M/s JSW HYDRO ENERGY LTD. vs SECRETARY, CENTRAL ELECTRICITY REGULATORY COMMISSION & Ors

Judgement in Appeal No.168 of 2022
IN THE APPELLATE TRIBUNAL FOR ELECTRICITY
(Appellate Jurisdiction)
APPEAL No. 168 OF 2022
Dated: 18th September, 2026
Present: Hon`ble Ms. Seema Gupta, Officiating Chairperson
Hon`ble Mr. Virender Bhat, Judicial Member
In the matter of:
M/s JSW HYDRO ENERGY LTD.
Karcham Wangtoo, H.E. Project,
Sholtu Colony, Post Office Tapri – 172104
Distt. Kinnaur (HP) …Appellant(s)
VERSUS
1. SECRETARY, CENTRAL ELECTRICITY REGULATORY COMMISSION,
rd th
3 & 4 Floor, Chandralok Building,
36, Janpath, New Delhi 110066.
2. MANAGING DIRECTOR, PTC INDIA LTD.
NBCC Tower, 15 Bhikaji Cama Place,
New Delhi – 110066
3. MANAGING DIRECTOR,
HARYANA POWER GENERATION CORPORATION LIMITED,
Plot No.C-7, Sector-6, Panchkula
Haryana - 134109
4. MANAGING DIRECTOR,
UTTAR PRADESH POWER CORPORATION LIMITED,
Shakti Bhawan, 14, Ashok Marg,
Lucknow - 226001
5. MANAGING DIRECTOR,
JAIPUR VIDYUT VITRAN NIGAM LIMITED,
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Judgement in Appeal No.168 of 2022
Vidyut Bhawan, Janpath,
Jaipur – 302005
6. MANAGING DIRECTOR,
AJMER VIDYUT VITRAN NIGAM LIMITED,
Vidyut Bhawan, Panchsheel Nagar,
Makarwali Road,
Ajmer - 305004
7. MANAGING DIRECTOR,
JODHPUR VIDYUT VITRAN NIGAM LIMITED,
New Power House, Industrial Area,
Jodhpur - 342003
8. MANAGING DIRECTOR,
PUNJAB STATE POWER CORPORATION LIMITED,
The Mall, Old PSEB Building,
Patiala – 147001
9. THE STATE OF HIMACHAL PRADESH
THROUGH PRINCIPAL SECRETARY (MPP & POWER)
GOVERNMENT OF HIMACHAL PRADESH
Shimla – 171002 (HP)
10. MANAGING DIRECTOR,
HIMACHAL PRADESH STATE ELECTRICITY BOARD LIMITED
Vidyut Bhawan,
Shimla-171004 …. Respondents
Counsel on record for the Appellant(s) : Mr. Basava Prabhu S. Patil,
Sr.Adv.
Aman Anand
Aman Dixit
Abhimanyu Maheshwari
for App. 1
Counsel on record for the
Respondent(s)
: Pradeep Misra
Manoj Kumar Sharma
for Res. 4
Poorva Saigal
Shubham Arya
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Judgement in Appeal No.168 of 2022
Ravi Nair
Shikha Sood
Reeha Singh
for Res. 5 to 7
Swapna Seshadri
Anand K. Ganesan
Amal Nair
Sugandh Khanna
for Res. 8
JUDGEMENT
PER HON’BLE MRS. SEEMA GUPTA, OFFICIATING CHAIRPERSON
1. The present Appeal has been preferred by JSW Hydro Energy Ltd, a
generating company, against the Order dated 17.03.2022 passed by the
Central Electricity Regulatory Commission in Petition No. 391/GT/2019,
whereby the Central Commission, while undertaking the truing-up of tariff
for the tariff period 2014-19 and determination of tariff for the period 2019-
24 in respect of the Karcham Wangtoo Hydro Electric Project (1000 MW),
disallowed the Appellant’s claim towards Interest During Construction
(“IDC”) on the excess equity infused during construction of the Project.
Description of parties
2. The Appellant- M/s JSW Hydro Energy Ltd. is a generating company
owning, operating and maintaining the Karcham Wangtoo Hydro Electric
Project (1000 MW), a run-of-the-river hydro generating station with
pondage, situated in the District of Kinnaur, Himachal Pradesh.
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Judgement in Appeal No.168 of 2022
3. Respondent No. 1 is the Central Electricity Regulatory Commission
(hereinafter referred as “Central Commission”/“CERC”), discharging
statutory functions under the Electricity Act, 2003. Respondent No. 2, the
PTC India Ltd. is an inter-State trading licensee.
4. Respondent Nos. 3 and 4 are Haryana Power Generation
Corporation and Uttar Pradesh Power Corporation Limited respectively.
Respondent nos. 5-7 are the distribution licensees for the State of
Rajasthan. Respondent No 8 is the Punjab State Corporation Limited and
Respondent No 9 and 10 are Govt of Himachal Pradesh and Himachal
Pradesh Electricity Board respectively.
Brief facts of the case
5. The present Appeal arises out of the tariff proceedings concerning the
Karcham Wangtoo Hydro Electric Project (1000 MW) (“Project”). A Power
Purchase Agreement was executed on 21.03.2006 (“PPA”) for sale of 704
MW capacity from the Project for a period of 35 years between Appellant
and Respondent No 2-PTC.
6. On 26.10.2019, Appellant filed Petition No. 391/GT/2019 before the
Central Electricity Regulatory Commission seeking truing-up of tariff for the
period 2014-19 under Regulation 8(1) of the Central Electricity Regulatory
Commission (Terms and Conditions of Tariff) Regulations, 2014 ( “2014
Tariff Regulations ”), and determination of tariff for the period 2019-24
under the Central Electricity Regulatory Commission (Terms and Conditions
of Tariff) Regulations, 2019 ( “2019 Tariff Regulations ”). In the said
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Judgement in Appeal No.168 of 2022
proceedings, the Appellant, inter alia, claimed Interest During Construction
(“IDC”) on the equity deployed during construction of the Project.
7. The Central Commission, vide the Impugned Order dated
17.03.2022, disallowed the Appellant’s claim towards IDC on the excess
equity deployed during construction on the ground that the Appellant had
not specifically raised the said claim in Petition No. 434/GT/2014, which
was filed for determination of tariff for the period FY 2014–19 and further
held that the claim could not be introduced and considered in the
subsequent truing-up proceedings in Petition No. 391/GT/2019.
8. Aggrieved by this disallowance and its consequential impact on the
tariff of the Project, the Appellant has preferred the present Appeal.
SUBMISSION URGED ON BEHALF OF THE APPELLANT
9. As per Regulation 9(2) read with Regulation 26(1) of the CERC Tariff
Regulations, 2014, equity in excess of 30% is to be treated as normative
loan, and the generator is entitled to normative interest during the
construction period, which then forms part of the capital cost. This principle
has been accepted by this Tribunal in its judgment dated 28.02.2025
passed in Appeal No. 212 of 2017, titled NTPC Tamil Nadu Energy
Company Ltd. v. AP Transmission Corp. Ltd. & Ors.
10. In the present case, CERC, in its Order dated 30.03.2017, duly noted
that the Petitioner had deployed more than 30% equity, as reflected in Form
14 and Form 14-A submitted by the Appellant as part of its Tariff Application
for FY 2014–19, however, CERC omitted to consider and implement the
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Judgement in Appeal No.168 of 2022
provisions of Regulation 9(2) at this stage. CERC, in its tariff order dated
30.03.2017, had specifically made the capital cost allowed along with IDC
subject to revision at the time of truing-up, based on the balance sheets,
allocation of IDC and reconciliation of the debt position as per Form 14 with
the books of accounts for each year, at the time of true-up in terms of
Regulation 8 of the 2014 Tariff Regulations.
11. Accordingly, Appellant filed Petition No. 391/GT/2019 for truing-up of
tariff for FY 2014–19 and determination of tariff for FY 2019–24, wherein
the omission to treat the excess equity in terms of Regulation 9(2) was
specifically pointed out. However, by the Impugned Order dated
17.03.2022, CERC declined to consider the claim for normative IDC on the
ground that it had not been claimed in the original tariff petition and that the
separate forms for normative IDC had not been submitted. Appellant
contended that the said finding cannot be sustained, as Forms 14 and 14-
A filed with Petition No. 434/GT/2014 clearly disclosed the deployment of
excess equity during construction, which position was also specifically
noticed by the CERC in its tariff order dated 30.03.2017. Thus, the relevant
factual material was already available on record before the Commission.
12. Appellant further submits that Regulation 7(4) of the 2014 Tariff
Regulations, requires an application for tariff determination to be filed in the
prescribed form under Annexure-I, comprising the prescribed checklist,
Forms 1 to 16 and other specified documents, all of which were admittedly
filed before the CERC in Petition No. 434/GT/2014. Importantly, Form-5B
under the 2014 Tariff Regulations did not contain any line item for “notional
IDC”; such entry was introduced only in Form 5B under the 2019 Tariff
Regulations. Thus, there was no statutory form in which the Appellant could
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Judgement in Appeal No.168 of 2022
have claimed normative IDC. This Tribunal, in its judgment dated
04.05.2026 in Appeal No. 430 of 2019, M/s Everest Power Private Ltd. v.
Punjab State Electricity Regulatory Commission , has held that the tariff
proceedings are not in the nature of adversarial proceeding. Such
proceedings are inquisitorial in nature, and while conducting scrutiny, the
Commission requisitions data and raises queries. The Generator cannot
anticipate with precision what information/documents would the
Commission require for prudence-check. No clarification/query/data gap in
relation to normative IDC on excess equity was sought for/raised in the
present case.
13. It is submitted that, since the fact that equity deployment during the
construction period exceeded 30% was indubitably available before the
CERC in the first round of proceedings, the CERC, being responsible for
implementing the applicable Regulations, was bound to give effect to the
treatment prescribed thereunder. The present case is neither one where the
Appellant seeks to alter the methodology adopted in the original tariff order
nor one where it seeks a de novo reconsideration of an issue consciously
decided against it; rather, the grievance is that a mandatory regulatory
provision was not applied at all, despite the relevant facts being on record.
Such inadvertent omission cannot be permitted to perpetuate, and where
an error has occurred and there are no reasons for non-implementation of
the applicable Regulations, the error is required to be corrected and that
such correction can take place at any stage, as recognised in Grindlays
Bank Ltd. v. Central Government Industrial Tribunal & Ors., 1980
(Supp) SCC 420; Laxmi Ram Bhuyan v. Hari Prasad, (2003) 1 SCC 197;
U.P. Power Corpn. Ltd. v. NTPC Ltd., (2009) 6 SCC 235; MPPGCL v.
MPERC, 2011 SCC OnLine APTEL 63 and judgment dated 14.08.2012
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Judgement in Appeal No.168 of 2022
in Appeal No. 89 of 2011, Chhattisgarh State Power Distribution Co.
Ltd. v. Chhattisgarh State Power Generation Co. Ltd. & Ors. Failure to
correct the said omission would result in continuing short-recovery to the
Appellant.
14. It is submitted that the CERC itself, while deciding Petition No.
309/GT/2015, Pragati Power Corp. Ltd. v. BSES Yamuna Power Ltd .,
vide Order dated 19.11.2019, accepted that it has the power to correct
inadvertent errors earlier made in the determination of capital cost and,
accordingly, allowed at the truing-up stage claims which had inadvertently
been left out earlier; a similar view was taken by CERC in NTPC v. Madhya
Pradesh Power Management Company Ltd., 2014 SCC OnLine CERC
116 (In the present case also, while undertaking truing-up, the CERC
corrected the inadvertent double deduction of interest earned from
IDC/IEDC in the computation of capital cost. It is not understood how then
it claims that errors cannot be corrected in true-up proceedings when it
comes to consideration of IDC on excess equity infused, as per the
Regulations.
15. The Respondents’ reliance on BSES Rajdhani Power Ltd., (2023) 4
SCC 788 , is misplaced, as the facts and principle therein are materially
distinguishable. In this case, DERC had initially allowed certain claims in
the tariff order and subsequently disallowed or altered the same in the
truing-up order, in these circumstances, the Hon’ble Supreme Court held
that the methodology consciously adopted in the tariff order cannot be
altered or reconsidered de novo at the truing-up stage. The present case,
however, involves no such change of methodology. The CERC did not
consciously adopt any methodology under which excess equity would be
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Judgement in Appeal No.168 of 2022
denied the regulatory treatment prescribed under Regulation 9(2); rather,
said Regulation was simply not implemented at the initial stage, without
assigning any reasons, despite the fact that the deployment of excess
equity was evident from the Forms filed by the Appellant.
16. This distinction has also been recognised by this Tribunal in its
judgment dated 11.09.2025 in Appeal Nos. 268 of 2016 and batch ,
“Damodar Valley Corporation v. West Bengal State Electricity
Distribution Company Ltd. & Ors. wherein the Tribunal limited the
application of BSES Rajdhani to cases involving a change or alteration of
the rules or methodology applied at the initial tariff determination, the
present case does not involve any such alteration. Likewise, in its judgment
dated 18.05.2026 in Appeal No. 213 of 2018, Tata Power Delhi
Distribution Ltd. this Tribunal declined to apply the BSES Rajdhani
principle where there was an omission to give effect to the applicable
Regulations at the tariff stage. The distinction is directly applicable to the
present case.
17. Respondent’s objection to the carrying cost is contrary to the
regulatory framework and deserves to be rejected. The Appellant has
suffered additional carrying cost in terms of Regulation 8 (11 & 13) for the
period 2014-19 and 2019-24 on the true up surplus, on account of this
inadvertent omission of the CERC to correct the capital cost and the tariff
payable for the said period. The Appellant is, therefore, entitled to the
amounts due under the applicable Regulations, together with the
consequential carrying cost.
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Judgement in Appeal No.168 of 2022
SUBMISSIONS URGED ON BEHALF OF RESPONDENT NO. 4,5,6,7,8
18. The issue that the equity infused was in excess of 30% and, therefore,
the excess equity was required to be treated as loan as contended by
Appellant, had not been raised by them in Petition No. 434/GT/2014 filed
for determination of tariff of the Hydro Power Station for the period 2014-
19, accordingly, the Central Commission has rightly observed that since the
IDC on the excess equity had neither been claimed by the Appellant nor
granted in the order dated 30.03.2017 passed in Petition No. 434/GT/2014,
the same could not be introduced or considered at the stage of truing up.
19. It is submitted that as per the law laid down by the Hon’ble Supreme
Court in U.P. Power Corporation Ltd. v. NTPC, reported in (2009) 6 SCC
235 , any claim relating to tariff is required to be raised within the relevant
tariff period and cannot be allowed subsequently when everybody has
arranged its affairs. The consumers at that time may not be the consumer
afterwards.
20. It is well settled that the true-up proceedings are only for consideration
of actual expenditure as against the estimated expenditure and are not
meant for consideration or re-consideration of new issues which were not
raised earlier ; truing-up of tariff is not to rectify the lacunae or gaps in the
original petition which resulted in disallowance of costs, as the purpose of
true-up is to ascertain whether the expenses/expenditure envisaged at the
time of tariff determination require any adjustment after completion of the
tariff period. There is no justification for why the issue in question was not
raised before, and a de-novo consideration of such issues cannot be
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undertaken at the stage of true-up and placed reliance on the judgment of
the Hon’ble Supreme Court in “ BSES Rajdhani Power Ltd. v. Delhi
Electricity Regulatory Commission”, (2023) 4 SCC 788 the judgment
dated 28.05.2022 passed by this Tribunal in Appeal No. 284 of 2015 &
batch, “Indraprastha Power Generation Company Limited v. Delhi
Electricity Regulatory Commission and others”); the judgment dated
04.12.2007 passed by this Tribunal in Appeal No. 100 of 2007, “ Karnataka
Power Transmission Corporation Limited v. Karnataka Electricity
Regulatory Commission” ; and the judgment dated 01.05.2007 passed by
this Tribunal in Appeal No. 265 of 2006 & batch, “North Delhi Power
Limited v. Delhi Electricity Regulatory Commission.”
21. It is contended that the claim of the Appellant is also contrary to the
principles enshrined in Order II Rule 2 of the Code of Civil Procedure, 1908,
which provides that the whole of the claim arising out of the same cause of
action is required to be included in one suit and that a plaintiff cannot
subsequently claim a relief or portion of the claim which was omitted or
relinquished, except with the leave of the Court. Reliance placed on the
judgment of the Hon’ble Supreme Court in Commissioner of Income Tax
v. T.P. Kumaran, (1996) 10 SCC 561 the judgment dated 25.10.2018
passed by this Tribunal in Appeal No. 185 of 2015, Kalani Industries Pvt.
Ltd. v. Rajasthan Electricity Regulatory Commission and others and
the judgment dated 18.05.2011 passed by this Hon’ble Tribunal in Appeal
No. 172 of 2010, Bihar Steel Manufacturers Association v. Bihar
Electricity Regulatory Commission and others. ).
22. Regarding the contention of the Appellant that the Tariff Filing Forms,
namely, Form 14 and 14A, were filed before the Central Commission,
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Judgement in Appeal No.168 of 2022
however, the implementation of Regulation 9(2)(b)(i) of the Tariff
Regulations, 2014 was inadvertently left out, it is submitted that, if such was
the case, Appellant ought to have filed a Review/Appeal challenging the
Order dated 30.03.2017 passed in Petition No. 434/GT/2014. Having
chosen not to challenge the said issue by way of Review/Appeal at the
relevant time, the Appellant was rightly disallowed from raising such a claim
at the stage of true-up. It is further submitted that the Form 14 submitted by
the Appellant at the time of initial tariff determination remained unchanged
throughout the tariff period 2014–19, as the same was never modified,
altered or revised by the Central Commission in any subsequent
proceedings/orders during the said period. Thus, the Form 14, continued to
remain the same throughout the Tariff Regulations, 2014–19 period. The
Appellant cannot, after the passing of more than four years, belatedly claim
IDC on excess equity on the ground that the said claim was inadvertently
left out. It is a general principle of law that law protects only the diligent and
that equity aids the vigilant and not the indolent— “Vigilantibus Non
Dormientibus Jura Subveniunt” . Reference in this regard may be placed on
the judgment of the Hon’ble Supreme Court in Delhi Airtech Services (P)
Ltd. v. State of U.P. , (2011) 9 SCC 354 Hameed Joharan v. Abdul Salam ,
(2001) 7 SCC 573 and Sagufa Ahmed v. Upper Assam Plywood
Products (P) Ltd. , (2021) 2 SCC 317
23. The reliance placed by the Appellant on the CERC order dated
19.11.2019 in Petition No. 309/GT/2015 in “ Pragati Power Corporation
Limited v. BSES Yamuna & Others” is misplaced, as the issue in Pragati
Power (supra) was not in the nature of a new issue or principle that had not
been raised at the time of the main Tariff Petition, but rather concerned
correction of arithmetical or inadvertent errors made earlier, without any
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Judgement in Appeal No.168 of 2022
change in the methodology or principles adopted. Likewise the reliance
placed by the Appellant on the judgment of this Tribunal dated 11.09.2025
in Appeal No. 268 of 2016 ( Damodar Valley Corporation ) and the
judgment dated 18.05.2026 in Appeal No. 213 of 2018 (T ata Power Delhi
Distribution Ltd) is also misplaced. In Damodar Valley Corporation , the
issues related to Pension & Gratuity liability and additional O&M expenses,
including subsidiary activities and Ash Evacuation, arose in the context of
DVC’s special statutory framework and, in particular, involved claims which
had been dealt with in earlier tariff/true-up proceedings. This Tribunal
specifically found, in relation to the Ash Evacuation issue, that the
Commission had not changed the methodology or norms, but had only
capped the allowance owing to an abnormal increase in expenditure.
Likewise, in Tata Power Delhi Distribution Ltd . , the issue was confined to
water charges pertaining to a period prior to the Appellant’s takeover, which
had not been included in the base-year O&M computation because the
charges had not then been paid, but were subsequently paid under an
Amnesty Scheme and were sought as a one-time pass-through pursuant to
the statutory liability under Rule 8(3) of the Transfer Scheme Rules; this
Tribunal expressly recorded that the case did not involve any alteration of
the methodology at the stage of true-up.
24. Present case stands on an entirely different factual footing, since the
Appellant’s claim for IDC on excess equity was neither claimed nor
considered in the original tariff determination in Petition No. 434/GT/2014,
and no subsequent payment, statutory liability, exceptional event or one-
time pass-through is involved; the Appellant is, in substance, seeking to
introduce an altogether new claim at the stage of true-up, notwithstanding
that the original tariff determination had attained finality. In any event and
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Judgement in Appeal No.168 of 2022
without prejudice to the above, it is submitted that there can be no grant of
carrying cost in terms of Regulation 8(13) of the Tariff Regulations, 2014,
considering that the delay was solely attributable to JSW Hydro. This
Tribunal has consistently held that where the delay in raising or filing a
Petition is attributable to the generating company itself, carrying cost cannot
be granted for such period as held in Maharashtra State Electricity
Distribution Co. Ltd. v. MERC , Order dated 19.09.2007 in Appeal No.
70 of 2007 Torrent Power Ltd. v. GERC , Order dated 30.05.2014 in
Appeal No. 147 of 2013 Paschim Gujarat Vij Company Ltd. & Ors. v.
Gujarat Electricity Regulatory Commission , Order dated 04.12.2014 in
Appeal No. 45 of 2014 Kanwar Singh & Ors. v. Union of India , 2005 (82)
DRJ 397
25. Reliance placed by the Appellant on the decision dated 04.05.2026
passed in Appeal Nos. 430 of 2019 and 416 of 2022 is not relevant to the
facts of the present case and is, therefore, distinguishable. In the said
decision, the issue involved was whether certain EPC contracts ought to
have been requisitioned by the Commission in a tariff proceeding; the claim
therein had otherwise been raised, and the only issue was with respect to
the underlying documents which the Commission ought to have
requisitioned. However, in the present case, the claim itself was not made
at the relevant stage and was sought to be introduced only at the stage of
true-up. The contention of the Appellant that it had indeed placed on record
the actual details of the equity infused by it, but that the same were not
considered by the Central Commission, is even more untenable, as such
contention would necessarily imply that a claim had been raised and
rejected, and that such rejection was thereafter accepted by the Appellant
without being challenged.
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Judgement in Appeal No.168 of 2022
DISCUSSION AND ANALYSIS
26. Heard Mr. Basava Prabhu S. Patil, Learned Senior Counsel
appearing on behalf of Appellant, Mr. Pradeep Mishra, Learned Counsel for
the Respondent No. 4, Ms. Poorva Saigal, Learned Counsel for the
Respondent No. 5 to 7 and Ms. Swapna Seshadri, Learned Counsel for the
Respondent No. 8, perused written submissions filed by the parties, and
other documents on record.
27. The main issue in the present Appeal pertains to the claim of
Appellant for the IDC on the equity deployed more than 30 % during
construction of the Project in the petition filed seeking truing-up of tariff for
the period 2014-19 and determination of tariff for the period 2019-24. It is
the case of the Appellant that actual equity deployed, which was more than
the 30 % of project Cost, was submitted in the Tariff forms filed along with
Petition for determination of Tariff for 2014-19 period, however IDC on
excess equity was not provided in the said Tariff order dated 30.03.2017
and since same is applicable in terms of the extent Regulation, CERC is
not justified in disallowing the same in the Impugned Order. Per contra,
Respondents have mainly contended that the Appellant failed to claim
Notional IDC at the time of initial Tariff determination and in case the
notional IDC was not given on the additional equity deployed in the Tariff
Order dated 30.03.2017, the right course would have been to either seek
review of the order and an Appeal against the said order. Having failed to
exercise such right, the tariff determination has attained finality and
methodology for IDC determination cannot be changed at the True-up
stage.
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28. We take note that the Impugned Order records the claim of Appellant
for interest on excess equity to be treated as Normative IDC in Paragraph
48 to 49 and consideration for disallowing such claim is noted in Paragraph
50 of Impugned Order, which is extracted as under:
“The matter has been examined. Petition No.252/GT/2013 filed by the
Petitioner for fixation of provisional tariff of the generating station for
the period from 26.5.2011 to 31.3.2014 was disposed of by the
Commission vide order dated 9.10.2014 with liberty to the Petitioner to
file fresh petition for determination of tariff in respect of this generating
station for the 2014-19 tariff period. Accordingly, in Petition No.
434/GT/2014 filed by the Petitioner for the 2014-19 tariff period, the
Commission vide its order dated 30.3.2017 determined the capital cost
as on COD of the generating station and for the 2014-19 tariff period.
It is pertinent to mention that, in the said petition, the Petitioner had not
claimed any normative IDC. Also, no additional submissions/ forms
with regard to normative IDC were submitted nor any oral submissions
were made by the Petitioner in this connection. Accordingly, no IDC
was considered/ allowed by the Commission in its order dated
30.3.2017 in Petition No.434/GT/2014. In this background, the claim of
the Petitioner for normative IDC, in the present petition, cannot be
considered, as the same is for truing up of the expenditure already
incurred as against the projected expenditure allowed earlier. In our
considered view, new issues/ claims (i.e. claims prior to COD) which
were not raised earlier, by the Petitioner, cannot be considered in the
present petition. Accordingly, we are not inclined to allow the IDC on
excess equity, as claimed by the Petitioner.”
29. In support of its claim of additional IDC at True up stage, the Appellant
has contended that CERC, in its tariff order dated 30.03.2017, had allowed
the capital cost along with IDC, subject to revision at the time of truing-up,
based on the balance sheet as on COD of each unit, allocation of IDC and
reconciliation of the debt position as per Form 14 with the books of accounts
for each year, at the time of true-up in terms of Regulation 8 of the 2014
Tariff Regulations. Accordingly, notional IDC should have been allowed by
the Central Commission at the True up stage.
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30. We take note that in the Tariff Order dated 30.03.2017, Interest During
Construction ( IDC) has been deliberated in Paragraph 78 to 82 and it has
been noted that based on the information supplied by Appellant, the total
interest works out to about Rs108399.12 Crore, however the Petitioner, i.e.
Appellant herein, has not furnished the basis of allocation of IDC for each
unit and in the absence of this information, IDC has been allowed based on
the amount of IDC as on 13.09.2011 claimed by them in form 5 B and IDC
was restricted to Rs. 92829.00 Crore as on 13.09.2011. Further, CERC in
paragraph 113 of the said order takes note that as per debt raised and
equity infused as per Form 14 and actual expenditure claimed, the debt
equity ratio worked out as 69.73%: 30.27, however, considered the debt:
equity ratio of 70:30 for the purpose of tariff determination and proceed to
work out interest on loan on the Gross Normative Loan for the year 2014-
15 to FY 2018-19.
31. During the hearing of the Appeal, Appellant has produced a sample
Form 5B under “2014 Tariff Regulations” and the “2019 Tariff Regulations”
to demonstrate that there was no provision of Notional IDC in the Form 5B
as per “2014 Tariff Regulation”, and same was introduced later under “2019
Tariff Regulations”. Perusal of the Form reveal that a line item for Notional
IDC was introduced in the relevant Form under the “2019 Tariff Regulation”,
presumably for more clarity and such a line item was not there in relevant
Form under “2014 Tariff Regulations’, while there was provision for Notional
IDC in “2014 Tariff Regulation” as well, relevant Regulation 9 (2) of “2014
Tariff Regulation” is extracted hereunder :
“9. Capital Cost
……….
(2) The Capital Cost of a new project shall include the following:
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(a) the expenditure incurred or projected to be incurred up to the date
of commercial operation of the project;
(b) Interest during construction and financing charges, on the loans (i)
being equal to 70% of the funds deployed, in the event of the actual
equity in excess of 30% of the funds deployed, by treating the excess
equity as normative loan, or (ii) being equal to the actual amount of
loan in the event of the actual equity less than 30% of the funds
deployed;”
32. From the above, it is evident that in terms of Statutory provisions,
under the Capital Cost Determination, IDC is allowed to be included, which
not only includes interest on actual loan drawn but the Notional IDC on the
equity deployed more than 30 % during the construction phase. This
Tribunal, in its judgement in “Powerlinks Transmission Limited v.
CERC”, in Appeal No. 231 of 2017 , has also examined the scheme of the
“2014 Tariff Regulations” in relation to normative IDC and recognized that,
where the regulatory conditions are satisfied, the normative debt-equity
framework may give rise to entitlement to Normative IDC and whatever be
the types of funds it is never free of cost. In the present case, though the
information about the equity deployed was provided during the initial tariff
determination however, separate Notional IDC was neither claimed nor
provided in the tariff Order dated 30.03.2017. Thus, in terms of Statutory
provisions, there is entitlement for the Notional IDC on the equity deployed
more than 30 % year on year during the construction stage of the project,
to be included as part of capital cost.
33. The Appellant has placed reliance on the Judgement of this Tribunal
dated 04.05.2026 passed in Appeal No. 430 of 2019, titled “ M/s Everest
Power Private Ltd. v. Punjab State Electricity Regulatory Commission”
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to contend that tariff proceedings are not adversarial proceedings in the
nature of civil trials, but are inquisitorial in nature. In such proceedings, the
Regulatory Commission conducts scrutiny by requisitioning relevant data,
documents and clarifications and by raising queries, as may be considered
necessary for the purpose of prudence-check. It has been further
contended that the generating company is required to place before the
Commission the statutory formats, audited accounts and such supporting
documents as are considered necessary to substantiate the costs claimed,
while the Commission, in exercise of its inquisitorial jurisdiction, may call for
further information or documents wherever required. In the present case,
no clarification, query or data gap was raised by the Commission in relation
to the claim of normative IDC on excess equity. Accordingly, the contention
that the Appellant ought to have produced or claimed the said amount at
the original tariff stage, without any query or requirement having been
raised by the Commission in that regard, proceeds on an assumption that
the Appellant could have anticipated in advance the precise requirement of
the Commission, which cannot fairly be expected in proceedings of such
nature.
34. Though we recognize the entitlement of Notional IDC in terms of
statutory scheme, we are not much impressed with such submissions of
Appellant, as subsequent to filing of Tariff Petition in which Order dated
30.03.2017, several details were submitted by the Appellant and separate
claim could have been made by the Appellant. It is also an admitted fact
that, when the notional IDC was not granted and IDC was restricted
considering the IDC actually claimed by the Appellant, in the Tariff Order
dated 30.03.2017, Appellant had neither invoked the review jurisdiction of
the Central Commission nor preferred an appeal before this Tribunal.
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35. Having observed as above, we, also take cognizance of the fact that
the Capital cost allowed along with IDC in the tariff order dated 30.03.2017
was subject to true up as noted in paragraph 82 of the said Order, as
extracted hereunder:
“The capital cost allowed along with the IDC as above is subject to
revision at the time of truing up exercise based on the balance sheet
as on COD of each unit and basis of IDC allocation, to be furnished by
the petitioner. The petitioner is also directed to furnish the
reconciliation of the debt position as per Form-14 with the books of
accounts for each year at the time of truing -up in terms of the
Regulation 8 of the 2014 Tariff Regulations.”
36. Therefore, the primary issue which arise for consideration is “Whether
the Appellant is barred from claiming Notional IDC at True Up stage having
omitted to claim the same at the tariff determination stage and is otherwise
permitted under Regulatory Scheme”. Both the parties have relied upon
various judgement to advance their case, which are deliberated in following
paragraphs.
37. The Appellant has placed reliance on the judgment of this Tribunal
dated 28.02.2025 in Appeal No. 212 of 2017 , “NTPC Tamil Nadu Energy
Company Ltd. v. AP Transmission Corporation Ltd. & Ors.” In this
Judgement, this Tribunal held that it would be unjust and contrary to the
applicable Regulations to deny notional IDC merely because the Appellant
had not raised any actual loan and had instead utilised funds from its own
resources for construction of the project. The Tribunal observed that every
form of funding, including deployment of the shareholders’ own funds,
carries a cost and, therefore, the absence of an actual loan cannot by itself
justify denial of normative IDC. The Tribunal further held that the
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Commission ought to determine the appropriate rate of interest for
calculating notional IDC rather than reject the claim altogether.
38. There is no dispute with regard to the contention, that every form of
funding carries a cost and in the present case, there is provision of notional
IDC, in the applicable Regulations, however issue involved in the present
Appeal is different; i.e., whether claim of Notional IDC, not advanced at the
Tariff determination stage, can be allowed at the True up stage and hence
ratio decided in this judgement has no direct application on the issue at
hand.
39. The Reliance has also been placed by the Appellant on Grindlays
Bank Ltd. v. Central Government Industrial Tribunal & Ors”., 1980
Supp SCC 420 where it is held that the Tribunal has the power to deal with
the application made for setting aside the ex-parte award and pass the
suitable orders. Further it was observed that when a review is sought due
to a procedural defect, the inadvertent error committed by the Tribunal must
be corrected ex debito justitiae to prevent the abuse of its process, and
such power inheres in every court or Tribunal. However, facts of the present
case is different as no review of the earlier order of the commission was
sought by the Appellant. Further in the judgement “ Laxmi Ram Bhuyan v.
Hari Prasad, (2003) 1 SCC 197” reliance placed by the Appellant;
rectification was sought so as to specify the extent and manner of reliefs
allowed in the judgment and the decree shall be in conformity with the
judgment. The facts of Laxmi Ram does not support the Appellant case
directly as the Commission in the earlier tariff determination order has not
at all dealt with issue of Notional IDC on merits.
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40. Both sides have placed reliance on the judgment of the Hon’ble
Supreme Court in U.P. Power Corporation Ltd. v. NTPC Ltd., (2009) 6
SCC 235, though for different propositions drawn from different parts of that
judgment. The Appellant relies on paragraphs 34 to 38 and 40 for the
proposition that an error resulting in the non-implementation of a binding
Regulation can be corrected at any stage. Respondents relies on
paragraphs 57 to 65 and 68 for the proposition that a claim for tariff must
be given effect to within the control period to which it relates, and cannot be
introduced or revised retrospectively once that period has closed and
parties i.e., generators, licensees and consumers have arranged their
affairs on the tariff as determined, since, as observed by the Hon’ble
Supreme Court, the body of consumers at one point in time may not be the
body of consumers at a later point in time. We do not read this judgment as
embodying two conflicting principles that the two sets of paragraphs
address two different situations; i.e. correction of an error within an issue
or claim already made before the adjudicating authority, as opposed to
introduction of an unclaimed head of cost after the relevant tariff period has
run its course and been given effect to in billing and recovery. In the present
case, Claim of Notional IDC has been made at the True up stage in the
same control period itself, and IDC so worked out in the original tariff
determination was itself subject to True up and therefore, reliance placed
by Respondents on this Judgement is of no avail.
41. The Appellant has also referred the judgements of the Central
Commission in “Pragati Power Corporation Ltd. vs BSES Yamuna and
“NTPC Ltd. v. Madhya Pradesh Power Management Company Ltd” to
emphasis that inadvertent omission in an earlier tariff proceeding does not,
in an appropriate case, preclude consideration and correction of the omitted
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component at a subsequent stage, where the same is otherwise allowable
under the applicable Regulations and duly substantiated by the record and
the claims have been entertained in subsequent stage, being missed out in
earlier determination.
42. In considering the judicial hierarchy under the Electricity Act, 2003, it
is manifest that this Tribunal is not bound by the pronouncements of the
Central Electricity Regulatory Commission (CERC). The Commission,
though vested with adjudicatory powers under Section 79 of the Act,
functions as a statutory authority of first instance, and its orders bind the
parties thereto until set aside. This Tribunal, while not bound by the
determinations of the Central Commission, takes cognizance of the fact that
the Commission, in exercise of its statutory powers, has permitted the claim
at the stage of truing-up, and such allowance has not been demonstrated
to be legally unsustainable. The independent adjudicatory discretion of this
Tribunal remains unfettered, but consistency with lawful regulatory practice
is a consideration that cannot be disregarded.
43. The Respondents have relied upon the Judgement in “BSES
Rajdhani Power Ltd. v. Delhi Electricity Regulatory Commission,
(2023) 4 SCC 788”,; U.P. Power Corporation Ltd. v. NTPC, (2009) 6 SCC
235, this Tribunal judgment dated 28.05.2022 in “Indraprastha Power
Generation Company Limited v. Delhi Electricity Regulatory
Commission and others” in Appeal No. 284 of 2015 & batch,; the
judgment dated 04.12.2007 “Karnataka Power Transmission
Corporation Limited v. Karnataka Electricity Regulatory Commission”
in Appeal No. 100 of 2007, and the judgment dated 01.05.2007 “North
Delhi Power Limited v. Delhi Electricity Regulatory Commission ”
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passed by this Tribunal in Appeal No. 265 of 2006 & batch to contend that
these decisions guard against truing-up being used to retrospectively
substitute a different methodology or principle of tariff determination, or to
reopen matters that were consciously contested and settled between the
parties, thereby disturbing consumers who have organised their affairs
around a different basis of computation altogether. Accordingly, a de-novo
consideration of such issues cannot be undertaken at the stage of true-up.
44. The reliance placed by the Appellant on the judgments of this Tribunal
in Damodar Valley Corporation v. West Bengal State Electricity
Distribution Company Ltd. & Ors., judgment dated 11.09.2025 in Appeal
Nos. 268 of 2016 and batch and Tata Power Delhi Distribution Ltd.,
judgment dated 18.05.2026 in Appeal No. 213 of 2018 is also relevant. In
Damodar Valley Corporation (supra), while considering the principle laid
down by the Hon’ble Supreme Court in BSES Rajdhani Power Ltd. v.
DERC , this Tribunal held that the said principle is attracted where there is
a change in the methodology or norms adopted for tariff determination. The
Tribunal, however, found that there was no change in the methodology or
norms in that case, but only a cap was imposed on the allowance on
account of an abnormal or manifold increase in expenditure without
justification. Similarly, in Tata Power Delhi Distribution Ltd. (supra) , this
Tribunal held that a claim involving a one-time pass-through at the truing-
up stage did not amount to a change in the tariff methodology and,
therefore, the ratio of BSES Rajdhani was not applicable. The principle
emerging from these decisions is that the bar against reopening tariff
methodology at the truing-up stage would not apply merely because a claim
is considered subsequently; what is material is whether the subsequent
consideration seeks to alter the methodology or norms already adopted in
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the original tariff determination. In the present case also, there is no change
in methodology at the True up stage, rather it is only the application of
Regulatory provisions at the True Up stage, which were missed out at initial
tariff determination and therefore, the ration of above judgements cited by
Respondents do not support the contention of Respondents.
45. The Respondents have also contended that the claim is barred by the
principle underlying Order II Rule 2 of the Code of Civil Procedure, 1908
that the whole of a claim arising from one cause of action must be included
in one proceeding, failing which the omitted relief cannot subsequently be
claimed relying on Commissioner of Income Tax v. T.P. Kumaran, (1996)
10 SCC 561 Kalani Industries Pvt. Ltd. v. RERC & Ors. (judgment dated
25.10.2018, Appeal No. 185 of 2015, and Bihar Steel Manufacturers
Association v. BERC & Ors. (judgment dated 18.05.2011, Appeal No.
172 of 2010, Order II Rule 2 CPC operates to prevent a plaintiff from
splitting a single cause of action across successive civil suits for tactical
advantage, here, the Appellant points to non-implementation of a
Regulation despite the relevant facts being on the Commission's own
record, in circumstances where the Commission's own order expressly
reserved the related component for truing-up.
46. On the question of delay and laches, the Respondents rely on the
maxim vigilantibus non dormientibus jura subveniunt and on Delhi Airtech
Services (P) Ltd. v. State of U.P., (2011) 9 SCC 354 Hameed Joharan v.
Abdul Salam, (2001) 7 SCC 573 and Sagufa Ahmed v. Upper Assam
Plywood Products (P) Ltd., (2021) 2 SCC 317 pointing to the unexplained
delay of over two-and-a-half years between the order dated 30.03.2017 and
the filing of Petition No. 391/GT/2019, and the Appellant's failure to seek
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review or appeal in the interregnum. We note that this delay is real and has
not been satisfactorily explained by the Appellant beyond a bare assertion
that it is being claimed at the True up stage. We are however, not
persuaded that it operates to extinguish the principal claim altogether,
since: (a) the disallowance is continuing, prospective effect on the tariff for
the ongoing and subsequent control period, and (b) the order dated
30.03.2017 itself contemplated further reconciliation of capital cost and IDC
at truing-up, reducing the force of any suggestion that the Appellant was
sitting on a fully and finally settled entitlement. We are, however, of the view,
for reasons given below that this delay should be reflected in the extent of
consequential relief, particularly carrying cost, rather than in an outright bar
to the principal claim.
47. In the present case, it is evident that the original tariff determination
order dated 30.03.2017 did not consciously reject the entitlement to notional
IDC under Regulation 9(2); rather, the Regulation was not given effect to at
the initial stage, notwithstanding that the excess equity was duly reflected
in the Forms submitted. In our view, if the earlier order dated 30.03.2017
had specifically considered and rejected the entitlement to notional IDC, a
subsequent true-up cannot ordinarily be used as a device to seek a review
of that concluded decision. Likewise, the licensee cannot claim notional IDC
retrospectively if the applicable Regulations do not permit it or if the
prescribed conditions are not established. Both of which are not applicable
in the present case. In the judgement in “ MPPGCL v. MPERC, 2011 SCC
OnLine APTEL 63 and “Chhattisgarh State Power Distribution Co. Ltd.
v. Chhattisgarh State Power Generation Co. Ltd. & Ors dated
14.08.2012 in Appeal No. 89 of 2011 it has been held that if in the main
order an error has been committed by the State Commission by not
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following the Regulations without assigning any reasons, the same errors
cannot be perpetuated and is required to be corrected in the true up. That
an inadvertent omission to give effect to the applicable Regulations cannot
be allowed to continue merely because the omission occurred at an earlier
stage. In the present case also, the Commission has not considered the
provisions of Notional IDC as per the prevalent Regulation, accordingly the
omission in the present case falls squarely within that description as it was
not a considered rejection of the Appellant's entitlement, but a simple non-
application of a binding Regulation to the facts already on record, without
reasons.
48. Under the CERC (Terms and Conditions of Tariff) Regulations, 2014,
IDC is an admissible component of capital cost, subject to the conditions
prescribed under Regulation 11 and the applicable principles governing the
capital structure and deployment of funds. The regulatory entitlement to
admissible IDC flows from the Regulations and its determination
necessarily depends upon the actual deployment and phasing of funds, the
applicable debt-equity treatment and the prudence of the expenditure. The
mere fact that the licensee did not specifically quantify or claim the
admissible notional IDC in an earlier tariff proceeding cannot, in our view,
by itself result in forfeiture of an entitlement otherwise available under the
statutory regulatory framework. This is particularly so where the earlier
determination was provisional in nature or subject to truing-up and the
relevant financial and factual parameters pertaining to the construction
period remain capable of verification.
49. It can therefore be concluded that the determination of IDC at the
tariff stage was never intended to be immutable as tariff order itself
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envisages IDC as being provisional and expressly subject to true-up, to be
reconciled with the audited accounts and actual debt deployment as
reflected in Form-14. In such circumstances, the omission of notional IDC
in the initial tariff determination cannot be construed as denial of
entitlement, particularly when the entitlement to IDC was not disputed. The
true-up stage is the appropriate occasion to operationalize such entitlement
by correcting inadvertent omissions and aligning IDC, including notional
IDC, with the actual financing costs borne by the generating company. To
hold otherwise would defeat the very purpose of the true-up exercise and
render nugatory the stipulation that IDC is subject to reconciliation.
50. At the stage of truing-up, the Commission is required to determine the
admissible capital cost and consequential tariff parameters on the basis of
the actual facts, subject to the governing Regulations and prudence check.
A claim which is otherwise admissible in law does not cease to be so merely
because it was omitted from an earlier claim on account of non-claim,
inadvertence or failure of quantification. In our view, consideration of the
regulatory treatment at the True up stage, more so when capital cost so
determined along with IDC was subject to True up, would amount to
correction with regard to implementation of the applicable Regulation and
not a change in the tariff methodology, and consequently, as mentioned
above, the ratio of BSES Rajdhani would not operate as a bar.
51. We are satisfied that the claim, though omitted at the tariff
determination stage, is otherwise permissible under the extant regulations
and falls within the category of costs that may be reconciled at the true-up
stage to ensure that the tariff reflects the actual audited expenditure. The
true-up exercise is corrective in nature and must prevent unjust denial of
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legitimate costs, and the claim is supported by verifiable records.
Accordingly, it is held that notional IDC, if missed out in the original tariff
determination, can and ought to be considered at the true-up stage, subject
to verification of audited accounts and regulatory parameters.
52. The entitlement to carrying cost is distinct. Carrying cost represents
compensation for regulatory lag in recovery of admitted revenue gaps. In
the present case, the omission to assert the claim at the initial tariff stage is
also on account of Appellant’s non assertion at that stage as well as not
challenging such omission in review or before the Appellate court and
therefore the claim cannot be retrospectively burdened upon consumers by
way of carrying cost for the interregnum. The equitable balance lies in
admitting the claim at the true-up stage, but restricting carrying cost to
accrue only from the date of filing of the true-up petition, when the claim
was first formally urged before the Central Commission. This Tribunal has
consistently held, in Maharashtra State Electricity Distribution Co. Ltd.
v. MERC (order dated 19.09.2007 in Appeal No. 70 of 2007, Torrent
Power Ltd. v. GERC (order dated 30.05.2014 in Appeal No. 147 of 2013,
and Paschim Gujarat Vij Company Ltd. & Ors. v. Gujarat Electricity
Regulatory Commission (order dated 04.12.2014 in Appeal No. 45 of
2014, following the principle recognised in Kanwar Singh & Ors. v. Union
of India, 2005 (82) DRJ 397. that carrying cost, being compensatory in
nature for delay in recovery of legitimately due amounts, cannot be granted
for a period of delay attributable to the claimant itself. To allow carrying cost
for the prior period would amount to rewarding inaction and shifting the
consequence of omission onto consumers, which is impermissible.
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53. For the reasons given above the Appellant’s claim for Notional IDC
on equity deployed more than 30 % during construction stage is allowed at
the true-up stage, however carrying cost on such claim shall be reckoned
from the date of filing of the true-up petition until its eventual adjustment.
Accordingly, Impugned Order on the issue of denial of additional IDC, on
equity deployed more than 30 % during construction stage is set aside and
matter remanded to Central Commission to undertake prudence check of
the data submitted in regard to additional IDC. However, carrying cost on
such additional IDC to be worked out from the date of filing of True Up
petition until its adjustment. Central commission to further pass the
consequential orders expeditiously, preferably within three months of the
receipt of this judgement.
54. The present Appeal is allowed in these terms and is disposed of
accordingly. Pending IAs, if any are disposed of accordingly.
th
PRONOUNCED IN THE OPEN COURT ON THIS 18 DAY OF
SEPTEMBER, 2026.
(Virender Bhat)
Judicial Member
(Seema Gupta)
Officiating Chairperson
REPORTABLE / NON-REPORTABLE
Pr/dk/ak/ag
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