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TMI Blog2018 (7) TMI 2025X X X X Extracts X X X X X X X X Extracts X X X X ..... eriod can be faulted with. We, therefore, decline to interfere with the aforesaid part of the order of the learned Appellate Tribunal. The learned Appellate Tribunal has also taken the view that having regard to the provisions of Section 79 of the 2003 Act it is the CERC which would be the Appropriate Commission for determination of tariff inasmuch as the Damodar Valley Corporation is a Corporation owned and controlled by the Central Government. The detailed inputs to arrive at the aforesaid conclusion have been duly considered by us - On such consideration, we are of the view that the above conclusion recorded by the learned Appellate Tribunal is neither unreasonable nor irrelevant so as to warrant our interference, particularly, in exercise of the limited jurisdiction Under Section 125 of the 2003 Act. Appeal dismissed. X X X X Extracts X X X X X X X X Extracts X X X X ..... oming into force of the 2003 Act the Corporation had not approached the CERC for determination of the tariff chargeable by it. Consequently, the CERC initiated suo motu proceedings by order dated 29th March, 2005 and directed the Corporation to submit an application for determination of tariff for the period from 1st April, 2004 to 31st March, 2009. In terms of the said order passed by the CERC, the Corporation made an application dated 8th June, 2005 before the CERC (i.e. Petition No. 66 of 2005) for determination of tariff for the period in question. It appears that in view of the "complexity" of the issues involved, the CERC had requested one of its members to go into the necessary fact-finding exercise and to submit a report of the detailed facts that would be relevant for determination of tariff by the CERC. On the basis of the available inputs received from the aforesaid single member Bench of the CERC, the CERC issued a tariff order dated 3rd October 2006 determining the tariff for generation and transmission for the period from 1st April, 2006 to 31st March, 2009 by allowing a two-year transition period to the Corporation i.e. from 1st April, 2004 to 31st March, 2006. 5. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and order dated 23rd November, 2007 took the view that by virtue of fourth proviso to Section 14 of the 2003 Act, while the Corporation continued to be a deemed licensee, the provisions of the Act of 1948, which are not inconsistent with the provisions of the 2003 Act, shall continue to apply to the Corporation. In other words, insofar as the inter-play between the provisions of the Act of 1948 and the 2003 Act is concerned, according to the learned Appellate Tribunal, it is only the provisions of the earlier Act inconsistent with the later Act that will cease to have effect and such provisions of the Act of 1948 that are consistent will continue to hold the field notwithstanding the enactment of the 2003 Act. Continuing further, the learned Appellate Tribunal held that while Section 20 of the Act of 1948 which empowers the Corporation to fix the tariff is inconsistent with Section 62 of the 2003 Act which authorised the "Appropriate Commission" to determine the tariff in accordance with the provisions of the 2003 Act, the specific provisions contained in Sections 32, 37, 38, 39 and 40 of Part IV of the Act of 1948 will continue to be relevant in the matter of determination of ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been affirmed by the learned Appellate Tribunal by a separate order dated 10th May, 2010 which is the subject matter of challenge in Civil Appeal No. 4881 of 2010 presently pending before this Court. The said appeal (Civil Appeal No. 4881 of 2010) has been ordered to be heard after disposal of the present appeals. 11. The arguments advanced by the respective Appellants who are also the Respondents in the connected appeals may be noted at this stage. 12. On behalf of the CERC, which is the Appellant in Civil Appeal No. 4289 of 2008, it has been contended that second part of the fourth proviso to Section 14 of the 2003 Act cannot be understood to mean, as has been held by the learned Appellate Tribunal, that the provisions of the Act of 1948 which are not inconsistent with the provisions of the 2003 Act so far as the determination of tariff is concerned would continue to hold the field. Two principal basis have been urged in support of the above. The first is that a proviso cannot be understood to go beyond the main part of the Section which, in the present case, deals only with 'licensing' and not 'tariff determination'. Reliance in this regard has been placed on the decisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld have been the basis for the determination of the extent of depreciation. In this regard, reliance has been placed on the decision of this Court in PTC India Ltd. v. Central Electricity Regulatory Commission (2010) 4 SCC 603 [Para 17]. 15. It is on the same basis that the findings of the learned Appellate Tribunal so far as the 'Sinking Fund' is concerned, which has been held to be recoverable through the tariff, has been assailed. It is urged that the Tariff Regulations do not make any provision for any 'Sinking Fund' and, therefore, the recovery of such fund through tariff is abhorrent to the provisions of Section 61 of the 2003 Act read with the Tariff Regulations. 16. Similarly, the finding of the learned Appellate Tribunal with regard to the allowability of charging the expenditure on projects other than electricity from the common fund as common expenditure has been assailed as being contrary to the spirit of the 2003 Act inasmuch as it is opposed to the principle of allowance of cross-subsidy which the 2003 Act seeks to do away with. Reference has been made to different provisions of the 2003 Act to contend that recovery of expenditure unrelated to electricity generatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the Corporation is concerned what was provided for is a limited exemption, the extent of which has been spelt out by Section 14 (fourth proviso) of the 2003 Act, which, necessarily, has to be understood to be circumscribed by the provisions of the main part of Section 14 of the 2003 Act which deals with licensing as distinguished from tariff determination. It is further urged on behalf of the Appellants - consumers that the decision to keep in abeyance the tariff for a period of two years is ultra vires the provisions of the 2003 Act, there being no authority in law to order any such relaxation or to postpone the coming into effect of the tariff fixed under the 2003 Act. The fact that the provisions of the Act of 1948 do not find any mention in the proviso to Section 61 of the 2003 Act has also been stressed upon. 21. In so far as the pension and gratuity fund is concerned, in addition to the grounds urged in this regard on behalf of the CERC, it is further urged that almost 99% of the pension and gratuity liability, as assessed by the Actuary, has been permitted to be loaded on to the electricity business without any reference or finding with regard to the percentage of man-p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of the aforesaid matters which are dealt with only by the Tariff Regulations in contra-distinction to specific provisions of the Act of 1948 covering the issue i.e. Section 40 of the Act of 1948, it is the provisions of Part IV of the Act of 1948 which will govern the matter. So far as the debt-equity ratio is concerned, it has been urged that the determination of the ratio at 50:50 for capital assets created prior to 30th March, 1992 and the ratio of 70:30 for the capital assets after 30th March, 1992 is consistent with the principles adopted for all Central Government Corporations like NTPC Limited, Powergrid Corporation of India Limited, NHPC etc. 24. Insofar as the pension and gratuity contribution required to be made by the Corporation is concerned, it is contended that the issue has been raised only at the stage of arguments by the HT-consumers i.e. Appellants in Civil Appeal Nos. 971-973 of 2008. The same has not been raised by the Regulatory Commission at all or even by the HT-consumers before the forums below. That apart, it is contended that the break-up of the details of the percentage of employees called for by the CERC in this regard was made available which fact i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aving regard to the provisions of Section 79 of the 2003 Act it is the CERC which would be the "Appropriate Commission" for determination of tariff inasmuch as the Damodar Valley Corporation is a Corporation owned and controlled by the Central Government. The detailed inputs to arrive at the aforesaid conclusion have been duly considered by us. On such consideration, we are of the view that the above conclusion recorded by the learned Appellate Tribunal is neither unreasonable nor irrelevant so as to warrant our interference, particularly, in exercise of the limited jurisdiction Under Section 125 of the 2003 Act. 29. We may now turn to the other/larger issues arising in the appeals. 30. The Damodar Valley Corporation had been incorporated under the provisions of the Act of 1948. The facts antecedent to the incorporation of this entity would throw considerable light on the objects and reasons for its incorporation. Sometime in the year 1943, the Damodar River Valley had been affected by severe floods leading to wide-scale destruction of life and property. The Provincial Government of Bengal had constituted an Enquiry Committee to suggest ways and means to avoid such catastrophes i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the treasurer will be appointed by the Central Government. The Corporation will have the power to acquire land and construct or cause to be constructed such dams, barrages, reservoirs, power-houses and power structures, electrical transmission line, irrigation and navigation works as may be necessary. The capital required by the Corporation will be provided by the Central Government and the Government of Bihar and West Bengal. The profits and losses will be distributed between these three Governments in certain agreed proportions. The provisions of this Bill are designed to give effect to the broad outlines of the agreement reached between the three Governments concerned. 33. Having noticed the objects and reasons behind the creation of the incorporated body and the main functions assigned to it by Parliament, we may now specifically revert to the issue of determination of tariff for supply/distribution of the electricity generated by the Corporation. 34. Insofar as the issue as to whether the Tariff Regulations would have an overriding effect to render the parallel provisions in the Act of 1948 ineffective, the reliance placed on behalf of the Appellants on the decision of a C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e administrator's legislative power, the decision-making power and the policy making power. However, any legislation enacted outside the terms of the enabling provision will be vulnerable to judicial review and ultra vires. 36. The opinion of a seven Judge Bench of this Court, though of considerable vintage, in The Presidential Reference, The Delhi Laws Act, 19122 may usefully be recalled at this stage: (In delegated legislation), a portion of the law-making power of the legislature is conferred or bestowed upon a subordinate authority and the Rules and Regulations which are to be framed by the latter constitute an integral portion of the statute itself. As said already, it is within powers of Parliament or any competent legislative body, when legislating within its legislative field, to confer subordinate administrative and legislative powers upon some other authority. The question is: What are the limits within which such conferment of bestowing of powers could be properly made? It is conceded by the learned Attorney-General that the legislature cannot totally abdicate its functions and invest another authority with all the powers of legislation which it possesses. Subordinate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elegation is permissible has got to be ascertained in India as a matter of construction from the express provisions of the Indian Constitution. It cannot be said that an unlimited right of delegation is inherent in the legislature power itself. This is not warranted by the provisions of the Constitution and the legitimacy of delegation depends entirely upon its being used as an ancillary measure which the legislature considers to be necessary for the purpose of exercising its legislative powers effectively and completely. The legislature must retain in its own hands the essential legislative functions which consist in declaring the legislative policy and laying down the standard which is to be enacted into a Rule of law, and what can be delegated in the task of subordinate legislation which by its very nature is ancillary to the statute which delegates the power to make it." 37. It may be wholly unnecessary to detract from the fundamental principles of law laid down in The Presidential Reference (supra), which would be an inevitable consequence, if the contentions advanced on behalf of the Appellants to the effect that the Tariff Regulations must override the provisions of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ricity or undertakes trading in electricity, whether before or after the commencement of this Act, such Government shall be deemed to be a licensee under this Act, but shall not be required to obtain a licence under this Act: PROVIDED also that the Damodar Valley Corporation, established Under Sub-section (1) of Section 3 of the Damodar Valley Corporation Act, 1948, shall be deemed to be a licensee under this Act but shall not be required to obtain a licence under this Act and the provisions of the Damodar Valley Corporation Act, 1948, insofar as they are not inconsistent with the provisions of this Act, shall continue to apply to that Corporation: PROVIDED also that the Government company or the company referred to in Sub-section (2) of Section 131 of this Act and the company or companies created in pursuance of the Acts specified in the Schedule, shall be deemed to be a licensee under this Act: PROVIDED also that the Appropriate Commission may grant a licence to two or more persons for distribution of electricity through their own distribution system within the same area, subject to the conditions that the applicant for grant of licence within the same area shall, without prej ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 845, was under consideration: It is true that Section 51 is framed as a proviso upon preceding sections. But it is also true that the latter half of it, though in form a proviso, is in substance a fresh enactment, adding to and not merely qualifying that which goes before., and contends that the latter portion of the proviso, in question, being a substantive enactment, comprehends not only those suits which were pending on the date of repeal but also those cases, which came within the language of the latter part of the proviso, whenever the Act was extended to new areas.............. ........As a general rule, a proviso is added to an enactment to qualify or create an exception to what is in the enactment, and ordinarily, a proviso is not interpreted as stating a general rule. But, provisos are often added not as exceptions or qualifications to the main enactment but as savings clauses, in which cases they will not be construed as controlled by the section. 40. Similarly in S. Sundaram Pillai (supra) this Court has observed: A very apt description and extent of a proviso was given by Lord Oreburn in Rhondda Urban District Council v. Taff Vale Railway Co., (1909) A.C. 253, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the intention of the legislature that the second part of the fourth proviso is to bring in the continued application of some of the provisions of the Act of 1948 which are not inconsistent with the provisions of the Act of 2003. There are no licensing provisions in the Act of 1948 to be saved. The obvious reference in the second part of proviso is to provide for the continued application of the provisions of the Act of 1948 insofar as they are not inconsistent with the provisions of the Act of 2003. 43. In the course of arguments, the Appellants made reference to Sections 18 and 19 of the Act of 1948 as being the provisions relating to licensing which could be said to be considered as saved by virtue of second part of the fourth proviso to Section 14 of the Act of 2003. A perusal of Sections 18 and 19 of the Act of 1948 show that they deal with the supply and generation of electrical energy and distribution of electricity within the Damodar Valley area. The provisions of the Act of 2003 which authorise the Regulatory Commissions to grant licence to persons (other than DVC) fully govern the field and there is no question of continued application of the Act of 1948 in that respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same. 46. The proceedings of the Parliamentary Standing Committee on Energy (13th Lok Sabha), insofar as the Electricity Bill of 2001 presented before the Lok Sabha on 19-12-2002 is concerned, would go to indicate that various organisations like the Ministry of Railways, the Bhakra Beas Management Board (BBMB) and also the Corporation had requested for exemption from the operation of the provisions of 2003 Act citing the peculiar, sensitive and specialised nature of task that such bodies have been entrusted by the statutory enactments constituting and governing the said bodies/organizations. Specifically, in this regard, the peculiar duties and responsibilities cast on the DVC by Section 12 of the Act of 1948 had been highlighted before the Parliamentary Standing Committee. It had been urged before us that it was recommended by the Parliamentary Standing Committee that exemption from the provisions of the proposed 2003 Act should be granted to the Corporation in view of its special statutory status which may get eroded if the exemptions are not to be granted. The provisions of Section 58 of the Act of 1948 which is in the following terms were also placed before the Parliament ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions of the Act of 1948 which are not inconsistent with the 2003 Act will continue to hold the field. Viewed thus, the fourth proviso to Section 14 of the Electricity Act 2003 has to be understood to be a legislative exercise in the nature of a substantial provision of law. Part IV of the Act of 1948 not being inconsistent with the provisions of the 2003 Act can, therefore, be taken into account for determination of tariff. Such provisions of the Act of 1948 will also have an overriding effect over the inconsistent provisions of the Tariff Regulations. Our view, as above, will also effectuate the provisions of the Act of 1948 in so far as the activities of the Corporation, other than generation and transmission of electricity, is concerned. We, therefore, affirm the above view taken by the Appellate Tribunal for the reasons afore-stated. 49. The specific heads of tariff fixation on which grievances have been raised by the Appellants in the present set of appeals are enumerated as hereunder: (a) Depreciation rate; (b) Sinking Fund; (c) Debt Equity ratio; (d) Pension & Gratuity Contribution; (e) Return on Capital Investment on Head Office etc.; (f) Revenue relating to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consumers through the tariff. Asking DVC to contribute out of its own resources would tantamount to denying it the return on equity as assured in terms of Tariff Regulations. However, if we look at it from the point of view of the consumers, the consumers, particularly the industrial and commercial ones, have now no option to adjust their sale price to take into consideration the need for meeting the accumulated liability. It is, therefore, an accepted fact that due to postponing of the creation of such fund, the consumers were enjoying lesser tariff than the legitimate tariff otherwise applicable to them. 53. A careful consideration of the reasoning adopted by the learned Appellate Tribunal would not disclose any such error so as to warrant interference of this Court. No error or fallacy, ex facie, is disclosed in the reasoning adopted so as to justify interference Under Section 125 of the 2003 Act. 54. Insofar as the consumers (Appellants in Civil Appeal Nos. 971-973 of 2008) are concerned, an additional issue has been struck, as noticed earlier. This is with regard to the number of employees engaged in the power sector by the Corporation for whom alone proportionate recovery ..... X X X X Extracts X X X X X X X X Extracts X X X X
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