POWERGRID CORPORATION OF INDIA LIMITED versus CENTRAL ELECTRICITY REGULATORY COMMISSION & ORS.

Citation: [2025] 6 S.C.R. 123 · Decided: 04-05-2025 · Supreme Court of India · Bench: ABHAY S. OKA · Disposal: Dismissed

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Judgment (excerpt)

[2025] 6 S.C.R. 123 : 2025 INSC 626
Powergrid Corporation of India Limited 
v. 
Central Electricity Regulatory Commission & Ors.
(Civil Appeal No(s). 5857-5858 of 2011) 
05 May 2025
[Abhay S. Oka and Ujjal Bhuyan,* JJ.]
Issue for Consideration
The questions arose for consideration whether the appellate tribunal 
and Central Electricity Regulatory Commission justified in rejecting 
the appellant’s claim of additional capitalization due to replacement 
of the damaged Inter-connecting Transformers-ICTs; whether the 
self-insurance policy of the appellant covered the cost of replacement 
of the damaged ICTs; and whether the Member Secretary of NRPC 
should have been directed by the appellate tribunal to issue revised 
availability certificate for the transmission assets.
Headnotes†
Central Electricity Regulatory Commission (Terms and 
Conditions of Tariff) Regulations, 2004 – Reg. 53 – Additional 
capitalisation – Claim of – Appellant owned and operated 
transmission systems in the northern region-R I and R II – 
Inter-connecting transformers in the R I transmission system 
got burnt and damaged due to internal faults – Transformers 
from R II temporarily taken out and diverted to R I – Appellant 
restored the transformers at R-1 and ICTs taken out from 
R II were restored by new/repaired transformers – Petition 
by the appellant before the respondent-CERC claiming de-
capitalization for the transformers taken out from R II and 
additional capitalization for the new/repaired transformer 
installed at R I – Claim not allowed by CERC holding that the 
net cost for such replacement has to be met out from the 
insurance fund reserve maintained by the appellant under 
the internal insurance policy; and also did not accede to the 
prayer of the appellant for giving directions to the Northern 
Regional Power Committee for issuance of revised availability 
certificate – Appeal thereagainst, dismissed by the appellate 
tribunal – Interference: 
* Author
124
[2025] 6 S.C.R.
Supreme Court Reports
Held: Not called for – Appellate tribunal and CERC justified in rejecting 
the appellant’s claim of additional capitalization due to replacement 
of the damaged ICTs – Reg. 53 provides that additional capital 
expenditure incurred after the commercial operation date and upto 
the cut-off-date may be admitted by the CERC if such expenditure 
relates to deferred liabilities, deferred works, procurement of initial 
spares, etc. – Reg. 53 does not include within its scope replacement 
of transformers due to damage or failure – As per Reg. 53(2)(iv) 
any additional work/services which becomes necessary for the 
efficient and successful operation of the project but not included in 
the original project cost may be admitted by CERC as additional 
capital expenditure – All that the appellant had done was diversion 
and replacement of transformers which cannot be construed as 
doing any additional work/services u/Reg.53(2)(iv) – Nothing on 
record to show that prior to the breakdown of transformers the 
transmission systems were in bad shape or had started wearing 
out – As regards the self-insurance policy, the loss caused to the 
appellant by fire would be covered by the policy as it covered all fires 
which caused loss without any exception and as all the ICTs were 
operating until those got burnt – Proximate cause for the damage 
to the transformers is the implosion/explosion in the internal/external 
machinery of the transformers which caused fire – Self-insurance 
policy of the appellant covered the cost of replacement of the 
damaged ICTs – Appellate tribunal justified in directing the appellant 
to finance the net cost from the self-insurance fund reserve as part 
of the operation and maintenance charges – As decapitalization and 
additional capitalization of the replaced ICTs have not been allowed, 
issuance of direction to NRPC for revised availability certificate for 
the transmission assets does not arise. [Paras 28-35, 37-39]
Case Law Cited
New India Assurance Company Limited v. Zuari Industries Limited 
[2009] 13 SCR 1101 : (2009) 9 SCC 70 – relied on.
Gujarat Urja Vikas Nigam Limited v. Renew Wind Energy (Rajkot) 
Private Limited [2023] 7 SCR 670 : 2023 SCC OnLine SC 411 – 
held inapplicable.
List of Acts
Electricity Act, 2003; Electricity Regulatory Commission Act, 1998; 
Central Electricity Regulatory Commission (Terms and Conditions 
of Tariff) Regulations, 2004.
[2025] 6 S.C.R. 
125
Powergrid Corporation of India Limited v.  
C

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