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Chhattisgarh Vidyut ... v. Chhattisgarh State E...
Factual and Procedural Background
Three civil appeals—Civil Appeal No. 3996 of 2006 (filed by Chhattisgarh Vidyut Mandal Abhiyanta Sangh), Civil Appeal No. 4268 of 2006 (filed by Chhattisgarh State Electricity Board), and Civil Appeal No. 4529 of 2006 (filed by M/s Jindal Steel and Power Limited)—were heard together. All three challenged a common judgment dated 11 May 2006 rendered by the Appellate Tribunal for Electricity in Appeals Nos. 179, 188 of 2005 and 16, 27 of 2006 under Section 111 of the Electricity Act, 2003. The Tribunal’s judgment had affirmed, with modifications, an order dated 29 November 2005 of the Chhattisgarh State Electricity Regulatory Commission (“the Commission”).
The Commission’s order (i) granted a distribution licence to Jindal Steel and Power Limited and (ii) imposed a penalty of Rs 1 lakh on that company for supplying electricity without legal authority during the period 1 April 2004 until the date of the licence. Both the grant of the licence and the penalty became subjects of appeal before the Tribunal and, subsequently, before the Supreme Court.
Legal Issues Presented
- Whether the Appellate Tribunal for Electricity erred by failing to consider and give reasons on the specific grounds raised in the appeals before it, thereby justifying interference by the Supreme Court.
- Consequent to such failure, whether the Tribunal’s judgment dated 11 May 2006 should be set aside and the matters remitted for fresh adjudication.
Arguments of the Parties
Chhattisgarh State Electricity Board (Appellant in C.A. No. 4268 of 2006)
- The Commission’s grant of a distribution licence to Jindal Steel and Power Limited is contrary to Section 14 (particularly Proviso 6), Section 43, Section 41 Proviso 3, and Section 86(4) of the Electricity Act, 2003.
- The licence offends the National Electricity Policy framed under Section 3, specifically paragraph 5.4.7, which is asserted to have statutory force.
- The decision violates sub-rule (2) of Rule 3 of the Code of Conduct Rules, 2005 and its Explanation.
- The Tribunal dismissed these objections summarily in paragraph 38 of its judgment without proper examination.
M/s Jindal Steel and Power Limited (Appellant in C.A. No. 4529 of 2006)
- Contends it did not require a distribution licence because, under Section 10(2) of the Act, a generating company may supply electricity to any person without using the Board’s transmission lines.
- Challenges the penalty of Rs 1 lakh imposed by the Commission for allegedly supplying electricity without authority between 1 April 2004 and the date of the licence.
- Argues that the Tribunal, although framing two issues on licensing and deemed-licensee status, failed to address them, particularly the relevance of Section 10(2).
Chhattisgarh Vidyut Mandal Abhiyanta Sangh (Appellant in C.A. No. 3996 of 2006)
- Adopted in full the submissions made by the Chhattisgarh State Electricity Board.
Table of Precedents Cited
No precedents were cited in the provided opinion.
Court's Reasoning and Analysis
The Supreme Court observed that an appeal under Section 111 of the Electricity Act functions as a first appeal, obligating the Appellate Tribunal to examine every ground raised and to record reasons on each. The Court found that the Tribunal had failed to discharge this duty: it dismissed the Electricity Board’s objections in a single paragraph and did not address the two framed issues or the statutory provisions invoked by Jindal Steel and Power Limited. Given this procedural deficiency, the Supreme Court concluded that the Tribunal’s decision could not stand.
Holding and Implications
Holding: The appeals are allowed; the Appellate Tribunal’s judgment dated 11 May 2006 is set aside, and the appeals before the Tribunal are restored for fresh consideration in accordance with law. The Supreme Court expressly refrained from commenting on the merits of the substantive disputes.
Implications: The Tribunal must rehear the appeals, address every ground raised, and provide reasoned findings. Recognizing the public importance and far-reaching consequences of the issues, the Supreme Court suggested that the Tribunal’s Chairman constitute an appropriate bench for the rehearing. No new substantive precedent was set; the decision primarily underscores the duty of appellate bodies to give reasoned judgments.
H.K Sema, J.— Civil Appeal No. 3996 of 2006 is filed by Chhattisgarh Vidyut Mandal Abhiyanta Sangh. Civil Appeal No. 4268 of 2006 is filed by Chhattisgarh State Electricity Board and Civil Appeal No. 4529 of 2006 is filed by M/s Jindal Steel and Power Limited.
2. All these appeals are directed against the common judgment and order of the Tribunal dated 11-5-2006 passed in Appeals Nos. 179, 188 of 2005, 16 and 27 of 2006 preferred under Section 111 of the Electricity Act, 2003 (in short “the Act”). In the aforesaid appeals, the appellants have challenged the order dated 29-11-2005 passed by the Chhattisgarh State Electricity Regulatory Commission (in short “the Commission”).
3. We have heard Mr Ravi Shankar Prasad, learned Senior Counsel, appearing on behalf of Chhattisgarh State Electricity Board, the appellant in CA No. 4268 of 2006, Mr Shanti Bhushan, learned Senior Counsel, appearing on behalf of M/s Jindal Steel and Power Limited, the appellant in CA No. 4529 of 2006 and Mr Kavin Gulati, learned counsel appearing on behalf of Chhattisgarh Vidyut Mandal Abhiyanta Sangh, the appellant in CA No. 3996 of 2006.
4. Counsel for the appellant in CA No. 3996 of 2006 has adopted the arguments of Mr Ravi Shankar Prasad, learned Senior Counsel, appearing for the appellant in CA No. 4268 of 2006.
5. In CA No. 4268 of 2006, the appellant has assailed the order dated 29-11-2005 passed by the Commission, granting licence in favour of Respondent 2 herein and the appellant in CA No. 4529 of 2006.
6. Mr Ravi Shankar Prasad, learned Senior Counsel appearing for the appellant, would contend that the impugned order of the Commission granting licence to Respondent 2 M/s Jindal Steel and Power Limited, is contrary to the provisions of Section 14 particularly Proviso 6 of the section. He would also contend that the grant of licence is contrary to Section 43, the National Electricity Policy framed under Section 3, particularly 5.4.7 which according to the counsel is statutory in character and sub-rule (2) of Rule 3 of the Code of Conduct Rules, 2005 and Explanation thereof. He would also contend that the grant of licence in favour of Respondent 2 would also offend the provisions of Section 41 Proviso 3 and Section 86(4) of the Act. In this connection, counsel has taken us to the grounds taken in the memo of appeal filed by the appellant. He has also taken us to the entire impugned judgment rendered by the Tribunal. The Tribunal has not at all dealt with the grounds urged by the appellant in the judgment. The Tribunal, however, rejected the grounds in para 38 as under:
“Taking up the fourth point, concedingly after coming into force of the Electricity Act, 2003 Jindal Power has submitted an application for grant of distribution licence under Section 12 of the Act. Section 14 of the Act provides for the grant of licence. Section 15 of the Act prescribes procedure for grant of licence. Though the Electricity Board has raised an objection, it is a clear afterthought presumably because of change or shifting of personalities in power, and such shifting stand had been adopted. The objections raised by Electricity Board are devoid of merits. The Regulatory Commission has considered the request of Jindal Power and directed issue of distribution licence. We do not find any illegality or error in the grant of licence as Jindal Power do possess all the requirements for the grant.”
7. M/s Jindal Steel and Power Limited, the appellant in CA No. 4529 of 2006, was aggrieved by the order of the Commission recorded in para 22 of the order. Para 22 of the order is in the following terms:
“The last issue for discussion is the treatment of the period from 1-4-2004 till the date of the grant of distribution licence, during which supply of power by the applicant has been without legal authority. As already discussed in paras 11 to 13 ante, the applicant did not have the necessary legal authority either under the 1910 Act or under the present Act to supply electricity in his industrial estate. This constitutes a clear contravention of the provisions of Section 12 of the Act that mandates licence to be obtained for supply of electricity. This Act of the applicant is punishable under Section 142 of the Act. The applicant is clearly liable for penalty under this provision of law. Although no opportunity has specifically been provided to the applicant of being heard in this regard as required and the provision of this section, the elaborate proceedings in this case have provided sufficient opportunity to the applicant to prove that he had not contravened the provision of the Act, in supply of power to his industrial estate. In fact, his main case is that he had the legal authority for his action, which we have not accepted. The Commission, therefore, feels that there is no need for another opportunity being given to the applicant of being heard in the matter. The Commission directs that the applicant pay a penalty of rupees one lakh for contravention of the provisions of the Act aforementioned. The amount shall be deposited with the Secretary of the Commission within seven days of this order.”
8. Aggrieved by this order M/s Jindal Steel and Power Limited, the appellant in CA No. 4529 of 2006 also filed Appeal No. 27 of 2006 before the Tribunal.
9. The ground taken in the appeal was that Jindal Power does not require the licence for supply of electricity as in terms of Section 10(2) of the Act as a generating company, it is competent to supply electricity to any person without using the transmission lines of the Electricity Board. After considering the ground of appeal, the Tribunal framed the following issues:
1. Whether Jindal Power was licensed to distribute electricity at any time? Without securing a licence is it permissible for Jindal Power to distribute power?
2. Whether Jindal Power could claim that it is a deemed licensee entitled to distribute power after coming into force of the Electricity Act, 2003?
10. Mr Shanti Bhushan, learned Senior Counsel, has taken us through the entire judgment of the Tribunal but the questions so framed were not at all addressed, particularly the application of Section 10(2) of the Act.
11. It is in these circumstances, that the learned Senior Counsel, appearing for the respective appellants, contended that this is eminently a fit case where this Court should set aside the order of the Tribunal and the matter be remitted to the Tribunal for fresh decision after considering all the grounds raised in the respective appeals. In the facts as alluded above we would also think so.
12. We may also hasten to note that the appeal under Section 111 before the Tribunal is in the nature of first appeal. The Tribunal, therefore, must examine the entire grounds of appeal and record its reasons on each ground while disposing of the appeal.
13. Accordingly, these appeals are allowed. The order dated 11-5-2006 passed in appeals are set aside. The appeals are restored to the file of the Tribunal. The Tribunal shall consider each ground in appeals and dispose of the appeals in accordance with law. We make it clear that we have not expressed any opinion on the merit of the case whatsoever.
14. Having regard to the question of public importance of far-reaching consequences involved in these appeals, the Chairman of the Tribunal may consider for constituting an appropriate Bench for hearing the appeals. With the aforesaid directions/observations these appeals are allowed. No costs.
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