U.P. POWER CORPORATION LTD. versus N.T.P.C. LTD. & ORS.

Citation: [2013] 9 S.C.R. 805 · Decided: 18-09-2013 · Supreme Court of India · Bench: T.S. THAKUR · Disposal: Dismissed

Judgment (excerpt)

[2013] 9 S.C.R. 805 
U.P. POWER CORPORATION LTD. 
v. 
N.T.P.C. LTD. & ORS. 
(Civil Appeal No. 4117 of 2006) 
SEPTEMBER 18, 2013 
[T.S. THAKUR AND VIKRAMAJIT SEN, JJ.] 
CENTRAL 
ELECTRICITY 
REGULA TORY 
COMMISSION 
(TERMS 
AND 
CONDITIONS 
FOR 
DETERMINATION OF TARIFF) REGULATIONS, 2001: 
Regulation 2.5 read with Regulation 1.9 - Taking over of 
Thermal Power Station - Excess expenditure - Fixation of tariff 
- Relevant period being 1.4.2001 to 31.3.2004 - Held: Basis 
A 
B 
c 
for fixation of tariff has to be the "actual capital expenditure" D 
incurred on the completion of the project -- But where the 
actual expenditure exceeds the approved expenditure, the 
excess so incurred can be taken into consideration to the 
extent the same is allowed by Central Electricity Authority or 
an appropriate independent agency nominated for the 
E 
purpose - This implies that the excess expenditure must go 
through a process of scrutiny either by CEA or the 
independent agency before it can constitute an input for 
determination of tariff - Scrutiny of the excess would in tum 
primarily involve examination of two distinct aspects: (a) 
Whether the excess expenditure has been actually incurred 
F 
or is a make believe or an exaggeration by the generating 
company; and (b) Whether the expenditure was capital in 
nature - In the instant case, CERC had on a prudent check 
disallowed a substantial part of the excess that was claimed 
by respondent-NTPC and the claim allowed had been 
G 
conceded by appellant-Corporation to have been actually 
spent by respondent for completion of project. 
Regulation 2.5 - Fixation of tariff - Reference to CEA or 
805 
H 
806 
SUPREME COURT REPORTS 
[2013] 9 S.C.R. 
A 
independent agency - Held: In the instant case, prayer for 
additional capitalisation was made by respondent-Corporation 
and considered by CERC after Electricity Act 2003 had come 
into force, repealing the earlier enactments - The new 
legislation did not set out any role for CEA, in the matter of 
B 
approval of schemes for generating companies or the capital 
expenditure for the completion of such projects - CERC was, 
therefore, right in holding that Central Electricity Authority had 
no part to play in the matter of approval for purposes of 
capitalisation of the extra expenditure incurred on a project -
C 
However, on facts, since the issue of actual expenditure had 
been concluded by the admission of appellant, and in the 
absence of any question relating to the nature of the 
expenditure, the absence of a reference to CEA cannot be 
said to have caused any miscarriage of justice for the 
0 
appellant or vitiated the tariff fixation by the CERC. 
ELECTRICITY ACT, 2003: 
s. 70 ands. 73 read with s. 61 proviso, and Regulation 2.5 
of Regulations of 2001 - Fixation of tariff - Capital expenditure 
E - Excess expenditure - Determination - Reference to CEA -
Held: The far reaching changes that came about in the legal 
framework with the enactment of the 2003 Act, made 
Regulation 2.5 redundant in so far as the same envisaged a 
reference to CEA or an Independent Agency for approval of 
F 
the additional capitalisation - Insistence on a reference, to 
CEA for such approval, despite the sea change in the legal 
framework would have been both unnecessary as well as 
opposed to the spirit of new law that reduced the role of CEA 
to what has been specified in s. 73. 
G 
The respondent-National Thermal Power Corporation 
(NTPC) took over the Thermal Power Station in question 
from the erstwhile U.P. State Electricity Board on 
13.02.1992, on an approved project cost of Rs.927 .85 
crores. On a petition filed by NTPC for approval of tariff 
H for the tariff period 01.04.2001 to 31.03.2004 in respect of 
U.P. POWER CORPORATION LTD. v. N.T.P.C. LTD. & 807 
ORS. 
the generating plant in question, the Central Electricity 
A 
Regulatory Commission (CERC) by an Order dated 
24.10.2003 approved the tariff taking into consideration 
the capital cost at Rs.940.70 crores as on 01.04.2001 but 
did not consider the additional capitalisation claimed by 
the respondent since the same was based only on an 
estimated capital expenditure and was unsupported by 
8 
an auditor's certificate. The respondent-NTPC then 
moved a petition before the CERC seeking approval of 
the revised fixed charges in respect of the generating 
plant for the relevant tariff period taking into account the c 
additional capital expenditure incurred during the said 
period which w

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