to why they should bear the brunt. Such quick-fix attitude, in our opinion, is not contemplated B as framing of forthcoming tariff was put subject to fresh regulations and not the old regulations. 51. We are not oblivious of the fact that in the Rihand Case, the Central Commission allowed the application of the c respondent, but, therein a provision was made therefor in the original tariff order itself. Respondent No. 1 had filed a separate I.A. claiming the impact of arrears paid by it in 2000-2001 towards the years 1997-'1998 to 1999-2000. 52. We, therefore, on the aforementioned ground alone are D of the opinion that it was not a fit case where the appellate tribunal should have interfered with the order of the Central Commission. 53. Although on the~ question of jurisdiction the Central E Commission might not have been correct, before parting with this case, we may, however, also notice a submission of Mr. Gupta that the appellate tribunal should not ordinarily interfere l with an order of the Central Commission. We do not agree. The – jurisdiction of the appellate tribunal is wide. It is also an expert f tribunal and, thus, it can interfere with the finding of the Central Commission both on fact as also on law. Both the Central Commission as also the appellate tribunal being expert, we do not see how the decisions of this Court in Union of India and Another v. Cynamide India Ltd. and Another [( 1987) 2 SCC 7201 and Shri Sitaram Sugar Company Limited and Another v. Union of India and Others [(1990) 3 SCC 223) would be r applicable. In Cellular Operators Association of India and Others v. Union of India and Others [(2004) 8 SCC 524), this Court held: -. U.P. POWER CORPORATION LTD. v. NATIONAL THERMAL POWER CORPORATION LTD. AND ORS. [S.B. SINHA, J.) 'l "TDSAT was required to exercise its jurisdiction in terms of Section 14-A of the Act. TDSAT itself is an expert body and its jurisdiction is wide having regard to sub- section (7) of Section 14-A thereof. Its jurisdiction extends to examining the legality, propriety or correctness of a direction/order or decision of the authority in terms of sub- section (2) of Section 14 as also the dispute made in an application under sub-section (1) thereof. The approach of the learned TD SAT, being on the premise that its jurisdiction is limited or akin to the power of judicial review is, therefore, wholly unsustainable. The extent of jurisdiction c of a court or a tribunal depends upon the relevant statute. TDSAT is a creature of a statute. Its jurisdiction is also conferred by a statute. The purpose of creation of TDSAT has expressly been stated by Parliament in the amending …… Act of 2000. TDSAT, thus, failed to take into consideration the amplitude of its jurisdiction and thus misdirected itself in law." 54. For the reasons aforementioned, the appeals are allowed with costs. Counsel's fee assessed at Rs. 50,000/- in each case. RP. Appeals allowed. 'f