Liability for transmission charges cannot be fastened on a State utility without a binding contractual commitment or proven default.

The Appellant (PTCUL), a State Transmission Utility, challenged a CERC order dated 31.03.2021.

In 2008, the Standing Committee on Transmission Planning (SCM) agreed to standard norms for 400/220 kV substations, which included six 220 kV line bays at the Dehradun substation.

While PTCUL utilized two bays for the Jhajra-Sherpur line in 2017, four bays remained unutilized as downstream networks were not commissioned.

PGCIL (Respondent No. 1) sought approval for the Commercial Operation Date (COD) of these four bays (Asset-III) as 04.02.2017.

The CERC approved the COD and held PTCUL liable to pay yearly transmission charges from that date until the completion of downstream assets, based on the "defaulter pays" principle derived from previous meeting minutes and correspondence.

PTCUL appealed, denying any binding contractual obligation to build the remaining lines or pay the charges.

The Court applied the National Electricity Policy (2005) and the Indian Electricity Grid Code (IEGC) 2006/2010, which mandate coordinated transmission planning through Regional Standing Committees.

It relied on the principle from Kollipara Sriramulu v. T. Aswathanarayana that an informal agreement is binding only if all material terms (like timelines and specific responsibilities) are finalized.

The Court interpreted Regulation 4(3), Proviso (ii) of the CERC Tariff Regulations, 2014, which allows for the declaration of "deemed COD" when an asset is ready but unutilized due to delays in upstream/downstream systems.

Finally, it considered the "defaulter pays" principle established in Nuclear Power Corporation of India Ltd. v. CERC to determine liability during a mismatch period.

The Tribunal analyzed the 23rd SCM minutes and subsequent meetings, concluding that the six bays were created based on generic planning norms for demand growth, not an exclusive request or commitment by PTCUL to build six specific lines.

The Court found that for Minutes of Meetings (MOM) to constitute a binding contract in the regulated electricity sector, they must specify the implementing agency and clear timelines, which were absent here.

While the Tribunal upheld the CERC's declaration of COD under Proviso (ii) of Regulation 4(3) because PGCIL’s bays were physically ready, it held that the "defaulter pays" principle could not be applied to PTCUL.

This was because no underlying contractual or legal obligation was established forcing PTCUL to utilize all six bays by a specific date.

The Tribunal further noted that PGCIL, acting as the CTU, failed in its statutory duty under Section 38 of the Electricity Act to ensure an "economical" and "coordinated" system by failing to execute a formal Implementation Agreement (IA) which would have clarified these obligations.

The Tribunal held that while the COD of 04.02.2017 was validly declared, PTCUL cannot be saddled with bilateral charges as no binding commitment for the downstream network existed.

The matter was remanded to the CERC for fresh adjudication to determine who should bear the transmission charges (e.g., whether they should be socialized via the PoC pool) after considering PGCIL’s coordination failures as the CTU and the lack of a formal Implementation Agreement.