POWER GRID CORPORATION OF INDIA LIMITED versus MADHYA PRADESH POWER TRANSMISSION COMPANY (15/05/2025) — Supreme Court headnote

AI-generated headnote. Verify against the judgment before relying on it. Paragraph numbers refer to the judgment.

Summary

The High Court erred in admitting writ petitions by a State transmission utility against CERC tariff orders that, while not condoning the delay in commissioning inter-State transmission assets, gave the Central transmission utility liberty to claim compensation from the State utility whose downstream delay caused it. The CERC exercises both regulatory and adjudicatory functions under Section 79(1) of the Electricity Act, 2003; absence of a regulation under Section 178 does not disable it from filling a regulatory gap by orders between the parties, such orders are appealable to APTEL under Section 111, no Whirlpool exception applied, and the writ petitions were dismissed leaving the merits to APTEL.

Issues

Whether the CERC, in exercising its functions under Section 79(1) of the Electricity Act, 2003, is circumscribed by regulations made under Section 178, and whether the absence of a regulation on a subject bars it from passing orders on that subject.
Whether the CERC exercises regulatory or adjudicatory functions under Section 79, and the scope of its power to regulate inter-State transmission and determine its tariff under clauses (c) and (d) of Section 79(1).
Whether the grant of liberty to claim compensation for delay was a regulatory or adjudicatory function, and whether principles of natural justice required a specific prayer and a hearing of the party made liable.
Whether the High Court was justified in admitting a writ petition under Article 226 against the CERC orders despite the statutory appeal to APTEL under Section 111.

Provisions considered

Section 79(1), especially clauses (c), (d) and (f), Electricity Act, 2003Section 79 enumerates the CERC's functions, which include both regulation (to regulate inter-State transmission, to regulate and determine tariff) and adjudication of disputes; the expressions 'regulate', 'determine' and 'adjudicate' are used for different purposes and cannot all be subsumed under adjudication. The regulatory powers under Section 79(1) are ad hoc, exercised by orders in the specific circumstances of the parties, to fill regulatory gaps case by case; they are not limited to adjudicatory orders and include administrative functions. (¶¶ 34, 37, 38, 46, 47, 48, 57, 58, 59, 63)
Section 178, Electricity Act, 2003Section 178 confers delegated legislative power to make regulations of general application, which can override existing contractual relationships. Measures under Section 79(1) must conform to Section 178 regulations where they exist (PTC India), but making a regulation is not a precondition to acting under Section 79(1); where no regulation covers a situation the CERC's general regulatory power may be used (Energy Watchdog). The vires of a Section 178 regulation can be tested only in judicial review, but its interpretation is appealable to APTEL. (¶¶ 36, 37, 38, 39, 40, 41, 42, 43, 62, 63)
Sections 61, 62 and 64, Electricity Act, 2003Section 61 lays down guiding principles for tariff terms, including conduct on commercial principles and safeguarding consumers' interest while recovering costs reasonably; actual tariff determination for a specific asset is done under Section 62 and is adjudicatory because it is party-specific and appealable (PTC India). Reading Sections 61 and 79 harmoniously, the liberty to claim compensation for a non-condoned delay was an exercise of regulation of tariff between the parties to fill a lacuna, striking a balance between commercial principles and consumers' interest. (¶¶ 31, 32, 33, 50, 51, 53, 54, 59, 60)
Section 111, Electricity Act, 2003Any person aggrieved by an order of the Appropriate Commission may appeal to APTEL, which may confirm, modify or set aside it. Because regulatory orders under Section 79(1) are ad hoc and not of general application they are appealable under Section 111; the State utility had this efficacious remedy and APTEL is the appropriate forum to examine on merits whether liability for transmission charges could be imposed on it. (¶¶ 35, 41, 63, 66)
Regulation 4(3), proviso (ii), Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2014Where a transmission element is prevented from regular service for reasons not attributable to the licensee but due to delay in commissioning the upstream or downstream system, the licensee applies to the Commission for approval of its date of commercial operation. The CERC approved the COD so proposed but did not condone the time-overrun; the Regulations contain no provision on who bears transmission charges for the period of delay, which, with the bar on charging beneficiaries (Barh-Balia), left a regulatory gap the CERC filled by its order. (¶¶ 6, 7, 8, 44, 45, 55, 56, 60)
Article 226, Constitution of IndiaA writ petition may be entertained despite an alternative remedy only in the Whirlpool categories (breach of natural justice, enforcement of fundamental rights, order without jurisdiction, challenge to vires). None applied: the CERC had jurisdiction, there was no breach of natural justice, and no regulation's vires was challenged, so the High Court should not have admitted the writ petition. (¶¶ 11, 12, 61, 64, 65)

Held

The CERC is simultaneously a decision-making and a regulation-making authority: functions under Section 79 are administrative or adjudicatory while those under Section 178 are legislative. There is a dichotomy between making a regulation of general application under Section 178, which can override contracts between regulated entities, and regulating or adjudicating case by case under Section 79, whose orders must stay within existing regulations and do not alter the parties' contract. (¶¶ 37, 38, 39, 40)
Following PTC India and Energy Watchdog, the absence of a regulation under Section 178 does not preclude the CERC from exercising its powers under Section 79(1) to pass specific orders between the parties before it; the argument that the 2014 Tariff Regulations do not provide for charging the party responsible for delay therefore failed. (¶¶ 39, 42, 43)
Section 79 envisages dual functions of regulation and adjudication. The regulatory powers under Section 79(1) are ad hoc, exercised in the context of the specific parties to fill regulatory gaps discovered case by case, and the CERC may exercise them by orders; Section 79 is not confined to adjudicatory orders. The label 'judicial order' used by APTEL in Nuclear Power Corporation does not alter the true regulatory nature of such an order, and there is no blanket ban on exercising regulatory functions by orders, though a regulation cannot be enacted through adjudication. (¶¶ 46, 47, 48, 57, 58)
The general/specific test of Sitaram Sugar is not the sole criterion for distinguishing regulatory from adjudicatory functions (AERA); where the statute draws no clear line, as the Electricity Act does not, the factors the authority must weigh and the context of its role as regulator are equally important, requiring a harmonious reading of Sections 61 and 79. (¶¶ 52, 53)
Beneficiaries cannot be made to pay transmission charges for a period before the assets were operational owing to a non-condonable delay by one of the utilities (Barh-Balia, affirmed); such cost cannot be passed through the Point of Connection mechanism. With no contractual clause on delay risk and no regulation on liability for charges before an element is put to use, a regulatory gap existed, which APTEL had recognised in Nuclear Power Corporation. (¶¶ 55, 56)
Though the CERC orders determined tariff, the liberty given to the Central transmission utility to claim compensation from the defaulting State utility addressed a situation uncovered by regulations, guidelines or contract and was an instance of regulating tariff between the parties in exercise of the general regulatory power under Section 79(1), balancing commercial principles and consumers' interest as Section 61 requires. (¶¶ 59, 60)
Since the CERC was regulating the consequences of the delay rather than adjudicating a dispute about it, no specific prayer for compensation was needed and there was no occasion to hear the State utility at that stage; a dispute over the levy would arise only when bills were raised. There was therefore no breach of natural justice. (¶¶ 49, 61)
While the vires of a Section 178 regulation cannot be challenged before an authority created by the parent statute, a specific regulatory order under Section 79(1) is different: its source is an ad hoc power limited to the parties and situation before the CERC, and such orders are appealable under Section 111. The Whirlpool exceptions were therefore unavailable and the High Court committed an egregious error in admitting the writ petitions. (¶¶ 62, 63, 64, 65)
The decision is confined to maintainability: the CERC is empowered to impose transmission charges on the party to whom delay is attributable, but whether such liability could be imposed on the State utility on the facts was not decided and is for APTEL if an appeal under Section 111 is preferred. (¶ 66)

Result

Appeals allowed; High Court judgment dated 25.02.2021 admitting the writ petitions set aside and both writ petitions dismissed; merits of the State utility's liability left open for APTEL under Section 111 if it appeals; pending applications disposed of; Registry directed to circulate the judgment to all High Courts.