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Previously, the Reliance company challenged the MERC Regulations on the ground that the norms pertaining to station heat rate at its thermal station are stricter in comparison to the other similarly situated companies. The Company had approached the High Court under Article 226 challenging the MERC regulations, and the High Court was not satisfied with the contentions of the petitioner and delivered a judgement in the interest of the respondent. Thus, the petitioner approached the Supreme Court to set aside the High Court order. It is pertinent to note that the appeal is pending before the Appellate Tribunal for Electricity (APTEL). Advocate P Chidambaram, appearing on behalf of Reliance, contended that the High Court was not justified in its conclusion because of the pendency of the appeal before the APTEL, and the exercise of the jurisdiction conferred under Article 226 resulted in abuse of process.
In the case PTC India Limited vs. Central Electricity Regulatory Committee, the court observed that the tribunal could not look into the validity of the regulation, whereas it could deal with the issue of interpretation of the regulations by the MERC. Hence, the Hon’ble bench stated that the challenge to the validity of the regulation could only lie before the High Court.
The Court said that even though the principles in the above case came to light in the context of regulations framed under section 178 by the CERC, the logic applied to regulation 18 framed under section 181 of the State Electricity Regulatory Commissions. Thus, given the decision of the constitutional bench, the high court was not justified in its order
Insofar as the MERC regulations are concerned, the court observed that there had been compliance with the statutory procedures for the determination of the tariffs. All the relevant factors including the national tariff policy, suggestions of stakeholders, CPRI assessment were taken into consideration. Hence, there was no room for arbitrariness or unreasonableness for the court to interfere.
The court observed, “It would be rather formulaic for the Court to accept that merely because DTPS was placed at par in the immediately previous period (2006- 07) and the period immediately succeeding (2016-20), that this must necessarily be extrapolated to the intervening period governed by the MYT Regulations 2011. A body which is entrusted with the task of framing subordinate legislation has a range of options including policy options. If on an appraisal of all the guiding principles, it has chosen a particular line of logic or rationale, this Court ought not to interfere."
The Hon’ble Bench of the Supreme Court upheld the judgement of the High Court in this issue, thereby dismissing the challenge to regulation 44.2(d) of the Maharashtra Electricity Regulatory Commission (Multi-Year Tariff) Regulations, 2011. Nonetheless, the Court set aside the cost of 1 lakh imposed by the High Court and said that the writ petition challenging such regulations could lie only before the High Court.
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