PTC INDIA LTD. v. CENTRAL ELECTRICITY REGULATORY COMMISSION THROUGH SECRETARY

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A 79(1 ), therefore, have got to be in conformity with the regulations under Seqtion 178. To regulate is an exercise which is different from making of the regulations. However, making of a regulation under Section ·178 is not a pre-condition to the Central Commission taking any steps/measures under Sectiorr B 79(1). As stated, if there is a regulation, then the measure under Section 79(1) has to be in conformity with such regulation under Section 178. This principle flows from various judgments of this Court which we have discussed hereinafter. For example, under Section 79(1)(g) the Central Commission is required to levy c fees for the purpose of the 2003 Act. An Order imposing regulatory fees could be passed even in the absence of a· regulation under Section 178. If the levy is unreasonable, it could be the subject matter of challenge before the Appellate Authority under Section 111 as the levy is imposed by an Order/ decision making process. Making of a regulation under Section 0 178 is not a pre-condition to passing of an Order levying a regulatory fee under Section 79(1)(g). However, if there is a regulation under Section 178 in that regard then the Order levying fees under Section 79(1)(g) has to be in consonance with such regulation. Similarly, while exercising the power to E frame the terms and conditions for determination of tariff under Section 178, the Commission has to be guided by the factors specified in Section 61. It is open to the Central Commission to specify terms and conditions for determination of tariff even in the absence of the regulations under Section 178. However, F if a regulation is made under Section 178, then, in that event, framing of terms and conditions for determination of tariff under Section 61 has to be in consonance with the regulation under Section 178. One must keep in mind the dichotomy between the power to make a regulation under Section 178 on one hand and the various enumerated areas in Section 79(1) in which the Central Commission is mandated to take such measures as it deems fit to fulfil the objects of the 2003 Act. Applying this test to the-,,resent controversy, it becomes clear that one such area enumerated in Section 79(1) refers to fixation of trading margin. Making of a regulation in that regard il? not a pre-

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REGULATORY COMM. THR. SECRY. (S.H. KAPADIA, J.]

condition to the Central Commission exercising its powers to fix a trading margin under Section 79(1 )0), however, if the Central Commission in an appropriate case, as is the case herein, makes a regulation fixing a cap on the trading margin under Section 178 then whatever measures a Central Commission takes under Section 79(1 )(j) has to be in conformity with Section 178. One must understand the reason why a regulation has been made in the matter of capping the trading margin under Section 178 of the Act. Instead of fixing a trading margin (including capping) on a case to case basis, the Central Commission thought it fit to make a regulation which has a general application to the entire trading activity which has been recognized, for the first time, under the 2003 Act. Further, it is impprtant to bear in mind that making of a regulation under Section 178 became necessary because a regulation made under Section 178 has the effect of interfering and overriding the existing contractual relationship between the regulated 0 entities. A regulation under Section 178 is in the nature of a subordinate Legislation. Such subordinate Legislation can even override the existing contracts including Power Purchase Agreements which have got to be aligned with the regulations under Section 178 and which could not have been done across E the board by an Order of the Central Commission under Section 79(1)0).

41Copy pinpoint41. To elucidate, we may refer to the Central Electricity Regulatory Commission (Terms and Conditions of Tariff) F Regulations, 2004. The said Regulations have been made under Section 178 of the 2003 Act. Regulation 15 deals with various components of tariff. It includes Advance Against Depreciation ("AAD" for short). Regulations 21 (1 )(ii) and 38(ii) deal with computation of depreciation including AAD. Recently, G this concept of AAD came for consideration before this Court in the case of National Hydroelectric Power Corporation Ltd. v. CIT reported in 2010 (1) SCALE 5. AAD was suggested by the Central Commission as part of the tariff in order to overcome the cash flow problems faced by Central Power H

670 SUPREMli COURT REPORTS [2010] 3 S.C.R.

A Sector Utilities for meeting loan repayment obligations. The important point to be noted is that although under Section 61 of the 2003 Act the Central Commission is empowered to specify AAD as a condition for determination of the tariff, the Central Commission in its wisdom thought it fit to bring in the 8 concept of AAD by enacting a regulation under Section 178 giving the benefit of AAD across the board to all Central Power Sector Utilities. In other words, instead of giving the benefit of AAD on a case to case basis under Section 61, the Central Commission decided to make a specifii; regulation giving benefit of AAD across the board to all Central Power Sector Utilities. There is one more reason why a regulation under Section 178 with regard to AAD had to be made by CERC. Under the 2003 Act, the Central Commission is empowered under Section 61 to include depreciation as an item in the computation of tariff. However, if the rate of depreciation envisaged by the Central Commission under the 2003 Act is different from the rate(s) of depreciation prescribed under Schedule XIV of the Companies Act, 1956 then such differential rate can be prescribed under the 2003 Act only by way of regulation under Section 178 of the 2003 Act which is in the nature of subordinate legislation. It is important to note that the Companies Act, 1956 constitutes a law applicable to companies. It prescribes the format of Balance Sheet in Schedule VI. It prescribes the requirements as to Profit and Loss account vide Part II of Schedule VI. It also prescribes the rates of depreciation vide Schedule XIV. If a different rate is required to be prescribed under the 2003 Act, then it could be done only by way of subordinate legislation, which is "' contemplated by Regulations framed under Section 178 of the 2003 Act. Similarly, profits earned by a trading company are not only required to be presented in the manner indicated under the Companies Act but it is also required to be computed under the Income-tax Act, 1961. If such profits/income of a trading company is required to be capped under the 2003 Act, it can .. only be done by a subordinate legislation made under Section H · 178 of the 2003 Act. Accrual of income/profit under the

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REGULATORY COMM. THR. SECRY. [S.H. KAPADIA, J.] Companies Act, 1956 or the Income-tax Act, 1961 can only be A curbed by a regulation made under the authority of subordinate legislation or primary legislation. This is exactly what is sought to be achieved by the impugned Regulation.

42.-0ne more-citation may be noticed. Reserve Bank of B India is a Regulator under the RBI Act, 1934 ("1934 Act"). Under the 1934 Act; RBI is empo\vered not only to regulate banks but also financial institutions, NBFCs etc .. Chapter Ill B of the 1934 Act deals with provisions relating to financial institutiohs and NBFCs receiving deposits from the public. Under Section 45JA C of the 1934 Act, RBI is given the power to determine policy and issue directions to NBFCs and financial. institutions in public · interest or in order to regulate the financial system of the country. Section 45JA, however, is confined to Chapter Ill B. However, under Section 58, which falls in Chapter IV, dealing with general provisions, the Board of Directors of RBI are given the power D to make regulations consistent with the 1934 Act to provide for all matters for which provision is necessary. The principle of "generality versus enumeration" is also applicable to Section 58 of RBI Regulations because under Section 58(2) there is a list of topics enumerated on which regulations could be made. E In other words, Section 58 (1), (2) of the 1934 Act is similar to Section 178 (1), (2) of the 2003 Act. Recently, before the Division Bench of this Court, the question arose, inter alia, as to the' accounting treatment to be given by NBFCs accepting deposits from the public in the context of provision to be made F for Non Performing Assets ("NPAs"). An Order was passed by RBI under Section 45JA of the 1934 Act stating that although provision for doubtful debts is required to be reduced from the assets' side of the balance sheet under the provisions of the Companies Act, 1956, for proper disclosure under the 1934 G Act, such a provision should be shown in the balance sheet specifically on the liabilities' side. It is interesting to note that the Order was passed under Section 45JA which, as stated above, is part of Chapter Ill B of the 1934 Act, which chapter expressly deals with provisions relating to NBFCs. There was H

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A no regulation enacted under Section 58 on the topic, namely, NPAs. The point to be noted is, that there could be an Order/ decision of a regulator under the Act even in the absence of regulations. RBI like CERC is a regulator under the 1934 Act. Under Section 45JA it is empowered to issue directions in B contradistinction to its powers to enact regulations. under Section 58 of the 1934 Act. Giving directions under Section 45JA need not be preceded by regulations made under Section 58, however, if in a given case, RBI/Board would have enacted a regulation on making of provision for NPAs under Section 58 c then the Order of RBI under Section 45JA of the 1934 Act was required to be in conformity with the said regulations. (See the judgment of this Court in the case of Mis Southern Technologies Ltd. v. Joint Commissioner of Income Tax, Coimbatore reported in 2010 (1) SCALE 329.)

43Copy pinpoint43. The above two citations have been given by us only to demonstrate that under the 2003 Act, applying the test of "general application", a Regulation stands on a higher pedestal vis-a-vis an Order (decision) of CERC in the sense that an Order has to be in conformity with the regulations. However, that would not mean that a regulation is a pre-condition to the order (decision). Therefore, we are not in agreement with the contention of the appellant(s) that under the 2003 Act, power to make regulations under Section 178 has to be correlated to the functions ascribed to each authority under the 2003 Act and that CERC can enact regulations only on topics enumerated in Section 178(2). In our view, apart from Section 178(1) which deals with "generality" even under Section 178(2)(ze) CERC could enact a regulation on any topic which may not fall in the enumerated list provided such powedalls within the scope of G 2003 Act. Trading is an activity recognized under the said 2003 Act. While deciding the nature of an Order (decision) vis-a-vis a Regulation under the Act, one needs to apply the test of general application. On the making of the impugned Regulations 2006, even the existing Power Purchase H Agreements ("PPA") had to be modified and aligned with the

PTC INDIA LTD. v. CEN'rRAL ELECTRICITY 673 ' . 1 REGULATORY COMM. THR. SECRY. [S.H. KAPADIA, J.)

said Regulations. In other words, the impugned Regulation A makes an inroad into even the existing contracts. This itself indicates the width of the power conferred on CERC under Section 178 of the 2003 Act. All contracts coming into existence after making of the impugned Regulations 2006 have also to factor in the capping of the trading margin. This itself indicates B that the impugned Regulations are in the nature of subordinate legislation. Such regulatory intervention into the existing contracts across-the-board could have been done only by making Regulations under Section 178 and not by passing an Order under S~ction 79(1 )0) of the 2003 Act. Therefore, in our c view, if we keep the above discussion in mind, it becomes clear that the word "order'' in Section 111 of the 2003 Act cannot include the impugned Regulations 2006 made under Section 178 .of the 2003 Act.

44Copy pinpoint44. We may usefully refer to some decisions relevant in D the context.

45Copy pinpoint45. In the case of City Board, Mussoorie v. State Electricity Board and Ors., reported in AIR (58) 1971 Allahabad 219, the matter arose under Electricity (Supply) Act, E 1948 ("1948 Act"). Under that Act, Grid Tariff had to be fixed from time to time under Section 46(1) "in accordance with any regulations made in that behalf'. Under Section 79 of the 1948 Act, the Board was also given the power to make regulations not inconsistent with the Act and the Rules made thereunder F to provide for all or any of the matters enumerated therein. It was argued on behalf of the appellant that the regulations must exist before a Grid Tariff can be fixed. This argument was rejected by the High Court which held that there was nothing in the 1948 Act to suggest that existence of a regulation was a G pre-condition to the determination of a grid tariff. It was held that under Section 46 of 1948 Act, the Board was given a wide discretion to frame the grid tariff depending upon various factors mentioned in the Act. According to the High Court, Section 46 of the Act was a standalone provision, therefore, the grid tariff H

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A could be fixed even in the absence of the regulations provided such fixation is not inconsistent with the 1948 Act. However, it was further observed that if the Board had made regulations under Section 79 then order framing the grid tariff under Section 46(1) had to conform to such regulations. This view stood B affirmed by this Court in the case of U.P. State Electricity Board, Lucknow v. City Board, Mussoorie, reported in (1985) 2 sec 16.

46Copy pinpoint46. A similar question arose for determination by this Court C in the case of Mis Jagdamba Paper Industries (Pvt.) Ltd. and Ors. v. Haryana State Electricity Board and Ors., reported in AIR 1983 SC 1296. In that case, enhancement in the security for meters and for payment of energy bills came to be challenged. It was argued on behalf of the appellants that the Board had not framed any Regulations under Section 79 of the D 1948 Act for such enhancement. According to the appellants, the supply of electricity was controlled under an agreement between the Board and the appellants and therefore unilateral escalation of security charges by passing of an Order under Section 49 would be contrary to any acceptable notion of contract. It was contended that under Section 49(1) of the 1948 Act, the Board was conferred with statutory powers to determine the conditions on the basis of which supply had to be made. Therefore, without determining the conditions under Section 49(1), it was not open to the Board to unilaterally enhance the security charges contrary to the existing contract between the Board and the consumers. This argument was rejected by this Court which held that what apply to the tariff fixation. would equally apply to the security. Section 49(1) of the 1948 Act clearly indicated that the Board may supply electricity to any person upon such terms and conditions as the Board thinks fit. It was held that since the contract between the consumer and the Board contemplated enhancement of security charges as a condition of supply of electricity, it was not open to the appellants to say that such enhancement cannot take place without regulations being framed under Section 79. This

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judgment is important from another angle also. It indicates that A regulations under Section 79 of 1948 Act were to be in the nature of subordinate legislation, therefore, all contracts had to be in terms of such regulations. In the present case also, if one examines the terms and conditions of the licences, power to fix trading margin is expressly contemplated by such terms. The B said judgment further held that the Board is a statutory authority and has to act within the framework of the 1948 Act. If the act of the Board is not in consonance or in breach of some statutory provisions of law, rule or regulation, it is always open to challenge in a petition under Section 226 of the Constitution. c

47Copy pinpoint47. In the case of Kera/a State Electricity-Board v. S.N. Govinda Prabhu and Bros. and Ors., reported in (1986) 4 sec 198, the dispute was confined to the question concerning increase in the electricity tariff by the Board under the 1948 Act. The principal ground of challenge was that the Board had acted 0 outside its statutory authority by formulating a price structure intended to yield sufficient revenue to offset not only the actual expenditure as contemplated by Section 59 of the 1948 Act but also expenditure not covered by that section. At this stage, we may point out that, in all these cases, the Supreme Court has E considered tariff fixation, price fixation, security charges fixation at par. In that case, one of the submissions which found favour. with the High Court, which accepted the submissions of the consumer, while striking down the impugned notification, was that in the absence of specification by the State Government, F it was not open to the Board to adjust the tariffs. What was found by the Supreme Court was that although the expenditure did not fall strictly within Section 59 of the 1948 Act, the actual expenditure stood incurred to avoid the loss. Therefore, the Supreme Court gave a schematic interpretation to the 1948 Act G and it held that the State Electricity Board was obliged to carry on its business economically and efficiently and consequently such charges were admissible even though they did not fall strictly within the ambit of Section 59. On the question as to absence of specification by the State Government, this Court H

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A . further held that the omission of the rule-making authority to · frame rules cannot takeaway the right to factor in such expenses in the revised tariff structure. This judgment is one more case which indicates that making of regulations is not a pre-condition to the tariff fixation or price fixation or security charges fixation.

48Copy pinpoint48. In the case of Hindustan Zinc Ltd. etc. v. Andhra Pradesh State Electricity Board and Ors. reported in (1991) 3 SCC 299, the main attack was to the upward revision of the tariffs for HT consumers in the writ petition before the High Court, inter alia, on the ground that the Board cannot generate a surplus in excess of the surplus specified under Section 59 of the 1948 Act. Section 59 of that Act gave power to the Board to lay down general principles for Board's finance. It was also contended that the tariff revision was made without prior consultation with the State Electricity Consultative Council as required by Section 16(5) of the 1948 Act. It was held by this Court that even in the absence of general principles being specified under Section 59 of that Act, it was open to the Board to generate a surplus in order to carry on the business in a more efficient and economic manner. Following the judgment in the case of S.N. Govinda Prabhu (supra), it was held that even in the absence of prior consuitation with the State Electricity Consultative Council as required by Section 16(5), it was open to the Board which was vested with the power of tariff fixation to make an upward revision of tariff. In other words, specification by. making rules or regulations was not a pre- condition for upward revision of tariff. It was observed that, if in a given case, it is found that such upward revision was arbitrary, then under the judicial review jurisdiction it was open to the courts to strike down such upward revision as arbitrary under Article 14. It was further observed that the "laying down procedure" before the Legislature was meant to effectively control the exercise of the delegated power of the Board, however, such laying down procedure will not make the impugned regulation immune from judicial review. (Also see the

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REGULATORY COMM. THR. SECRY. [S.H. KAPADIA, J.] judgment of this Court in Indian Express Newspapers A (Bombay) Pvt. Ltd. and Ors. v. Union of India and Ors. reported in (1985) 1 sec 641. !)aragraphs 75 to 79).

49Copy pinpoint49. On the question of "generality versus enumeration" principle, it was further held in the case of Hindustan Zinc Ltd. B (supra) that under Section 49(1) of the 1948 Act a general power was given to the Board to supply electricity to any person not being a licensee upon such terms and conditions as the Board thinks fit and the Board may for the purposes of such supply frame uniform tariffs under Section 49(2). The Board was required to fix uniform tariffs after taking into account certain enumerated factors. It was held that the power of fixation of tariffs in the Board ordinarily had to be done in the light of specified factors, however, such enumerated factors in Section 49(2) did not prevent the Board from fixing uniform tariffs on factors other than those enumerated in Section 49(2) as long as they were relevant and in consonance with the Act. To the same effect is the judgment of this Court in Shri Sitaram Sugar . Co. Ltd. (supra). In that judgment also this Court held that the enumerated factors/topics in a provision do not mean that the authority cannot take any other matter into consideration which may- be relevant. The words in the enumerated provision are not a fetter; they are not words of limitation, but they are words for general guidance.

50Copy pinpoint50. One more s..;pect needs to be mentioned. The F judgment of this Court in Shri Sitaram Sugar Co. Ltd. (supra) has laid down various tests to distinguish legislative from ·administrative functions. It further held that price fixation is a legislative function unless the statute provides otherwise. It also laid down the scope of judicial review in such cases. G

51Copy pinpoint51. Applying the above judgments to the present case, it is clear that fixation of the trading margin in the inter-State trading of electricity can be done by making of regulations under Section 178 of 2003 Act. Power to fix the trading margin H

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A under Section 178 is, therefore, a legislative power and the Notification issued under that section amounts to a piece of subordinate legislation, which has a general application in the sense that even existing contracts are required to be modified in terms of the impugned· Regulations. These Regulations make B an inroad into contractual relationships between the parties. Such is the scope and effect of the impugned Regulations which could not have taken place by an Order fixing the trading margin under Section 79(1)U). Consequently, the impugned Regulations cannot fall within the ambit of the word "Order" in c Section 111 of the 2003 Act.

52Copy pinpoint52. Before concluding on this topic, we still need to examine the scope of Section 121 of the 2003 Act. In this case, appellant(s) have relied on Section 121 to locate the power of judicial review in the Tribunal. For that purpose, we must notice · D the salient features of Section 121. Under Section 121, there must be a failure by a Commission to perform its statutory function in which event the Tribunal is given authority to issue orders, instructions or directions to the Commission to perform its statutory functions. Under Section 121 the Commission has E to be heard before such orders, instructions or directions can be issued.

53Copy pinpoint53. The main issue which we have to decide is the nature of the power under Section 121. lri the case of Mis Raman and F Raman Ltd. v. State of Madras and Ors. reported in AIR 1959 SC 694, Section 43A of Motor Vehicles Act, 1939, ("1939 Act"), as amended by Madras Act 20 of 1948, came for consideration before the Supreme Court. Section 43A conferred power on the State Government to issue "orders" and G "directions", as it may consider necessary in respect of any matter relating to road transport to the State Transport Authority or a Regional Transport Authority. The meaning of the words "orders" and "directions" came for interpretation before the Supreme Court in the said case. It was held, on examination H of the Scheme of the Act, that Section 43A was placed by the

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REGULATORY COMM. THR. SECRY. [S.H. KAPADIA, J.] legislature before the sections conferring quasi-judicial powers A on Tribunals which clearly indicated that the authority conferred under Section 43A was confined to administrative functions of the Government and the Tribunals rather than to their judicial functions. It was further held that the legislature had used two words in the section: (i) orders; and (ii) directions. This Court s further noticed that under the 1939 Act there was a separate Chapter which dealt with making of "rules" which indicated that the words "orders" and "directions" in Section 43A were meant to clothe the Government-with the authority to issue directions of administrative character. It was held that the source of power c did not affect the character of acts done in exercise of that power. Whether it is a law or an administrative direction depends upon the character or nature of the orders or directions authorized to be issued in exercise of the power conferred. It was, therefore, held that the words "orders" and "directions" 0 were not laws. They were binding only on the Authorities under the Act. Such orders and directions were not required to be published. They were not kept for scrutiny by legislature. It was further held that such orders and directions did not override the discretionary powers conferred on an authority under Section 60 of the 1939 Act. It was observed that non compliance of such orders, instructions and directions may result in taking disciplinary action but they cannot affect a finding given by the quasi-judicial authority nor can they impinge upon the rules enacted by the rule-making authority. It was held that such orders and directions would cover only an administrative field of the officers concerned and therefore such orders and directions do not regulate the rights of the parties. Such orders and directions cannot add to the considerations/topics prescribed under Section 47 of the 1939 Act on the basis of which an adjudicatir:ig authority is empowered to issue or refuse permits, as the case may be.

54Copy pinpoint54. Applying the tests laid down in the above judgment to the present case, we are of the view that, the words "orders", "instructions" or "directions" in Section 121 do not confer power H

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A of judicial review in the Tribunal. It is not possible to lay down any exhaustive list of cases in which there is failure in performance of statutory functions by Appropriate Commission. However, by way of illustrations, we may state that, under Section 79(1)(h) CERC is required to specify Grid Code having B regard to Grid Standards. Section 79 comes in Part X. Section 79 deals with functions of CERC. The word "grid" is defined in Section 2(32) to mean high voltage backbone system of interconnected transmission lines, sub-station and generating plants. Basically, a grid is a network. Section 2(33) defines "grid c code" to mean a code specified by CERC under Section 79(1 )(h). Section 2(34) defines "grid standards" to mean standards specified under Section 73(d) by the Authority. Grid Code is a set of rules which governs the maintenance of the network. This maintenance is vital. In summer months grids tend to trip. In the absence of the making of the Grid Code in 0 accordance with the Grid Standards, it is open to the Tribunal to direct CERC to perform its statutory functions of specifying the Grid Code having regard to the Grid Standards prescribed by the Authority under Section 73. One can multiply these illustrations which exercise we do not wish to undertake. Suffice E it to state that, in the light of our analysis of the 2003 Act, hereinabove, the words orders, instructions or directions in Section 121 of the 2003 Act cannot confer power of judicial review under Section 121 to the Tribunal, which, therefore, cannot go into the validity of the impugned Regulations 2006, F as rightly held in the impugned judgment.

55Copy pinpoint55. One of the contentions raised by Shri Shanti Bhushan, learned senior counsel appearing on behalf of Calcutta Electricity Supply Company Ltd. needs to be considered. It was contended on behalf of CESC Ltd. that under Section 111 of the 2003 Act, an appeal lies only against an Order by the Appropriate Commission and not against Regulations framed by CERC under Section 178 of the 2003 Act. It was contended that Regulations under Section 178 are framed in exercise of delegated power in which there was an element of legislative

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REGULATORY COMM. THR. SECRY. [S.H. KAPADIA, J.] function. That, the Regulations framed by CERC are required A to be laid before the Parliament under Section 179 of the 2003 Act. The said Regulations could be modified by the two Houses of the Parliament. In the circumstances, it was, therefore, contended that neither Section 111 nor Section 121 would be deemed to have conferred any power on the Appellate Tribunal B for Electricity to supervise or sit in judgment over the Regulations. To this extent, learned counsel supported the contentions of the learned Solicitor General, appearing on behalf of CERC (respondent no.1). Further, an interesting argument was advanced by the learned counsel, namely, that, c Section 121 of the 2003 Act has not yet been brought into force. In this connection, reference was made to Section 1(3) of the 2003 Act as well as to the notification dated 10.6.2003 issued under Section 1(3) of the 2003 Act by which the Central Government had fixed 10.6.2003 as the date on which Sections 0 1 to 120 and Sections 122 to 185 were brought into force, however, Section 121 was not brought into force till Notification dated 27 .1.2004, which brought into force Electricity (Amendment) Act 2003 (No.57 of 2003) came to be issued. According to the learned counsel, Section 4 of the Electricity E (Amendment) Act, 2003 (No.57 of 2003) which was brought into force on 27.1.2004 merely provided for substitution of the original Section 121 with new Section 121, without issuance of a further notification under Section 1(3) of the original Electricity Act, 2003. According to the learned counsel, there is a differencs between substituting a dormant Section iri an F Act and in bringing a substituted section into force which has not been done in this case and, therefore, Section 121, although being part of the statute, is not brought into force, till today. To answer the above contention, we need to quote Section 1(3) and also Section 121 of the original Electricity Act, 2003 which G was not brought into force though, as stated above, Sections 1 to 120 and Sections 122 to 185 were brought into force vide notification dated 10.6.2003:

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A "Section 1. Short title, extent and commencement. -

(3) It shall come into force on such date as the Central Government may, by notification, appoint:

Provided that different dates may be appointed for B different provisions of this Act and any reference in any such provision to the commencement of this Act shall be construed as a reference to the coming into force of that provision."

c "Section 121. Power of Chairperson of Appellate Tribunal.- The Chairperson of the Appellate Tribunal shall exercise general power of superintendence and control over the appropriate Commission."

56Copy pinpoint56. We also quote hereinbelow Sections 1 and 4 of the D Electricity (Amendment) Act, 2003 (No.57 of 2003) which was brought into force on 27.1.2004:

"Section 1. (2) It shall come into force on such date as the Central Government may, by notification in the Official E Gazette, appoint.

Section 4. For Section 121 of the principal Act, the following Section shall be substituted, namely:-

"121. Power of Appellate Tribunal F 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 G performance of its statutory functions under this Act."

57Copy pinpoint57. As stated above, the Electricity (Amendment) Act, 2003 (No.57 of 2003) was brought into force by Notification dated 27.1.2004 which is reproduced hereinbelow:

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. REGULATORY COMM. THR. SECRY. [S.H. KAPADIA, J.]

"MINISTRY OF POWER A Notification New Delhi, the 27th January, 2004 S.0.119(E). In exercise of the powers conferred by sub-section (2) of Section 1 of the Electricity (Amendment) 8 Act, 2003 (57 of 2003), the Central Government hereby appoints the 27th January, 2004, as the date on which the provisions of the said Act shall come into force.

[F. No.23/23/2004-R&R] AJAY SHANKAR, Jt. Secy." C

58Copy pinpoint58. In our view, there is no merit in the above contention advanced on behalf of CESC Ltd. At the outset, we may state that material brought on record indicates that Section 121 of the original Electricity Act, 2003, quoted hereinabove, was D never brought into force because some MPs expressed the concern that the power, under that section, conferred upon the Chairperson of the Appellate Tribunal, could lead to excessive centralization of power and interference with the day-to-day activities of the Commission by the Chairperson of the Tribunal. E Therefore, Section 121 was amended by Electricity (Amendment) Act, 2003 (No.57 of 2003) which is also quoted hereinabove and which amendment Act came into force from 27.1.2004. In our view, by necessary implication of the coming into force of the Electricity (Amendment) Act, 2003 (No.57 of 2003) all provisions amended by it also came into force, hence, there is no requirement for a further notification under Section 1(3), particularly when Section 121 in its amended form has come into force w.e.f. 27.1.2004. In this connection, it may be seen that Section 121 of the original Act stood substituted by Amendment Act No.57 of 2003. Substitution of a provision results in repeal of the earlier provision and its replacement by the new provision. Substitution is a combination of repeal and fresh enactment. [See: Principles of Statutory Interpretation by G.P. Singh, 11th Edn., p. 638]. Section 121 of the original Electricity Act, 2003 was never brought into force. It was H

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A substituted by new Section 121 by Amendment Act No.57 of 2003 which was brought into force by a notification dated 27.1.2004. Substitution, as stated above, results in repeal of the old provision and replacement by a new provision. Applying these tests to the facts of the present case, we find that the B Electricity (Amendment) Act, 2003 (No.57 of 2003) was brought into force by notification dated 27.1.2004. That, notification was issued under Section 1(2) of the Electricity (Amendment) Act, 2003 (No.57 of 2003). If one reads Section 1(2) of Electricity (Amendment) Act, 2003 (No.57 of 200:.=,) with Notification dated c 27.1.2004 issued under Section 1(2) of the amended Act, 2003, it becomes clear that on coming into force of the Electricity (Amendment) Act, 2003 (No.57 of 2003) all provisions amended by it also came into force. Hence, there was no requirement for a further notification under Section 1 (3), consequently, Section 121 in its amended form came into force 0 with effect from 27.1.2004.

59Copy pinpoint59. Summary of Our Findings:

(i) In the hierarchy of regulatory powers and functions E under the 2003 Act, Section 178, which deals with making of regulations by the Central Commission, under the authority of subordinate legislation, is wider than Section 79( 1) of the 2003 Act, which enumerates the regulatory functions of the Central F Commission, in specified areas, to be discharged by Orders (decisions).

(ii) A regulation under Section 178, as a part of regulatory framework, intervenes and even overrides the existing contracts between the G regulated entities inasmuch as it casts a statutory obligation on the regulated entities· to align their existing and future contracts with the said regulations.

H (iii) A regulation under Section 178 is made under the

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REGULATORY COMM. THR. SECRY. [S.H. KAPADIA, J.] authority of delegated legislation and consequently A its validity can be tested only in judicial review proceedings before the courts and not by way of appeal before the Appellate Tribunal for Electricity under Section 111 of the said Act. B (iv) Section 121 of the 2003 Act does not confer power of judicial review on the Appellate Tribunal. The words "orders", "instructions" or "directions" in Section 121 do not confer power of judicial review in the Appellate Tribunal for Electricity. In this C judgment, we do not wish to analyse the English authorities as we find from those authorities that in certain cases in England the power of judicial review is expressly conferred on the Tribunals constituted under the Act. In the present 2003 Act, the power of judicial review of the validity of the D Regulations made under Section 178 is not conferred on the Appellate Tribunal for Electricity.

(v) If a dispute arises in adjudication on interpretation of a regulation made under Section 178, an appeal would certainly lie before the Appellate Tribunal under Section 111, however, no appeal to the Appellate Tribunal shall lie on the validity of a regulation made under Section 178.

(vi) Applying the principle of "generality versus enumeration", it would be open to the Central Commission to make a regulation on any residuary item under Section 178( 1) read with Section 178(2)(ze). Accordingly, we hold that the CERC was empowered to cap th~ trading margin under the authority of delegated legislation under Section 178 vide the impugned notification dated 23.1.2006.

(vii) Section 121, as amended by Electricity H

686 _ SUPREME COURT REPORTS [2010] 3 S.C.R.

A (Amendment) Act 57 of 2003, came into force with effect from 27.1.2004. Consequently, there is no merit in the contention advanced that the said section is not yet been brought into force.

B Conclusion:

60Copy pinpoint60. For the aforesaid reasons, we answer the question raised in the reference as follows:

The Appellate Tribunal for Electricity has no jurisdiction to c decide the validity of the Regulations framed by the Central Electricity Regulatory Commission under Section 178 of the Electricity Act, 2003. The validity of the Regulations may, however, be challenged by seeking judicial review under Article 226 of the Constitution of India.

D Our summary of findings and answer to the reference are with reference to the provisions of the Electricity Act, 2003. They shall not be construed as a general principle of law to be applied to Appellate Tribunals vis-a-vis Regulatory Commissions under other enactments. In particular, we make E it clear that the decision may not be taken as expression of any view in regard to the powers of Securities Appellate Tribunal vis-a-vis Securities and Exchange Board of India under the Securities and Exchange Board of India Act, 1992 or with reference to the Telecom Disputes Settlements and Appellate F Tribunal vis-a-vis Telecom Regulatory Authority of India under the Telecom Regulatory Authority of India Act, 1997.

61Copy pinpoint61. In view of our findings, we dismiss these appeals as having no merit with no order as to costs,

G K.K.T. Appeals dismissed.