# U.P. Power Corporation Ltd v. Central Electricity Regulatory Commission & Anr

- **Citation:** (2024) 5 ILRA 1593
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2024-05-16
- **Case number:** Writ C No. 7368 of 2006
- **Bench:** Vivek Chaudhary, Om Prakash Shukla
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/u-p-power-corporation-ltd-v-central-electricity-regulatory-commission-anr-51996
- **Pages:** 6

## Headnote

(A) Electricity Law - The Electricity Act,
2003 - Section 61 - Tariff regulation ,
Section 62 - Determination of tariff ,
Section 63 - Determination of tariff by
bidding process , Section 178 - Power of
central commission to make regulations -
Central Electricity Regulatory Commission
(Terms and Conditions of Tariff) (First
Amendment),
Regulations,
2006
-
Regulation 5A - Provisional Tariff - Law
should be consonant with principles of
faith and reason - Delegated legislation,
including regulations, should not conflict
with principal legislation - Regulations
should be harmonious with the statutes
they are formulated under - The Electricity
Act
of
2003
provides
the
statutory
framework for regulations. (Para - 9)

(B) Electricity Law - The Electricity Act,
2003 - Section 62(6) - If any licensee or a
generating company recovers a price or
charge exceeding the tariff determined
under this section, the excess amount shall
be recoverable by the person who has paid
such price or charge along with interest
1594 INDIAN LAW REPORTS ALLAHABAD SERIES
equivalent to the bank rate without
prejudice to any other liability incurred by
the licensee. (Para -5)

Section 62(6) and Regulation 5A Conflict -
Section 62(6) states interest equivalent to bank
rate chargeable for price or charge exceeding
tariff - Regulation 5A stipulates simple interest at
6% per annum for adjustment - Regulation 5A
contradicts Section 62(6), which equates interest
rate to bank rate - Quashing Regulation 5A of
Central Electricity Regulatory Commission -
Declares regulation ultra-vires and inconsistent
with Electricity Act, 2003. (Para - 2,7)

HELD:-Central
Electricity
Regulatory
Commission did not have any power to provide
any different rate of interest in its regulations for
adjustment which is at variation from the amount
payable under Section 62 of the Act of 2003.
Regulation 5A to the extent of fixation of payable
interest for amounts to be adjusted under Section
62 of the Act of 2003, being in direct conflict with
Section 62(6) of the Act of 2003 is declared ultravires and is quashed.(Para - 10,11)

Petitions allowed. (E-7)

List of Cases cited:

## Text

5 All. U.P. Power Corporation Ltd. Vs. Central Electricity Regulatory Commissioner & Anr.
1593
no person should be a judge in their own
cause; and (ii) audi alteram partem, which
means
that
a
person
affected
by
administrative, judicial or quasi- judicial
action must be heard before a decision is
taken.
The
courts
generally
favor
interpretation of a statutory provision
consistent with the principles of natural
justice because it is presumed that the
statutory authorities do not intend to
contravene fundamental rights. Application
of the said principles depends on the facts
and circumstances of the case, express
language and basic scheme of the statute
under which the administrative power is
exercised, the nature and purpose for which
the power is conferred, and the final effect
of the exercise of that power."

24. In view of the aforesaid
submissions and discussions, this Court is of
considered opinion that the proper and fair
opportunity of hearing has not been afforded
to the present petitioners, as is evident, from
the original records of the society produced
before this Court. Further, the settled
proposition of law has also materially been
ignored. Consequently, the writ petition is
hereby allowed and the impugned order
dated 19.12.2023 is quashed.

25. Matter is relegated back to the
Deputy Registrar concerned to proceed with
the matter a fresh, after hearing all the
stakeholders,
while
providing
them
opportunity of hearing and the decision shall
be taken within a period of three months.

26. The original certificate shall be
submitted by the opposite party No. 4 before
the Deputy Registrar, within a week, if he
has received it, already.

27. Office is directed to return the
original records to counsel for the State.
----------
(2024) 5 ILRA 1593
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: LUCKNOW 16.05.2024

BEFORE

THE HON'BLE VIVEK CHAUDHARY, J.
THE HON'BLE OM PRAKASH SHUKLA, J.

Writ C No. 7368 of 2006

U.P. Power Corporation Ltd. ...Petitioner
Versus
Central Electricity Regulatory Commission
& Anr. ...Respondents

Counsel for the Petitioner:
D.D. Chopra, Divyam Krishna, Shailesh
Verma

Counsel for the Respondents:
I.B. Singh, Madhumita Bose, Rekha Nigam

(A) Electricity Law - The Electricity Act,
2003 - Section 61 - Tariff regulation ,
Section 62 - Determination of tariff ,
Section 63 - Determination of tariff by
bidding process , Section 178 - Power of
central commission to make regulations -
Central Electricity Regulatory Commission
(Terms and Conditions of Tariff) (First
Amendment),
Regulations,
2006
-
Regulation 5A - Provisional Tariff - Law
should be consonant with principles of
faith and reason - Delegated legislation,
including regulations, should not conflict
with principal legislation - Regulations
should be harmonious with the statutes
they are formulated under - The Electricity
Act
of
2003
provides
the
statutory
framework for regulations. (Para - 9)

(B) Electricity Law - The Electricity Act,
2003 - Section 62(6) - If any licensee or a
generating company recovers a price or
charge exceeding the tariff determined
under this section, the excess amount shall
be recoverable by the person who has paid
such price or charge along with interest
1594 INDIAN LAW REPORTS ALLAHABAD SERIES
equivalent to the bank rate without
prejudice to any other liability incurred by
the licensee. (Para -5)

Section 62(6) and Regulation 5A Conflict -
Section 62(6) states interest equivalent to bank
rate chargeable for price or charge exceeding
tariff - Regulation 5A stipulates simple interest at
6% per annum for adjustment - Regulation 5A
contradicts Section 62(6), which equates interest
rate to bank rate - Quashing Regulation 5A of
Central Electricity Regulatory Commission -
Declares regulation ultra-vires and inconsistent
with Electricity Act, 2003. (Para - 2,7)

HELD:-Central
Electricity
Regulatory
Commission did not have any power to provide
any different rate of interest in its regulations for
adjustment which is at variation from the amount
payable under Section 62 of the Act of 2003.
Regulation 5A to the extent of fixation of payable
interest for amounts to be adjusted under Section
62 of the Act of 2003, being in direct conflict with
Section 62(6) of the Act of 2003 is declared ultravires and is quashed.(Para - 10,11)

Petitions allowed. (E-7)

List of Cases cited:

1. Sukhdev Singh Vs Bhagatram Sardar Singh
Raghuvanshi, (1975) 1 SCC 421

2. General Officer Commanding-in-Chief Vs
Subhash Chandra Yadav, (1988) 2 SCC 351

3. St. Johns Teachers Training Institute Vs
Regional Director, NCTE, (2003) 3 SCC 321

4. Newspapers Ltd. Vs St. Industrial Tribunal,
U.P. & Ors., 1957 SCC Online SC 32

(Delivered by Hon'ble Vivek Chaudhary, J.
&
Hon'ble Om Prakash Shukla, J.)

1. Heard Sri D.D. Chopra, learned
Senior Advocate, assisted by Sri Shailesh
Verma, learned counsel representing the
UPPCL-petitioner, Ms. Madhumita Bose,
learned counsel for respondent no.1-CERC
and Ms. Rekha Nigam, learned counsel for
respondent no.2-NTPC.

2. Present writ petition is filed by U.P.
Power
Corporation
Limited
(UPPCL)
against the Central Electricity Regulatory
Commission (CERC) and NTPC Limited.
Though, number of reliefs are sought in the
present writ petition, however, Sri D.D.
Chopra, learned Senior Counsel for the
petitioner confines his prayer to relief 'ia' of
the writ petition only and states that he is not
pressing any other relief except the aforesaid
relief 'ia'. The relief 'ia' of the writ petition
reads under:-

"ia. Issue an appropriate writ,
order or direction in the nature of certiorari
quashing
Regulation
5A
of
Central
Electricity Regulatory Commission (Terms
and
Conditions
of
Tariff)
(First
Amendment),
Regulations,
2006
(the
impugned regulations) be declaring it to be
ultra-vires and not consistent with the
provisions of Electricity Act, 2003 only to
the extent the same provides for payment of
simple interest at 6% per annum."

3. Learned counsel for petitioner states
that Regulation 5A of Central Electricity
Regulatory
Commission
(Terms
and
Conditions of Tariff) (First Amendment),
Regulations, 2006 (hereinafter referred to as
'Regulations of 2006') is directly in conflict
with Section 62(6) of the Electricity Act,
2003 (hereinafter referred to as 'Act of
2003').

4. Opposing the same, both the counsel
for respondents submit that there is no
illegality in the regulations.

5. Section 61 of the Electricity Act
provides that appropriate commission shall,
subject to the provision of this Act, specify
5 All. U.P. Power Corporation Ltd. Vs. Central Electricity Regulatory Commissioner & Anr.
1595
the
terms
and
conditions
for
the
determination of tariff. Section 62 of the
Electricity Act, 2003 reads as follows:-

"62. Determination of tariff.-(1)
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: Provided that the Appropriate
Commission may, in case of shortage of
supply of electricity, fix the minimum and
maximum ceiling of tariff for sale or
purchase of electricity in pursuance of an
agreement,
entered
into
between
a
generating company and a licensee or
between licensees, for a period not
exceeding one year to ensure reasonable
prices of electricity;

(b) transmission of electricity;

(c) wheeling of electricity;

(d) retail sale of electricity:

Provided
that
in
case
of
distribution of electricity in the same area by
two or more distribution licensees, the
Appropriate
Commission
may,
for
promoting competition among distribution
licensees, fix only maximum ceiling of tariff
for retail sale of electricity.

(2) The Appropriate Commission
may require a licensee or a generating
company to furnish separate details, as may
be specified in respect of generation,
transmission
and
distribution
for
determination of tariff.

(3) The Appropriate Commission
shall not, while determining the tariff under
this Act, show undue preference to any
consumer of electricity but may differentiate
according to the consumer's load factor,
power factor, voltage, total consumption of
electricity during any specified period or the
time at which the supply is required or the
geographical position of any area, the
nature of supply and the purpose for which
the supply is required.

(4) No tariff or part of any tariff
may ordinarily be amended, more frequently
than once in any financial year, except in
respect of any changes expressly permitted
under the terms of any fuel surcharge
formula as may be specified.

(5) The Commission may require a
licensee or a generating company to comply
with such procedures as may be specified for
calculating the expected revenues from the
tariff and charges which he or it is permitted
to recover.

6) If any licensee or a generating
company recovers a price or charge
exceeding the tariff determined under this
section, the excess amount shall be
recoverable by the person who has paid
such price or charge along with interest
equivalent to the bank rate without
prejudice to any other liability incurred by
the licensee."

6. Section 178 of the Act of 2003
empowers the Central Commission to make
rules for carrying out the provisions of the
Act. In exercise of such powers, Central
Electricity Regulatory Commission had
notified Central Electricity Regulatory
Commission (Terms and Conditions of
Tariff) Regulations, 2004 (Regulations of
2004). Further, by notification dated
01.06.2006,
the
Central
Electricity
Regulatory Commission amended the said
regulations by inserting Regulation 5A, after
Regulation 5 of the principal Regulations of
2004. Regulation 5A reads as follows:-

"5A.
Provisional
tariff:
Provisional tariff or provisional billing of
charges,
wherever
allowed
by
the
Commission based on the application made
by
the
generating
company
or
the
transmission licensee or by the Commission
1596 INDIAN LAW REPORTS ALLAHABAD SERIES
on its own motion or otherwise, shall be
adjusted against the final tariff approved by
the Commission.

Provided
that
where
the
provisional tariff charged exceeds the final
tariff approved by the Commission under
these regulations, the generating company
or the transmission licensee, as the case may
be, shall pay simple interest @ 6% per
annum, computed on monthly basis, on the
excess amount so charged, from the date of
payment of such excess amount and up to the
date of adjustment.

Provided further that where the
provisional tariff charged is less than the
final tariff approved by the Commission, the
beneficiaries shall pay simple interest @ 6%
per annum, computed on monthly basis on
the deficit amount from the date on which
final tariff will be applicable up to the date
of billing of such deficit amount.

Provided also that excess/deficit
amount along with simple interest @ 6%
shall be adjusted within three months from
the date of the order failing which the
defaulting utility/beneficiary shall be liable
to pay penal interest on excess/deficit
amount at the rate as may be decided by the
Commission."

7. The simple submission made by
counsel for petitioner is that while Section
62(6) specifically provides that interest
equivalent to bank rate shall be chargeable
at the time of recovery of a price or charge
exceeding the tariff determining under the
said section, while regulation 5A provides
that while adjusting the said amount simple
interest at the rate 6% per annum shall be
payable. On the face of it, Regulation 5A is
directly in conflict with the Section 62(6)
which specifically provides that the interest
rate would be equivalent to the bank rate.

8. In the present case, the regulations
are framed under the Act of 2003 and they
can not be in conflict with any provision of
Act of 2003. Suffice is to refer to the
decision in 5 Judges Bench of Supreme
Court in case of Sukhdev Singh v.
Bhagatram Sardar Singh Raghuvanshi,
(1975) 1 SCC 421. In paragraph-18 the
Court held:-

"18. The authority of a statutory
body or public administrative body or
agency ordinarily includes the power to
make or adopt rules and regulations with
respect to matters within the province of
such body provided such rules and
regulations are not inconsistent with the
relevant law. In America a "public agency"
has been defined as an agency endowed with
governmental or public functions. It has
been held that the authority to act with the
sanction
of
Government
behind
it
determines whether or not a governmental
agency exists. The rules and regulations
comprise those actions of the statutory or
public bodies in which the legislative
element predominates. These statutory
bodies cannot use the power to make rules
and regulations to enlarge the powers
beyond
the
scope
intended
by
the
legislature. Rules and regulations made by
reason of the specific power conferred on
the statute to make rules and regulations
establish the pattern of conduct to be
followed. Rules are duly made relative to the
subject-matter on which the statutory bodies
act subordinate to the terms of the statute
under
which
they
are
promulgated.
Regulations are in aid of the enforcement of
the provisions of the statute. Rules and
regulations have been distinguished from
orders or determination of statutory bodies
in the sense that the orders or determination
are actions in which there is more of the
judicial function and which deal with a
5 All. U.P. Power Corporation Ltd. Vs. Central Electricity Regulatory Commissioner & Anr.
1597
particular present situation. Rules and
regulations on the other hand are actions in
which
the
legislative
element
predominates." (emphasis added)

In
General
Officer
Commanding-in-Chief
v.
Subhash
Chandra Yadav, (1988) 2 SCC 351. In
paragraph-14 the Court held:-

"14. This contention is unsound. It
is well settled that rules framed under the
provisions of a statute form part of the
statute. In other words, rules have statutory
force. But before a rule can have the effect
of a statutory provision, two conditions
must be fulfilled, namely, (1) it must
conform to the provisions of the statute
under which it is framed; and (2) it must
also come within the scope and purview of
the rule-making power of the authority
framing the rule. If either of these two
conditions is not fulfilled, the rule so
framed would be void. The position remains
the same even though sub-section (2) of
Section 281 of the Act has specifically
provided that after the rules are framed and
published they shall have effect as if enacted
in the Act. In other words, in spite of the
provision of sub-section (2) of Section 281,
any rule framed under the Cantonments Act
has to fulfil the two conditions mentioned
above for their validity. The observation of
this Court in Jestamani Gulabrai Dholkia v.
Scindia Steam Navigation Company [AIR
1961 SC 627 : (1961) 2 SCR 811] relied
upon by Mr Aggarwal, that a contract of
service may be transferred by a statutory
provision, does not at all help the
appellants. There can be no doubt that a
contract of service may be transferred by
statutory provisions, but before a rule
framed under a statute is regarded a
statutory provision or a part of the statute, it
must fulfil the above two conditions. Rule 5C was framed by the Central Government in
excess of its rule-making power as
contained in clause (c) of sub-section (2) of
Section 280 of the Cantonments Act before
its amendment by the substitution of clause
(c); it is, therefore, void."(emphasis added)

In St. Johns Teachers Training
Institute v. Regional Director, NCTE,
(2003) 3 SCC 321. In paragraph-10 the
Court held:-

"10. A regulation is a rule or order
prescribed
by
a
superior
for
the
management of some business and implies a
rule for general course of action. Rules and
regulations are all comprised in delegated
legislations. The power to make subordinate
legislation is derived from the enabling Act
and it is fundamental that the delegate on
whom such a power is conferred has to act
within the limits of authority conferred by
the Act. Rules cannot be made to supplant
the provisions of the enabling Act but to
supplement it. What is permitted is the
delegation of ancillary or subordinate
legislative functions, or, what is fictionally
called, a power to fill up details. The
legislature may, after laying down the
legislative policy confer discretion on an
administrative agency as to the execution of
the policy and leave it to the agency to work
out the details within the framework of
policy. The need for delegated legislation is
that they are framed with care and
minuteness when the statutory authority
making the rule, after coming into force of
the Act, is in a better position to adapt the
Act to special circumstances. Delegated
legislation permits utilisation of experience
and consultation with interests affected by
the practical operation of statutes. Rules
and regulations made by reason of the
specific power conferred by the statutes to
make rules and regulations establish the
pattern
of
conduct
to
be
followed.
Regulations are in aid of enforcement of the
provisions of the statute. The process of
legislation by departmental regulations
1598 INDIAN LAW REPORTS ALLAHABAD SERIES
saves time and is intended to deal with local
variations and the power to legislate by
statutory instrument in the form of rules and
regulations is conferred by Parliament. The
main justification for delegated legislation
is that the legislature being overburdened
and the needs of the modern-day society
being complex, it cannot possibly foresee
every administrative difficulty that may
arise after the statute has begun to operate.
Delegated legislation fills those needs. The
regulations made under power conferred by
the statute are supporting legislation and
have the force and effect, if validly made, as
an Act passed by the competent legislature."
(Emphasis added)

In Newspapers Ltd. Vs.
State Industrial Tribunal, U.P. And

Others, 1957 SCC Online
SC 32. In paragraph-19 the Court held:-

"19....The cardinal rule in regard
to promulgation of by-law or making rules is
that they must be legi fidei rationi consona,
and therefore all regulations which are
contrary or repugnant to statutes under
which they are made are ineffective..."
(Emphasis added)

9. The principle of law is well settled
that law should be consonant with principles
of faith and reason, delegated legislation
such as regulations framed under an Act,
cannot be in conflict with its principal
legislation.
Regulations
need
to
be
consistent and harmonious with the statutes
under which they are formulated. The
Electricity Act of 2003 provides the
statutory
framework
within
which
regulations are enacted, and any regulations
promulgated must be aligned with and not
contradict the provisions of the principal
legislation.

10. Counsels for the respondents could
not explain the said conflict between the
regulation and section. Bank rate is variable
and is based upon large number of
considerations. The legislature in its best
wisdom has provided the same to be charged
while adjusting the amount, therefore, the
respondent
no.1
Central
Electricity
Regulatory Commission did not have any
power to provide any different rate of
interest in its regulations for adjustment
which is at variation from the amount
payable under Section 62 of the Act of 2003.

11. Thus, the said Regulation 5A to the
extent of fixation of payable interest for
amounts to be adjusted under Section 62 of
the Act of 2003, being in direct conflict with
Section 62(6) of the Act of 2003 is declared
ultra-vires and is quashed.

12. The writ petition succeeds and is
allowed.
----------
(2024) 5 ILRA 1598
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 13.05.2024

BEFORE

THE HON'BLE SHEKHAR B. SARAF, J.

Writ Tax No. 1348 of 2022

M/s Ace Manufacturing Systems Limited
 ...Petitioner
Versus
State of UP & Ors. ...Respondents

Counsel for the Peitioner:
Atul Gupta, Prakhar Shukla

Counsel for the Respondents:

(A) Tax Law - Presence of mens rea for
evasion of tax is a sine qua non for
imposition of penalty - Mens Rea: A
Jurisprudential Principle in Taxation - Mens
rea, or the presence of a guilty mind, is a