Case at a Glance
The Appellate Tribunal for Electricity had upheld a CERC tariff order for Damodar Valley Corporation for 2009–2014, following the Supreme Court’s decision in Bhaskar Shrachi Alloys. No appeal was filed, but a review petition stayed pending for about five years and was allowed in 2024 on the ground that allowing both depreciation and Sinking Fund contributions was a ‘double benefit’. The Supreme Court set aside the review, restored the Tribunal’s order of 17 May 2019, and imposed costs of Rs 2 lakh on the first respondent and Rs 1.5 lakh on intervener SAIL.
Damodar Valley Corporation (DVC) generates and supplies electricity under the Damodar Valley Corporation Act, 1948, with tariff fixed by the Central Electricity Regulatory Commission (CERC) under the Electricity Act, 2003 and the 2009 Tariff Regulations. In Bhaskar Shrachi Alloys Ltd. v. Damodar Valley Corporation, (2018) 07 SC CK 0052, (2018) 8 SCC 281, the Supreme Court held that the provisions of the DVC Act that are not inconsistent with the Electricity Act continue to apply, and upheld the treatment of depreciation and Sinking Fund contributions as tariff items.
For the 2009–2014 period, CERC fixed DVC’s tariff, and the Appellate Tribunal for Electricity (APTEL), by order dated 17 May 2019, upheld it, relying on Bhaskar Shrachi. No one appealed. Instead, a review petition was filed and remained pending for about five years; in 2024, the Tribunal allowed it, holding that allowing depreciation on assets built from bond money while also allowing the Sinking Fund contribution (for repayment of those bonds) as an expense was a double benefit that burdened consumers. Steel Authority of India Limited (SAIL) intervened in DVC’s appeal in support of the review order.
The Key Question Before the Court
Could the Appellate Tribunal for Electricity, in review, set aside its own order that had followed a binding Supreme Court decision, on the ground of a ‘double benefit’ in tariff?
Review Is Not an Appeal in Disguise
Justice K. Vinod Chandran, writing for the Bench, held that Section 40 of the DVC Act and Regulation 43 of the 2009 Regulations specifically allow depreciation at rates set by the Comptroller and Auditor General and treat Section 40 funds, including the Sinking Fund, as recoverable expenses — a deliberate departure from ordinary accounting, where a Sinking Fund would be an appropriation of profit. The fourth proviso to Section 14 of the Electricity Act is substantive, and Section 174 overrides only inconsistent laws, so the non-inconsistent provisions of the DVC Act survive. The Court found that the allowance of depreciation had been “specifically considered and upheld” in Bhaskar Shrachi and in the Tribunal’s original order.
On review, the Court applied State of West Bengal v. Kamal Sengupta, (2008) 06 SC CK 0007, (2008) 8 SCC 612: review is confined to errors apparent on the face of the record; an error that needs a long process of reasoning to detect does not qualify; and a tribunal cannot sit in appeal over its own decision. As the Court put it, an erroneous order cannot be corrected in the guise of review. Overturning an order that followed a binding precedent was a breach of judicial discipline and of Article 141. The Court also noted with “some consternation” that the review was kept pending for five years, calling it “clearly an abuse of process of law”, and said SAIL had been “ill-advised” to support it, stressing that “finality and closure is the expedient need in litigation”.
What the Court Actually Held
- The Tribunal’s review order of 2024 was set aside and its original appellate order dated 17 May 2019 was restored; the appeal was allowed with costs.
- A review cannot be used to reopen a decision that followed binding Supreme Court precedent; doing so breaches judicial discipline and Article 141.
- Under Section 40 of the DVC Act and Regulation 43 of the 2009 Regulations, depreciation and Sinking Fund contributions are both recoverable through tariff, as upheld in Bhaskar Shrachi Alloys.
- Costs of Rs 2,00,000 on the first respondent and Rs 1,50,000 on SAIL were imposed, payable to DVC within one month, failing which interest at 18% per annum applies.
Why This Judgment Matters
- It reinforces the narrow scope of review before tribunals, including APTEL, and the binding force of Supreme Court decisions.
- It settles that DVC can recover both depreciation and Sinking Fund contributions through tariff under its special statute.
- Costs on a party and an intervener send a message against keeping review petitions pending to reopen settled issues.
What Should Advocates Take Away From the Judgment?
For Industrial Consumers
- A disagreement with a tariff order must be pursued by appeal, not by an indefinitely pending review.
- Interveners supporting an order made in breach of precedent can themselves face costs.
For Counsel
- Cite Kamal Sengupta for the limits of review before tribunals.
- In DVC tariff matters, rely on Bhaskar Shrachi Alloys on the continued operation of the DVC Act.
- Advise clients that reopening a decided issue through review may attract costs.
Key Takeaways
- A review is limited to errors apparent on the face of the record.
- A tribunal cannot review an order merely because it now thinks the binding precedent produces a ‘double benefit’.
- DVC’s depreciation and Sinking Fund contributions are both tariff items under its special law.
- Total costs of Rs 3.5 lakh were imposed for abuse of process.
Frequently Asked Questions
What was the ‘double benefit’ argument?
The respondents argued that allowing depreciation on assets built with bond money and also allowing the Sinking Fund contribution (to repay those bonds) as an expense burdened consumers twice. The Court said this had already been considered and upheld in Bhaskar Shrachi.
Why did the Supreme Court set aside the review?
Because the Tribunal’s original order followed binding Supreme Court precedent, and a review cannot correct a supposedly erroneous decision; it is limited to errors apparent on the face of the record.
Why were costs imposed on SAIL?
The Court said SAIL, as intervener, willingly participated in the attempt to uphold an order passed in breach of judicial discipline, and had been ill-advised.
Conclusion
The Supreme Court has restored DVC’s 2009–2014 tariff position and reminded tribunals that review is not a second appeal — least of all against binding precedent.
Practical takeaway: Challenge an adverse tribunal order by appeal; a long-pending review that seeks to undo binding precedent risks being set aside with costs.
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