BSES RAJDHANI POWER LTD. versus DELHI ELECTRICITY REGULATORY COMMISSION

Citation: [2022] 14 S.C.R. 790 · Decided: 18-10-2022 · Supreme Court of India · Bench: S. ABDUL NAZEER · Disposal: Appeal(s) allowed

Cited by 2 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

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SUPREME COURT REPORTS
[2022] 14 S.C.R.
   [2022] 14 S.C.R. 790
790
BSES RAJDHANI POWER LTD.
v.
DELHI ELECTRICITY REGULATORY COMMISSION
CIVIL APPEAL NO(S). 4324 OF 2015
OCTOBER 18, 2022
[S. ABDUL NAZEER AND KRISHNA MURARI, JJ.]
Electricity Act, 2003 : ss. 2(17), 12, 14, 43, 61, 62 and 64 –
Determination of tariff – Exercise of ‘truing up’ – Appellants are
distribution licensees, involved in distributing and supplying
electricity in their designated areas within the NCT of Delhi – In
terms of the 2003 Act, Delhi Electricity Regulatory Commission-
DERC, regulated the Annual revenue requirement-ARR of the
appellants to conduct the licensed business and consequently the
tariff to be recovered from the consumers – DERC made
disallowances in Tariff orders dated 26.08.2012 for determination
of ARR and Tariff for FY 2011-12 and truing up of financials for
FY 2008-09 and FY 2009-10 – DERC changed methodology of
computation of ARR at the stage of true up – Challenged by the
appellants before the appellate tribunal for Electricity – Appellants
contented that since privatization, the ARR determined by the DERC
was not even sufficient to meet the actual power purchase cost which
led to creation of a huge revenue gap; that the DERC in repeated
disregard to its statutory regulations and its own statutory advice
refused to make periodic increase in the tariff rate, leading to the
indebtness of appellants – Findings of DERC confirmed by APTEL
– On appeal, held: It is not permissible to amend the tariff order
during true up exercise – On the pretext of prudence check and
truing up, DERC could not have amended the tariff order –
Regulator cannot ‘change the rules after it has begun’ in the ‘truing
up exercise’ – Thus, the findings of the DERC, as confirmed by the
APTEL in the on issues pertaining to change in methodology in
computation of AT&C losses; change in methodology for
computation of depreciation; disallowance of salary for FR/SR
Structure; and disallowance of Fringe Benefit Tax, are contrary to
the order of the original MYT determination Tariff Order dated
23.02.2008 and 28.05.2009, thus, set aside – As regards the
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disallowance of interest incurred on Consumer Security Deposit
retained by DPCL, the appellants are entitled to recover interest on
Consumers Security Deposit as held by the DPCL – As regards,
reduction in million units in relation to enforcement sale for the
purpose of calculation of Aggregate Technical and Commercial
losses, pertaining to theft/unauthorized use of electricity, the
assessed energy has to be considered as supply by the appellants in
the enforcement cases – DERC to consider assessed energy for
calculation of enforcement sales and allow the impact of the same
along with carrying costs – Thus, the order of the DERC and the
judgment of the APTEL impugned herein are set aside.
s. 64 – Procedure for tariff order – Amendment of tariff order
made u/s. 64 during the ‘truing up’ exercise – Permissibility of –
Held: A tariff order is quasi-judicial in nature which becomes final
and binding on the parties unless it is amended or revoked u/s.
64(6) or set aside by the appellate authority – ‘Truing up’ stage is
not an opportunity for the DERC to rethink de novo on the basic
principles, premises and issues involved in the initial projections of
the revenue requirement of the licensee – ‘Truing up’ exercise cannot
be done to retrospectively change the methodology/principles of
tariff determination and re- opening the original tariff determination
order thereby setting the tariff determination process to a naught at
‘true-up’ stage – Revision or re-determination of the tariff already
determined by DERC on the pretext of prudence check and truing
up would amount to amendment of the tariff order, which can be
done only as per the provisions of sub-Section (6) of s.64 within the
period for which the Tariff Order was applicable – DERC cannot
amend the tariff order for the period 01.04.2008 to 31.03.2010 in
the guise of ‘true-up’ after the relevant financial year is over and
the same is replaced by a subsequent tariff Order – This would
amount to a retrospective revision of tariff when the relevant period
for such tariff order is already over – Thus, not permissible to amend
the tariff order made u/s. 64 during the ‘truing up’ exercise.
s.125 – Appeal to Supreme Court – Exercise of jurisdiction
under – Held: Existence of a ‘substantial question of law’ arising
from the judgment of t

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