REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 5722 OF 2006

Grid Corporation of Orissa Ltd. …Appellant   

Versus

Gajendra Haldea and Ors. …Respondents

WITH  

Civil appeal No. 185 of 2007 Civil appeal No. 399 of 2007

  SLP (C) No.11629 of 2007

J U D G M E N T

Dr. ARIJIT PASAYAT, J.

1. These  appeals  involve  an important question regarding

jurisdiction of the Appellate Tribunal for Electricity (in short

‘Appellate  Tribunal’),  New  Delhi.  The  first  judgment  of  the

Appellate  Tribunal  is  assailed  in  the  case  of  appellant-Grid

Corporation of Orissa Ltd.   

2. Background facts in a nutshell are as follows:

Respondent  No.1-Gajendra  Haldea  a  serving  officer

based in Delhi  filed a petition before  the Central  Electricity

Regulatory  Commission  (in  short  the  ‘CERC’)  purportedly

under Section 52 read with Section 79(1)(g) of the Electricity

Act, 2003 (in short the ‘Act’) on 28.2.2006.  The prayers inter-

alia were under:

(a) Direct  GRIDCO  to  adhere  to  the  maximum trading  margin  of  4  paise  while  entering  into  a contract for sale of power to any trading licensee in case such power is ultimately routed to a licensee outside the State of Orissa through an inter-state transmission system.

(b) Direct  GRIDCO to file  appropriate  returns in the  prescribed  Form-III  of  the  Central  Electricity Regulatory  Commission  (Procedure,  Terms  & Conditions for grant of Trading Licence and other related  matters)  Regulations,  2004  in  respect  of each transaction of sale, where the electricity sold

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by it  has been  ultimately  transferred  to  a license outside  the  State  of  Orissa  using  inter-state transmission system.

(c) Direct  GRIDCO  not  to  sell  electricity  in  the course of inter state trade with a margin exceeding 4 paisa per unit and  to modify any contract that allows it to retain a higher margin.  

(d) Direct  GRIDCO  not  to  invite  bids  with  the intent  of  selling  electricity  in  the  course  of inter-state  trade  with  a  margin  exceeding  4 paisa per unit.

(e) Exempt  petitioner  from  the  requirement  of payment of the prescribed fee.  

(f) Pass  such  other  and  further  orders  and/or directions as this Hon’ble Court may deem fit and proper in the facts and circumstances of the case.”

As is  evident  from paras 9 and 11 of the petition,  the

same was purportedly in public interest and was intended to

save interests of consumers  of electricity in the country. The

appellant-Grid Corporation of India filed objections inter-alia

taking  the  stand  that  petition  filed  by  respondent  No.1-

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Gejendra Haldea was misconceived and not maintainable  in

law and was liable  to be  rejected.  By order  dated  1.5.2006

CERC  dismissed  the  petition  and  following  findings  were

recorded:

“In our considered view, GRIDCO though deemed to be an Electricity trader is an inter- state  trader  and  is  amenable  to  the jurisdiction  of  the  Orissa  Commission. Therefore,  the Trading margin of 4 paise/KW specified by the Commission in its Notification dated  23.1.2006  published  in  the  Official Gazette  on  27.1.2006  does  not  apply  to GRIDCO.”  

Challenging  the  order  of  CERC,  respondent  No.1-

Gajendra  Haldea  carried  the  matter  before  the  Appellate

Tribunal in appeal purportedly filed under Section 111 of the

Act.  By the impugned order,  the Appellate  Tribunal  allowed

the  appeal  and granted reliefs  as  prayed  for  by respondent

No.1.

3.  The basic challenge in these appeals is that the petition

filed by respondent No.1-Gajendra Haldia was thoroughly mis-

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conceived because  the appeal  in terms of sub-section (1)  of

Section 111 has to fulfill the following requirements.  

“111.  Appeal  to  Appellate  Tribunal.-(1)  Any person  aggrieved  by  an  order  made  by  an adjudicating  officer  under  this  Act  (except  under section 127) or an order made by the Appropriate Commission under this Act may prefer an appeal to the Appellate Tribunal for Electricity:

Provided  that  any  person  appealing  against the  order  of  the  adjudicating  officer  levying  any penalty  shall,  while  filing  the  appeal,  deposit  the amount of such penalty:

Provided further that where in any particular case, the Appellate Tribunal is of the opinion that the  deposit  of  such  penalty  would  cause  undue hardship to such person, it may dispense with such deposit subject to such conditions as it may deem fit to impose  so as to safeguard the realisation of penalty.

(2) Every appeal under sub-section (1) shall be filed within a period of forty  five days from the date on which a copy of the order made by the adjudicating officer or the Appropriate Commission is received by the aggrieved person and it shall be in such form, verified  in  such  manner  and  be  accompanied  by such fee as may be prescribed:

Provided  that  the  Appellate  Tribunal  may entertain  an  appeal  after  the  expiry  of  the  said period of forty-five days if it is satisfied that there was  sufficient  cause  for  not  filing  it  within  that period.

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(3)  On receipt of an appeal  under sub-section (1), the Appellate Tribunal may, after giving the parties to the appeal an opportunity of being heard, pass such  orders  thereon  as  it  thinks  fit,  confirming, modifying  or  setting  aside  the  order  appealed against.

(4) The Appellate Tribunal shall send a copy of every order made by it to the parties to the appeal and to the  concerned  adjudicating  officer  or  the Appropriate Commission, as the case may be.

(5)  The  appeal  filed  before  the  Appellate  Tribunal under sub-section (1)  shall  be dealt  with by it  as expeditiously  as  possible  and  endeavour  shall  be made by it  to dispose  of the appeal  finally within one  hundred  and  eighty  days  from  the  date  of receipt of the appeal:

Provided that where any appeal could not be disposed of within the said period of one hundred and eighty days, the Appellate Tribunal shall record its reasons in writing for not disposing of the appeal within the said period.

(6) The Appellate Tribunal may, for the purpose of examining the  legality,  propriety  or correctness  of Appropriate Commission under this Act, as the case may be, in relation to any  proceeding, on its own motion  or  otherwise,  call  for  the  records  of  such proceedings and make such order in the case as it thinks fit.”

4. It  was,  therefore,  submitted  that  respondent  No.1  was

neither  entitled  to  file  a  petition  before  the  CERC  under

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Section 52 read with Section 79 (1)(g) of the Act nor is entitled

to file an appeal before the Appellate Tribunal.  

5. It  is  pointed  out  that  the  expression  ‘any  person

aggrieved’ must be a  person who suffered legal grievance or

legal injury or one who has been unjustly deprived and denied

of something which he would have entitled to obtain in usual

course.  

6. On merits it is submitted that the transaction between

the appellant-Grid Corporation of Orissa Ltd. and PTC India

Ltd. was intra-state within the meaning of Central Electricity

Regulatory  Commission  (Procedure,  Terms  &  conditions  for

Grant  of  Trading  Licence  and  Other  Related  Matters)

Regulations, 2004 (in short the ‘Regulations’). It is submitted

that even on cursory reading of the Regulations, it would be

apparent  that  the  appellant’s  sale  to  Power  Trading

Corporation of India Ltd. (in short ‘PTC’)  cannot be construed

as inter-state trading within the meaning of said expression.  

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7. Civil  Appeal  No.185/2007 has been filed by PTC India

Ltd and the challenge is to the order of the Appellate Tribunal

dated  16.11.2006.  Here  again,  the  Appellate  Tribunal  held

that the transaction of sale of surplus energy  by GRIDCO to

PTC  was  in  the  nature  of  inter-state  trade  attracting

Regulation 2 of the Central Electricity Regulatory Commission

(Fixation  of  Trading  Margin)  Regulations,  2006  (in  short

‘Trading Regulations’).  PTC being an inter-state trader could

not sell electricity purchased from GRIDCO in Orissa. Allowing

electricity  traders  to  sell  electricity  at  unregulated  price

without fixing trading margins will have baneful effect on the

development of the power sector. The aforesaid findings of the

Appellate Tribunal are questioned in this appeal.  

8. It  is  pointed  out  that  PTC  was  not  impleaded  as  the

respondent  or  a  party  before  CERC and/or  PTC  was  never

afforded an opportunity of placing its case in writing or even in

hearing before the Appellate Tribunal.  The Appellate Tribunal

concluded  its  hearing  on  28.8.2006.  The  subject  matter  of

Petition  No.41  of  2005  and  Appeal  No.81  of  2006  are

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unrelated. It was understood by PTC that it was not required

to intervene in the Appeal No.81 of 2006, particularly, since

hearing of Petition No.1 of 2005, which was subject matter of

challenge  in  Civil  Appeal  No.68  of  2007  was  concluded  on

26.3.2006  and the  judgment  was reserved.  In  said  matters

larger question of design of electricity market under Section

66 of the Act and role of regulators under Sections 60, 62, 79

(1)(j) and 178 thereof were involved.  

9. It  is  pointed out that in terms of the agreement dated

9.3.2006  which was for sale of electricity by GRIDCO  to PTC,

sale  was   completed  within  Orissa  at  the  points  of  supply

listed in Clause 2 of the General Terms and Conditions of the

Agreement. The Appellate Tribunal concluded as follows:

“(a) Title passed to PTC within Orissa.

(b) Risk passed to PTC within Orissa.

(c) Obligation to pay for electricity arose

against PTC within Orissa.

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(d) Control over the electricity so supplied and choice of whom to sell and at what price passed to PTC within Orissa.”

10. It is pointed out that the finding  recorded to the effect

that  the  sale  took  place  only  after  electricity  was  exported

outside Orissa and sale took place only by consumption are

contrary  to  the  scheme  of  the  Electricity  Act.  It  is  also

submitted that the finding regarding protection of consumers’

interest and the question qua exporting of unregulated rates

at which the electricity is sold by a trader of  electricity will

promote competition and protect consumers and the finding

that the appropriate Commissions must utilize the mechanism

of fixing trading margins under Section 79(1)(j) and 86(1)(j) to

protect consumers’ interests is neither based on any pleadings

nor  arises for adjudication in Appeal No.81 of 2006.      

11. It  is  pointed  out  that  the  Appellate  Tribunal  itself

understood  that  there  is  no  power  vested  in  any  ERC  to

determine tariff for trading. It has noted as follows:

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“Section  66  requires  development  of  market (price  determination  by  forces  of  demand  by supply); and   (b) Section 60 empowers  the ERCs to adjudicate

upon  any  instance  of  and  issue  directions considered appropriate to prevent an adverse effect on competition in electricity industry by-

(i) Entering into an agreement (ii) Abusing its dominant position; or (iii) Entering into a combination.

12. The  appellant-GRIDCO  has  also  submitted  that  the

definition of inter-state trading in terms of Section 2(g) of the

Regulations has not been kept in view. Reference is made to

Clauses  2,  3,  4,  18  and  23  to  contend  that  the  Appellate

Tribunal’s conclusions are erroneous. It is also submitted that

scope and ambit of Clause 26 has been mis-construed by the

Appellate Tribunal.

13. Additionally, learned counsel for GRIDCO has submitted

that in reply  to the  petition filed GRIDCO had categorically

submitted that respondent Gajendra had no locus standi to

file the petition and the petition filed was not maintainable.

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CERC held that trading margins are not applicable to GRIDCO

since it is carried out the functions of bulk supply of electricity

within the State of Orissa under Bulk Supply Licence issued

by the CERC and the transactions were completed in the State

of Orissa.  The entire benefit  from the sale of such surplus

power was passed on to the consumers of the State through

the Bulk Supply Tariff Orders.  CERC, it is pointed out, had

dismissed the  petition by respondent  No.1-Gajendra  Haldea

by holding that GRIDCO is an intra state trader.  GRIDCO’s

transactions under the said contract with PTC was completed

within the State of Orissa. Accordingly, it was held that the

Regulations were not applicable to GRIDCO.  CERC in view of

the  above  did  not  deal  with  the  question  of  locus  standi.

Appellate  Tribunal  held  that  Gajendra  Haldea  had  locus

standi  to  file  the  petition.  Though  it  did  not  disturb  the

findings of CERC that GRIDCO is an intra-state trader, it held

that the transactions of sale of surplus power by GRIDCO to

the inter-state traders are in the nature of inter-state trading.

Accordingly,  it  held  that  the  transactions  of  GRIDCO  are

governed  by the  Trading  Regulations  and directed  CERC to

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find out a methodology for refund of the excess amount.  

14. On behalf of respondent No.1-Gajendra Haldea the order

of Appellate Tribunal is supported.  

15. It is unnecessary to go into the question as to the nature

of the transaction, because respondent No.1-Gajendra Haldea

in order to prove that he had locus standi relied on Sections

121 and 142 of the Act. It was also stated that it is not in the

nature of PIL. It was stated that the prayer for refund was not

being pressed.        

16. A bare reading of Sections 121 and 142 of the Act which

read as follows shows that those provisions are not applicable.

“121. Power  of  Appellate  Tribunal-  The Appellate  Tribunal  may,  after  hearing  the Appropriate Commission or other interested party, if  any,  from  time  to  time,  issue  such  orders, instructions or directions as it may deem fit, to any Appropriate Commission for the performance of its statutory function under this Act.

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“142.  Punishment  for  non-compliance  of directions  by  Appropriate  Commission.-In  case any  complaint  is  filed  before  the  Appropriate Commission by any person or if that Commission is satisfied  that  any  person  has  contravened  any of the provisions of this Act or the rules or regulations made  thereunder,  or  any  direction  issued  by  the Commission,  the  Appropriate  Commission  may after  giving  such  person  an  opportunity  of  being heard in the matter, by order in writing, direct that, without prejudice to any other penalty to which he may be liable under this Act, such person shall pay, by way of penalty, which shall not exceed one lakh rupees  for  each  contravention  and  in  case  of  a continuing failure with an additional penalty which may extend to six  thousand rupees  for  every  day during  which  the  failure  continues  after contravention of the first such direction.”

17. Therefore,  the  Appellate  Tribunal  was  wrong  in

interfering  with  the  conclusions  of  CERC  that  respondent

No.1’s  petition was not entertainable and/or maintainable.  

18. In  Ben Gorm Nilgiri Plantations Company, Coonoor and

ors.  v. Sales Tax Officer, Special Circle, Ernakulam and Ors.

(1964 (7) SCR 706), it was inter alia observed as follows:

“To constitute a sale in the course of export of goods out of  the territory of  India,  common intention of

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the parties to the transaction to export the goods followed by actual export of the goods, to a foreign destination  is  necessary.  But  intention  to  export and  actual  exportation  are  not  sufficient  to constitute a sale in the course of export, for a sale by export "involves a series of integrated activities commencing  from  the  agreement  of  sale  with  a foreign buyer  and ending with the  delivery  of  the goods to a common carrier or transport out of the country  by  land  or  sea.  Such  a  sale  cannot  be dissociated from the export without which it cannot be  effectuated,  and  the  sale  and resultant  export form  parts  of  a  single  transaction":  State  of Travnncore  Cochin  and  others  v.  The  Bombay Company  Ltd.  A  sale  in  the  course  of  export predicates  a  connection  between  the  sale  and export,  the two activities  being  so  integrated  that the  connection  between  the  two  cannot  be voluntarily  interrupted,  without  a  breach  of  the contract or the compulsion arising from the nature of the transaction. In this sense to constitute a sale in the course  of  export  it  may be  said that there must be an intention on the part of both the buyer and the seller to export, there must be obligation to export,  and  there  must  be  an  actual  export.  The obligation may arise by reason of statute, contract between the parties, or from mutual understanding or  agreement  between  them,  or  even  from  the nature  of  the  transaction which  links  the  sale  to export. A transaction of sale which is a preliminary to export of the commodity sold may be regarded as a  sale  for  export but  is  not  necessarily  to  be regarded as one in the course of export, unless the sale occasions export. And to occasion export there must exist  such a bond between the   contract  of sale  and the actual  exportation,  that each link is inextricably  connected  with  the  one  immediately preceding it. Without such a bond, a transaction of sale cannot be called a sale in the course of export

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of goods out of the territory of India.  There are a variety  of  transactions  in  which  the  sale  of  a commodity is followed by export thereof. At one end are transactions in which there is a sale of goods in India  and  the  purchaser  immediate  or  remote exports  the  goods  out  of  India  for  foreign consumption.  For  instance,  the  foreign  purchaser either  by  himself  or  through his  agent  purchases goods within the territory of India and exports the goods and even if the seller has the knowledge that the  goods  are  intended  by  the  purchasers  to  be exported, such a transaction is not in the course of export, for the seller does not export the goods, and it is not his concern as to how the purchaser deals with the  goods.  Such a  transaction without  more cannot be regarded as one in the course of export because  etymologically,  "in  the  course  of  export", contemplates an integral relation or bond between the  sale  and  the  export.  At  the  other  end  is  a transaction under a contract of sale with a foreign buyer  under  which  the  goods  may  under  the contract  be  delivered  by  the  seller  to  a  common carrier  for  transporting  them  to  the  purchaser. Such a sale would indisputably be one for export, whether the contract and delivery  to the common carrier are effected directly or through agents. But in between lie a variety of transactions in which the question whether the sale is one for export or is one in the course of export i.e., it is a transaction which has  occasioned  the  export,  may  have  to  be determined on a correct appraisal of all  the facts. No  single  test  can  be  laid  as  decisive  for determining that question. Each case must depend upon  its  facts.  But  that  is  not  to  say  that  the distinction  between  transactions  which  may  be called  sales  for  export  and  sales  in  the course  of export  is  not  real.  In  general  where  the  sale  is effected by the seller, and he is not connected with the export which actually takes place, it is a sale for

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export. Where the export is the result of sale,  the export being inextricably linked up with the sale so that  the  bond  cannot  be  dissociated  without  a breach of the obligation arising by statute, contract or  mutual  understanding  between  the  parties arising from the nature of the transaction, the sale is in the course of export.

It may be conceded that when chests of tea out of the export quota are sold together with the export rights, the goods are earmarked for export, and knowledge that the goods were purchased by the  bidders  for  exporting  them  to  the  foreign principals  of  the  bidders  must  clearly  be attributable  to  them.  Does  the  co-existence  of these  circumstances,  impress  upon  the transactions  of  sale  with  the  character  of  a transaction  in  the  course  of  export  out  of  the territory  of  India?  We are  unable  to  hold  that  it does. That the tea chests   are sold together with export rights imputes knowledge to the seller that the  goods  are  purchased  with  the  intention  of exporting. But there is nothing in the transaction from which springs a bond between the sale and the intended export linking them up as part of the same  transaction.  Knowledge  that  the  goods purchased  are  intended  to  be  exported  does  not make  the  sale  and  export  parts  of  the  same transaction, nor does the sale of the quota with the sale of the goods lead to that result. There is no statutory obligation upon the purchaser to export the chests of tea purchased by him with the export rights.  The  export  quota  merely  enables  the purchaser to obtain export licence, which he may or may not obtain. There is nothing in law or in the contract between the parties, or even in the nature of the transaction which prohibits diversion of the goods for internal  consumption.  The sellers have no  concern  with  the  actual  export  of  the  goods,

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once the goods are sold. They have no control over the goods. There is therefore no direct connection between  the  sale  and export  of  the goods  which would  make  them  parts  of  an  integrated transaction of sale in the course of export.

In  our  view,  the  transactions  of  sale  in  the present  case  did  not  occasion  the  export  of  the goods,  even  though the  appellants  knew that  the buyers in offering the bids for chests of tea and the export  quotas  were  acting  on  behalf  of  foreign principals, and that the buyers intended to export the  goods.  There  was  between  the  sale  and  the export no such bond as would justify the inference that the sale and the export formed parts of a single transaction  or  that  the  sale  and  export  were integrally  connected.  The  appellants  were  not concerned with the actual exportation of the goods, and the sales were intended to be complete without the export, and as such it cannot be said that the sales  occasioned  export.  The  sales  were  therefore for export, and not in the course of export.”  

19. The Appellate Tribunal’s conclusions regarding nature of

transactions are not supportable when various clauses of the

agreement  are  considered.  They  clearly  establish  inter-state

nature of the transactions.  

20. It  is  to  be  noted  that  under  Rule  9  of  the  Central

Electricity Rules, 2005 (in short the ‘Central Rules’) there is no

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restriction on the licensee effecting sale or re-sale in the same

State and no separate licence is needed.  In fact, there was no

agreement to take out the electricity, as was inferred by the

Appellate  Tribunal.   PTC is  bound by the Regulations. It  is

pointed out that whenever there is sale for inter state trade,

the margin is maintained.  Additionally, PTC was not a party

before  CERC.  Originally  also  it  was  not  a  party  before  the

Appellate Tribunal.  In another case relating to trade margin

PTC  was  a  party.  The  issues  were  different  and  PTC  was

discharged  from  the  proceedings.  It  is  stated  that  PTC  is

affected  by  para  56  of  the  Appellate  Tribunal’s  order.  The

observation of the Appellate Tribunal that PTC could not have

sold electricity and it could not have effected sale inside the

State is wrong because of Rule 9 of the Central Rules.  It is

also to be noted that the contract was concluded in the State

of Orissa and the transmission loss was to be borne by PTC

who was not agent of GRIDCO.   

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21. In that view of the matter, looked at from any angle the

order passed by the Appellate Tribunal cannot be maintained

and is set aside.  

22. In view of the order passed in Civil  Appeal  No.5722 of

2006, other Civil Appeals are allowed, and in view of the said

order passed, no separate orders are necessary to be passed

in IAs and they are rejected, and SLP (C) No.11629 of 2007

filed  by  Haryana  Power  Generation  Corporation  Ltd.   is

dismissed.  Costs made easy.  

……………………………J. (Dr. ARIJIT PASAYAT)

…………………………..J. (P. SATHASIVAM)

New Delhi, August 13, 2008            

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