Supreme Court dismissed Tata Power’s challenge to MERC decision to award Rs. 7,000 crore Transmission Contract on a Nomination basis to Adani Electricity

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The Supreme Court dismissed Tata Power’s challenge to MERC decision to award Rs. 7,000 crore transmission contract on a nomination basis to Adani Electricity.


APTEL, by its judgment, dismissed an appeal under Section 111 of the Act instituted by the appellant against a decision of MERC. MERC granted a transmission licence to AEMIL under Sections 14 and 15 of the Act for setting up a 1000 MW HVDC (VSC based) link between 400 kV MSETCL Kudus and 220 kV AEML Aarey EHV Station.  

The appellant challenged MERC’s order before APTEL, inter alia, on the ground that the grant of the licence was not preceded by a TBCB process. 

TPC-T contended that the failure to adhere to a TBCB process pursuant to Section 63 was contrary to public interest and statutory mandate. APTEL dismissed the appeal. This has given rise to a statutory appeal under Section 125 of the Act.  


Senior Advocate Shyam Divan, appearing for the appellants, urged that for all transmission projects, the rule for the award of transmission licences is competitive bidding, subject to certain exceptions. The rule of competitive bidding is based on statute, statutory policy, and guidelines of the and State Governments.

Senior Advocate Abhishek Manu Singhvi and Vikas Singh, appearing for the AEML-T and AEMIL urged that on a proper construction of the provisions of Sections 61, 62 and 63, the legal position is that Sections 62 and 63 stand on an equal footing and it would be incorrect to postulate that Section 63 has a dominant character.

The contended that MERC was correct in entering a finding of fact that the appellant is only interested in delaying the project. 


The three judges bench of The Chief Justice of India Dhananjaya Y Chandrachud, Justice AS Bopanna and Justice J.B. Pardiwala observed that the Electricity Act 2003 provides the States sufficient flexibility to regulate the intra-state transmission systems, wherein the Appropriate State Commissions possess the power to determine and regulate tariff. The Electricity Act 2003 seeks to distance the State Governments from the determination and regulation of tariff, placing such power completely within the ambit of the Appropriate Commissions. 

It was further observed that the provisions of the Electricity Act 2003 do not prescribe one dominant method to determine tariff. Section 63 operates after the bidding process has been conducted. 

The bench said that the criteria or guidelines for the determination of the modality of tariff determination ought to be notified by the Appropriate State Commission either through regulations under Section 181 of the Act or guidelines under Section 61 of the Act.

It added that the threshold limit not having been notified by MERC, it was open to MERC to allot the HVDC project either under the RTM or the TBCB route.

The court directed all State Regulatory Commissions to frame Regulations under Section 181 of the Act on the terms and conditions for determination of tariff within three months from the date of this judgment. 

It further directed that while framing these guidelines on determination of tariff, the Appropriate Commission shall be guided by the principles prescribed in Section 61, which also includes the NEP and NTP. Where the Appropriate Commission(s) has already framed regulations, they shall be amended to include provisions on the criteria for choosing the modalities to determine the tariff, in case they have not been already included. 

“The regulations framed must be in consonance with the objective of the Electricity Act 2003, which is to enhance the investment of private stakeholders in the electricity regulatory sector so as to create a sustainable and effective system of tariff determination that is cost efficient so that such benefits percolate to the end consumers” the court said. 

Case title: The TATA Power Company Limited Transmission v/s Maharashtra Electricity Regulatory Commission & Ors. 

Citation: Civil Appeal No. 1933 of 2022

Date: 23.11.2022

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