Even in the Absence of Regulations, CERC Is Not Powerless to Regulate: Supreme Court Affirms Ad Hoc Regulatory Powers under Electricity Act

“High Court Erred in Entertaining Writ Despite Statutory Appeal Under Section 111” —Supreme Court of India that the Central Electricity Regulatory Commission (CERC) retains regulatory powers even when specific regulations under Section 178 of the Electricity Act, 2003 are absent. The Court clarified that CERC’s authority under Section 79 includes both adjudicatory and regulatory functions, and upheld its direction permitting Power Grid to claim transmission charges due to delays caused by the respondent. Importantly, the Court chastised the High Court for entertaining a writ petition despite an effective appellate remedy under Section 111, ruling the writ as non-maintainable.

“There Is No Bar on Exercise of Powers under Section 79 in the Absence of Regulations under Section 178”

The core legal issue revolved around whether CERC could allow Power Grid to claim compensation where the Tariff Regulations, 2014 did not expressly provide for such recovery. The High Court had admitted the respondent's writ petition, reasoning that the CERC had acted beyond its jurisdiction. The Supreme Court overruled this, holding unequivocally:

“Making of a regulation under Section 178 is not a precondition to the Central Commission taking any steps or measures under Section 79(1).”

The bench, comprising Justices J.B. Pardiwala and R. Mahadevan, quoted extensively from PTC India Ltd. v. CERC (2010) 4 SCC 603 and Energy Watchdog v. CERC (2017) 14 SCC 80, reinforcing the settled legal proposition that the Commission’s regulatory powers are broader and more dynamic than a strict dependence on codified regulations.

The dispute arose from the Western Region System Strengthening Schemes (WRSS-XIV and WRSS-XVI) implemented by Power Grid Corporation of India Ltd. (PGCIL), which were delayed due to Madhya Pradesh Power Transmission Company Ltd. (MPPTCL) failing to timely commission intra-state assets. Although PGCIL completed its infrastructure, it could not operationalize them due to MPPTCL's failure.

PGCIL approached CERC for approval of Commercial Operation Dates (COD) and transmission charges. While approving the CODs, the CERC did not condone the delay but allowed PGCIL to claim charges for the unused period from MPPTCL, terming it as liquidated damages and incidental costs.

“The CERC Is Not Merely an Adjudicatory Body, But a Regulator Empowered to Fill Legislative Gaps”

In dismissing the respondent’s contention that CERC exceeded its jurisdiction, the Court said:

“The CERC is enabled to exercise its regulatory powers by way of orders under Section 79... These are ad hoc powers not of general application.”

The Court explained the distinction between regulations under Section 178, which are legislative and general, and regulatory measures under Section 79, which are administrative and fact-specific. In that context, it remarked:

“Orders under Section 79 are made appealable under Section 111 because they are regulatory measures tailored to the particular parties and situations.”

Relying on Airports Economic Regulatory Authority v. DIAL (2024), the Court reiterated that regulatory functions are not nullified simply because they are issued by way of an order and not a formal regulation. The judges cautioned that “over-emphasising the general/specific distinction would ignore the purpose and structure of modern regulation.”

“Writ Petitions Cannot Be Used to Circumvent Statutory Appellate Tribunals”

The High Court had entertained the respondent’s writ petition by invoking the Whirlpool exceptions, stating that the orders challenged were beyond jurisdiction and violated natural justice. The Supreme Court rejected this argument, stating in clear terms:

“This Court’s observations in Whirlpool are of no avail... The matter falls in none of the cases enumerated therein.”

There was neither a breach of fundamental rights nor violation of natural justice, nor any constitutional challenge or complete lack of jurisdiction. On the contrary, the respondent had a clear and effective statutory remedy before Appellate Tribunal for Electricity (APTEL) under Section 111.

The Court emphasized: “The High Court committed an egregious error in passing the impugned judgment... There was no occasion for the High Court to admit the writ petition.”

It further remarked that allowing writ petitions in such cases would lead to a breakdown of statutory discipline, especially in specialized regulatory sectors such as electricity.

“Grant of Liberty to Claim Compensation Was a Regulatory Measure, Not an Adjudication on Liability”

Another pivotal issue was whether the CERC, by allowing Power Grid to claim charges, had “adjudicated” a dispute beyond the prayers sought. The Court held this was a regulatory action, not an adjudication. It stated:

“CERC was not adjudicating the issue of delay... It was only regulating the consequences of the delay to the commissioning of the transmission elements.”

It further observed: “Any dispute pertaining to the levy would arise only upon the appellant raising bills. It cannot be said that there was a contravention of the principles of natural justice by the CERC.”

The Court clarified that CERC had not fixed liability, but had merely recognized the appellant’s right to raise a claim, which could then be contested on merits before APTEL.

The Supreme Court's judgment powerfully affirms the robust and flexible regulatory powers of CERC under the Electricity Act and restores faith in the specialized statutory appellate framework. The decision reinforces that judicial review cannot be a substitute for expert statutory tribunals, especially where no constitutional or jurisdictional infirmity exists.

As the Court concluded: “We are of the opinion that APTEL is the appropriate authority to look into the merits of the matter... We have not considered the question whether such liability... could be imposed on the respondent.”

Date of Decision: 15 May 2025