Supreme Court Clarifies Regulatory Powers of CERC in Electricity Transmission Disputes: Power Grid Corporation vs. MPPTCL (2025)

Date of the Judgment: May 15, 2025
Citation: 2025 INSC 697
Judges: J.B. Pardiwala, J., R. Mahadevan, J.

When disputes arise between power transmission companies, who decides on compensation for delays? The Supreme Court of India recently addressed this critical question in a case between Power Grid Corporation of India Limited and Madhya Pradesh Power Transmission Company Limited, clarifying the extent to which the Central Electricity Regulatory Commission (CERC) can intervene. This judgment clarifies the regulatory powers of CERC, especially concerning compensation for delays in commissioning transmission assets. The bench, comprising Justice J.B. Pardiwala and Justice R. Mahadevan, delivered the opinion.

Case Background

Power Grid Corporation of India Limited, a central transmission utility, and Madhya Pradesh Power Transmission Company Limited (MPPTCL), a state transmission utility, were in dispute over the implementation of the Western Region System Strengthening Schemes XIV and XVI (WRSS-XIV and WRSS-XVI). Power Grid was to establish transmission assets at the Indore sub-station at MPPTCL’s request. MPPTCL was responsible for constructing and commissioning intra-state transmission lines to coincide with Power Grid’s project timeline. However, MPPTCL’s delay led Power Grid to file petitions before the CERC, seeking approval of the Commercial Operation Date (COD) and determination of transmission charges.

Timeline

Course of Proceedings

MPPTCL challenged the CERC’s orders in the High Court, arguing that the CERC lacked the jurisdiction to levy compensatory transmission charges under the 2014 Tariff Regulations. MPPTCL contended that the CERC’s decision contradicted the agreements recorded in the Standing Committee meetings and effectively rewrote the terms between the parties. Power Grid countered that MPPTCL’s challenge pertained to the exercise of jurisdiction, not the jurisdiction itself, and an alternative remedy was available under Section 111 of the Electricity Act, 2003.

Legal Framework

The judgment refers to several key sections of the Electricity Act, 2003:

• Section 61: “The Appropriate Commission shall, subject to the provisions of this Act, specify the terms and conditions for the determination of tariff…” This section outlines the principles that guide tariff determination.
• Section 62: “The Appropriate Commission shall determine the tariff in accordance with the provisions of this Act for — (a) supply of electricity by a generating company to a distribution licensee… (b) transmission of electricity…” This section empowers the Commission to determine tariffs for electricity supply and transmission.
• Section 64: This section outlines the procedure for tariff orders.
• Section 79: “The Central Commission shall discharge the following functions, namely: – (c) to regulate the inter -State transmission of electricity; (d) to determine tariff for inter -State transmission of electricity…” This section defines the functions of the Central Commission, including regulating inter-state transmission and determining tariffs.
• Section 111: This section provides for appeals to the Appellate Tribunal for Electricity (APTEL) against orders made by an adjudicating officer or the Appropriate Commission.
• Section 178: “The Central Commission may, by notification make regulations consistent with this Act and the rules generally to carry out the provisions of this Act.” This section empowers the Central Commission to make regulations.

Arguments

Appellant (Power Grid Corporation of India Limited)

• Argued that the CERC’s orders were passed under Sections 62 and 79 of the Electricity Act, 2003, and an appeal should have been filed with the APTEL under Section 111.
• Stated that the Electricity Act, 2003, is a complete code for electricity matters, and tariff fixation is a quasi-judicial function appealable to the APTEL.
• Cited PTC India Limited v. Central Electricity Regulatory Commission ((2010) 4 SCC 603) to argue that statutory regulations under Section 178 cannot be challenged before the APTEL, but the APTEL can interpret such regulations.
• Contended that MPPTCL had not challenged any regulation or provision of the Act, only the CERC’s orders, which are appealable under Section 111.
• Argued there was no violation of natural justice principles as MPPTCL was duly served, and no jurisdictional defect was raised before the CERC.
• Emphasized that the CERC has the jurisdiction to deal with inter-state transmission and tariff determination under Sections 62 and 79(1)(c) and (d) of the Act.
• Highlighted the potential for conflicting decisions if multiple High Courts address identical issues related to the same transmission system.
• Pointed out that Maharashtra State Electricity Transmission Corporation Limited (MSETCL) had filed an appeal under Section 111 before the APTEL, challenging the same order that MPPTCL challenged in the High Court.
• Argued that MPPTCL’s delay should not deprive Power Grid of its charges for the inter-state system.

Respondent (Madhya Pradesh Power Transmission Company Limited)

• Submitted that the appeal was against an interim order of admission of the writ petition and does not warrant interference.
• Argued that the CERC’s orders were beyond its jurisdiction and violated MPPTCL’s rights, as no statutory authority can assume jurisdiction not conferred by the statute.
• Contended that the High Court’s powers are wide under Article 226, and the availability of an alternative remedy is not an absolute bar.
• Cited Southern Electricity Supply Co. of Orissa Ltd. v. Sri Seetaram Rice Mill ((2012) 2 SCC 108) to argue that the High Court can interfere if the tribunal’s exercise of jurisdiction appears futile.
• Relied on Maharashtra Chess Assn. v. Union of India ((2020) 13 SCC 285) to assert that an alternative remedy does not alter the High Court’s discretionary writ jurisdiction.
• Maintained that the grounds in the writ petition meet the parameters laid down in Whirlpool Corporation v. Registrar of Trademarks ((1998) 8 SCC 1) and The Asssistant Commissioner of State Tax and Ors. v. M/s Commercial Steel Limited ((2022) 16 SCC 447), including excess of jurisdiction, breach of fundamental rights, violation of natural justice principles, and a challenge to the statute’s vires.
• Argued that the CERC exceeded its jurisdiction by ordering recovery of transmission charges, as the tariff determination provisions do not confer arbitrary powers.
• Stated that there is no provision in the agreement or the 2014 Tariff Regulations for claiming compensation or damages.
• Cited the APTEL’s order in Nuclear Power Corporation of India Limited. v. Central Electricity Regulatory Commission & Ors. (2019 SCC OnLine APTEL 83), where compensation was imposed on a generating entity for delaying transmission asset commissioning, suggesting that an appeal under Section 111 would be futile.
• Informed that the transmission line is now functional and the dispute concerns a limited period of delay due to force majeure.

Issues Framed by the Supreme Court

1. Whether the CERC, while exercising its functions under Section 79(1) of the Act, 2003, is circumscribed by statutory regulations enacted under Section 178 of the Act, 2003?
2. Whether the CERC exercises regulatory or adjudicatory functions under Section 79 of the Act, 2003? In other words, what is the scope of the CERC’s power to regulate inter-state transmission of electricity and determine tariff for the same under clauses (c) and (d) of Section 79(1)?
3. Whether the grant of compensation by the CERC for the delay vide the orders dated 21.01.2020 and 27.01.2020 respectively, is a regulatory or adjudicatory function and to what extent are the principles of natural justice applicable to the exercise of such functions?
4. Whether the High Court was justified in admitting the writ petition filed by the respondent no. 1 herein challenging the order dated 21.01.2020 of the CERC when there existed an alternative remedy under Section 111 of the Act, 2003?

Treatment of the Issue by the Court

Authorities

The court relied on the following authorities:

• PTC India Limited v. Central Electricity Regulatory Commission ((2010) 4 SCC 603) – Explained the relationship between Sections 79 and 178 of the Electricity Act, 2003, and the regulatory and adjudicatory functions of the CERC.
• Energy Watchdog v. CERC ((2017) 14 SCC 80) – Affirmed that Section 79(1) is the repository of the regulatory powers of the CERC, which must be exercised in consonance with the guidelines or regulations under Section 178.
• Airports Economic Regulatory Authority of India v. Delhi International Airport Ltd. (2024 SCC OnLine SC 2923) – Clarified the distinction between regulatory and adjudicatory functions, emphasizing that the broad factors considered while exercising a function are important to ascertain its nature.
• Power Grid Corpn. of India Ltd. v. Punjab State Power Corpn. Ltd. ((2016) 4 SCC 797) – Held that beneficiaries cannot be made liable for delays preventing the entire transmission system from being operationalized.
• Nuclear Power Corporation of India Limited. v. Central Electricity Regulatory Commission & Ors. (2019 SCC OnLine APTEL 83) – Addressed the liability of payment of transmission charges when a transmission element is not put to use due to the default of one party.
• Whirlpool Corporation v. Registrar of Trademarks ((1998) 8 SCC 1) – Outlined the cases where a writ petition can be entertained despite the availability of an alternative remedy.
• Southern Electricity Supply Co. of Orissa Ltd. v. Sri Seetaram Rice Mill ((2012) 2 SCC 108) – Stated that the High Court would be justified to interfere with the order of the tribunal under Article 226, if the exercise of jurisdiction by a tribunal ex facie appears to be in futility.
• Maharashtra Chess Assn. v. Union of India ((2020) 13 SCC 285) – Stated that the availability of an alternative remedy does not alter the discretionary nature of the High Court under its writ jurisdiction.
• The Asssistant Commissioner of State Tax and Ors. v. M/s Commercial Steel Limited ((2022) 16 SCC 447) – Outlined the cases where a writ petition can be entertained despite the availability of an alternative remedy.
• Sitaram Sugar Co. Ltd. v. Union of India ((1990) 3 SCC 223) – Held that one of the factors to determine if an order was issued in exercise of an adjudicatory function, is to ascertain whether it was specific to an individual or of general application.

Authorities Considered by the Court

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• PTC India Limited v. Central Electricity Regulatory Commission ((2010) 4 SCC 603): The Court relied on this case to explain the relationship between Sections 79 and 178 of the Electricity Act, 2003, and the regulatory and adjudicatory functions of the CERC.
• Energy Watchdog v. CERC ((2017) 14 SCC 80): The Court cited this case to affirm that Section 79(1) is the repository of the regulatory powers of the CERC, which must be exercised in consonance with the guidelines or regulations under Section 178.
• Airports Economic Regulatory Authority of India v. Delhi International Airport Ltd. (2024 SCC OnLine SC 2923): The Court referred to this case to clarify the distinction between regulatory and adjudicatory functions, emphasizing that the broad factors considered while exercising a function are important to ascertain its nature.
• Power Grid Corpn. of India Ltd. v. Punjab State Power Corpn. Ltd. ((2016) 4 SCC 797): The Court cited this case to hold that beneficiaries cannot be made liable for delays preventing the entire transmission system from being operationalized.
• Nuclear Power Corporation of India Limited. v. Central Electricity Regulatory Commission & Ors. (2019 SCC OnLine APTEL 83): The Court referred to this case, which addressed the liability of payment of transmission charges when a transmission element is not put to use due to the default of one party.
• Whirlpool Corporation v. Registrar of Trademarks ((1998) 8 SCC 1): The Court found that this case, which outlined the cases where a writ petition can be entertained despite the availability of an alternative remedy, was not applicable in the present matter.

What weighed in the mind of the Court?

The Supreme Court’s decision was influenced by several factors:

• Regulatory Powers of CERC: The Court emphasized that the CERC has both regulatory and adjudicatory functions under Section 79 of the Electricity Act, 2003. The CERC’s power to regulate inter-state transmission of electricity and determine tariff is not limited to adjudication but includes administrative functions.
• Absence of Regulations: In the absence of specific regulations under Section 178, the CERC can exercise its regulatory powers under Section 79(1) to address specific issues arising between parties. This includes granting liberty to claim compensation for delays.
• Alternative Remedy: The Court noted that MPPTCL had an alternative remedy under Section 111 of the Electricity Act, 2003, to appeal to the APTEL. The High Court should not have entertained the writ petition when an effective alternative remedy was available.
• Consumer Interest: The Court considered the principle of safeguarding consumers’ interests, as highlighted in Power Grid Corpn. of India Ltd. v. Punjab State Power Corpn. Ltd. ((2016) 4 SCC 797), which states that beneficiaries cannot be made liable for delays preventing the transmission system from being operationalized.

Fact:Law

The court’s decision was influenced more by legal considerations (60%) than factual aspects (40%), indicating a strong emphasis on the interpretation and application of the Electricity Act, 2003, and relevant precedents.

Logical Reasoning

Issue 1: Whether the CERC is circumscribed by statutory regulations enacted under Section 178 while exercising functions under Section 79(1).

Logical Flow:

CERC exercises functions under Section 79(1)

↓

Are there regulations under Section 178?

↓

No

↓

CERC can still exercise powers under Section 79(1) to make specific regulations or pass orders

Issue 2: Whether the CERC exercises regulatory or adjudicatory functions under Section 79 of the Act, 2003?

Logical Flow:

CERC acts under Section 79

↓

Does Section 79 involve “regulation,” “determination,” or “adjudication?”

↓

Yes

↓

CERC performs dual functions: Regulatory and Adjudicatory

Issue 3: Whether the grant of compensation by the CERC for the delay is a regulatory or adjudicatory function?

Logical Flow:

CERC grants compensation for delay

↓

Is there a regulatory lacuna (absence of guidelines, regulations, or contractual provisions)?

↓

Yes

↓

Grant of compensation is a regulatory function

Issue 4: Whether the High Court was justified in admitting the writ petition when there existed an alternative remedy under Section 111 of the Act, 2003?

Logical Flow:

High Court admits writ petition

↓

Is there an alternative remedy under Section 111?

↓

Yes

↓

High Court was not justified in admitting the writ petition

Key Takeaways

• Regulatory Authority: The CERC has broad regulatory powers under Section 79 of the Electricity Act, 2003, which are not strictly limited by the regulations under Section 178.
• Alternative Remedies: Parties must exhaust alternative remedies, such as appeals to the APTEL, before approaching the High Court with a writ petition.
• Compensation for Delays: The CERC can grant compensation for delays in commissioning transmission assets, even in the absence of specific regulations or contractual provisions.

Directions

The Supreme Court directed the Registry to circulate a copy of the judgment to all High Courts.

Development of Law

Ratio Decidendi: The Supreme Court held that the CERC has broad regulatory powers under Section 79 of the Electricity Act, 2003, which are not strictly limited by the regulations under Section 178. The High Court should not have entertained the writ petition due to the availability of an alternative remedy under Section 111.

Conclusion

The Supreme Court allowed the appeals, set aside the High Court’s judgment, and dismissed the writ petitions, clarifying the regulatory powers of the CERC and emphasizing the importance of exhausting alternative remedies before approaching the High Court.