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Legal Case Shots

Court judgements broken down into the case type, how the decision played out, and the lesson worth remembering, with the full judgement available as a PDF.

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Legal Case Shots is a searchable database of Supreme Court of India judgments, each broken down into the case type, the court's key holding, and a practical lesson learnt, with the full judgment available as a PDF for citation or deeper reading.

Electricity & Energy LawSupreme Court of India

Power Grid Corporation of India v. Tamil Nadu Generation and Distribution Co. Ltd. & Ors.

Civil Appeal · 2019 INSC 654Decided 9 May 2019
Civil Appeal No. 684 of 2007
Justice N.V. Ramana · Justice Mohan M. Shantanagoudar · Justice Indira Banerjee

Background

Power Grid Corporation, a transmission utility, charged tariffs that are fixed by the Central Electricity Regulatory Commission (CERC), and sought to apportion a "Foreign Exchange Rate Variation" (FERV) cost component between debt and equity in a normative 50:50 ratio once it was added to capital cost. The Appellate Tribunal for Electricity had approved the method of calculating FERV but held that it should be apportioned only against debt liability, not equity, prompting the Corporation's appeal. A connected appeal by NTPC Limited raised the identical FERV-apportionment issue arising from the same underlying order.

Decision Breakdown

The Supreme Court held that the appellant had failed to point to any rule, regulation, statute, or precedent requiring FERV to be apportioned in any particular debt-equity ratio, and that the question raised was not even a substantial question of law. It further noted that recovery of such tariff components could be made directly from the beneficiary without even approaching CERC, and that allowing a change now, years after the 2001-2004 tariff period in question, would unfairly burden consumers who had no connection to that period. Both the main appeal and the connected NTPC appeal (which turned on the same legal issue) were dismissed with no order as to costs.

Lesson Learnt

In regulated-tariff disputes, a party seeking a particular cost-apportionment method must point to a specific legal rule or regulation supporting it: courts will not import an "as a matter of practice" claim into binding tariff regulations, especially where doing so would retroactively shift costs onto consumers.

Power Grid Corporation of India v. Tamil Nadu Generation and Distribution Co. Ltd. & Ors. – Legal Case Shots | LegalAware