IN THE SUPREME COURT OF INDIA   CIVIL APPELLATE JURISDICTION

 CIVIL APPEAL NO.805 OF 2008

WEST BENGAL ELECTRICITY  REGULATORY COMMISSION                               .….APPELLANT(S)   

VERSUS

HINDALCO INDUSTRIES LTD. & ORS.                …RESPONDENT(S)

W I T H

CIVIL APPEAL NO.3341 OF 2008

  J U D G M E N T

SURINDER SINGH NIJJAR, J.

1. In these two appeals the appellants are aggrieved by the order  

passed by the Appellate Tribunal for Electricity (hereinafter referred to  

as ‘the Tribunal’) in Appeal No.3/2007 dated October 31, 2007.  The  

present Appeal  No.  805 of  2008 is at  the instance of  West Bengal  

Electricity  Regulatory  Commission  (hereinafter  referred  to  as  ‘the  

Commission’).  Appeal No.3341/2008 has been filed by the Calcutta  

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Electricity  and Supply Company Limited  (hereinafter  referred to as  

‘CESC’).

2. We propose to decide the two appeals by this common judgment  

as  they  arise  out  of  the  aforesaid  common  order  passed  by  the  

Tribunal.

3. The  controversy  between  the  parties  revolves  around  the  

methodology, criteria/formula that has to be applied in determining  

the wheeling charges in accordance with the applicable Rregulations  

framed under the Electricity Act 2003.

4. We may notice here the skeletal facts which are necessary for  

the purpose of disposal of these two appeals.  HINDALCO Industries  

Limited,  formerly  known  as  Indian  Aluminum  Company  Limited  

(hereinafter  referred to as respondent No.1)  has an aluminum and  

copper  products  factory  at  Belurmath  in  West  Bengal  within  the  

distribution  licence  area  of  CESC.   It  had  an  existing  Contract  

Demand  Agreement  for  8.5  MW with  CESC drawing  power  at  the  

voltage of 33 KV through dedicated lines from the Belurmath receiving  

Sub-Station  of  CESC.   For  this  purpose,  respondent  No.1  has  

installed a 33 KV Sub-Station at its premises.   It has a captive power  

plant  at  Hirakud,  Orissa.   On  31.10.2003  respondents  filed  an  

application under Section 9 and 42 of the Electricity Act, 2003 before  

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the Commission seeking permission for open access to wheel surplus  

captive power of an approximately 9 MW from its power plant to its  

Belur  factory.   The  distance  between  the  captive  power  plant  at  

Hirakud, Orissa and Belurmath plant in West Bengal is about 555  

kilometers, out of which 550 kilometers falls within the jurisdiction of  

West Bengal State Electricity Board (for short WBSEB), OPTCL and  

Eastern  Region.  We  may  also  notice  here  that  out  of  these  five  

kilometers, respondent No.1 had at its own cost put up 2 kilometers  

long dedicated transmission line, thus using only 3 kilometers of the  

CESC  network.  Respondent  No.1  paid  wheeling  charges  for  

transmission  of  power  at  the  rate  of  9.57  paise  per  unit  for  550  

kilometers.  However, in respect of remaining five kilometers, which  

also fall within the State of West Bengal, respondent No.1 has to pay  

wheeling  charges  at  the  rate  of  83.54  paise/kWh as  fixed  by  the  

Appellate Commission by its order dated 21.11.2005.   In its order  

dated 21.11.2005 the Commission had observed as follows:

“26.0  Thereafter, actual of working of open access  should  follow,  naturally  depending-upon  availability  of  capacity as laid down in the Regulations on open access.  Payments  of  various  charges  /  fees  should  follow  the  provisions of the Regulations dealing with fees, charges  and formats.  There are still two items on which specific  orders from the Commission will  be required.  The first  one concerns the quantum / rate of additional surcharge,  while the second one concerns the wheeling charge which  will have to be determined by the Commission in terms of  Regulation 14.3(b) and Regulation 14.5(b) respectively of  the  West  Bengal  Electricity  Regulatory  Commission  (Terms  and  Conditions  for  Open  Access)  Regulations,  2005.  We have since determined the wheeling charges  applicable to CESC Limited for the year 2005-06 based on  

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factors like distribution network cost,  units saleable by  the  distribution  licensee  to  its  consumers,  units  to  be  wheeled by the open access customer etc. and the same  has worked out  to  83.54 paise per  kWh.   This will  be  revised  appropriately,  needless  to  add,  by  the  Commission every year.”   

5. Aggrieved by the aforesaid order,  respondent No.1 challenged  

the  same  before  the  Tribunal  by  way  of  an  appeal  being  Appeal  

No.1/2006.  The aforesaid appeal was allowed by the Tribunal by its  

order dated 11.7.2006.  The impugned order of the Commission was  

quashed  and  set  aside.   The  matter  was  remanded  back  to  the  

Commission for a fresh determination of wheeling charges with the  

following observations:

“35. It  follows that in calculating wheeling charges for  the distribution system or associated facilities are to be  assessed on applicable  distribution network  cost,  units  saleable and units wheeled by all open access customers  in  the  network.   The  learned  counsel  for  appellant  contends that as per CERC (Open Access in Inter-State  Transmission)  Regulations  and  WBERC  (Terms  &  Conditions for Open Access –Schedule of Charges, Fees &  Formats  for  Open  Access)  Regulation,  the  wheeling  charges of the Distributing system should be 0.25 time  for short term open access.  However, we find from Para  26.0 of the order appealed against, there is no detailed  discussion  in  this  respect  except  holding  that  83.54  paisa/kWh shall be the wheeling charges.  No particulars  been  disclosed  is  the  main  grievance  and  Regulations  governing  wheeling  charges  have  not  been  applied  correctly.   The  second  respondent  has  stated  in  its  submission  that  the  WBERC  determined  the  wheeling  charges in case of WBSEB for 2005-06 at the rate of 56  paisa/kWh  and  a  copy  also  was  filed.   In  the  circumstances  with  respect  to  fixation  of  wheeling  charges  the  matter  deserves  to  be  remitted  back  to  WBERC for fresh consideration in the light of the relevant  Rules  and  affording  opportunity  to  appellant.   The  

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authority  shall  take  note  of  the  fact  that  open  access  within  the  Distribution  area  of  CESC  is  applied  to  a  distance  of  5  KM and  out  of  5  KM,  2  KM distance  is  appellant’s  dedicated  transmission  line  put  up  at  its  costs.”  

 6. Upon remand, the matter was again heard, and decided by the  

Commission  vide  order  dated  16.11.2006.   By  this  order  the  

Commission sought to demonstrate  and detail  the methodology for  

determining the wheeling charges payable by respondent No.1.  The  

wheeling  charges  were  re-determined  by  the  Commission  

at  83.54  paisa  per  KWH.   Again  being  aggrieved  by  the  aforesaid  

order,  respondent No.1 impugned the same before the Tribunal by  

way of Appeal No.3/2007.   

7. We  may  notice  here  that  in  both  the  matters  before  the  

Tribunal,  respondent  No.1  had  challenged  the  determination  of  

wheeling charges for the year 2005-06.  Initially, respondent No.1 had  

challenged  the  order  passed by  the  Commission  on 21.11.2005 in  

Appeal No.1/2006.  By order dated 11.7.2006 Appeal No.1/2006 was  

allowed and the matter was remanded back to the Commission for  

fresh determination of wheeling charges.  It was observed that there  

was no detailed discussion in the order which would throw light upon  

the  manner  and  methodology  behind  determination  of  wheeling  

charges.  The grievance made by respondent No.1 which was noticed  

by the Tribunal was that “no particular wheel disclosed is the main  

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grievance and regulation governing wheeling charges have not been  

applied correctly.”

8. Taking  note  of  the  aforesaid  observations,  the  Commission  

re-determined the wheeling charges.  It is the case of the appellants  

herein that wheeling charges had been correctly re-determined on the  

basis of the total distribution network cost as mandated under the  

Commission  (Terms  and  Conditions  for  Open  Access  –Schedule  of  

Charges,  Fees  & Formats  for  Open Access)  Regulations,  2005;  the  

West  Bengal  Electricity  Regulatory  Commission  (Terms  and  

Conditions for Open Access)  Regulations 2005 as well  as the West  

Bengal Electricity Regulatory Commissions (Terms and Conditions of  

Tariff) Regulations, 2005.

9. It  is  claimed  by  the  appellants  that  the  formula/  

methodology/criteria for determining wheeling charges has to be in  

terms of form 1.27 attached to the Tariff Regulations, 2005.  In spite  

of  the  clear  and  categorical  statutory  provisions  contained  in  the  

applicable regulations, the appellants have been wrongly directed by  

the  Tribunal  to  re-determine  the  wheeling  charges  on the  basis  of  

applicable  network  of  33  KVW  distribution  system  on  which  the  

electricity is being rolled by respondent No.1.  The appellants had laid  

considerable emphasis on the submissions that the determination of  

wheeling charges based on the interpretation directed by the Tribunal  

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would be  ex  facie  contrary  to  the  scheme contemplated  under  the  

applicable  regulations  framed  under  the  Electricity  Act,  2003  

governing determination of wheeling charges.  A combined reading of  

all the applicable regulations, according to the appellants, leads to the  

irresistible  conclusion  that  for  determining  wheeling  charges  total  

distribution cost of the network and not the voltage-wise cost would  

be the determining factor.  The interpretation made by the Tribunal, if  

accepted, would render the regulation framed by the appellant otiose.  

The Tribunal incorrectly understood and interpreted the expressions  

applicable  distribution  network  as  the  distribution  network  cost  

which is to be determined at the relevant voltage level.   

10. At this stage we need not decide any of the issues raised by the  

appellants as, in our opinion, the appeals have to be allowed on the  

short ground that the Tribunal has failed to consider the objection  

raised  by  the  appellants  with  regard  to  the  maintainability  of  the  

appeal filed by respondent No.1, before the Tribunal.   

11. Both the appellants had categorically stated before the Tribunal  

that respondent No.1 has sought to challenge the wheeling charges  

for the year 2005-06 as determined by the Tribunal in the order dated  

16.11.2006.  During the year 2005-06 not a single unit of energy was  

wheeled by respondent No.1 and therefore no wheeling charges were  

paid/payable.  Therefore, the appeal filed by respondent No.1 herein  

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was at best of an academic interest only, as at the relevant point of  

time when Appeal No.03/2007 was filed the wheeling charges for the  

year 2006-07 had already been determined.  It was also mentioned  

that for reasons best known to respondent No.1 herein the wheeling  

charges  for  2006  were  not  challenged  in  the  appeal  before  the  

Tribunal.  In any event since respondent No.1 had not wheeled any  

power during the period 2005-06, it did not have to pay any wheeling  

charges  in  the  first  place.   Thus,  the  appeal  ought  to  have  been  

dismissed as having become infructuous.   It  is  emphasised by the  

counsel for the appellant that detailed written notes were submitted  

before the Tribunal during the course of hearing in Appeal No.3/2007.  

Thereafter also written submissions were filed detailing the scope of  

the issues before the Tribunal.  Copies of these written submissions  

have been placed before us as an annexure to the grounds of appeal.  

12. The specific submission made by the appellant with regard to  

the  maintainability  of  the  appeal  was  an  important  issue  which  

needed consideration by the Tribunal.  Numerous issues, which have  

been raised in these appeals on merits, were also raised before the  

Tribunal  which  seem  to  have  escaped  the  notice  of  the  Tribunal  

rendering its decision vulnerable.  In our opinion, it would be in the  

interest of justice to remand the matter back to the Tribunal for fresh  

consideration  of  all  the  issues  after  taking  into  consideration  the  

factual and legal submissions made by the appellant.  In view of the  

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above both the appeals succeed and are allowed.  The order passed by  

the Tribunal  is  set  aside.   The appeals  are  remanded back to  the  

Tribunal  to  be  decided  afresh  on  merits,  in  accordance  with  law  

preferably within a period of three months of the receipt of a certified  

copy of this order.  

13. Appeals  are  allowed  as  indicated  above  with  no  order  as  to  

costs.    

 .....…...…………………………J.

                [ B. SUDERSHAN REDDY ]    

..……….………………………….J. NEW DELHI;                     [ SURINDER SINGH NIJJAR ]  APRIL 22, 2010.   

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