Central Power Distribution Co. v. Central Electricity Regulatory Commission, Appellate Tribunal For Electricity, Judgment, Law, casemine.com

Factual and Procedural Background

This appeal by the appellants challenged the Central Electricity Regulatory Commission (CERC) order dated July 4, 2005 (petition No. 67/2003, suo moto) which directed that the Availability Based Tariff (ABT) be applied to the Simhadri SPTS thermal station of the National Thermal Power Corporation (NTPC) with effect from December 1, 2005. The appellants raised objections to that CERC order and the matter came before the Court for review of jurisdiction and procedural fairness issues. The Court considered submissions of the appellant's senior counsel and the statutory scheme under the Electricity Act, 2003.

Legal Issues Presented

Whether the CERC had jurisdiction to introduce ABT for a generating station (Simhadri) supplying power within the State of Andhra Pradesh, given the State Commission's functions under Section 86 of the Electricity Act, 2003.

Whether the CERC failed to provide an opportunity of hearing to the appellant before passing the impugned order, thereby causing prejudice.

Arguments of the Parties

Appellant's Arguments

The CERC lacked jurisdiction to introduce the ABT for generating stations supplying power within the State of Andhra Pradesh (i.e., the matter fell within the State Commission's domain under Section 86 of the Electricity Act, 2003).

The CERC failed to provide the appellant an opportunity of hearing before passing the impugned order, causing prejudice to the appellant's interests.

The opinion does not contain a detailed account of any counter-arguments by respondents in this text.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Venkataramana Devaru vs State of Mysore, AIR 1958 SC 255	Application of the maxim generalia specialibus non derogant (general provisions yield to special provisions).	The Court cited this case as an instance where the Supreme Court applied the rule to resolve a conflict between specific constitutional provisions, supporting the conclusion that a special statutory provision (Section 79) prevails over a general one (Section 86).
South India Corporation (P) Ltd. vs Secretary, Board of Revenue, Trivandrum, AIR 1964 SC 207	Principle that a general provision must yield to a special provision; discussion contrasting Articles 372 and 277 of the Constitution.	Used to illustrate the settled doctrine that special provisions are to be given effect to the extent of their scope, reinforcing that Section 79 (special) displaces general aspects of Section 86.
State of Gujarat vs Ramji Bhai, AIR 1979 SC 1098	Generalia specialibus non derogant as a cardinal principle of interpretation.	Cited for the proposition that general statutory wording must yield to specific provisions dealing with a subject matter, applied to support CERC's jurisdiction under Section 79.
Maharashtra State Board of Secondary and Higher Secondary Education vs Pritosh Bhupeshkumar Sheth, (1984) 4 SCC 27	Doctrine that specific sections or rules receive special treatment and exclude general applicability; statutory provisions must be construed harmoniously.	Relied upon to reinforce that where a specific statutory scheme exists, the special provision will exclude general provisions—supporting the Court's reading of Sections 76/79 as prevailing over Section 86 for central-government controlled generating companies.
Gujarat State Co-operative Land Development Bank vs P.R. Mankad, (1979) 3 SCC 123	Reiteration of the maxim that a general provision must yield to the special provision.	Invoked to support the interpretive rule applied by the Court when construing the Electricity Act's allocation of powers between Central and State Commissions.
Barker vs Edgar, (1898) AC 749	Statement (Lord Hobhouse) that when legislature has given consent to a separate subject and made provision for it, a subsequent general enactment is not intended to interfere with the special provision unless clearly manifested.	Used to support the general interpretive principle that supports giving effect to the specific statutory allocation of powers (here, Section 79) over a broader general provision (Section 86).

Precedent

Rule or Principle Cited For

Application by the Court

Venkataramana Devaru vs State of Mysore, AIR 1958 SC 255

Application of the maxim generalia specialibus non derogant (general provisions yield to special provisions).

The Court cited this case as an instance where the Supreme Court applied the rule to resolve a conflict between specific constitutional provisions, supporting the conclusion that a special statutory provision (Section 79) prevails over a general one (Section 86).

South India Corporation (P) Ltd. vs Secretary, Board of Revenue, Trivandrum, AIR 1964 SC 207

Principle that a general provision must yield to a special provision; discussion contrasting Articles 372 and 277 of the Constitution.

Used to illustrate the settled doctrine that special provisions are to be given effect to the extent of their scope, reinforcing that Section 79 (special) displaces general aspects of Section 86.

State of Gujarat vs Ramji Bhai, AIR 1979 SC 1098

Generalia specialibus non derogant as a cardinal principle of interpretation.

Cited for the proposition that general statutory wording must yield to specific provisions dealing with a subject matter, applied to support CERC's jurisdiction under Section 79.

Maharashtra State Board of Secondary and Higher Secondary Education vs Pritosh Bhupeshkumar Sheth, (1984) 4 SCC 27

Doctrine that specific sections or rules receive special treatment and exclude general applicability; statutory provisions must be construed harmoniously.

Relied upon to reinforce that where a specific statutory scheme exists, the special provision will exclude general provisions—supporting the Court's reading of Sections 76/79 as prevailing over Section 86 for central-government controlled generating companies.

Gujarat State Co-operative Land Development Bank vs P.R. Mankad, (1979) 3 SCC 123

Reiteration of the maxim that a general provision must yield to the special provision.

Invoked to support the interpretive rule applied by the Court when construing the Electricity Act's allocation of powers between Central and State Commissions.

Barker vs Edgar, (1898) AC 749

Statement (Lord Hobhouse) that when legislature has given consent to a separate subject and made provision for it, a subsequent general enactment is not intended to interfere with the special provision unless clearly manifested.

Used to support the general interpretive principle that supports giving effect to the specific statutory allocation of powers (here, Section 79) over a broader general provision (Section 86).

Court's Reasoning and Analysis

The Court engaged in a statutory and doctrinal analysis focused on allocation of regulatory authority under the Electricity Act, 2003. The reasoning proceeded in the following steps:

Statutory foundation: The Court observed that Section 76 requires the CERC to exercise the powers and discharge the functions conferred on it, and Section 79 specifically lists functions of the CERC, including regulation of tariff for generating companies owned or controlled by the Central Government and adjudication of disputes involving such generating companies.

Application to facts: The Court found it undisputed that NTPC is controlled by the Central Government and that Simhadri is an NTPC-owned generating station. Given Section 79's explicit assignment of tariff regulation for such central-government controlled generating companies to the CERC, the Court concluded that fixing tariff for Simhadri falls within CERC's purview.

Conflict with State Commission powers: The Court noted the appellant's reliance on Section 86 (State Commission functions) but treated Section 86 as a general provision. It applied the well-established interpretive maxim generalia specialibus non derogant—special provisions prevail over general ones—and therefore held that Section 79 (special provision regarding central-government controlled generating companies) supersedes any conflicting general authority under Section 86.

Precedential support: The Court relied on multiple precedents where the Supreme Court applied the same interpretive rule to demonstrate that special statutory provisions exclude the applicability of general provisions on the same subject matter.

Procedural fairness / hearing issue: On the second submission, the Court noted that the impugned order referred to an earlier CERC order dated January 4, 2000 (petition No. 2/99, suo moto) in which, after a transparent process of hearing and consultations, the Commission had resolved to implement ABT nationally in a phased manner. The Court treated the July 4, 2005 order as a logical step in implementing that earlier decision.

Implementation history and effects: The Court recorded that ABT had already been implemented in regions in phased dates (Northern, Southern, Western, Eastern, North-Eastern) and that the Commission had noted beneficial results in scheduling, dispatch and grid-frequency maintenance. The appellant had not placed material on record to contradict these findings or to show any harmful effect of ABT.

Policy support: The Court noted the National Electricity Policy (notified February 12, 2005) which recognized the positive impact of ABT and advised State Electricity Regulatory Commissions (SERCs) to introduce ABT at the State level within one year; the Court treated this policy as relevant guidance under Section 79(4).

No shown prejudice: The Court concluded the appellant had not demonstrated any prejudice from the absence of a fresh hearing on the July 4, 2005 order nor any illegality in the ABT regime. The Court explained how ABT allocates fixed cost pro rata among beneficiaries by capacity entitlement and variable cost in proportion to actual energy consumption, and found this approach reasonable for a generating station created to serve beneficiaries.

Holding and Implications

Holding: The appeal is dismissed. The Court rejected the appellant's contention that the CERC lacked jurisdiction and the contention that lack of a fresh hearing invalidated the order; accordingly, the impugned CERC order (application of ABT to Simhadri) stands.

Implications:

The CERC's order of July 4, 2005 implementing ABT for the Simhadri generating station (effective December 1, 2005) remains operative as the appellate challenge failed.

The Court affirmed that where a generating company is owned or controlled by the Central Government (here, NTPC), the power to regulate tariff under Section 79 of the Electricity Act, 2003 resides with the CERC rather than the State Commission for matters covered by that special provision.

The Court found no procedural defect warranting interference, noting prior hearings and the phased implementation history of ABT; the appellant did not demonstrate prejudice or illegality from the impugned order.

No broader or novel legal precedent was announced by the Court beyond the application of established interpretive principles and prior authorities; the decision applies settled statutory interpretation to the facts before the Court and results directly in dismissal of the appeal.

Opinion dated: 3rd January, 2006. Chairperson: Justice Anil Dev Singh; Technical Member: A.A. Khan.

Central Power Distribution Co. v. Central Electricity Regulatory Commission

Per Honble Mr. Justice Anil Dev Singh, Chairperson This appeal by Appellants is directed against the order of the Central Electricity Regulatory Commission (CERC) dated July 4, 2005 passed in petition No. 67/2003 (suo moto), whereby the CERC inter alia ordered the application of Availability Based Tariff (ABT) to Simhadri SPTS thermal station of the National Thermal Power Corporation (NTPC) with effect from December 1, 2005. The learned senior counsel appearing for the appellant has attacked the impugned order on the following twin grounds:

1. The CERC did not have the jurisdiction to introduce ABT for generating stations supplying power within the State of Andhra Pradesh; and

2. The CERC failed to provide an opportunity of hearing to the appellant whose interests have been adversely affected by the impugned order. We have considered the submissions advanced on behalf of the appellant.

2. In so far as the first submission of the learned senior counsel appearing for the appellant is concerned, we find no merit in it. As per Section 76 of the Electricity Act, 2003 (for short the Act ) the CERC is required to exercise the powers conferred on, and discharge the functions assigned to, it. Section 79 of the Act, inter alia, provides that the CERC shall discharge the functions of regulating the tariff for generating companies owned or controlled by the Central Government. It also casts an obligation on the CERC to adjudicate upon disputes involving generating companies or transmission licensees in regard to the matters specified therein including the matter of regulation of tariff of generating companies owned or controlled by the Central Government. Section 79 of the Electricity Act to the extent relevant may be set out for the purpose of immediate reference.

79. 1. The Central Commission shall discharge the following functions, namely:- a. To regulate the tariff of generating companies owned or controlled by the Central government; b. To regulate the tariff of generating companies other than those owned or controlled by the Central Government specified in clause (a), if such generating companies enter into or otherwise have a composite scheme for generation and sale of electricity in more than one State; c. To regulate the inter-State transmission of electricity; d. To determine tariff for inter-State transmission of electricity; e. To issue licenses to persons to function as transmission licensee and electricity trader with respect to their inter-State operations; f. To adjudicate upon disputes involving generating companies or transmission licensee in regard to matters connected with clauses (a) to (d) above and to refer any dispute for arbitration; g. To levy fees for the purpose of this Act; h. To specify Grid Code having regard to Grid Standards;

i. To specify and enforce the standards with respect to quality continuity and reliability of service by licensees j. To fix the trading margin in the inter-State trading of electricity, if considered, necessary; k. To discharge such other functions as may be assigned under this Act.

2. The Central Commission shall advise the Central Government on all or any of the following matters, namely:-

1. Formulation of National Electricity Policy and tariff policy;

2. Promotion of competition, efficiency and economy in activities of this electricity industry;

3. Promotion of investment in electricity industry; and

4. Any other matter referred to the Central Commission by that Government.

3. The Central Commission shall ensure transparency while exercising its powers and discharging its functions.

4. In discharge of its functions, the Central Commission shall be guided by the National Electricity Policy, National Electricity Plan and Tariff Policy published under Section 3.

3. Thus, it is clear that the CERC has to discharge various functions. One of the functions is to regulate the tariff of generating companies owned or controlled by the Central Government. It is not in dispute that the NTPC is a generating company controlled by the Central Government. It is also not disputed that Simhadri is a generating station set up and owned by the NTPC. This being so the tariff for the electricity generated by aforesaid generating station is required to be fixed by the CERC.

4. Learned senior counsel for the appellant submitted that according to Section 86 of the Act, it is the function of the State Commission to determine tariff for generation, supply, transmission and wheeling of electricity within the State. Contention of the learned senior counsel overlooks the provisions relating to the constitution and powers and functions of CERC. As already pointed out under Section 79 of the Act the CERC has been vested with the power to regulate the tariff of generating companies owned or controlled by the Central Government. Since, the special provision relating to fixation of tariff of generating companies owned or controlled by the Central government is being dealt with under Section 79 read with Section 76 of the Act, Section

86 which is a general provision, cannot be read to confer power on the State Commission to determine the tariff of a generating company owned or controlled by the Central Government supplying power to the transmission company within the State. Where there is a special provision specifically dealing with a subject, a general provision, howsoever widely worded must yield to the former. This principle is expressed in the maxim Generalia specialibus non derogant.

5. The aforesaid rule of construction was applied by the Supreme Court in Venkataramana Devaru Vs State of Mysore, AIR 1958 Supreme Court 255. In that case the Supreme Court applied the rule to resolve conflict between Article 25 (2)(b) and 26 (b) of the Constitution. It was held that the right of every religious denomination or any Section thereof to manage its own affairs in matter of religion is subject to a law made by a State providing for social welfare and reform or throwing open to Hindu religious institution of a public character to all classes and sections of Hindus. In South India Corporation (P) Ltd. Vs Secretary, Board of Revenue, Trivandrum AIR 1964 Supreme Court 207, it was held that the general provision under Article 372 of the Constitution regarding continuance of existing laws is subject to Article 277 of the Constitution, which is a special provision relating to taxes, duties, cesses or fees lawfully levied at the commencement of the Constitution. In this regard, the Supreme Court observed as follows:- With this background let us know considered the following two questions raised before us: (i) whether Article 372 of the Constitution is subject to Article 277 thereof; and (ii) whether Article 372 is subject to Article 278 thereof. Article 372 is a general provision; and Article 277 is a special provision. It is settled law that special provision should be given effect to the extent of its scope, leaving the general provision to control cases where the special provision does not apply. The earlier discussion makes it abundantly clear that the constitution gives a separate treatment to the subject of finance and Article 277 saves the existing taxes etc. levied by states, if the conditions mentioned therein are complied with. While Article 372 saves all pre- Constitution valid laws, Article 277 is confined only to taxes, duties, cesses or fees lawfully levied immediately before the Constitution. Therefore, Article 372 cannot be construed in such a way as to enlarge the scope of the savings of taxes, duties, cesses or fees. To state it differently, Article 372 must be read subject to Article 277. We have already held that an agreement can be entered into between the Union and the States in terms of Article 278 abrogating or modifying the power preserved to the State under Article 277. In State of Gujarat Vs. Ramji Bhai AIR 1979 Supreme Court 1098 taking note of the principle observed as follows: Generalia Specialibus non derogant is a cardinal principles of interpretation. It means that the general provisions must always yield to the special provisions. Construed in accordance with this fundamental principle, the special class of unregistered dealer covered by Section 33 (6) must be taken to have been excluded from the purview of the general provisions in section 35. Thus considered, it is clear that the case of an unregistered dealer who evade tax by committing the double default specified in Section 33(6), action can be taken only under that Section and not under Section 35. Again in Maharashtra State Board of Secondary and Higher Secondary Education Vs. Pritosh Bhupeshkumar Sheth (1984) 4 SCC 27, the Supreme Court while considering the aforesaid principle held as follows: We consider that the above approach made by the High Court is totally fallacious and is vitiated by its failure to follow the well established doctrine of interpretation that the provisions can change in a Statutory enactment or in rules/ regulations framed thereunder have to be so construed as to be in harmony with each other and that where under specific sections or rule a particular subject has received special treatment, such special provision will exclude the applicability. (emphasis supplied) In Gujarat State Co-operative Land Development Bank Vs P.R. Mankad, (1979) 3 SCC 123, the Supreme Court applying the maxim generalia specialibus non-derogant held that a general provision must yield to the special provision. Lord Hobhouse in Barker Vs Edgar (1898) AC 749 opined that when the legislature had given its consent to a separate subject and made provision for it, the presumption is that a subsequent general enactment is not intended to interfere with the special provision unless it manifests that intention very clearly.

6. Thus, it is well settled that if a special provision is made on a certain matter, that matter is excluded from the general provision. In the event of conflict between a general and a special provision, the latter must prevail. Differently stated the principle is that general words in a Statute should not be held to repeal or rip up a specific provision upon a particular matter. A general rule though stated in wide terms must be taken to be not interfering with matters covered by a special provision.

7. In view of the aforesaid discussion, we have no hesitation in rejecting the plea of the appellant that the CERC lacked the jurisdiction to introduce ABT for Simhadri thermal station.

8. As regards the second submission of the appellant that no opportunity of hearing was provided to it before the CERC passed the impugned order is of no avail to the appellant. The impugned order specifically point out that the CERC in its earlier order dated January 4, 2000 in petition No.2/99 (suo moto) after going through a transparent process of hearing and consultations with all concerned had resolved to implement the ABT regime in all the regions of the country in a phased manner. Therefore, it is clear that at the time of the earlier decision the concerned agencies were heard. The decision to implement the ABT scheme was taken as far back as January 4, 2000. The impugned order is a logical step towards the implementation of the earlier order. Earlier the scheme of ABT was implemented in a phased manner in the case of generating stations supplying electricity to more than one State as per the following details: a. Western Region 1.7.2003 b. Northern Region 1.12.2002 c. Southern Region 1.1.2003 d. Eastern Region 1.4.2003 e. North-Eastern Region 1.11.2003

9. It has also been noted in the impugned order that ABT has been applicable in all the regions of the country for sufficient time and the results point to its beneficial effect. As per the Commission, the beneficial results of ABT are evident in the scheduling and despatch of generating capacity and maintenance of grid frequency within the optimum frequency band. The appellant has not placed any material on record to controvert the opinion of the Commission or to show any baneful effect of the ABT.

10. The Central Government on February 12, 2005 has notified National Electricity Policy. Para 5.7.1 (b) of the Policy needs to be taken note of. The said para reads as follows: The ABT regime introduced by CERC at the national level has had a positive impact. It has also enabled a credible settlement mechanism for intra-day power transfers from licenses with surpluses to Licenses experiencing deficits. SERCs are advised to introduce the ABT regime at the State level within one year. Thus, the National Electricity Policy, which is required under sub-Section

4 of Section 79 of the Act to guide the CERC in discharge of its functions, also recognizes the positive impact of the ABT regime.

11. Though the appellant has been heard by us, it has not been able to show as how it has suffered any prejudice because of the CERC not providing an opportunity of hearing to it before passing the impugned order. The appellant was also not able to point out any illegality attached to the ABT regime. Under the ABT, the fixed cost is charged pro rata from the beneficiaries in the ratio of their capacity entitlement for power from the stations. Since the Simhadari generating station has been created for catering to the needs of the beneficiaries, it is logical that the fixed cost should be borne by them as per their share in the capacity created by the generating station. The variable cost of the generating station is charged to the beneficiaries as per the earlier practice in proportion to the actual energy consumed by them during that period. We find nothing wrong with the application of ABT regime to the generation of electricity by the Simhadari generating station within the State. In view of the aforesaid discussion, there is no merit in the appeal. Accordingly, the appeal fails and is hereby dismissed. (Justice Anil Dev Singh) Chairperson (A.A. Khan) Technical Member Dated: the 3rd January, 2006

Appeal No. 152 of 2005

Central Power Distribution Co. v. Central Electricity Regulatory Commission

Structured Summary of the Opinion (Chairperson: Justice Anil Dev Singh)

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Appellant's Arguments

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Central Power Distribution Co. v. Central Electricity Regulatory Commission

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