Supreme Court Holds CERC Can Regulate Compensation for Delay in Transmission Works; Sets Aside High Court Admission of Writs

A bench of Justices J.B. Pardiwala and R. Mahadevan heard appeals by Power Grid Corporation of India Ltd. against an order of the Madhya Pradesh High Court that admitted writ petitions filed by Madhya Pradesh Power Transmission Company Ltd. challenging Central Electricity Regulatory Commission (CERC) orders which had approved commercial operation dates and granted Power Grid liberty to claim compensation from the State utility for delayed downstream works. The core question concerned whether CERC, in the absence of specific regulations under Section 178 of the Electricity Act, 2003, could, in exercise of its powers under Section 79, issue orders that regulated consequences of commissioning delays and whether the High Court should have entertained writ proceedings instead of leaving the remedy to the Appellate Tribunal for Electricity (APTEL).

The Court allowed the appeals, set aside the High Court's admission order dated 25.02.2021 and dismissed the writ petitions. The Supreme Court held that Section 79 conferred both regulatory and adjudicatory powers on the CERC and that, where there was no applicable regulation under Section 178, the CERC could exercise its general regulatory power to fill gaps on a case-by-case basis. The Court emphasised that such measures “have got to be in conformity with the regulations under Section 178, wherever such regulations are applicable,” but that absence of such regulations did not tie the CERC’s hands. The Court, in its reasoning, observed: “These measures, which the Central Commission is empowered to take, have got to be in conformity with the regulations under Section 178, wherever such regulations are applicable. Measures under Section 79(1), therefore, have got to be in conformity with the regulations under Section 178.” The Court further noted that “the CERC is empowered to order for imposition of transmission charges on the party to whom delay is attributable,” but clarified that it did not decide the merits of whether such liability could be imposed on the State utility in the present facts and directed that APTEL was the appropriate forum to examine the substantive challenge if an appeal were preferred.

Background The dispute arose from implementation of Western Region System Strengthening schemes (WRSS‑XIV and WRSS‑XVI) by Power Grid at Indore sub-station. Power Grid, a deemed inter‑state transmission licensee, completed certain inter‑state assets but downstream intra‑state lines and bays to be executed by MPPTCL were delayed. Power Grid approached CERC under Regulation 4(3) of the 2014 Tariff Regulations for approval of Commercial Operation Dates (CODs) and determination of transmission charges. CERC approved CODs under Regulation 4(3)(ii) but declined to condone time‑overrun attributable to Power Grid’s decision to synchronise commissioning with downstream works; it nonetheless granted Power Grid liberty to claim compensation (liquidated damages, IDC and incidental expenses) from the defaulting State utility for the period prior to the approved COD. MPPTCL challenged those CERC orders by writs before the Madhya Pradesh High Court on grounds that CERC had no power under the 2014 Regulations to levy compensatory transmission charges on it and that CERC had effectively rewritten contractual terms agreed in Standing Committee minutes. The High Court admitted the writs, relying on Whirlpool and related authorities permitting writ jurisdiction despite alternative remedies where jurisdictional excess, breach of natural justice or constitutionality was alleged.

On appeal, the Supreme Court analysed the relationship between Sections 79 and 178 and earlier precedents including PTC India Ltd. v. CERC, Energy Watchdog v. CERC, APTEL decisions and this Court’s later regulatory jurisprudence. The Court held that Section 79 conferred both regulatory and adjudicatory functions; while regulations under Section 178, if made, constrained Section 79 measures, absence of such regulations authorised CERC to address regulatory lacunae by orders directed to parties before it. The Court found the High Court erred in entertaining the writs and observed that the vires of regulations remained a judicial review matter but that appeals to APTEL were appropriate for orders passed under Section 79. The Supreme Court allowed the appeals, set aside the admission order, dismissed the writ petitions and recorded that it did not decide the substantive question of liability — leaving that issue open for APTEL.

Case Details: Case No.: CIVIL APPEAL NO. 6847 OF 2025; CIVIL APPEAL NO. 6848 OF 2025 (Arising from SLP (C) Nos. 7605 & 7607 of 2021) Case Title: Power Grid Corporation of India Limited v. Madhya Pradesh Power Transmission Company Limited & Ors. Appearances: For the Petitioner(s): Mr. M.G. Ramachandran, Senior Advocate (for Power Grid Corporation of India Ltd.) For the Respondent(s): Mr. Prashant Singh, Advocate General, Madhya Pradesh (for MPPTCL)