TAMIL NADU STATE ELECTRICITY BOARD versus CENTRAL ELECTRICITY REGULATORY COMMISSION AND ORS.

Citation: [2007] 5 S.C.R. 416 · Decided: 20-04-2007 · Supreme Court of India · Bench: H.K. SEMA · Disposal: Dismissed
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Judgment (excerpt)

"V--· 
A 
TAMIL NADU STATE ELECTRICITY BOARD 
.;, 
v. 
CENTRAL ELECTRICITY REGULATORY COMMISSION AND ORS. 
APRIL 20, 2007 
B 
[H.K. SEMA AND V.S. SIRPURKAR, JJ.] 
. ' 
Central Electricity Regulatory Commission (Terms and Conditions of 
>-· 
Tarriff) Regulations, 2001; Regulation 2. 7(d)(iv)/Electricity Act, 2003; S. I 25: 
c 
Operation and Maintenance/expenses including insurance-Revision-· 
Escalation factor for the deviation between 4.8% and 7.2% in terms of 
Regulation 2. 7 (d)(iv)-Interpretation of-Held: In terms of Regulation 
2. 7(d)(iv) escalation factor of 6% is to be used for revising other charges-
On each year the escalation factor would be computed on the basis of actual 
D inflation data-In case, the deviation factor works out to be within 20% of 
the standard escalation factor of 6% such deviation shall be ignored since 
"* 
objective behind the provision is that an exercise of computation could be 
i 
dispensed with for a little or insignificant charges-Plain and simple meaning 
of the provision admits that the deviation beyond the prescribed limit would 
E 
only be available for adjustment and such a deviation has to be absorbed 
by utilities/beneficiaries-Interpretation of Statutes. 
Words and Phrases: 
'Beyond the limit'-Meaning of the context of Regulation 2. 7 (d)(iv). 
F 
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National Thermal Power Corporation, one of the respondents, generates 
electricity at its various plants and sells it to the State utilities viz. appellants 
at the tariff fixed by the Central Electricity Regulatory Commission (CERC). 
After CERC Regulations, 2001 were notified which provide the method for 
working out the allowable Operation and Maintenance expenses and escalation 
G 
factors thereupon, the Commission with a view to look into the question of 
revision of O&M expenses for the period from 2001-2002 to 2003-2004 
initiated suo motu proceedings in the year 2004. The Commission circulated 
,f 
its Draft Order dated 4.1.2005 dealing with adjustment of 0 & M expenses 
based on actual escalation factor for the deviation beyond the limit prescribed 
by Regulation 2. 7 (d)(iv) of the Central Electricity Regulatory Commission 
H 
416 
TAMIL NADU STAlE ELECTRICITY BOARD v. CENlRAL ELECTRICITY REGULATORY COMMISSION 
417 
- .. 
(Terms and Conditions of Tariff) Regulation, 2001. The CERC vide its order A 
dated 28.2.2005 directed that the O&M charges between April 1, 2001 to 
March 31, 2004 should be worked out by applying the actual escalation rates 
for the years 2001-2002 and 2003-2004 as calculated by CERC. A Review 
Petition was filed before the CERC by the NTPC was rejected by the CERC 
by its order dated 7.6.2005. Aggrieved, NTPC and others filed an appeal before B 
the Appellate Authority. The Appellate Authority vide its order dated 3.1.2006 
allowed the appeals filed by the NTPC and set aside the orders passed by the 
> .. 
CERC dated 28.2.2005 and 7.6.2005. Hence the present appeals. 
~ 
Appellant-Utilities contended that the Appellate Authority has clearly 
erred in giving a literal interpretation to the provision, namely, Clause c 
2. 7( d)(iv) of CERC Regulations; that the Appellate Authority was bound to 
discern the true intendment of the provision and should have given it a 
meaningful interpretation, in that, the escalation factor should have been 
calculated keeping 6% as the base and it should not have been limited to the 
difference alone; that the rule was manifestly neutral rule founded on purely 
neutral consideration and while interpreting the same, the Appellate Court D 
bas divested itself with the logic thereof, that the rule was meant for the 
• t 
convenience of all concerned which included both administrative as well as 
financial convenience; that the intention behind the rule was that the CERC 
should not be exposed to the tedious exercise of review and re-adjustment of 
tariff already fixed so long as the deviation was within 20% which was E 
perceived to be the reasonable tolerance limit and hat being the only objective 
behind the peculiar language of the rule; that by adopting the literal 
interpretation, the Utilities could not have been deprived of the full benefits if 
the O&M factor went below 20% of the escalation factor of6%; that in case 
the O&M factor went beyond the 20% by way of an upswing then the 
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generating unit like NTPC-the respondent was always justified to charge on F 
the basis of the full difference between the actual upswing point and the 6%; 
that this was th
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