Regulatory Commissions cannot exercise review powers suo moto to modify substantive orders without hearing affected parties.

The Appellant (UPJVNL) operates the Rihand and Matatila Hydro Power Stations. Based on historical agreements (Sachdeva Committee, 1964), the State of Madhya Pradesh (Respondent No. 2, MPPMCL) is entitled to a specific share of power at cost price plus 5% due to submergence of its land.

Following jurisdictional disputes, Respondent No. 2 filed Petition No. 128/MP/2016 before the CERC seeking a direction for UPJVNL to determine O&M expenses from April 1, 2008.

On October 12, 2017, the CERC held it had jurisdiction but declined to reopen tariffs for 2008–2014 as they had already been determined by the State Commission (UPERC); it directed UPJVNL to file for tariff determination only from 2014–15 onwards.

Respondent No. 2 filed a Review Petition (1/RP/2018). In the impugned review order dated July 11, 2018, the CERC rejected the primary grounds for review but suo motu modified the original order, directing Respondent No. 2 to pay only O&M charges for the 2008–2014 period based on UPERC orders.

1. Whether the CERC could exercise suo motu review powers to modify its previous order in the absence of a specific prayer or application by the parties.

2. Whether the CERC violated the principles of natural justice (Audi Alteram Partem) by modifying the Appellant's tariff entitlement without hearing the parties on that specific issue.

3. Whether the CERC exceeded its jurisdiction by effectively modifying tariff orders previously passed by the State Commission (UPERC).

The court primarily applied the principles governing review jurisdiction under Section 114 and Order XLVII of the Code of Civil Procedure, 1908, which stipulate that review power must be exercised upon an application and not suo motu.

The fundamental principle of natural justice, Audi Alteram Partem, which mandates that no party be condemned or deprived of a right without being heard.

The principle that a Central Commission does not possess supervisory or appellate jurisdiction over the final tariff orders of a State Commission unless specifically provided by statute.

The Tribunal found that the CERC had made a "conscious decision" in its original order not to reopen the 2008–2014 tariff because the UPERC had already adjudicated the matter.

In the review proceedings, Respondent No. 2 did not seek the specific relief of paying only O&M charges for that period.

The Tribunal reasoned that review jurisdiction is not a suo motu power; since no party applied for that specific rectification, the CERC's intervention was unwarranted.

Furthermore, the Tribunal noted that the CERC failed to hear the Appellant before curtailing its tariff entitlement, thereby violating the principles of natural justice.

The Tribunal observed a logical inconsistency: the CERC upheld the validity of the UPERC tariff orders for 2008–2014 while simultaneously issuing a direction that modified the payment terms of those very orders, which it had no jurisdiction to do.

The Tribunal held that the CERC’s modification was perverse, lacked jurisdiction, and violated natural justice.

The appeal was allowed, and the original order dated October 12, 2017, was restored to its original form regarding the 2008–2014 period.