Bhaskar Shrachi Ayolls ltd., West Bengal Electricity… Etc vs. Damodar Valley Corporation

Bhaskar Shrachi Ayolls ltd., West Bengal Electricity… Etc vs. Damodar Valley Corporation
In the Supreme Court of India
Civil Appellate Jurisdiction 
Civil appeal no(s).971973 OF 2008
Appellant
Bhaskar Shrachi Ayolls Ltd. , West Bengal Electricity … Etc  
Respondent
Damodar Valley Corporation
Date of Judgement
23rd July 2018
Bench
Hon’ble Justice Ranjan Gogoi; Hon’ble Justice R. Banumati

Background

The learned   Appellate   Tribunal for   Electricity at   New   Delhi passed a common judgment and order on 23rd November 2007. The appeal arose out of it. Against the order passed by Central Electricity Regulatory Commission (hereinafter referred to as CERC) the appeal was made before the learned Tribunal.

Statutes & Provisions Involved

  • Sections 32, 37, 38, 39 and 40 of Damodar Valley Corporation Act, 1948
  • Sections 14, 41, 51 of Electricity Act, 2003

Facts

Damodar Valley area which falls within the States of West Bengal and Jharkhand; Electricity Corporation was established for the development of that area. Section 12 of Damodar   Valley   Corporation   Act,   1948 lays down the provision for the following three things namely (i) generation, transmission, and distribution of power, (ii) Control of flood & (iii) soil conservation, aforestation connected activities. 

The tariff chargeable from its consumer has to be determined by the Electricity Corporation as per section 20 of the Act of 1948. The facets of expenditure, depreciation, allowances, payment of interest, etc. are dealt with by section 32, 37, 38, 39 and 40 of the Act of 1948. All these areas function on the amount collected through tariff which the corporation imposes on its consumers.

On 1st September 2000, the Damodar Valley Corporation (hereinafter referred to as Corporation) had notified its own tariff.  On 10th June 2003 the Electricity Act, 2003 came into force. The Corporation didn’t approach to CERC regarding fixing tariff even after the enactment of the Act of 2003.  On 29th March 2005, the proceedings were started by the CERC suo moto and the corporation was directed by CERC to submit the documents and application related to determining the tariff from 1st April 2004 to 31st March 2009 which has to be imposed on consumers.

The CERC for determining tariff for the period being in question created the impression that taking into account the “multifaceted nature or complexity” of the issues in question, the CERC had mentioned one of its individuals to go into the vital fact-finding exercise and to present a report of the point by point realities that would be significant for determining tariff by the CERC. Based on the accessible data sources got from the previously mentioned single part Bench of the CERC, the CERC gave a tariff request dated 3rd October 2006 deciding the duty for age and transmission for the period from 1st April 2006 to 31st March 2009 by permitting a two year transformation period to the Corporation.

On 3rd October 2006 the CERC came up with an order that says the determination of tariff chargeable by the corporation will now be determined according to the Act of 2003; thereby refusing the grants and claims of the consumers namely, West   Bengal   Electricity   Regulatory Commission, Jharkhand Electricity Regulatory Commission, Bhaskar Shrachi Alloys Ltd., Anjaney Ferro Alloys Ltd., Impex Ferro Tech Ltd., Maithan Alloys Ltd., Shyam Ferro Alloys Ltd., etc. The power of the State Electricity Regulatory Commission also affected in determining the intrastate transmission.

Issues

Regardless of whether the view taken by the Appellate Tribunal as to the fourth proviso to Section 14 of the 2003 Act and the applicability of the Sections 32, 37, 38, 39 and 40 contained in Part IV of the Act of 1948 in the matter of determining tax under the 2003 Act is right?

Regardless of whether it is the provisions of the Tariff Regulations (2004 Regulations) which alone would hold the field in the matter of determination of tax to the rejection of the arrangements of Sections 32, 37, 38, 39, and 40 contained in Part IV of the Act of 1948?

Regardless of whether the ends and discoveries of the Appellate Tribunal on any at least one of the cases made by any of the partners in the matter of determination of tax are vitiated by the grave and clear mistakes?

Contention

Petitioner’s contention

  • That as far as the upbraided order dated 23 rd November 2007 passed by the Appellate Tribunal the issue has been anew considered and re ­ determined by the CERC by its request dated August 6, 2009. This has occurred because of the absence of any restrictions. The said request of the CERC dated August 6, 2009, has since been confirmed by the Appellate Tribunal by a different appeal dated May 10, 2010, which is the topic of challenge in Civil Appeal No.4881 of 2010 by and by pending before this Court.

Respondent’s contention

The appendage of the contention depends on the arrangements contained in Section 174 of the 2003 Act which gives a superseding impact to the arrangements of the 2003 Act despite any irregularity with some other law for now in force.

It was further contended that second piece of the fourth stipulation to Section 14 of the 2003 Act can’t be comprehended to mean, as has been held by the Appellate Tribunal, that the provisions of the Act of 1948 which are not in conformity with the provisions of the 2003 Act most definitely would keep on holding the field.

Judgment:

Ratio Decidendi:

  • To the extent that the issue of remittance of cost identifying with different exercises of the Corporation to be recouped through a tariff on power is concerned, the bench observed the objection(s) brought up in such manner which in overall gist is that Sections 32 and 33 of the Act of 1948 are in direct clash with Sections 41 and 51 of the 2003 Act and, thusly, recuperation of cost caused in “different works” attempted by the Corporation through the power of tariff is completely unsound. Aside from repeating the premise on which we have thought it appropriate to confirm the discoveries of the educated Appellate Tribunal on the implications and extent of the fourth stipulation to Section 14 of the 2003 Act and the proceeded with the activity of the provisions of the Act of 1948 which are not conflicting with the provisions of the 2003 Act.
  • After hearing all the issues, contentions, and interpretation of statues the Supreme Court affirmed the judgment and order passed by the tribunal; thereby, dismissing the appeal.

Obiter Dicta:

  • The court likewise observed the particular provisions contained in Sections 41 and 51 of the 2003 Act which, inter Alia, require the support of discrete records of the different business embraced by transmission/dispersion licensees to guarantee that the profits from the transmission/conveyance business of power don’t sponsor some other such business.
  • Not just Sections 41 and 51 of the 2003 Act mull over earlier approval of the Appropriate Commission before a licensee can take part in some other business other than that of a licensee under the 2003 Act, what is considered by the previously mentioned provisions of the 2003 Act is some arrival or gaining of income from such business.
  • In the case, “different exercises” of the Corporation are not discretionary as thought about under Sections 41/51 of the 2003 Act however are obligatorily thrown by the resolution for example Act of 1948 which, being in the idea of socially advantageous measures, in essence, don’t involve gaining of any income to require the support of independent records. The recompense of recuperation of cost acquired regarding “different exercises” of the Corporation from the normal store produced by tariff chargeable from the shoppers/clients of power as mulled over by the provisions of the Act of 1948, along these lines, don’t impact or is, in any way, conflicting with the arrangements of the 2003 Act. The court, accordingly, has no event to meddle with the findings recorded by the Appellate Tribunal on the above score.

Conclusion:

After the thorough check, it must have concurred with the requirement for subsidizing the Pension and Gratuity Contribution funds, Damodar Valley Corporation ought to have been permitted to recoup the whole sum from the buyers through the tariff. Soliciting Damodar Valley Corporation to contribute out from its own assets would commensurate to denying it the return on equity as guaranteed as far as Tariff Regulations. In any case, in the event that we take a look at it from the perspective of the consumers, especially the commercial and industrial ones, have now no alternative to modify their deal cost to contemplate the requirement for meeting the aggregated liability. Hence, it is an acknowledged certainty that due to delaying the formation of such funds, the consumers were getting a charge out of lesser tariff than the real tariff applicable to them.

“The views of the authors are personal

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I’m Adya Aditi Samal, pursuing B.A. LL.B in Xavier Law School. I’m a self-motivated law student who believes in the idea that “there is always someone better than you”, and this makes me keep going. I love to learn new things because I feel learning refine you, redefines you. I’ve been an ardent admirer of world history, psychology and mythology all through my life. Finally, my heart found solace when I fell in love with criminal law and human rights law. The intrinsically intimate thread between society and law mesmerizes me every time. In my leisure, I write poems and short stories in Odia. And finally; I don’t eat to live but rather live to eat.