Bihar State Power Transmission Company Limited vs Bihar Electricity Regulatory Commission on 9 October 2026

JUDGEMENT

PER HON’BLE MRS. SEEMA GUPTA, OFFICIATING CHAIRPERSON

1. The present appeal has been preferred by Bihar State Power Transmission Company Limited (“BSPTCL”), an intra-State transmission licensee against the Order dated 28.03.2025 (“Impugned Order”) passed by the Bihar Electricity Regulatory Commission ( hereinafter referred as “BERC”/“State Commission”) in Case No. 27 of 2024, whereby the State Commission, while approving the truing-up of tariff for FY 2023-24, the Annual Performance Review (“APR”) for FY 2024-25, and the Multi

Year Aggregate Revenue Requirement (“ARR”) for the Control Period FY 2025-26 to FY 2027-28, disallowed 25% of the allowable depreciation on the ground that the Appellant had not submitted a certified Fixed Asset Register (“FAR”) along with its tariff petition. Factual matrix of the Case:

2. In 2021, the Commission notified the BERC (Multi Year Transmission Tariff and SLDC Charges) Regulations, 2021 (“MYT Regulations, 2021”), applicable up to FY 2024-25, and on 30.10.2024 notified the BERC (Multi Year Transmission Tariff and SLDC Charges) Regulations 2024 (“MYT Regulations, 2024”), applicable from 01.04.2025 to FY 2027-28. Regulation 23, which governs depreciation, is, in material part, identically worded in both sets of Regulations.

3. The issue relating to preparation and submission of the FAR had arisen in the earlier tariff proceedings of the Appellant. In Case (Tariff) No. 20 of 2022, pertaining to FY 2021-22, the State Commission allowed depreciation of Rs. 322.14 crore, as against Rs. 364.78 crore claimed by the Appellant. Similarly, in the proceedings for FY 2022-23 (Case (Tariff) No. 25 of 2023, order dated 01.03.2024), the State Commission allowed depreciation of Rs. 403.03 crore as against Rs. 410.65 crore claimed, without any disallowance on account of the FAR, taking note of the Appellant's continuing efforts in preparation of FAR and directing that the FAR be submitted along with the petition for FY 2023-24.

4. On 15.11.2024, the Appellant filed the Subject Petition, being Case No. 27 of 2024, seeking, inter alia, (a) truing-up of tariff for FY 2023-24

under the MYT Regulations, 2021; (b) APR for FY 2024-25 under the MYT Regulations, 2021; and (c) approval of the Business Plan and MYT ARR for the Control Period FY 2025-26 to FY 2027-28 under the MYT Regulations, 2024.

5. By the Impugned Order dated 28.03.2025, the State Commission approved a computed depreciation of Rs. 475.90 crore for FY 2023-24 in truing-up, but held that, in the absence of the FAR despite repeated directions in earlier tariff orders, it was unable to ascertain whether depreciation claimed on an estimated asset value would be consistent with the applicable Regulations or with consumer interest, and accordingly allowed only 75% of the computed depreciation, i.e., Rs. 356.92 Crore, while directing that the normative repayment of loan continue to be reckoned with reference to the full computed figure of Rs. 475.90 Crore.

6. Aggrieved by the aforesaid order, the Appellant filed a Review Petition, being Case No. 17 of 2025, which was dismissed by the State Commission by its Order dated 17.06.2025. The Appellant has thereafter preferred the present Appeal on the issue of disallowance of depreciation for non-submission of FAR. SUBMISSIONS URGED ON BEHALF OF THE APPELLANT

7. The Appellant submits that the Regulation 23 of the MYT Regulations, nowhere authorizes the State Commission to reduce depreciation for want of the FAR. Further, the disallowance, i.e. 25% of the depreciation claim for FY 2023-24, APR of 2024-25 and ARR for 2025-26 to 2027-2028, in

substance, a penalty for non-submission of the FAR, imposed in a tariff- determination proceeding is ultra vires.

8. The Appellant placed reliance on this Tribunal’s judgement in Appeal No. 364 of 2024, “ JBVNL vs JSERC” dated 02.01.2025, wherein it was held that a Commission cannot reduce the ARR for non-compliance of regulations, such action being in excess of jurisdiction and tantamount to an impermissible penalty. Appellant also relied upon the Judgment dated 04.05.2009 passed by this Tribunal in Appeal No. 71 of 2007, “ MSEDCL vs MERC” wherein it was held that while Section 142 of the Act empowers the Commission to punish disobedience however such power cannot be exercised to convert the its tariff-fixation power into a penalty proceeding.

9. Regarding the reliance placed by State Commission on the Regulations 42 and 43 of the MYT Regulations, in its Reply dated 15.12.2025 to justify its power to deduct, learned counsel for the Appellant submits that Hon'ble Supreme Court judgment in “GUVNL v. Solar Semiconductor Power Company (India) Pvt. Ltd. & Anr., (2017) 16 SCC 498 has held that Commission cannot take recourse to exercise of a power, procedure for which is otherwise specifically provided under the Act. Accordingly, in the absence of any express powers, the State Commission cannot resort to inherent powers to deduct depreciation while determining Tariff.

10. It is further submitted that the Appellant has made bona fide and continuous efforts to complete the FAR. Preparation of FAR is being carried out under a centralization imitative of the Holding Company, Bihar State Power Holding Company pursuant to a tender inviting submission of

FAR under a project timeline ending 13.09.2027, of which 6 milestones already stand completed and 04 milestones are within their multi-month timelines running to September 2027 as per the Status Update dated 27.07.2026.

11. The Appellant further relied on the Commission's own orders dated 18.03.2026 in Case No. 52 of 2025, whereby it has not made deduction in the depreciation for FY 2024-25 true-up, expressly recording the progress made towards the FAR and approving full depreciation of Rs. 567.19 crore. Accordingly, Appellant has prayed that the deduction of Rs.119.98 crore towards depreciation for FY 2023-24 to be set aside and Appellant’s claim for full depreciation be allowed in terms of Regulation 23. SUBMISSIONS URGED ON BEHALF OF THE RESPONDENT

12. The Respondent submits that the Regulation 23(vii) of the MYT Regulations mandates that the licensee submit a certified copy of the Asset Register, with details of fully depreciated transmission lines, substation, transformers, disposed-of assets and amount received thereof in the tariff petition every year. The State Commission has been directing the Appellant to prepare and submit such Asset Register along with the tariff petitions filed every year however, the Appellant has failed to comply with these directions. In the absence of the Asset Register, the State Commission has no means of ascertaining the exact life of an asset post- capitalisation, correct computation of depreciation, Return on Equity, and interest and finance charges cannot otherwise be arrived at.

13. Learned Counsel for Respondent submits that during the hearing of the tariff petition for FY 2022-23, on a query, Appellant submitted that a tender had been floated for engagement of an agency for physical verification, identification, valuation and preparation of the Asset Register, but failed to provide any concrete answer regarding the steps being taken and, during the proceedings on the tariff petition for FY 2025-26, the Commission again observed that the Appellant had still not prepared or submitted the Asset Register despite repeated directions.

14. Accordingly, rather than to initiate proceedings under Section 142 of the Electricity Act, 2003 for imposition of penalty for continued non- compliance, the Commission took a lenient view, having regard to the fact that the defaulting entity is a public utility, preferred to only deduct a token amount of only 25% of the allowable depreciation. The disallowance is also supported by the Independent Auditor's Report on the Appellant's Annual Accounts for FY 2023-24, which records instances of non-compliance with Indian Accounting Standard (Ind AS) 16 on account of non- componentisation of fixed assets pending maintenance of the fixed Asset Register.

15. It is contended that in terms of Regulation 42 of the MYT Regulations (Right to vary terms and conditions) and Regulation 43 (Limitation of Power of Commission), State commission is empowered to take such steps as the commission deems fit and proper in given circumstances and interest of justice.

16. It is further submitted that in the event, the Appellant furnishes the Asset Register, the depreciation may be claimed on an actual basis and

any consequential adjustment can be undertaken by the State Commission at the time of true-up; the disallowance is accordingly not final in nature, and the present Appeal is misconceived and liable to be dismissed. DISCUSSION AND ANALYSIS

17. Heard Mr. Shri Venkatesh, learned senior counsel for the Appellant, Mr. Ravi Kishore learned Counsel for the Respondent, perused the written submissions filed by the parties, Impugned Order and other documents on record. The main issue in the present Appeal pertains to deduction of 25 % of the depreciation claim in the True up for FY 2023-24 because Fixed Asset Register is not submitted by the Appellant.

18. The methodology for calculation of Depreciation is specified in Regulation 23 and admittedly under point no vii of this Regulation, the licensee is required to submit the certified copy of the Asset Register with the list of fully depreciated transmission lines, substation, transformers etc. along with details of disposed off assets and amount received therefore with the Tariff Petitions.

19. There is no doubt that the fixed Asset register provides a detailed record of each asset, its description, cost, date of capitalization, location, and useful life and therefore FAR ensures that only genuine, in-service assets are considered for tariff computation and accordingly Depreciation is allowed only on capitalized assets forming part of the regulated business. It is an admitted position that Appellant has not prepared fixed Asset Register till date. It has been stated on behalf of the Appellant that Appellant came into existence as a distinct legal entity only with effect from

01.11.2012, pursuant to the Bihar State Electricity Reforms Transfer Scheme 2012, and in compliance of regulatory requirements Appellant has initiated action for preparation of Fixed asset Register, however earlier attempts of engaging an agency for the purpose were not successful on various counts. Upon a query from this Tribunal, Appellant vide its affidavit dated 13.03.2026, submitted that under a centralized initiative undertaken by Holding Company, i.e. Bihar State Power Holding Company, an agency has been appointed for preparing the FAR for which agreement was signed on 13.01.2026 with completion time line of 13.09.2027.

20. We take note that State Commission in its order dated 18.03.2026 in Case No 52 of 2025 for True up of FY 2024-25, acknowledging the progress made by Appellant towards preparation of Fixed Asset Register has not made any deductions in the approved depreciation. We also take note that though Regulation 23 vii requires a licensee to submit a certified copy of Asset Register, the Regulations do not provide that non-submission of FAR shall result in reduction of Depreciation. State Commission has contended that it has directed the Appellant to prepare and submit the FAR on several occasions, and Appellant failed to comply with these directions and therefore instead of initiating proceedings under Section 142 considering it to be public entity, it took a lenient view in imposing 25 % deduction from the approved depreciation.

21. Under Section 142 of Electricity Act, as extracted hereunder, there is provision for punishment for noncompliance of directions by the Appropriate Commission, a position also acknowledged by State Commission.

142. Punishment for non-compliance of directions by Appropriate Commission:– In case any complaint is filed before the Appropriate Commission by any person or if that Commission is satisfied that any person has contravened any of the provisions of this Act or the rules or regulations made thereunder, or any direction issued by the Commission, the Appropriate Commission may after giving such person an opportunity of being heard in the matter, by order in writing, direct that, without prejudice to any other penalty to which he may be liable under this Act, such person shall pay, by way of penalty, which shall not exceed one lakh rupees for each contravention and in case of a continuing failure with an additional penalty which may extend to six thousand rupees for every day during which the failure continues after contravention of the first such direction.

22. Section 142 of the Electricity Act, 2003 is designed to secure obedience to the lawful orders and directions of the Commission. The language employed therein is general and admits of no distinction between government-owned utilities and privately held licensees or generating companies. The obligation to comply is universal, and the consequence of non-compliance is uniform. The provision thus operates without demarcation, ensuring that all regulated entities, whether public or private, are equally amenable to the jurisdiction of the Commission and liable to penalty for breach of its orders.

23. Hon'ble Supreme Court in its judgment in “GUVNL v. Solar Semiconductor Power Company (India) Pvt. Ltd. & Anr., (2017) 16 SCC 498 has categorically held that commission, being a creature of statute cannot assume to itself any powers which are otherwise not conferred to it. Relevant paragraph is extracted hereunder:

“39. The Commission being a creature of statute cannot assume to itself any powers which are not otherwise conferred on it. In other words, under the guise of exercising its inherent power, as we have already noticed above, the Commission cannot take recourse to exercise of a power, procedure for which is otherwise specifically provided under the Act.”

24. The ratio decidendi is therefore that the Commission must act strictly within the four corners of the statute and regulations, and any assumption of powers not conferred would be contrary to the statute. In the present case, as already observed, the applicable Regulations do not specify consequences for non-submission of the FAR. The State Commission, instead of invoking the penal provision available under the Electricity Act, chose to make an ad hoc deduction of 25% from the approved depreciation on account of non-submission of FAR. Such deduction is not legally sustainable, being dehors the statutory framework, and stands vitiated as being arbitrary.

25. The State Commission has sought to justify the deduction in depreciation by placing reliance upon Regulation 42 (Right to Vary Terms and Conditions) and Regulation 43 (Limitation of Power of Commission) of the Bihar Electricity Regulatory Commission (Multi Year Transmission Tariff and SLDC Charges) Regulations. The relevant provisions are extracted hereunder for ready reference:

42. Right to vary terms and conditions---- The terms and conditions for determination of tariff specified in these regulations are in the nature of general framework on the basis of which the tariff shall be determined. The Commission reserves its right to vary these terms and conditions, as and when deems fit.

43. Limitation of Power of Commission---Nothing in these regulations shall be deemed to limit the powers of the Commission to deal with any

manner or exercise any power under the relevant Acts for which no regulons have been made/framed and to make such orders as it may consider appropriate to meet the ends of justice in any case.

26. Regulation 42 clarifies that the tariff regulations are a general framework and that the Commission retains discretion to vary or adapt them. However, such variation must be exercised judicially and with recorded reasons, not arbitrarily. It is essentially a saving clause to allow flexibility in unforeseen circumstances. Regulations 43 preserves the plenary statutory powers of the Commission under the parent Act. In our view, saving clauses embodied in Regulations 42 and 43 are enabling provisions, intended to preserve flexibility and inherent jurisdiction of the Commission. They do not, however, confer authority to alter substantive tariff elements in disregard of the methodology prescribed under the Regulations. Deduction of 25% depreciation for want of a Fixed Asset Register, in absence of any express stipulation in the tariff framework, would amount to an arbitrary variation and cannot be justified under these Regulations. The State Commission can insist on proper asset verification, but any disallowance must be anchored in the governing norms.

27. It is apposite to refer to the judgements of this Tribunal, as also relied upon by the Appellant. This Tribunal in its Judgment dated 04.05.2009 in Appeal No. 71 of 2007, “ MSEDCL vs MERC” has held that the disallowance of some cost on account of non adherence of load shedding protocol and violation of commissions order to be legally unsustainable. It was held that while Section 142 of the Act empowers the Commission to punish disobedience however such power cannot be exercised to convert the its tariff-fixation power into a penalty proceeding. It has been observed that:

“ The Electricity Act has sufficient provision for handling the situation of disobedience. As already mentioned above, section 142, gives the Commission, power for punishment in such a situation. The Commission is a creation of the statute. Even if such power given is considered by the Commission to be insufficient, the Commission cannot convert its power of tariff fixation given by section 61 and 62 of the Electricity Act 2003 into a proceeding for imposing penalty.”

28. Similarly, this Tribunal dated 02.01.2025, in Appeal No. 364 of 2024, (“JBVNL vs JSERC”), referring to the above judgement held that Respondent commission has exceeded its jurisdiction in imposing a penalty of reduction of 2 % of ARR for the failure of Appellant to comply with their Solar Power RP obligations. Further, this Tribunal in its judgement in APPEAL No. 98 OF 2021 & batch dated 28.11.2025 has set aside the 25 % disallowance in opening Gross Block as penalty for non – compliance of Regulations, by referring to earlier judgements of this Tribunal, being arbitrary.

29. Accordingly, in light of the law declared in the aforesaid judgments and the deliberations held above, it is evident that the State Commission has exceeded its jurisdiction in imposing a penalty by way of reduction in the approved depreciation in the true-up of FY 2022-23 for the Appellant, solely on account of failure to submit the Fixed Asset Register. Such action, being dehors the statutory framework, cannot be sustained.

30. In view of the above deliberations, we set aside the impugned order to the extent that it disallows 25% of the depreciation in the true-up for FY 2022-23. The matter is remanded to the State Commission to pass an order afresh, restoring the deductions made in depreciation for FY

2022-23, and to ensure that the consequential adjustments are duly carried out. The State Commission is directed to pass the consequential order expeditiously, preferably within two months of receipt of this judgment, so that regulatory certainty is maintained and the Appellant is not prejudiced by undue delay.

31. The present Appeal, along with pending interlocutory applications, if any, stands disposed of in the above terms. PRONOUNCED IN THE OPEN COURT ON THIS 09th DAY OF OCTOBER, 2026. (Virender Bhat) Judicial Member (Seema Gupta) Officiating Chairperson REPORTABLE / NON-REPORTABLE _________________________________________________ pr/ak