M/s JSW HYDRO ENERGY LTD. vs SECRETARY, CENTRAL ELECTRICITY REGULATORY COMMISSION & Ors on 18 September 2026

JUDGEMENT

PER HON’BLE MRS. SEEMA GUPTA, OFFICIATING CHAIRPERSON

1. The present Appeal has been preferred by JSW Hydro Energy Ltd, a generating company, against the Order dated 17.03.2022 passed by the Central Electricity Regulatory Commission in Petition No. 391/GT/2019, whereby the Central Commission, while undertaking the truing-up of tariff for the tariff period 2014-19 and determination of tariff for the period 2019- 24 in respect of the Karcham Wangtoo Hydro Electric Project (1000 MW), disallowed the Appellant’s claim towards Interest During Construction (“IDC”) on the excess equity infused during construction of the Project. Description of parties

2. The Appellant- M/s JSW Hydro Energy Ltd. is a generating company owning, operating and maintaining the Karcham Wangtoo Hydro Electric Project (1000 MW), a run-of-the-river hydro generating station with pondage, situated in the District of Kinnaur, Himachal Pradesh. Ravi Nair Shikha Sood Reeha Singh for Res. 5 to 7 Swapna Seshadri Anand K. Ganesan Amal Nair Sugandh Khanna for Res. 8

3. Respondent No. 1 is the Central Electricity Regulatory Commission (hereinafter referred as “Central Commission”/“CERC”), discharging statutory functions under the Electricity Act, 2003. Respondent No. 2, the PTC India Ltd. is an inter-State trading licensee.

4. Respondent Nos. 3 and 4 are Haryana Power Generation Corporation and Uttar Pradesh Power Corporation Limited respectively. Respondent nos. 5-7 are the distribution licensees for the State of Rajasthan. Respondent No 8 is the Punjab State Corporation Limited and Respondent No 9 and 10 are Govt of Himachal Pradesh and Himachal Pradesh Electricity Board respectively. Brief facts of the case

5. The present Appeal arises out of the tariff proceedings concerning the Karcham Wangtoo Hydro Electric Project (1000 MW) (“Project”). A Power Purchase Agreement was executed on 21.03.2006 (“PPA”) for sale of 704 MW capacity from the Project for a period of 35 years between Appellant and Respondent No 2-PTC.

6. On 26.10.2019, Appellant filed Petition No. 391/GT/2019 before the Central Electricity Regulatory Commission seeking truing-up of tariff for the period 2014-19 under Regulation 8(1) of the Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2014 (“2014 Tariff Regulations”), and determination of tariff for the period 2019-24 under the Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2019 (“2019 Tariff Regulations”). In the said

proceedings, the Appellant, inter alia, claimed Interest During Construction (“IDC”) on the equity deployed during construction of the Project.

7. The Central Commission, vide the Impugned Order dated 17.03.2022, disallowed the Appellant’s claim towards IDC on the excess equity deployed during construction on the ground that the Appellant had not specifically raised the said claim in Petition No. 434/GT/2014, which was filed for determination of tariff for the period FY 2014–19 and further held that the claim could not be introduced and considered in the subsequent truing-up proceedings in Petition No. 391/GT/2019.

8. Aggrieved by this disallowance and its consequential impact on the tariff of the Project, the Appellant has preferred the present Appeal. SUBMISSION URGED ON BEHALF OF THE APPELLANT

9. As per Regulation 9(2) read with Regulation 26(1) of the CERC Tariff Regulations, 2014, equity in excess of 30% is to be treated as normative loan, and the generator is entitled to normative interest during the construction period, which then forms part of the capital cost. This principle has been accepted by this Tribunal in its judgment dated 28.02.2025 passed in Appeal No. 212 of 2017, titled NTPC Tamil Nadu Energy Company Ltd. v. AP Transmission Corp. Ltd. & Ors.

10. In the present case, CERC, in its Order dated 30.03.2017, duly noted that the Petitioner had deployed more than 30% equity, as reflected in Form 14 and Form 14-A submitted by the Appellant as part of its Tariff Application for FY 2014–19, however, CERC omitted to consider and implement the

provisions of Regulation 9(2) at this stage. CERC, in its tariff order dated 30.03.2017, had specifically made the capital cost allowed along with IDC subject to revision at the time of truing-up, based on the balance sheets, allocation of IDC and reconciliation of the debt position as per Form 14 with the books of accounts for each year, at the time of true-up in terms of Regulation 8 of the 2014 Tariff Regulations.

11. Accordingly, Appellant filed Petition No. 391/GT/2019 for truing-up of tariff for FY 2014–19 and determination of tariff for FY 2019–24, wherein the omission to treat the excess equity in terms of Regulation 9(2) was specifically pointed out. However, by the Impugned Order dated 17.03.2022, CERC declined to consider the claim for normative IDC on the ground that it had not been claimed in the original tariff petition and that the separate forms for normative IDC had not been submitted. Appellant contended that the said finding cannot be sustained, as Forms 14 and 14- A filed with Petition No. 434/GT/2014 clearly disclosed the deployment of excess equity during construction, which position was also specifically noticed by the CERC in its tariff order dated 30.03.2017. Thus, the relevant factual material was already available on record before the Commission.

12. Appellant further submits that Regulation 7(4) of the 2014 Tariff Regulations, requires an application for tariff determination to be filed in the prescribed form under Annexure-I, comprising the prescribed checklist, Forms 1 to 16 and other specified documents, all of which were admittedly filed before the CERC in Petition No. 434/GT/2014. Importantly, Form-5B under the 2014 Tariff Regulations did not contain any line item for “notional IDC”; such entry was introduced only in Form 5B under the 2019 Tariff Regulations. Thus, there was no statutory form in which the Appellant could

have claimed normative IDC. This Tribunal, in its judgment dated 04.05.2026 in Appeal No. 430 of 2019, M/s Everest Power Private Ltd. v. Punjab State Electricity Regulatory Commission, has held that the tariff proceedings are not in the nature of adversarial proceeding. Such proceedings are inquisitorial in nature, and while conducting scrutiny, the Commission requisitions data and raises queries. The Generator cannot anticipate with precision what information/documents would the Commission require for prudence-check. No clarification/query/data gap in relation to normative IDC on excess equity was sought for/raised in the present case.

13. It is submitted that, since the fact that equity deployment during the construction period exceeded 30% was indubitably available before the CERC in the first round of proceedings, the CERC, being responsible for implementing the applicable Regulations, was bound to give effect to the treatment prescribed thereunder. The present case is neither one where the Appellant seeks to alter the methodology adopted in the original tariff order nor one where it seeks a de novo reconsideration of an issue consciously decided against it; rather, the grievance is that a mandatory regulatory provision was not applied at all, despite the relevant facts being on record. Such inadvertent omission cannot be permitted to perpetuate, and where an error has occurred and there are no reasons for non-implementation of the applicable Regulations, the error is required to be corrected and that such correction can take place at any stage, as recognised in Grindlays Bank Ltd. v. Central Government Industrial Tribunal & Ors., 1980 (Supp) SCC 420; Laxmi Ram Bhuyan v. Hari Prasad, (2003) 1 SCC 197; U.P. Power Corpn. Ltd. v. NTPC Ltd., (2009) 6 SCC 235; MPPGCL v. MPERC, 2011 SCC OnLine APTEL 63 and judgment dated 14.08.2012

in Appeal No. 89 of 2011, Chhattisgarh State Power Distribution Co. Ltd. v. Chhattisgarh State Power Generation Co. Ltd. & Ors. Failure to correct the said omission would result in continuing short-recovery to the Appellant.

14. It is submitted that the CERC itself, while deciding Petition No. 309/GT/2015, Pragati Power Corp. Ltd. v. BSES Yamuna Power Ltd., vide Order dated 19.11.2019, accepted that it has the power to correct inadvertent errors earlier made in the determination of capital cost and, accordingly, allowed at the truing-up stage claims which had inadvertently been left out earlier; a similar view was taken by CERC in NTPC v. Madhya Pradesh Power Management Company Ltd., 2014 SCC OnLine CERC 116 (In the present case also, while undertaking truing-up, the CERC corrected the inadvertent double deduction of interest earned from IDC/IEDC in the computation of capital cost. It is not understood how then it claims that errors cannot be corrected in true-up proceedings when it comes to consideration of IDC on excess equity infused, as per the Regulations.

15. The Respondents’ reliance on BSES Rajdhani Power Ltd., (2023) 4 SCC 788, is misplaced, as the facts and principle therein are materially distinguishable. In this case, DERC had initially allowed certain claims in the tariff order and subsequently disallowed or altered the same in the truing-up order, in these circumstances, the Hon’ble Supreme Court held that the methodology consciously adopted in the tariff order cannot be altered or reconsidered de novo at the truing-up stage. The present case, however, involves no such change of methodology. The CERC did not consciously adopt any methodology under which excess equity would be

denied the regulatory treatment prescribed under Regulation 9(2); rather, said Regulation was simply not implemented at the initial stage, without assigning any reasons, despite the fact that the deployment of excess equity was evident from the Forms filed by the Appellant.

16. This distinction has also been recognised by this Tribunal in its judgment dated 11.09.2025 in Appeal Nos. 268 of 2016 and batch, “Damodar Valley Corporation v. West Bengal State Electricity Distribution Company Ltd. & Ors. wherein the Tribunal limited the application of BSES Rajdhani to cases involving a change or alteration of the rules or methodology applied at the initial tariff determination, the present case does not involve any such alteration. Likewise, in its judgment dated 18.05.2026 in Appeal No. 213 of 2018, Tata Power Delhi Distribution Ltd. this Tribunal declined to apply the BSES Rajdhani principle where there was an omission to give effect to the applicable Regulations at the tariff stage. The distinction is directly applicable to the present case.

17. Respondent’s objection to the carrying cost is contrary to the regulatory framework and deserves to be rejected. The Appellant has suffered additional carrying cost in terms of Regulation 8 (11 & 13) for the period 2014-19 and 2019-24 on the true up surplus, on account of this inadvertent omission of the CERC to correct the capital cost and the tariff payable for the said period. The Appellant is, therefore, entitled to the amounts due under the applicable Regulations, together with the consequential carrying cost.

SUBMISSIONS URGED ON BEHALF OF RESPONDENT NO. 4,5,6,7,8

18. The issue that the equity infused was in excess of 30% and, therefore, the excess equity was required to be treated as loan as contended by Appellant, had not been raised by them in Petition No. 434/GT/2014 filed for determination of tariff of the Hydro Power Station for the period 2014- 19, accordingly, the Central Commission has rightly observed that since the IDC on the excess equity had neither been claimed by the Appellant nor granted in the order dated 30.03.2017 passed in Petition No. 434/GT/2014, the same could not be introduced or considered at the stage of truing up.

19. It is submitted that as per the law laid down by the Hon’ble Supreme Court in U.P. Power Corporation Ltd. v. NTPC, reported in (2009) 6 SCC 235, any claim relating to tariff is required to be raised within the relevant tariff period and cannot be allowed subsequently when everybody has arranged its affairs. The consumers at that time may not be the consumer afterwards.

20. It is well settled that the true-up proceedings are only for consideration of actual expenditure as against the estimated expenditure and are not meant for consideration or re-consideration of new issues which were not raised earlier ; truing-up of tariff is not to rectify the lacunae or gaps in the original petition which resulted in disallowance of costs, as the purpose of true-up is to ascertain whether the expenses/expenditure envisaged at the time of tariff determination require any adjustment after completion of the tariff period. There is no justification for why the issue in question was not raised before, and a de-novo consideration of such issues cannot be

undertaken at the stage of true-up and placed reliance on the judgment of the Hon’ble Supreme Court in “BSES Rajdhani Power Ltd. v. Delhi Electricity Regulatory Commission”, (2023) 4 SCC 788 the judgment dated 28.05.2022 passed by this Tribunal in Appeal No. 284 of 2015 & batch, “Indraprastha Power Generation Company Limited v. Delhi Electricity Regulatory Commission and others”); the judgment dated 04.12.2007 passed by this Tribunal in Appeal No. 100 of 2007, “Karnataka Power Transmission Corporation Limited v. Karnataka Electricity Regulatory Commission”; and the judgment dated 01.05.2007 passed by this Tribunal in Appeal No. 265 of 2006 & batch, “North Delhi Power Limited v. Delhi Electricity Regulatory Commission.”

21. It is contended that the claim of the Appellant is also contrary to the principles enshrined in Order II Rule 2 of the Code of Civil Procedure, 1908, which provides that the whole of the claim arising out of the same cause of action is required to be included in one suit and that a plaintiff cannot subsequently claim a relief or portion of the claim which was omitted or relinquished, except with the leave of the Court. Reliance placed on the judgment of the Hon’ble Supreme Court in Commissioner of Income Tax v. T.P. Kumaran, (1996) 10 SCC 561 the judgment dated 25.10.2018 passed by this Tribunal in Appeal No. 185 of 2015, Kalani Industries Pvt. Ltd. v. Rajasthan Electricity Regulatory Commission and others and the judgment dated 18.05.2011 passed by this Hon’ble Tribunal in Appeal No. 172 of 2010, Bihar Steel Manufacturers Association v. Bihar Electricity Regulatory Commission and others.).

22. Regarding the contention of the Appellant that the Tariff Filing Forms, namely, Form 14 and 14A, were filed before the Central Commission,

however, the implementation of Regulation 9(2)(b)(i) of the Tariff Regulations, 2014 was inadvertently left out, it is submitted that, if such was the case, Appellant ought to have filed a Review/Appeal challenging the Order dated 30.03.2017 passed in Petition No. 434/GT/2014. Having chosen not to challenge the said issue by way of Review/Appeal at the relevant time, the Appellant was rightly disallowed from raising such a claim at the stage of true-up. It is further submitted that the Form 14 submitted by the Appellant at the time of initial tariff determination remained unchanged throughout the tariff period 2014–19, as the same was never modified, altered or revised by the Central Commission in any subsequent proceedings/orders during the said period. Thus, the Form 14, continued to remain the same throughout the Tariff Regulations, 2014–19 period. The Appellant cannot, after the passing of more than four years, belatedly claim IDC on excess equity on the ground that the said claim was inadvertently left out. It is a general principle of law that law protects only the diligent and that equity aids the vigilant and not the indolent—“Vigilantibus Non Dormientibus Jura Subveniunt”. Reference in this regard may be placed on the judgment of the Hon’ble Supreme Court in Delhi Airtech Services (P) Ltd. v. State of U.P., (2011) 9 SCC 354 Hameed Joharan v. Abdul Salam, (2001) 7 SCC 573 and Sagufa Ahmed v. Upper Assam Plywood Products (P) Ltd., (2021) 2 SCC 317

23. The reliance placed by the Appellant on the CERC order dated 19.11.2019 in Petition No. 309/GT/2015 in “Pragati Power Corporation Limited v. BSES Yamuna & Others” is misplaced, as the issue in Pragati Power (supra) was not in the nature of a new issue or principle that had not been raised at the time of the main Tariff Petition, but rather concerned correction of arithmetical or inadvertent errors made earlier, without any

change in the methodology or principles adopted. Likewise the reliance placed by the Appellant on the judgment of this Tribunal dated 11.09.2025 in Appeal No. 268 of 2016 (Damodar Valley Corporation) and the judgment dated 18.05.2026 in Appeal No. 213 of 2018 (Tata Power Delhi Distribution Ltd) is also misplaced. In Damodar Valley Corporation, the issues related to Pension & Gratuity liability and additional O&M expenses, including subsidiary activities and Ash Evacuation, arose in the context of DVC’s special statutory framework and, in particular, involved claims which had been dealt with in earlier tariff/true-up proceedings. This Tribunal specifically found, in relation to the Ash Evacuation issue, that the Commission had not changed the methodology or norms, but had only capped the allowance owing to an abnormal increase in expenditure. Likewise, in Tata Power Delhi Distribution Ltd., the issue was confined to water charges pertaining to a period prior to the Appellant’s takeover, which had not been included in the base-year O&M computation because the charges had not then been paid, but were subsequently paid under an Amnesty Scheme and were sought as a one-time pass-through pursuant to the statutory liability under Rule 8(3) of the Transfer Scheme Rules; this Tribunal expressly recorded that the case did not involve any alteration of the methodology at the stage of true-up.

24. Present case stands on an entirely different factual footing, since the Appellant’s claim for IDC on excess equity was neither claimed nor considered in the original tariff determination in Petition No. 434/GT/2014, and no subsequent payment, statutory liability, exceptional event or one- time pass-through is involved; the Appellant is, in substance, seeking to introduce an altogether new claim at the stage of true-up, notwithstanding that the original tariff determination had attained finality. In any event and

without prejudice to the above, it is submitted that there can be no grant of carrying cost in terms of Regulation 8(13) of the Tariff Regulations, 2014, considering that the delay was solely attributable to JSW Hydro. This Tribunal has consistently held that where the delay in raising or filing a Petition is attributable to the generating company itself, carrying cost cannot be granted for such period as held in Maharashtra State Electricity Distribution Co. Ltd. v. MERC, Order dated 19.09.2007 in Appeal No. 70 of 2007 Torrent Power Ltd. v. GERC, Order dated 30.05.2014 in Appeal No. 147 of 2013 Paschim Gujarat Vij Company Ltd. & Ors. v. Gujarat Electricity Regulatory Commission, Order dated 04.12.2014 in Appeal No. 45 of 2014 Kanwar Singh & Ors. v. Union of India, 2005 (82) DRJ 397

25. Reliance placed by the Appellant on the decision dated 04.05.2026 passed in Appeal Nos. 430 of 2019 and 416 of 2022 is not relevant to the facts of the present case and is, therefore, distinguishable. In the said decision, the issue involved was whether certain EPC contracts ought to have been requisitioned by the Commission in a tariff proceeding; the claim therein had otherwise been raised, and the only issue was with respect to the underlying documents which the Commission ought to have requisitioned. However, in the present case, the claim itself was not made at the relevant stage and was sought to be introduced only at the stage of true-up. The contention of the Appellant that it had indeed placed on record the actual details of the equity infused by it, but that the same were not considered by the Central Commission, is even more untenable, as such contention would necessarily imply that a claim had been raised and rejected, and that such rejection was thereafter accepted by the Appellant without being challenged.

DISCUSSION AND ANALYSIS

26. Heard Mr. Basava Prabhu S. Patil, Learned Senior Counsel appearing on behalf of Appellant, Mr. Pradeep Mishra, Learned Counsel for the Respondent No. 4, Ms. Poorva Saigal, Learned Counsel for the Respondent No. 5 to 7 and Ms. Swapna Seshadri, Learned Counsel for the Respondent No. 8, perused written submissions filed by the parties, and other documents on record.

27. The main issue in the present Appeal pertains to the claim of Appellant for the IDC on the equity deployed more than 30 % during construction of the Project in the petition filed seeking truing-up of tariff for the period 2014-19 and determination of tariff for the period 2019-24. It is the case of the Appellant that actual equity deployed, which was more than the 30 % of project Cost, was submitted in the Tariff forms filed along with Petition for determination of Tariff for 2014-19 period, however IDC on excess equity was not provided in the said Tariff order dated 30.03.2017 and since same is applicable in terms of the extent Regulation, CERC is not justified in disallowing the same in the Impugned Order. Per contra, Respondents have mainly contended that the Appellant failed to claim Notional IDC at the time of initial Tariff determination and in case the notional IDC was not given on the additional equity deployed in the Tariff Order dated 30.03.2017, the right course would have been to either seek review of the order and an Appeal against the said order. Having failed to exercise such right, the tariff determination has attained finality and methodology for IDC determination cannot be changed at the True-up stage.

28. We take note that the Impugned Order records the claim of Appellant for interest on excess equity to be treated as Normative IDC in Paragraph 48 to 49 and consideration for disallowing such claim is noted in Paragraph 50 of Impugned Order, which is extracted as under: “The matter has been examined. Petition No.252/GT/2013 filed by the Petitioner for fixation of provisional tariff of the generating station for the period from 26.5.2011 to 31.3.2014 was disposed of by the Commission vide order dated 9.10.2014 with liberty to the Petitioner to file fresh petition for determination of tariff in respect of this generating station for the 2014-19 tariff period. Accordingly, in Petition No. 434/GT/2014 filed by the Petitioner for the 2014-19 tariff period, the Commission vide its order dated 30.3.2017 determined the capital cost as on COD of the generating station and for the 2014-19 tariff period. It is pertinent to mention that, in the said petition, the Petitioner had not claimed any normative IDC. Also, no additional submissions/ forms with regard to normative IDC were submitted nor any oral submissions were made by the Petitioner in this connection. Accordingly, no IDC was considered/ allowed by the Commission in its order dated 30.3.2017 in Petition No.434/GT/2014. In this background, the claim of the Petitioner for normative IDC, in the present petition, cannot be considered, as the same is for truing up of the expenditure already incurred as against the projected expenditure allowed earlier. In our considered view, new issues/ claims (i.e. claims prior to COD) which were not raised earlier, by the Petitioner, cannot be considered in the present petition. Accordingly, we are not inclined to allow the IDC on excess equity, as claimed by the Petitioner.”

29. In support of its claim of additional IDC at True up stage, the Appellant has contended that CERC, in its tariff order dated 30.03.2017, had allowed the capital cost along with IDC, subject to revision at the time of truing-up, based on the balance sheet as on COD of each unit, allocation of IDC and reconciliation of the debt position as per Form 14 with the books of accounts for each year, at the time of true-up in terms of Regulation 8 of the 2014 Tariff Regulations. Accordingly, notional IDC should have been allowed by the Central Commission at the True up stage.

30. We take note that in the Tariff Order dated 30.03.2017, Interest During Construction ( IDC) has been deliberated in Paragraph 78 to 82 and it has been noted that based on the information supplied by Appellant, the total interest works out to about Rs108399.12 Crore, however the Petitioner, i.e. Appellant herein, has not furnished the basis of allocation of IDC for each unit and in the absence of this information, IDC has been allowed based on the amount of IDC as on 13.09.2011 claimed by them in form 5 B and IDC was restricted to Rs. 92829.00 Crore as on 13.09.2011. Further, CERC in paragraph 113 of the said order takes note that as per debt raised and equity infused as per Form 14 and actual expenditure claimed, the debt equity ratio worked out as 69.73%: 30.27, however, considered the debt: equity ratio of 70:30 for the purpose of tariff determination and proceed to work out interest on loan on the Gross Normative Loan for the year 2014- 15 to FY 2018-19.

31. During the hearing of the Appeal, Appellant has produced a sample Form 5B under “2014 Tariff Regulations” and the “2019 Tariff Regulations” to demonstrate that there was no provision of Notional IDC in the Form 5B as per “2014 Tariff Regulation”, and same was introduced later under “2019 Tariff Regulations”. Perusal of the Form reveal that a line item for Notional IDC was introduced in the relevant Form under the “2019 Tariff Regulation”, presumably for more clarity and such a line item was not there in relevant Form under “2014 Tariff Regulations’, while there was provision for Notional IDC in “2014 Tariff Regulation” as well, relevant Regulation 9 (2) of “2014 Tariff Regulation” is extracted hereunder : “9. Capital Cost ……….

(2) The Capital Cost of a new project shall include the following:

(a) the expenditure incurred or projected to be incurred up to the date of commercial operation of the project; (b) Interest during construction and financing charges, on the loans (i) being equal to 70% of the funds deployed, in the event of the actual equity in excess of 30% of the funds deployed, by treating the excess equity as normative loan, or (ii) being equal to the actual amount of loan in the event of the actual equity less than 30% of the funds deployed;”

32. From the above, it is evident that in terms of Statutory provisions, under the Capital Cost Determination, IDC is allowed to be included, which not only includes interest on actual loan drawn but the Notional IDC on the equity deployed more than 30 % during the construction phase. This Tribunal, in its judgement in “Powerlinks Transmission Limited v. CERC”, in Appeal No. 231 of 2017, has also examined the scheme of the “2014 Tariff Regulations” in relation to normative IDC and recognized that, where the regulatory conditions are satisfied, the normative debt-equity framework may give rise to entitlement to Normative IDC and whatever be the types of funds it is never free of cost. In the present case, though the information about the equity deployed was provided during the initial tariff determination however, separate Notional IDC was neither claimed nor provided in the tariff Order dated 30.03.2017. Thus, in terms of Statutory provisions, there is entitlement for the Notional IDC on the equity deployed more than 30 % year on year during the construction stage of the project, to be included as part of capital cost.

33. The Appellant has placed reliance on the Judgement of this Tribunal dated 04.05.2026 passed in Appeal No. 430 of 2019, titled “M/s Everest Power Private Ltd. v. Punjab State Electricity Regulatory Commission”

to contend that tariff proceedings are not adversarial proceedings in the nature of civil trials, but are inquisitorial in nature. In such proceedings, the Regulatory Commission conducts scrutiny by requisitioning relevant data, documents and clarifications and by raising queries, as may be considered necessary for the purpose of prudence-check. It has been further contended that the generating company is required to place before the Commission the statutory formats, audited accounts and such supporting documents as are considered necessary to substantiate the costs claimed, while the Commission, in exercise of its inquisitorial jurisdiction, may call for further information or documents wherever required. In the present case, no clarification, query or data gap was raised by the Commission in relation to the claim of normative IDC on excess equity. Accordingly, the contention that the Appellant ought to have produced or claimed the said amount at the original tariff stage, without any query or requirement having been raised by the Commission in that regard, proceeds on an assumption that the Appellant could have anticipated in advance the precise requirement of the Commission, which cannot fairly be expected in proceedings of such nature.

34. Though we recognize the entitlement of Notional IDC in terms of statutory scheme, we are not much impressed with such submissions of Appellant, as subsequent to filing of Tariff Petition in which Order dated 30.03.2017, several details were submitted by the Appellant and separate claim could have been made by the Appellant. It is also an admitted fact that, when the notional IDC was not granted and IDC was restricted considering the IDC actually claimed by the Appellant, in the Tariff Order dated 30.03.2017, Appellant had neither invoked the review jurisdiction of the Central Commission nor preferred an appeal before this Tribunal.

35. Having observed as above, we, also take cognizance of the fact that the Capital cost allowed along with IDC in the tariff order dated 30.03.2017 was subject to true up as noted in paragraph 82 of the said Order, as extracted hereunder: “The capital cost allowed along with the IDC as above is subject to revision at the time of truing up exercise based on the balance sheet as on COD of each unit and basis of IDC allocation, to be furnished by the petitioner. The petitioner is also directed to furnish the reconciliation of the debt position as per Form-14 with the books of accounts for each year at the time of truing -up in terms of the Regulation 8 of the 2014 Tariff Regulations.”

36. Therefore, the primary issue which arise for consideration is “Whether the Appellant is barred from claiming Notional IDC at True Up stage having omitted to claim the same at the tariff determination stage and is otherwise permitted under Regulatory Scheme”. Both the parties have relied upon various judgement to advance their case, which are deliberated in following paragraphs.

37. The Appellant has placed reliance on the judgment of this Tribunal dated 28.02.2025 in Appeal No. 212 of 2017, “NTPC Tamil Nadu Energy Company Ltd. v. AP Transmission Corporation Ltd. & Ors.” In this Judgement, this Tribunal held that it would be unjust and contrary to the applicable Regulations to deny notional IDC merely because the Appellant had not raised any actual loan and had instead utilised funds from its own resources for construction of the project. The Tribunal observed that every form of funding, including deployment of the shareholders’ own funds, carries a cost and, therefore, the absence of an actual loan cannot by itself justify denial of normative IDC. The Tribunal further held that the

Commission ought to determine the appropriate rate of interest for calculating notional IDC rather than reject the claim altogether.

38. There is no dispute with regard to the contention, that every form of funding carries a cost and in the present case, there is provision of notional IDC, in the applicable Regulations, however issue involved in the present Appeal is different; i.e., whether claim of Notional IDC, not advanced at the Tariff determination stage, can be allowed at the True up stage and hence ratio decided in this judgement has no direct application on the issue at hand.

39. The Reliance has also been placed by the Appellant on Grindlays Bank Ltd. v. Central Government Industrial Tribunal & Ors”., 1980 Supp SCC 420 where it is held that the Tribunal has the power to deal with the application made for setting aside the ex-parte award and pass the suitable orders. Further it was observed that when a review is sought due to a procedural defect, the inadvertent error committed by the Tribunal must be corrected ex debito justitiae to prevent the abuse of its process, and such power inheres in every court or Tribunal. However, facts of the present case is different as no review of the earlier order of the commission was sought by the Appellant. Further in the judgement “Laxmi Ram Bhuyan v. Hari Prasad, (2003) 1 SCC 197” reliance placed by the Appellant; rectification was sought so as to specify the extent and manner of reliefs allowed in the judgment and the decree shall be in conformity with the judgment. The facts of Laxmi Ram does not support the Appellant case directly as the Commission in the earlier tariff determination order has not at all dealt with issue of Notional IDC on merits.

40. Both sides have placed reliance on the judgment of the Hon’ble Supreme Court in U.P. Power Corporation Ltd. v. NTPC Ltd., (2009) 6 SCC 235, though for different propositions drawn from different parts of that judgment. The Appellant relies on paragraphs 34 to 38 and 40 for the proposition that an error resulting in the non-implementation of a binding Regulation can be corrected at any stage. Respondents relies on paragraphs 57 to 65 and 68 for the proposition that a claim for tariff must be given effect to within the control period to which it relates, and cannot be introduced or revised retrospectively once that period has closed and parties i.e., generators, licensees and consumers have arranged their affairs on the tariff as determined, since, as observed by the Hon’ble Supreme Court, the body of consumers at one point in time may not be the body of consumers at a later point in time. We do not read this judgment as embodying two conflicting principles that the two sets of paragraphs address two different situations; i.e. correction of an error within an issue or claim already made before the adjudicating authority, as opposed to introduction of an unclaimed head of cost after the relevant tariff period has run its course and been given effect to in billing and recovery. In the present case, Claim of Notional IDC has been made at the True up stage in the same control period itself, and IDC so worked out in the original tariff determination was itself subject to True up and therefore, reliance placed by Respondents on this Judgement is of no avail.

41. The Appellant has also referred the judgements of the Central Commission in “Pragati Power Corporation Ltd. vs BSES Yamuna and “NTPC Ltd. v. Madhya Pradesh Power Management Company Ltd” to emphasis that inadvertent omission in an earlier tariff proceeding does not, in an appropriate case, preclude consideration and correction of the omitted

component at a subsequent stage, where the same is otherwise allowable under the applicable Regulations and duly substantiated by the record and the claims have been entertained in subsequent stage, being missed out in earlier determination.

42. In considering the judicial hierarchy under the Electricity Act, 2003, it is manifest that this Tribunal is not bound by the pronouncements of the Central Electricity Regulatory Commission (CERC). The Commission, though vested with adjudicatory powers under Section 79 of the Act, functions as a statutory authority of first instance, and its orders bind the parties thereto until set aside. This Tribunal, while not bound by the determinations of the Central Commission, takes cognizance of the fact that the Commission, in exercise of its statutory powers, has permitted the claim at the stage of truing-up, and such allowance has not been demonstrated to be legally unsustainable. The independent adjudicatory discretion of this Tribunal remains unfettered, but consistency with lawful regulatory practice is a consideration that cannot be disregarded.

43. The Respondents have relied upon the Judgement in “BSES Rajdhani Power Ltd. v. Delhi Electricity Regulatory Commission, (2023) 4 SCC 788”,; U.P. Power Corporation Ltd. v. NTPC, (2009) 6 SCC 235, this Tribunal judgment dated 28.05.2022 in “Indraprastha Power Generation Company Limited v. Delhi Electricity Regulatory Commission and others” in Appeal No. 284 of 2015 & batch,; the judgment dated 04.12.2007 “Karnataka Power Transmission Corporation Limited v. Karnataka Electricity Regulatory Commission” in Appeal No. 100 of 2007, and the judgment dated 01.05.2007 “North Delhi Power Limited v. Delhi Electricity Regulatory Commission”

passed by this Tribunal in Appeal No. 265 of 2006 & batch to contend that these decisions guard against truing-up being used to retrospectively substitute a different methodology or principle of tariff determination, or to reopen matters that were consciously contested and settled between the parties, thereby disturbing consumers who have organised their affairs around a different basis of computation altogether. Accordingly, a de-novo consideration of such issues cannot be undertaken at the stage of true-up.

44. The reliance placed by the Appellant on the judgments of this Tribunal in Damodar Valley Corporation v. West Bengal State Electricity Distribution Company Ltd. & Ors., judgment dated 11.09.2025 in Appeal Nos. 268 of 2016 and batch and Tata Power Delhi Distribution Ltd., judgment dated 18.05.2026 in Appeal No. 213 of 2018 is also relevant. In Damodar Valley Corporation (supra), while considering the principle laid down by the Hon’ble Supreme Court in BSES Rajdhani Power Ltd. v. DERC, this Tribunal held that the said principle is attracted where there is a change in the methodology or norms adopted for tariff determination. The Tribunal, however, found that there was no change in the methodology or norms in that case, but only a cap was imposed on the allowance on account of an abnormal or manifold increase in expenditure without justification. Similarly, in Tata Power Delhi Distribution Ltd. (supra), this Tribunal held that a claim involving a one-time pass-through at the truing- up stage did not amount to a change in the tariff methodology and, therefore, the ratio of BSES Rajdhani was not applicable. The principle emerging from these decisions is that the bar against reopening tariff methodology at the truing-up stage would not apply merely because a claim is considered subsequently; what is material is whether the subsequent consideration seeks to alter the methodology or norms already adopted in

the original tariff determination. In the present case also, there is no change in methodology at the True up stage, rather it is only the application of Regulatory provisions at the True Up stage, which were missed out at initial tariff determination and therefore, the ration of above judgements cited by Respondents do not support the contention of Respondents.

45. The Respondents have also contended that the claim is barred by the principle underlying Order II Rule 2 of the Code of Civil Procedure, 1908 that the whole of a claim arising from one cause of action must be included in one proceeding, failing which the omitted relief cannot subsequently be claimed relying on Commissioner of Income Tax v. T.P. Kumaran, (1996) 10 SCC 561 Kalani Industries Pvt. Ltd. v. RERC & Ors. (judgment dated 25.10.2018, Appeal No. 185 of 2015, and Bihar Steel Manufacturers Association v. BERC & Ors. (judgment dated 18.05.2011, Appeal No. 172 of 2010, Order II Rule 2 CPC operates to prevent a plaintiff from splitting a single cause of action across successive civil suits for tactical advantage, here, the Appellant points to non-implementation of a Regulation despite the relevant facts being on the Commission's own record, in circumstances where the Commission's own order expressly reserved the related component for truing-up.

46. On the question of delay and laches, the Respondents rely on the maxim vigilantibus non dormientibus jura subveniunt and on Delhi Airtech Services (P) Ltd. v. State of U.P., (2011) 9 SCC 354 Hameed Joharan v. Abdul Salam, (2001) 7 SCC 573 and Sagufa Ahmed v. Upper Assam Plywood Products (P) Ltd., (2021) 2 SCC 317 pointing to the unexplained delay of over two-and-a-half years between the order dated 30.03.2017 and the filing of Petition No. 391/GT/2019, and the Appellant's failure to seek

review or appeal in the interregnum. We note that this delay is real and has not been satisfactorily explained by the Appellant beyond a bare assertion that it is being claimed at the True up stage. We are however, not persuaded that it operates to extinguish the principal claim altogether, since: (a) the disallowance is continuing, prospective effect on the tariff for the ongoing and subsequent control period, and (b) the order dated 30.03.2017 itself contemplated further reconciliation of capital cost and IDC at truing-up, reducing the force of any suggestion that the Appellant was sitting on a fully and finally settled entitlement. We are, however, of the view, for reasons given below that this delay should be reflected in the extent of consequential relief, particularly carrying cost, rather than in an outright bar to the principal claim.

47. In the present case, it is evident that the original tariff determination order dated 30.03.2017 did not consciously reject the entitlement to notional IDC under Regulation 9(2); rather, the Regulation was not given effect to at the initial stage, notwithstanding that the excess equity was duly reflected in the Forms submitted. In our view, if the earlier order dated 30.03.2017 had specifically considered and rejected the entitlement to notional IDC, a subsequent true-up cannot ordinarily be used as a device to seek a review of that concluded decision. Likewise, the licensee cannot claim notional IDC retrospectively if the applicable Regulations do not permit it or if the prescribed conditions are not established. Both of which are not applicable in the present case. In the judgement in “MPPGCL v. MPERC, 2011 SCC OnLine APTEL 63 and “Chhattisgarh State Power Distribution Co. Ltd. v. Chhattisgarh State Power Generation Co. Ltd. & Ors dated 14.08.2012 in Appeal No. 89 of 2011 it has been held that if in the main order an error has been committed by the State Commission by not

following the Regulations without assigning any reasons, the same errors cannot be perpetuated and is required to be corrected in the true up. That an inadvertent omission to give effect to the applicable Regulations cannot be allowed to continue merely because the omission occurred at an earlier stage. In the present case also, the Commission has not considered the provisions of Notional IDC as per the prevalent Regulation, accordingly the omission in the present case falls squarely within that description as it was not a considered rejection of the Appellant's entitlement, but a simple non- application of a binding Regulation to the facts already on record, without reasons.

48. Under the CERC (Terms and Conditions of Tariff) Regulations, 2014, IDC is an admissible component of capital cost, subject to the conditions prescribed under Regulation 11 and the applicable principles governing the capital structure and deployment of funds. The regulatory entitlement to admissible IDC flows from the Regulations and its determination necessarily depends upon the actual deployment and phasing of funds, the applicable debt-equity treatment and the prudence of the expenditure. The mere fact that the licensee did not specifically quantify or claim the admissible notional IDC in an earlier tariff proceeding cannot, in our view, by itself result in forfeiture of an entitlement otherwise available under the statutory regulatory framework. This is particularly so where the earlier determination was provisional in nature or subject to truing-up and the relevant financial and factual parameters pertaining to the construction period remain capable of verification.

49. It can therefore be concluded that the determination of IDC at the tariff stage was never intended to be immutable as tariff order itself

envisages IDC as being provisional and expressly subject to true-up, to be reconciled with the audited accounts and actual debt deployment as reflected in Form-14. In such circumstances, the omission of notional IDC in the initial tariff determination cannot be construed as denial of entitlement, particularly when the entitlement to IDC was not disputed. The true-up stage is the appropriate occasion to operationalize such entitlement by correcting inadvertent omissions and aligning IDC, including notional IDC, with the actual financing costs borne by the generating company. To hold otherwise would defeat the very purpose of the true-up exercise and render nugatory the stipulation that IDC is subject to reconciliation.

50. At the stage of truing-up, the Commission is required to determine the admissible capital cost and consequential tariff parameters on the basis of the actual facts, subject to the governing Regulations and prudence check. A claim which is otherwise admissible in law does not cease to be so merely because it was omitted from an earlier claim on account of non-claim, inadvertence or failure of quantification. In our view, consideration of the regulatory treatment at the True up stage, more so when capital cost so determined along with IDC was subject to True up, would amount to correction with regard to implementation of the applicable Regulation and not a change in the tariff methodology, and consequently, as mentioned above, the ratio of BSES Rajdhani would not operate as a bar.

51. We are satisfied that the claim, though omitted at the tariff determination stage, is otherwise permissible under the extant regulations and falls within the category of costs that may be reconciled at the true-up stage to ensure that the tariff reflects the actual audited expenditure. The true-up exercise is corrective in nature and must prevent unjust denial of

legitimate costs, and the claim is supported by verifiable records. Accordingly, it is held that notional IDC, if missed out in the original tariff determination, can and ought to be considered at the true-up stage, subject to verification of audited accounts and regulatory parameters.

52. The entitlement to carrying cost is distinct. Carrying cost represents compensation for regulatory lag in recovery of admitted revenue gaps. In the present case, the omission to assert the claim at the initial tariff stage is also on account of Appellant’s non assertion at that stage as well as not challenging such omission in review or before the Appellate court and therefore the claim cannot be retrospectively burdened upon consumers by way of carrying cost for the interregnum. The equitable balance lies in admitting the claim at the true-up stage, but restricting carrying cost to accrue only from the date of filing of the true-up petition, when the claim was first formally urged before the Central Commission. This Tribunal has consistently held, in Maharashtra State Electricity Distribution Co. Ltd. v. MERC (order dated 19.09.2007 in Appeal No. 70 of 2007, Torrent Power Ltd. v. GERC (order dated 30.05.2014 in Appeal No. 147 of 2013, and Paschim Gujarat Vij Company Ltd. & Ors. v. Gujarat Electricity Regulatory Commission (order dated 04.12.2014 in Appeal No. 45 of 2014, following the principle recognised in Kanwar Singh & Ors. v. Union of India, 2005 (82) DRJ 397.that carrying cost, being compensatory in nature for delay in recovery of legitimately due amounts, cannot be granted for a period of delay attributable to the claimant itself. To allow carrying cost for the prior period would amount to rewarding inaction and shifting the consequence of omission onto consumers, which is impermissible.

53. For the reasons given above the Appellant’s claim for Notional IDC on equity deployed more than 30 % during construction stage is allowed at the true-up stage, however carrying cost on such claim shall be reckoned from the date of filing of the true-up petition until its eventual adjustment. Accordingly, Impugned Order on the issue of denial of additional IDC, on equity deployed more than 30 % during construction stage is set aside and matter remanded to Central Commission to undertake prudence check of the data submitted in regard to additional IDC. However, carrying cost on such additional IDC to be worked out from the date of filing of True Up petition until its adjustment. Central commission to further pass the consequential orders expeditiously, preferably within three months of the receipt of this judgement.

54. The present Appeal is allowed in these terms and is disposed of accordingly. Pending IAs, if any are disposed of accordingly. PRONOUNCED IN THE OPEN COURT ON THIS 18th DAY OF SEPTEMBER, 2026. (Virender Bhat) Judicial Member (Seema Gupta) Officiating Chairperson REPORTABLE / NON-REPORTABLE Pr/dk/ak/ag