REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 3109  OF 2006

M/s. DLF Power Limited …..Appellant

Versus

Central Coalfields ltd. & Anr. ….Respondents

(With Civil Appeal  No. 3561  /2006 )

J U D G M E N T

Dr. ARIJIT PASAYAT.

1. These two Civil Appeals are inter related and are, therefore, disposed

of by this common order.  Civil Appeal No. 3561 of 2006 has been filed by

Central Coalfields Limited (in short the ‘CCL’) under Section 125 of the

Electricity Act, 2003 (in short the ‘Act’) impugning the judgment and order

dated 11th May, 2006 passed by the Appellate Tribunal for Electricity, New

Delhi (in short the ‘Appellate Tribunal’) in Appeal No.166 of 2005.  The

other  appeal  i.e.  Civil  Appeal  No.  3109 of  2006 has  been filed by DLF

Power Limited (in short the ‘DLF’) challenging part of the judgment dated

11.5.2006 passed by the Appellate Tribunal. By order dated 11.7.2007 this

court directed the Cost Accounts Wing of M/s. Ernst & Young to determine

the  actual  capital  cost  based  on  the  formula  in  the  “Power  Purchase

Agreement”  dated  8.2.1993 between  CCL and  DLF.  This  Court  further

directed that the copy of the report of the Cost Accounts Wing be given to

the parties and to the Jharkhand State Electricity Regulatory Commission

(in  short  the  ‘State  Commission’).  It  was  further  directed  that  the  State

Commission on receipt  of  the report shall  determine the tariff  as per  the

terms of the “Power Purchase Agreement” between the parties for the two

power plants.   

2. CCL’s case is that the Cost Accounts Wing of M/s. Ernst & Young

only on the basis of the documents supplied by DLF have carried out the

exercise  of  determining  the  actual  capital  cost  of  the  two  power  plants

without  even  asking  for  any  comments  or  any  inputs  from CCL  while

working out the actual capital cost.  Grievance is that the report was based

solely on the basis of the documents supplied by DLF, copies of which were

also not made available to CCL.  M/s. Ernst & Young have determined the

capital  cost  of  the two power  plants  at  Giddi  at  Rs.72.34 crores  and for

Rajrappa determined the actual capital cost of Rs.67.45 crores.  On receipt

2

of the report from the Cost Accounts Wing of M/s. Ernst & Young, State

Commission determined the tariff cost.  The Commission consisted of two

members; one was the Chairman and the other was the Member (Technical).

Both of them separately determined the tariff for the subsequent year after

the first year based on the actual capitalization cost supplied by the Cost

Accountants.  It  is  submitted  that  the  two  determinations  are  at  great

variance from each other.

3. It is submitted that the international norms for actual capitalization

cost for power has not been kept in view.  It is pointed out that the actual

capitalization  cost  arrived  at  is  apparently  highly  excessive,  purportedly

based on the inflated figures supplied by DLF without supplying copies to

CCL.

4. Learned counsel  for  the appellant  CCL submitted  that  the basis  of

tariff fixation is erroneous and in any event a statutory forum is available to

question correctness of the report, which can be availed.

5. On the other hand learned counsel for the DLF submitted that M/s

Ernst & Young are internationally reputed financial consultants.  There is

no substance in the objections raised by CCL.

3

6. We are inclined to accept the submissions of learned counsel for the

CCL that the complex process of evaluation is involved in fixing the tariff

and it would be in the interest of parties challenge, if any, to the report is

made before  the prescribed  authority.   That  being  so,  we dispose  of  the

appeals with the direction that in case CCL files appeal within four weeks

from  today  the  same  shall  be  considered  by  the  Appellate  Tribunal  in

accordance with law.  The Appellate Tribunal is requested to dispose of the

appeal on merits within a period of two months from the date of filing.  All

questions  are  left  open  to  be  decided  without  the  question  of  limitation

relating the filing of appeal. It is stated that CCL is paying Rs.2.07 of KWH

for both  Rajrappa and Giddi  for  the  second year  after  commissioning in

July, 2000 for Rajrappa and in April, 2001 for Giddi.  CCL shall continue to

make the payment.  We make it clear that by providing interim protection

we have not expressed any opinion on the merits of the case.   

………………………………….J. (Dr. ARIJIT PASAYAT)

……………………………………J. (LOKESHWAR SINGH PANTA)

New Delhi, April 01, 2009      

4