MAHARASHTRA STATE ELECTRICITY DISTRIBUTION CO. LTD. versus UNION OF INDIA AND OTHER

Citation: [2020] 3 S.C.R. 1048 · Decided: 28-02-2020 · Supreme Court of India · Bench: ARUN MISHRA · Disposal: Disposed off

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Judgment (excerpt)

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MAHARASHTRA STATE ELECTRICITY
DISTRIBUTION CO. LTD.
v.
UNION OF INDIA AND OTHER
(Civil Appeal No. 4304 of 2007)
FEBRUARY 28, 2020
[ARUN MISHRA, M. R. SHAH AND B. R. GAVAI, JJ.]
Electricity Regulatory Act, 1998 – The Maharashtra State
Electricity Regulatory Commission (MERC) quashed circular No.
602 dated 23.07.1998, Circular No. 619 dated 25.05.1999, Circular
No. 627 dated 02.09.1999, Circular No. 651 dated 19.09.2000 and
Circular No. 663 dated 05.10.2001, insofar as they purport to
impose “take or pay” obligation and minimum off-take requirement
as also of any additional tariff for captive power plant holders on
the ground that there was no approval of the MERC constituted in
terms of the provisions of the Electricity Regulatory Act, 1998 –
The appellant-MSEDCL was directed to make refund to respondent
nos. 3 to 7 – Appeal preferred by MSEDCL was dismissed by the
Appellate Tribunal for Electricity (APTEL) – Before the Supreme
Court, the appellant-MSEDCL contended that MERC was
constituted on 05.08.1999, its approval was not required with regard
to two circulars issued before the said date – Held: The circular
issued before the Commission was constituted could not have been
quashed on the ground that Maharashtra State Electricity Board
(MSEB) had no power to issue them without the approval of the
Commission – In Binani Zinc Limited, the Supreme court held that
before Commission came into existence, the power was to be
exercised by the State Electricity Board – Therefore, the circulars
and the policy decisions issued before the establishment of the
Commission were illegally set aside – Insofar as refund order is
concerned, it is apparent from the additional affidavit filed by the
appellant-MSEDCL that the respondents used supply of electricity
to manufacture their products – The cost incurred on production
has been passed on to the buyers/ consumers buying their products
– In the peculiar facts of the case, as the Commission earlier opined
in order dated 10.01.2002 that Captive Power Plant Policy is a
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policy matter and it did not decide as to the merits of subject matter
as prayer for approval was made by the appellant- MSEDCL – The
Commission without considering on merits the reasonableness of
the demand, quashed the circulars – It would not be appropriate in
the peculiar facts of the case to direct refund to be made by the
appellant-MSEDCL of the amount recovered by it as it would
tantamount to unjust enrichment – Consequently, the orders passed
by the Commission as well as the APTEL set aside and in the peculiar
facts and circumstances of the case, the order concerning a refund
of amount recovered also set aside.
Allowing the appeal, the Court
HELD:1. The first question for consideration is whether
the Commission could have quashed  circulars  issued  by  the
appellant-MSEDCL  before  its  formation. The Commission was
constituted under the Act of 1998 on 5.8.1999. The circular issued
before that could not have been quashed on the ground that MSEB
had no power to issue them without the approval of the
Commission. The decisions in that regard of Commission as well
as of APTEL are liable to be set aside. In Binani Zinc Limited,
this Court held that before Commission came into existence, the
power was to be exercised by the State Electricity Board. [Para
24][1058-F-G]
Binani Zinc Limited v. Kerala State Electricity Board
and Ors. (2009) 11 SCC 244 – relied on.
2. Concerning circular dated 2.9.1999, which remained in
force till 28.4.2000, the Commission as well as the APTEL were
required to consider impact of Commission earlier order passed
on 10.1.2002 and also its observations made in the said order
that CPP is a policy matter and that Commission was recently
conferred with the power under Section 22(2) of the Act of 1998,
it ought to have gone into the merits of the claim. It was also
pointed out on behalf of appellant-MSEDCL that it had submitted
circulars for approval to Commission, which has not gone into
the merits of the subject matter and later quashed circulars on
the ground of competence. The MSEDCL filed circulars along
with tariff proposal for approval as that was an essence of the
tariff. [Para 25][1059-G-H; 1060-A]
MAHARASHTRA STATE ELECTRICITY DISTRIBUTION CO.
LTD. v. UNION OF INDIA
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3. It has also been pointed out that in subsequent ord

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