Full Judgment Text
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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