Power Transmission Corporation of Uttarakhand Limited, vs Power Grid Corporation of India Limited on 2 July 2026

JUDGEMENT

PER HON’BLE MR. AJAY TALEGAONKAR, TECHNICAL MEMBER

1. This Appeal is filed by Power Transmission Corporation of Uttarakhand Limited (“PTCUL”/ “Appellant”) challenging the Impugned Order dated 31.03.2021 passed by the Central Electricity Regulatory Commission (“CERC”/ “Respondent No. 2”) in Petition No. 104/TT/2020.

Description of the Parties

2. The Appellant, PTCUL is a company incorporated under the Companies Act, 1956 and discharges the functions of a State Transmission Utility (STU) in the State of Uttarakhand under Section 2(67) read with Section 39 of the Electricity Act, 2003 (“Act”).

3. The Respondent No.1, Power Grid Corporation of India Limited (“PGCIL”), the original Petitioner in Petition No.104/TT/2020, is a deemed transmission licsensee under the Act.

4. The Respondent No. 2, the Central Electricity Regulatory Commission (CERC), is a statutory regulatory body constituted under Section 76 of the Electricity Act, 2003.

5. The Respondent Nos. 3 to 19, are distribution licensees/ utilities/ state administration departments in terms of the Act.

Factual Matrix of the Case

6. The present Appeal arises out of the Order dated 31.03.2021 (“Impugned Order”) passed by the CERC whereby the Commercial Operation Date (COD) of certain transmission assets (Asset-III) was approved and consequential liability towards transmission charges was fastened upon the Appellant.

7. In the 23rd Standing Committee Meeting (SCM) held on 16.02.2008 at Dehradun, the scheme for construction of a 400/220 kV substation at Dehradun by Respondent No. 1 was inter-alia discussed and standard norms regarding the number of bays for substations were adopted. According to these agreed norms, six 220 kV line bays were planned at Dehradun. Out of these, on 01.02.2017, two

bays were utilized by the Appellant for actuating the 220 kV D/c Jhajra-Sherpur1 line. Thereafter, on 04.02.2017, all six 220 kV line bays were decalred under commercial operation by Respondent No. 1; however, four bays remained unutilized due to the non-commissioning of the downstream network.

8. The Appellant-PTCUL was requested to inform utilization plan for these bays at various points of time. Finally, the Respondent No. 1-PGCIL, by letter dated 20.03.2017, informed the Appellant about the commissioning of the transmission system and highlighted that four bays remained unutilized, requesting a utilization plan. The Appellant, however, only undertook internal correspondence dated 30.06.2017 and 27.12.2017 exploring possible future utilization of these bays which were not communicated to Respondent No. 1.

9. In Petition No. 55/TT/2017, CERC passed an order dated 30.11.2017 determining COD and tariff for Asset-I but declined to approve COD and tariff for the remaining four bays (termed Asset-II at that point of time but were temed Asset- III in the Impugned Order), observing that the said assets were not put to regular service due to the absence of downstream connectivity. Respondent No. 1’s Review Petition No. 8/RP/2018 against the said order was dismissed by CERC on 12.06.2018.

10. Meanwhile, on 20.12.2018, Long Term Access (LTA) was granted to M/s SJVN for the Naitwar Mori HEP, requiring implementation of a 220 kV D/c Mori- Dehradun line along with bays at the Dehradun substation. A Tripartite Agreement 1 It is noted that that while PGCIL calls the sub-station as Dehradun sub-station, PTCUL names it as Sherpur sub-station. Sherpur is a village and locality within the Dehradun district of Uttarakhand.

dated 31.01.2020 was executed between the Appellant, Respondent No. 1 and M/s SJVN in this regard.

11. Thereafter, Respondent No. 1 filed Petition No. 104/TT/2020 before CERC on 06.01.2020 seeking truing-up of tariff and approval of COD for the four unutilized bays (now termed as Asset-III) as 04.02.2017. During the proceedings, the Appellant was impleaded as a party for the first time on 25.02.2020.

12. Meanwhile, the issue of implementation of the Mori-Dehradun line was discussed in the 3rd meeting of NRPC Transmission Planning held on 19.02.2021, wherein it was agreed that the line may be implemented under the Central Sector.

13. By the Impugned Order dated 31.03.2021, CERC approved the COD of Asset-III as 04.02.2017 and held the Appellant liable to bear transmission charges from the said date till the commissioning of the downstream network.

14. Pursuant to the Impugned Order, Respondent No. 1 raised monthly bilateral bills upon the Appellant towards transmission charges for Asset-III from November 2021 onwards.

15. The Appellant challenged the Impugned Order by filing a Review Petition No. 21/RP/2021 before CERC; however, the same was dismissed by order dated 27.05.2022. During this period, the issue regarding utilization of the four bays was also discussed in the 50th meeting of the Northern Regional Power Committee held on 28.01.2022, wherein no decision was taken in view of the pendency of the matter before CERC.

16. Aggrieved by the Impugned Order dated 31.03.2021 and the subsequent dismissal of the review petition, the Appellant has preferred the present Appeal.

17. The Appellant has prayed for the following relief before us:

“A. allow the present appeal and set-aside the Impugned Order dated 31.03.2021 passed by the Ld. Central Electricity Regulatory Commission in Petition No. 104/TT/2020 to the extent that it has determined the COD for Asset-III as 04.02.2017 under proviso (ii) of Regulation 4(3) of the 2014 Tariff Regulations, and has held the Appellant to be liable to build the downstream networks and liable to bear the yearly transmission charges for Asset-Ill from COD on 04.02.2017 to COD of the downstream networks;

B. declare and hold that PTCUL/Appellant is/was not liable to make the downstream asset with respect to Asset-Ill;

C. declare and hold that PTCUL/Appellant is not liable to pay yearly transmission charges of the Asset-Ill;

D. quash and set aside the bills (refer para 7.34) raised by the Respondent No.1 upon the Appellant seeking payment of transmission charges for Asset-Ill; and E Pass such further or other orders as may be deemed necessary in the facts and circumstances of the present appeal.”

Issues for Consideration

18. After hearing the Learned Senior Counsel for the Appellant and the Learned Counsel for the Respondent at length and carefully considering their respective submissions, we have also examined the written pleadings and relevant material on record. We have framed the following issues for our consideration mainly based on the submissions of the Appellant:

Issue 1: Whether the minutes of meetings and related correspondence, in the absence of any Contractual or statutory provision create any binding obligation on PTCUL to construct downstream assets? Issue 2: Can PTCUL be made to pay transmission charges for the subject bays, particularly under the PoC-based regime applicable during 2014-2019. Issue 3: Can COD of the subject bays be declared without actual utilization? Issue 4: Whether the Impugned Order is vitiated by deviation from CERC’s earlier orders on the same asset? Issue 5: Do record establish that the bays were constructed for PTCUL? Issue 6: Whether PGCIL’s own conduct, including delay in commissioning the bays, non-impleadment of PTCUL in initial tariff proceedings and later tripartite LTA arrangements, operates as estoppel against any allegation of prior binding obligation on PTCUL?

Submissions of the Parties, Our Analysis and Conclusions

Issue

1: Whether the minutes of meetings and related correspondence, in the absence of any Contractual or statutory provision create any binding obligation on PTCUL to construct downstream assets?

Submissions of PTCUL

19. The Appellant submits that CERC and PGCIL have proceeded on an erroneous legal premise in treating minutes of a planning forum as constituting consensus ad idem so as to create binding financial liability upon PTCUL. It is contended that consensus ad idem requires a concluded and enforceable agreement with clear intention to create legal relations, certainty of terms and enforceability, which is admittedly absent in the present case.

20. It is contended that the minutes of Standing Committee meetings (SCMs) and NRPC meetings are characterised as mere coordination and planning documents, which do not, by themselves, constitute contracts or impose obligations in the absence of any implementation agreement, TSA, LTA or other binding instrument. The Appellant submits that its participation in such statutory planning meetings and routine system-planning correspondence was in discharge of its statutory functions as State Transmission Utility and cannot be retrospectively construed as creating commercial liability or enforceable obligations.

21. It is specifically denied by PTCUL that the 23rd SCM reflects any agreement that the six 220 kV bays were constructed for PTCUL or that PTCUL assumed any obligation to develop downstream connectivity or to bear any transmission charges for the subject bays. The minutes do not record any agreement, commitment or

allocation of tariff liability upon PTCUL, nor do they stipulate any timelines for downstream implementation that could be enforced as contractual obligations.

Submissions of PGCIL

22. PGCIL disputes PTCUL’s plea of absence of consensus ad idem and contends that consensus within the statutory transmission-planning framework is established through deliberations and recorded decisions in SCM and NRPC meetings. According to PGCIL, the 23rd SCM dated 16.02.2008, read with the 25th SCM dated 17.07.2008, records agreement of all stakeholders, including PTCUL, that six 220 kV line bays at Dehradun substation would be constructed by PGCIL for PTCUL’s use.

23. PGCIL further relies on subsequent SCMs (34th on 08.08.2014, 36th on 13.07.2015, 37th on 20.01.2016 and 38th on 30.05.2016) to submit that the understanding regarding matching development of upstream and downstream systems was repeatedly reiterated and that PTCUL indicated that its 220 kV system from Dehradun would be ready by March 2015. In the 41st NRPC meeting dated 27.02.2018, PTCUL itself is stated to have proposed specific utilization of the bays for Dehradun-Naugaon and Dehradun-Selaqui lines, and in the 42nd NRPC meeting dated 28.06.2018 to have provided a concrete utilization plan including Yamuna basin projects.

24. PGCIL also relies on its letters issued between 2013 and 2017 seeking updates on downstream connectivity, which were received without objection, and on internal correspondence of PTCUL (including letters dated 30.06.2017 and 27.12.2017) acknowledging planned utilization of the six bays. On this basis, PGCIL submits that there was a clear and continuing meeting of minds and that

formal execution of a TSA/LTA was not a pre-condition for PTCUL’s obligations to arise in this statutory planning context.

Analysis & Conclusions

25. It is settled position of law that even an oral agreement can be construed as contract, if such oral agreement encompasses a concluded agreement on all material terms and the parties intended to be bound at that stage, then the contract is complete even though a later formal document is contemplated. (Kollipara Sriramulu v. T. Aswathanarayana, 1968 SCC OnLine SC 87).

26. It must be kept in mind that in India, electricity sector is governed by policies, rules and regulations issued under the Act. Further, the transmission segment of electricity sector is closely regulated. Therefore, it is essential that we first look at the policy prescription in the National Electricity Policy (NEP) issued in February, 2005. The relevant part of paragraph 5.3.2 of the NEP is reproduced below: “5.3.2 Keeping in view the massive increase planned in generation and also for development of power market, there is need for adequately augmenting transmission capacity. While planning new generation capacities, requirement of associated transmission capacity would need to be worked out simultaneously in order to avoid mismatch between generation capacity and transmission facilities. The policy emphasizes the following to meet the above objective:

• ……

• ……..

• Network expansion should be planned and implemented keeping in view the anticipated transmission needs that would be incident on the system in the open access regime. Prior agreement with the beneficiaries would not be a pre- condition for network expansion. CTU/STU should undertake network expansion after identifying the requirements in consultation with stakeholders and taking up the execution after due regulatory approvals.

• ……” (Emphasis Supplied)

27. Further, Section 3.4 (b) of the Indian Electricity Grid Code issued by CERC in 2006 (IEGC 2006), provides as under: “3.4 Planning Policy

(a) … ….

(c) In addition to the major inter-State transmission system, the CTU shall plan, from time to time, system strengthening schemes, need of which may arise to overcome the constraints in power transfer and to improve the overall performance of the grid. The inter-State transmission proposals including system strengthening scheme identified on the basis of the planning studies would be discussed, reviewed and finalized in the meetings of Regional Standing Committees for Transmission Planning constituted by CEA, in consultation with the beneficiaries, RPC, CEA and the RLDC. …..”

(Emphasis Supplied)

28. The revised IEGC was issued by CERC in 2010 and the relevant provision reads as under: “3.4 Planning Philosophy

(a) … ….

(c) In addition to the inter-State transmission system, the CTU shall plan, from time to time, system strengthening schemes, need of which may arise to overcome the constraints in power transfer and to improve the overall performance of the grid. The inter-state transmission proposals including system strengthening scheme identified on the basis of the planning studies would be discussed, reviewed and finalized in the meetings of Regional Standing Committees for Transmission Planning constituted by CEA, in consultation with the Regional Entities, RPC, CEA, NLDC and the RLDC and action may be taken by CTU on the basis of Power Purchase Agreements (PPAs) signed with the beneficiaries. In case of associated transmission system where all PPAs have not yet been signed, and where agreement could not be reached in respect of system strengthening schemes, the CTU may approach CERC for the regulatory approval in accordance with Central Electricity Regulatory Commission (Grant of Regulatory Approval for Capital Investment to CTU for execution of Inter-State Transmission Scheme) Regulations, as and when they come into force . …….” (Emphasis Supplied)

29. A combined reading of the relevant policy prescriptions and the provisions of the IEGC demonstrates that the process of transmission system planning undertaken in the meetings of the Regional Standing Committee (referred to as “SCM” in the present case) has the requisite regulatory sanction. Further, it is well recognised that certain terms and conditions that would ordinarily form part of a contract, including the determination and recovery of transmission charges, emanate from and are governed by the applicable Regulations. Therefore, in our considered view, the Minutes of Meeting may constitute a contractual framework, provided that the essential terms are sufficiently crystallised, including, inter alia, the identity of the entity responsible for development of the transmission system (either on its own or through another agency) and the timelines for execution of such works. If there is no agreement on necessity of a transmission element, then also in line with NEP, the agencies responsible for planning namely CEA and CTU can decide to go ahead, if they are convinced about requirement of such element. However, in line with the settled position of law, we are of the opinion that the implementing agency and time lines must be recorded in the minutes of the meeting (“MOM”) to construe it as contract, both for ISTS element as well as downstream intra-state element(s) essential for utilisation of the ISTS element.

30. In this context, we intend to examine all the MOM and correspondence relied upon by the PGCIL to contend that PTCUL had agreed to utilize all the six 220 kV bays at Dehradun:

(a) 23rd SCM meeting held on 16.02.2008

31. The first and perhaps most important document is the minutes of 23rd SCM held on 16.02.2008. The relevant part of the MOM is extracted below:

“6.0 Region System Strengthening Scheme - New Proposal 6.1 It was also discussed and agreed that in view of increasing demand density the norm of providing 220 kV bays with 400/220 kV transformers would be revised as following:-

• For 2x315 MVA -

6 nos. of line bays

• For 3rd 315 MVA transformer - 2 line bays

• For 500 MVA transformer - 4 nos. of line bays 6.2 It was discussed and agreed that for meeting the increasing demands and increasing quantum of power supply required to be delivered from regional grid to state grids, there was need for providing new regional grid 400kV substations at Manesar in Haryana, Kotputli and Neemrana in Rajasthan, Hapur and Bagpat in U.P, Hamirpur in H.P, Dehradun in Uttrakhand (this would also facilitate power evacuation from Kotlibhel HEP), New Wanpoh and one s/s for Jammu in J&K and S/S capacity augmentation at Patiala and Malerkotla in Punjab. Of these, s/s at Manesar and Bagpat would be GIS and s/s at Neemrana, Hapur, Hamirpur, Dehradun and other places could be GIS or open yard depending on availability of space.” (Emphasis supplied)

32. It emerges that the broad consensus amongst the participants (and not just PGCIL and PTCUL), inter-alia was that from then onwards, whenever a sub-station with 2 x 315 MVA 400/220 kV transformers would get established, there will be six number of bays on 220 kV side. The provision of six 220 kV bays appears to be in consonance with the planning requirement for adequate downstream evacuation arrangement, while maintaining the requisite redundancy and operational flexibility. Each 220 kV bay can typically facilitate transfer of the order of 200-300 MW of power, though the actual capability would depend upon the characteristics, configuration and rating of the downstream 220 kV transmission line. Though the

Dehradun Sub-station was intended to cater to the anticipated increase in demand in Uttarakhand, there is nothing on record to indicate the extent of demand growth that was envisaged to be served through the said Sub-station in the ensuing years. In the absence of such material, we are inclined to conclude that the six bays were created in accordance with the agreed planning norms and were not intended exclusively for power drawal by Uttarakhand. Also, there is no mention of the date by which these bays were to be ready, which in our view, is one of the essential conditions for MOM to be construed as contract.

(b) 34th SCM meeting held on 08.08.2014

33. Next, reliance is placed by the PGCIL on the minutes of the 34th SCM meeting. In this meeting, under the item “Establishment of new 400/220 kV substations in NR”, the statement of GM, PTCUL is recorded as under: “GM, PTCUL stated that their 220 kV system for 400 kV Dehradun would be available by March 2015 matching with the commissioning of the substation”

34. PGCIL has contended, and the CERC has concluded, that PTCUL, during the said meeting, had assured completion of the downstream assets corresponding to all six bays by March 2015. However, PTCUL has submitted that their representative was only speaking about Sherpur (PGCIL)- Jhajra line. In our opinion, the expression “their 220 kV system” merely denotes the 220 kV transmission lines being developed by PTCUL and cannot, by itself, be read as a commitment to utilise all six 220 kV bays envisaged at the Sub-station. The record is devoid of any indication as to the number of bays that were intended to be utilised for those lines. Further, now, it is clear (from the internal correspondence of PTCUL dated 30.06.2017 and 27.12.2017 relied upon by PGCIL) that in the worst case scenario against PTCUL, it can be said that it was contemplating constructing downstream transmission lines for use of all the bays, but the

execution of transmission lines connecting to remaining four bays had not started. In such a scenario, it is unlikely that GM, PTCUL in a meeting held in August 2014 could have promised completion of entire downstream network using all six 220 kV bays within 8 months so as to be ready by March 2015. It is surprising that none of the participants in the meeting, including PGCIL requested PTCUL to furnish details of the downstream network being constructed, which would have brought clarity that seems to be missing in the hindsight.

(c) 36th SCM meeting held on 13.07.2015

35. We find that the only relevant part recorded in this MOM in the relevant context is as under: “25. Establishment of new 400/220kV substations in Northern Region:

25.1. POWERGRID informed the capacity and expected schedule of the new 400/220V substations which are under implementation under various transmission schemes. These are 400/220kV Kurukshetra(GIS), Dehradun, Bagpat(GIS), Saharanpur, Rajghat(GIS), Papankalan-I(GIS), Tughlakabad(GIS), Kala Amb, Amargarh, Patran, Kadarpur(GIS), Sohna Road(GIS), Prithala(GIS) and Jauljivi and 220/66kV GIS S/s at Sector 47, Chandigarh.

25.2. POWERGRID requested for implementation of adequate 220kV downstream transmission system by the States in matching time frame for utilization of the above ISTS substations.

25.3. STUs noted the above and agreed to inform the planned 220kV transmission system from these substations and their status to CEA and CTU in the next SCM.”

36. It is clear from the above that the discussion recorded does not support the contention of PGCIL in any way as there is only a promise by STUs (including PTCUL) to inform the status.

(d) 37th SCM meeting held on 20.01.2016

37. The discussions in the 37th SCM meeting on the relevant issue proceeded almost in the same manner as in the 36th SCM meeting. The relevant part of the minutes of this meeting is extracted below:

“29.0 Establishment of new 400/220kV substations in Northern Region: 29.1 Powergrid informed that the following new substations were planned under various transmission schemes & are under implementation:

S. No. Name of Substation Capacity (MVA) Expected Schedule

400/220kV Dehradun Sub station 2x315 Mar’16

… 30.2 For above 400/220kV substations, implementation of downstream 220k V elements needs to be commissioned at the earliest for utilization of the system. It was desired that the 220kV system also gets commissioned in the matching time frame. Appropriate STUs may note the above and inform the committee about the planned 220 kV system from these substations and their status to CEA and CTU. Members noted the same.”

38. It may be seen from the extract in the preceding paragraph that the expected date of commissioning of Dehradun substation was pushed further to March 2016 by PGCIL. Only a desire was expressed that STUs should commission their downstream network with matching timeframe and inform status to CEA and CTU. It is worth mentioning that at that point of time, PGCIL was also functioning as CTU. PGCIL has not placed on record any document to show whether or not PTCUL had submitted that status, and if not, whether this was followed up with them by PGCIL.

(e) Letter dated 20.04.2016

39. This letter was written by Chief Manager, PGCIL to Superintending Engineer, PTCUL. The relevant part of the letter is reproduced below: “Construction of 400/220 KV Sherpur Substation is almost complete. The 400 KV D/C Dehradun-Bagpat and 400 KV D/C Dehradun-Abdullapur transmission lines are at advance stage of competion and the same shall be completed by end of June 2016. We shall therefore be ready for charging of 400/220 KV Sherpur Substation by 30/06/2016. However, power flow may be possible only after completion of 220 KV Jhajra-Sherpur line. You are requested to complete the construction work of 220 KV Jhajra-Sherpur line on or hefore 30/06/2016. The progress details of the line may be given to us for reference. This is for your kind information please.”

40. It may be seen from the above extract that PGCIL was only seeking the status of PTCUL's 220 kV Jhajra-Sherpur line, which was ultimately commissioned and utilised two bays. No mention is made of the remaining four bays. While not conclusive, this circumstance tends to indicate that utilisation of all six bays by PTCUL may not have been contemplated at that stage.

(f) Letter dated 25.04.2016

41. This letter was from DGM, PGCIL to Director (Projects), PTCUL. The relevant extract is reproduced blow: “As you are aware that construction of 400/220KV 2x 315MVA Dehradun substation is almost completed. Pre-commissioning activities of both 400Kv as well as 220KV switchyard are in final stage. Connecting 400KV lines viz. 400KV D/C Dehradun- BaghPat and 400KV D/C Dehradun-Abdullapur are targeted to be completed by June 2016. Thereupon substation will be commissioned and charged from Abdullapur Rookee & Baghpat 400KV substations POWERGRID. But it appears that construction of outgoing 220KV feeders by M/S PTCUL is progressing at a very slow pace. You are requested to please expedite the construction of outgoing 220KV feeders to match with our commissioning schedule.”

42. It may be seen that aforesaid letter only mentions that 220 kV downstream feeders of PTCUL were progressing at very slow pace. There is no specific mention of 220 kV Jhajra-Sherpur line of PTCUL. However, since this was the only 220 kV line of PTCUL terminating at Dehradun sub-station which was under construction, it is logical to conclude that the slow progress was being attributed to this line only.

(g) 38th SCM meeting held on 30.05.2016

43. It is seen from the item 21.0 titled “Mismatch of network at the time of declaration of Date of Commercial Operation (COD)” of the MOM of the aforesaid meeting that a concern was expressed by PGCIL, which was emanating from an order of CERC, which had held as under: “In case of cost plus, the mismatch between Generation/Downstream network/Upstream network, Transmission licensee will not burden the consumers and the charges would be compensated through the IA between the parties”

44. In the MOM, there is also mention of the direction of CERC that such assets shall not be included in the computation of PoC charges and in case of declaration of commercial operation of such assets, transmission charges shall be recovered from the concerned generator/STU/Discoms. Further, there is mention of a new regulation framed by the CERC which requires transmission licensee to endavour to match commissioning of its transmission system with that of other transmission licensee and this shall be ensured through an appropriate Implementation Agreement (IA).

45. The CERC’s order appears to have dispelled any expectation that transmission charges could continue to be recovered without utilisation of the bays.

46. However, the MOM also reveals that the expected date of commissioning of Dehradun sub-station was indicated just within one or two month (July 2016); whereas the actual commercial operation took place in February 2017. Further, the STUs were requested to furnish status of outgoing 220 kV lines and sign IA with PGCIL. Thus, nothing recorded in the MOM supports contention of PGCIL. Further, subsequent MOM and correspondence does not indicate if PGCIL had made any attempt to sign Implementation Agreement (IA) for outgoing transmission lines as mandated by CERC. Discussion for signing of such IA itself would have given clarity on the system actually being implemented by PTCUL.

(h) 38th meeting of TCC and 41st meeting of NRPC held in February 2018

47. For the first time, it was recorded that one bay would be utilised for the Naugaon Sub-station and two bays for the proposed Selaqui Sub-station, covering only three of the four unutilised bays. Significantly, the minutes indicate a plan for

future development of the downstream lines rather than implementation of any long-standing commitment. Consequently, they do not support the proposition that transmission charges were recoverable from the date of commercial operation, i.e. 04.02.2017. Representative of PTCUL was present in this meeting. However, no date for completion of the downstream lines was recorded. Without any indication of when PTCUL’s downstream lines were to be completed, it is impossible to ascertain the point in time from which any liability for transmission charges could be fastened upon PTCUL. The absence of such a timeline deprives the arrangement of a fundamental element ordinarily expected in a binding contractual framework.

(i) 39th TCC and 42nd NRPC meetings held in June 2018

48. The use of 2 bays each for Yamuna Basin (Mori sub-station) and Selaqui sub-station is recorded in the MOM. Though not clearly mentioned but the relevant transmission lines were to be presumably developed by PTCUL. However, here also, in the absence of any mention of the date of completion, we do not consider the MOM satisfies the necessary requirements for being treated as a contract.

(j) Subsequent TCC and NRPC meetings

49. Thereafter, there are few TCC and NRPC meetings, where it is recorded that 220 kV Dehradun -Jhajra D/c line would be completed in November 2021, as if this was to be new line for use of two of the four unused bays. However, as recorded in the Order dated 30.11.2017 of CERC in Petition No. 55/TT/2017, this line had already been commissioned in February 2017.

(k) Letters written by PGCIL

50. We note that there are several letters written by PGCIL before and after the commercial operation of Dehradun substation requesting PTCUL to submit utilization plan for the bays. We believe that there was no reply from PTCUL, as neither PGCIL nor PTCUL has placed any such response on record. PGCIL could get hold of some internal correspondence of PTCUL and contended that PTCUL had planned to use the remaining four bays, and since these plans did not materialize, the four bays remained unused. However, we are of the opinion that neither in any letter to PGCIL nor in any meeting, any commitments were made by PTCUL or any obligation was imposed on PTCUL regarding utilisation of four unused bays.

51. Based on the aforesaid analysis of the MOM and correspondence relied upon by PGCIL, we conclude that- (i) the six bays at Dehradun were created in accordance with the agreed planning norms and not specifically for use by PTCUL, and (ii) there was no explicit or implicit agreement by PTCUL that it will be using all the six 220 kV bays at Dehradun for constructing downstream network.

Issue 2: Can PTCUL be made to pay transmission charges for the subject bays, particularly under the PoC-based regime applicable during 2014-2019.

Submissions of PTCUL

52. The Appellant submits that there exists no contractual or statutory obligation upon PTCUL to utilize the subject bays or to construct downstream infrastructure. No implementation agreement, Transmission Service Agreement or other

contractual arrangement has ever been executed between PGCIL and PTCUL in relation to these bays since 16.02.2008; in the absence of such privity of contract, PTCUL cannot be held liable either for development of downstream assets or for payment of transmission charges.

53. It is further contended that transmission charges are payable either upon actual usage of the system or pursuant to an express contractual allocation of risk, neither of which exists in the present case. The Appellant relies on PSPCL v. Patran Transmission Company Ltd. (Appeal No. 390 of 2017) and NRSS XXI(B) Transmission Ltd. v. CERC (Appeal No. 17 of 2019) to submit that liability to bear transmission charges can arise only where a binding contractual framework clearly allocates responsibility for upstream or downstream systems, and on PSTCL v. CERC & Ors. (Appeal No. 109 of 2021) where this Tribunal held that transmission charges are recoverable only from beneficiaries under contractual arrangements and cannot be imposed upon a State Transmission Utility in the absence of such privity.

54. During the relevant control period (2014-2019), recovery of ISTS charges was governed by the PoC mechanism under the 2010 Sharing Regulations; accordingly, even where deemed COD is granted, recovery is to be effected through the PoC pool and not by imposing unilateral bilateral liability on an STU in the absence of an express contractual or regulatory provision. The Appellant submits that the 2014 Tariff Regulations do not create any right of bilateral recovery against an STU, and that PGCIL’s attempt to conflate PTCUL’s statutory planning role with commercial liability is contrary to settled regulatory and contractual principles.

Submissions of PGCIL

55. PGCIL submits that, as CTU and STU respectively, PGCIL and PTCUL operate under a statutory mandate under Section 38(2)(b) of the Electricity Act, 2003 for coordinated planning and development of inter-State and intra-State transmission systems, which is implemented through SCM and RPC forums. In such a regulatory framework, assets are conceptualised and implemented on the basis of collective decisions in these statutory forums and “formal contracts” are not indispensable for liability to arise.

56. PGCIL contends that it is a settled principle that where a transmission asset is ready but cannot be put to use due to delay in the matching upstream or downstream system, liability for transmission charges lies upon the entity responsible for such delay; reliance is placed on RAVP Transmission Company Limited v. PGCIL (Petition No. 43/MP/2016). PGCIL further submits that under the 2014 Tariff Regulations, transmission charges are payable for an asset which has achieved COD but remains under-utilized on account of delay in the associated system, irrespective of the PoC framework, and that PTCUL’s express indication in the 34th SCM that its downstream system would be available by March 2015, coupled with subsequent utilization plans placed in the 41st and 42nd NRPC meetings, renders PTCUL the defaulting entity for the period of mismatch.

57. Accordingly, PGCIL’s case is that PTCUL’s responsibility to bear transmission charges flows from its own default in commissioning the downstream network within the indicated timeframe and from the statutory planning consensus, and not strictly from a bilateral TSA/LTA or actual regular usage during the mismatch period.

Analysis and Conclusions

58. We have already inter-alia concluded under the issue 1 that- (i) it is not necessary to have an explicit agreement with a party to fasten responsibility for sharing of transmission charges on that party, (ii) MOM can also serve the purpose of contract provided necessary minimum conditions are clearly mentioned in the MOM, and (iii) based on the MOM of various meetings and correspondence on record, it cannot be established that there was any commitment by PTCUL to utilise all the six 220 kV bays at Dehradun for downstream network.

59. We have carefully considered the judgments of this Tribunal relied upon by PGCIL, namely, PSPCL vs. Patran Transmission Company Ltd. & Ors. (Appeal No. 390 of 2017), Bhartiya Nabhikiya Vidyut Nigam Ltd. vs. PGCIL (Appeal No. 151 of 2015 and Ors.), Jindal India Thermal Power Ltd. vs. CERC & Ors. (Appeal No. 275 of 2018 and Ors.), NRSS XXXI (B) Transmission Ltd. vs. CERC & Ors. (Appeal No. 17 of 2019), Fatehgarh Bhadla Transmission Company Ltd. vs. CERC & Ors. (Appeal No. 352 of 2022) and Neyveli Uttar Pradesh Power Ltd. vs. UPERC & Ors. (Appeal No. 332 of 2023).

60. In our opinion, none of the judgments cited by PGCIL assist them in the peculiar facts of the present case. The authorities relied upon by PGCIL undoubtedly recognise the principle that a defaulting entity may, in an appropriate case, be held liable for transmission charges during a mismatch period, they do not dispense with the requirement of first establishing the source of such obligation.

61. The fundamental difficulty in applying the aforesaid line of authorities to the present case is that we have already held, on an examination of the Standing Committee minutes, NRPC deliberations and various correspondence that no

contractual or legally enforceable commitment by PTCUL to construct any downstream network corresponding to the disputed bays has been established. The very foundation on which liability was imposed in the judgements cited by PGCIL is therefore absent in the present case. Once it is found that the bays were not constructed pursuant to any binding commitment undertaken by PTCUL, the mere fact that the bays remained unutilised cannot by itself create a financial liability against PTCUL.

62. Therefore, it directly flows from (iii) above in paragraph 58 that the liability of transmission charges for four unutilised bays can not be fastened on PTCUL. The question as to whether PTCUL could have been saddled with liability of transmission charges had a contractual arrangement been found to exist on the basis of the MoM when Regulations provide for recovery through pool, is purely academic in the present proceedings. Accordingly, it is neither necessary nor appropriate to express any opinion on that question.

63. Interestingly, PGCIL has raised issue of co-orinated planning under Section 38 (2) (b) of the Act; particularly as at that point of time PGCIL was also acting as CTU. However, we consider it necessary to peruse 38 (2) (c) of the Electricity Act, 2003 as well. The relevant extract of this Section is reproduced below: “Section 38. (Central Transmission Utility and functions): (1)…..

(2) The functions of the Central Transmission Utility shall be - (a) to undertake transmission of electricity through inter-State transmission system; (b) to discharge all functions of planning and co-ordination relating to inter-State transmission system with –

(i) State Transmission Utilities;

(ii) Central Government;

(iii) State Governments;

(iv) generating companies;

(v) Regional Power Committees;

(vi) Authority;

(vii) licensees;

(viii) any other person notified by the Central Government in this behalf;

(c) to ensure development of an efficient, co-ordinated and economical system of inter-State transmission lines for smooth flow of electricity from generating stations to the load centres; ….”

64. It is clear that coordination is required to be done by CTU not only with respect to planning function mentioned in (b) above, but also for ensuring “development of an efficient, co-ordinated and economical system of inter-State transmission lines” for smooth flow of electricity from generating stations to the load centres, mentioned in (c) above. We are of the view that merely writing letters and seeking status updates during meetings constitutes only the beginning, and certainly not the end, of effective coordination. Both PGCIL (as CTU at the relevant point of time) and PTCUL (as STU) were statutorily mandated to ensure the development of an efficient, coordinated, and economical inter-state and intra- state transmission system in accordance with Section 38 and 39 of the Act respectively. However, the current record raises prima facie concerns regarding a potential gap in coordination between the two utilities. While PGCIL engaged in routine ‘status-taking’ during planning meetings and correspondence, it is questionable whether it should have taken further steps to hold bilateral meetings or formalize the Implementation Agreement as envisioned by the CERC; measures that might have clarified the specific downstream network being implemented by PTCUL. Furthermore, PTCUL’s failure to respond to PGCIL’s communications adds to the ambiguity surrounding the factual position.

Issue 3: Can COD of the subject bays be declared without actual utilization? Submissions of PTCUL

65. The Appellant submits that PGCIL has erroneously relied on the second proviso to Regulation 4(3) of the 2014 Tariff Regulations to contend that approval of COD automatically results in imposition of transmission charges on PTCUL. It is urged that the proviso is limited to determination of COD for tariff purposes where the asset is ready but cannot be put to use due to non-availability of upstream or downstream systems, and does not in itself identify any liable entity or create a right of bilateral recovery against an STU.

66. It has been contended that even PGCIL has acknowledged that the downstream system under PTCUL had not been commissioned; further, the subject bays were never put to regular use during the relevant period. Relying on Power Grid Corporation of India Ltd. v. Punjab State Power Corporation Ltd., (2016) 4 SCC 797, the Appellant submits that declaration of COD is contingent upon charging of the line, successful trial operation and the asset being in regular service, and that approval of COD for bays that are admittedly not in regular use is contrary to settled law.

67. The Appellant distinguishes Fatehgarh Bhadla Transmission Ltd. v. CERC & Ors. (Appeal No. 352 of 2022) on the ground that it arose under a different regulatory framework (2019 Tariff Regulations and 2020 Sharing Regulations) and a different factual context, and is therefore inapplicable to the present case governed by the 2014 Tariff Regulations and 2010 Sharing Regulations involving a regional system strengthening scheme. Reliance on Power Grid Corporation of India Ltd. v. Madhya Pradesh Power Transmission Company Ltd. & Ors., 2025 SCC OnLine SC 1128, is also stated to be misplaced, as that judgment does not

hold that an STU can be saddled with transmission charges during a mismatch period solely on the basis of COD approval in the absence of any contractual commitment.

Submissions of PGCIL

68. PGCIL submits that the dispute arises solely due to a mismatch between the transmission assets commissioned by PGCIL and the downstream system to be developed by PTCUL. In such a situation, the second proviso to Regulation 4(3) of the 2014 Tariff Regulations expressly permits approval of COD where the transmission asset is ready but cannot be put to use on account of non-availability of the corresponding upstream or downstream system.

69. PGCIL contends that the settled legal principle in such cases is that liability for transmission charges must be borne by the entity due to whose default the system remains unutilized. Reliance is placed on Nuclear Power Corporation of India Limited v. CERC (Appeal No. 332 of 2016), where this Tribunal held that the defaulting entity is liable to pay transmission charges from SCOD till commissioning of the matching system, irrespective of the existence of a formal contractual relationship. PGCIL further traces this principle to PSPCL v. Patran Transmission Company Limited (Appeal No. 390 of 2017) and relies on Fatehgarh Bhadla Transmission Ltd. v. CERC & Ors. (Appeal No. 352 of 2022) to submit that such regulatory obligations are binding even in the absence of a contract.

70. On this basis, PGCIL argues that once COD is approved under the second proviso to Regulation 4(3) and PGCIL has established readiness of the bays, the liability to bear transmission charges for the mismatch period rests squarely with PTCUL, which failed to provide interconnecting facilities by the committed timeline of March 2015.

Analysis and Conclusions

71. The regulation 4 (3) of CERC Tariff Regulations, 2014 which is relevant for this issue is reproduced below: “4. Date of Commercial Operation: The date of commercial operation of a generating station or unit or block thereof or a transmission system or element thereof shall be determined as under: ….

(3) Date of commercial operation in relation to a transmission system shall mean the date declared by the transmission licensee from 0000 hour of which an element of the transmission system is in regular service after successful trial operation for transmitting electricity and communication signal from sending end to receiving end: Provided that:

(i) where the transmission line or substation is dedicated for evacuation of power from a particular generating station, the generating company and transmission licensee shall endeavour to commission the generating station and the transmission system simultaneously as far as practicable and shall ensure the same through appropriate Implementation Agreement in accordance with Regulation 12(2) of these Regulations :

(ii) in case a transmission system or an element thereof is prevented from regular service for reasons not attributable to the transmission licensee or its supplier or its contractors but is on account of the delay in commissioning of the concerned generating station or in commissioning of the upstream or downstream transmission system, the transmission licensee shall approach the Commission through an appropriate application for approval of the date of commercial operation of such transmission system or an element thereof.”

72. PTCUL has relied on the Power Grid Corporation of India Ltd. v. Punjab State Power Corporation Ltd., (2016) 4 SCC 797. We note that this judgement was based on Tariff Regulations of 2009 issued by CERC, whereas in the case in hand, Tariff Regulations of 2014 are applicable. However, the intent and effect of

the relevant regulatory provision remains same. In the cited judgement, the commercial operation was made ineffective because the transmission line in question was not complete; as switchgear at the other end for protection and metering to be installed by another party were not in place. There is no doubt that a transmission line and a bay are different assets. It is an undisputed position that the bay works at the Dehradun Sub-station were complete on the COD declared by CERC; the bays were ready and all it required was for someone to create downstream transmission lines to connect to these bays. In view of the forgoing analysis, we are satisfied that the conditions mentioned in proviso (ii) of Regulation 4(3) were satisfied and CERC was right in declaring COD of the relevant asset with effect from 04.02.2017.

73. Next comes the contention of PTCUL that even with declaration of COD under proviso (ii) of Regulation 4.3, the recovery of the transmission charges should have been done as per CERC (Sharing of Inter-State Transmission Charges and Losses) Regulations, 2010, which essentially requires pooling and socialization; and that transmission charges could not have been levied on PTCUL even in case of mismatch. Without distracting from the rationale underlying the “defaulter pays” principle, there may also be a merit in the argument of PTCUL purely from the view point of economic efficiency2. The issue of void in the Regulations about payment of transmission charges in case of mismatch in 2 It can be argued that if each licensee developing an upstream or downstream transmission system is required to compensate the other in case of delays attributable to it, this may translate into potentially significant liabilities, which prospective bidders under tariff-based competitive bidding may seek to cover by quoting higher transmission charges, i.e., by incorporating a risk premium. This may lead to the discovery of higher transmission charges in future tariff-based competitive bidding projects and, ultimately, higher liability for Long-Term Transmission Customers (LTTCs). On the other hand, if this risk is assumed by the LTTCs through socialization of the impact of delay, the overall increase in liability may be lower, since only a limited number of projects, rather than all projects, may actually suffer delays. In fact, CERC through amendment made in October 2023 in Sharing Regulations has tried to limit liability of party responsible for delay in power flows.

commissioning, and the “defaulter pays” principle based on the judgement of Hon’ble Supreme Court judgement was recognized by this Tribunal in judgement in Appeal No 322 of 2016 (Nuclear Power Corporation of India Limited v. CERC). The relevant extract of this judgement is reproduced below: “10.3 We further observe that these type of major issues ought to have been covered under Regulations by the Central Commission to plug the gaps, which would avoid litigations. The importance of the same was considered by the Central Commission at one point of time in its order dated 5.8.2015 and directed its staff for appropriate amendments in the Tariff Regulations, 2014. Till date no such modifications have been carried out by it in the Regulations. It is however, observed that there are many regulatory/ judicial orders of the Central Commission to deal with the situations like in the present case. 10.4 The Hon’ble Supreme Court in the judgement dated 3.3.2016 in Civil Appeal No. 9302 of 2012 in case of PGCIL Vs. PSPCL and Ors. has held that the LTTCs are liable to pay the transmission charges only when the transmission system is made operational put to use. The Central Commission has also relied on the said judgement while formulating principles of payment of transmission charges by the entities before the transmission system/ asset is made operational/ put to use. ….. 10.6 It is clear that the liability to pay transmission charges by the Appellant to the Respondent No. 2 from SCOD till downstream system is commissioned does not arise from the Regulations of the Central Commission. Our most relevant decision matching to the circumstances of the present case is our judgment dated 27.3.2018 in Appeal No. 390 of 2017(Patran judgment) where the principles were laid down clearly that the entity due to which system developed through TBCB route cannot be put to use is liable to pay the transmission charges from SCOD till commissioning of the upstream/ downstream system/terminal bays. The Transmission System in question has also been developed through TBCB route. In the present case as per the principles laid down by the Central Commission it emerges that NPCIL is the defaulting party and should have been made liable to pay the said transmission charges. However, we find that there is no contractual relation between the Respondent No. 2 and NPCIL.”

74. In view of the foregoing discussion, it is apparent that the CERC proceeded on the basis of the “defaulter pays” principle, which was by then a well-established principle governing recovery of transmission charges. However, in light of our finding that there is no material on record to establish that PTCUL was under an obligation to develop the downstream network corresponding to all six 220 kV bays

at the Dehradun Sub-station, PTCUL cannot be treated as a defaulter on that count. Consequently, the basis for recovery of transmission charges in respect of the said bays would require fresh examination.

Issue 4: Whether the Impugned Order is vitiated by deviation from CERC’s earlier orders on the same asset? Submissions of PTCUL

75. The Appellant submits that CERC, in its earlier orders dated 30.11.2017 (Petition No. 55/TT/2017) and 12.06.2018 (Petition No. 8/RP/2018), declined approval of COD of the subject bays under proviso (ii) to Regulation 4(3) of the 2014 Tariff Regulations on the ground that the assets were not in regular use and directed PGCIL to seek COD approval only upon readiness of the downstream system; these orders were not challenged and have attained finality.

76. Despite there being no change in factual circumstances, PGCIL filed a fresh petition seeking identical relief, which, according to the Appellant, ought to have been rejected on the principle of issue estoppel and consistency in judicial decision-making. The Impugned Order, in approving COD as 04.02.2017 without identifying any change in circumstances or furnishing reasons for departure from the earlier consistent view, is said to be arbitrary and unsustainable, and contrary to the Barh-Balia judgment (upheld by the Hon’ble Supreme Court) that COD can be declared only upon successful trial operation and regular use.

77. It is further submitted that the Impugned Order is non-speaking, since CERC has failed to justify its contrary conclusion or to provide any cogent basis for fastening liability on PTCUL, particularly when PTCUL had not even been impleaded in the earlier proceedings relating to the same bays. Relying on Secretary & Curator, Victoria Memorial Hall v. Howrah Ganatantrik Nagrik Samity

& Ors., (2010) 3 SCC 732, Vishnu Dev Sharma v. State of U.P., (2008) 3 SCC 172, and Mohinder Singh Gill v. Chief Election Commissioner, (1978) 1 SCC 405, the Appellant contends that recording of reasons is an essential facet of judicial and quasi-judicial decision-making and that absence of reasons renders an order indefensible.

Submissions of PGCIL

78. PGCIL submits that the earlier orders dated 30.11.2017 (Petition No. 55/TT/2017) and 12.06.2018 (Review Petition No. 8/RP/2018) did not reject approval of COD on merits but merely deferred consideration until the associated downstream system was ready, while granting explicit liberty to PGCIL to file a fresh petition. Petition No. 104/TT/2020 was accordingly filed in compliance with those directions.

79. It is contended that the earlier orders were procedural and interlocutory in nature and did not constitute final adjudication on the merits of COD or liability; therefore, they do not operate as res judicata or issue estoppel, particularly as PTCUL was not a party to those proceedings. Reliance is placed on Jamia Masjid v. K.V. Rudrappa, (2022) 9 SCC 225, to support the proposition that such orders do not bar subsequent proceedings.

80. PGCIL further submits that, upon dismissal of the review petition, the review order merged with the original order and does not have an independent existence; in terms of Order XLVII Rule 7 CPC and decisions including Shrihari Hanumandas Totala v. Hemant Vithal Kamat & Ors., (2021) 9 SCC 99, and DSR Steel (Pvt.) Ltd. v. State of Rajasthan & Ors., (2012) 6 SCC 782, an order rejecting review is not appealable and does not itself create rights. PGCIL also points out that CERC is empowered under Regulation 4(3) of the 2014 Tariff Regulations to approve COD

and determine liability for mismatch periods and that this position has been affirmed by the Hon’ble Supreme Court in Power Grid Corporation of India Ltd. v. Madhya Pradesh Power Transmission Co. Ltd., 2025 SCC OnLine SC 1128.

81. On this basis, PGCIL contends that the Impugned Order is not a deviation from a concluded earlier view attracting issue estoppel, but a substantive determination made in the exercise of regulatory powers upon satisfaction of conditions for COD under the second proviso.

Analysis and Conclusions

82. The relevant paragraph 23 of the CERC order dated 30.11.2017 is extracted below: “23. It is observed that Asset-II is not in regular service due to non-availability of associated downstream transmission system under the scope of PTCUL and therefore, the COD of Asset-II is not considered in the instant order. The petitioner is directed to file fresh petition matching with the associated downstream transmission system.”

83. PGCIL had filed a review petition No. 8/RP/2018 inter-alia on the issue of not approving deemed commercial operation of the asset. The CERC vide order dated 12.06.2018 rejected the prayer for review expressing that the contention of PGCIL falls in the scope of appeal and not review. However, PGCIL made a fresh request for allowing COD of unused 4 Nos. of bays at Dehradun in the Petition No. 104/TT/2020, which was primarily filed for truing up of transmission tariff for some already commissioned assets relatable to Dehradun sub-station. This time CERC agreed to the request and allowed COD of these bays with effect from 04.02.2017 under proviso (ii) of Regulation 4.3 of the Tariff Regulations 2014.

84. We do not find merit in contention of PTCUL that CERC’s earlier orders dated 30.11.2017 (Petition No. 55/TT/2017) and 12.06.2018 (Petition No. 8/RP/2018) had attained finality; and that CERC has erred in allowing COD having rejected the same in earlier order. We agree with the contention of PGCIL that the CERC had merely deferred consideration of the issue and intended to examine it upon the development of the downstream network. Whether such deferment was justified is a separate question, and does not fall for consideration in the present appeal. Since the CERC had not taken any final view, the argument of PTCUL, that CERC should have given detailed reasons for deviating from earlier position, also collapses.

85. At the same time, we are of the view that consideration of the issue could not have been deferred indefinitely. To hold otherwise would lead to anomalous consequences. For instance, if the downstream network were not to be commissioned during the entire economic life of the bays, the issue would remain unresolved indefinitely. Nothing in Regulation 4(3) of the Tariff Regulations, 2014 mandates that a determination regarding COD under proviso (ii) can be made only upon actual utilisation of the asset. The regulation does not preclude the CERC from taking a decision on the basis of the facts and circumstances available at the relevant point in time.

86. In view of the forgoing analysis, we find no error in the CERC allowing the COD of the asset. The earlier orders cannot be construed as having conclusively determined the issue; they merely deferred its consideration pending the occurrence of relevant events. Consequently, the CERC was not precluded from examining and deciding the issue in the Impugned Order.

Issue 5: Do record establish that the bays were constructed for PTCUL? Submissions of PTCUL

87. The Appellant has contended that the subject 220 kV bays at the 400/220 kV Sherpur, Dehradun substation were conceived and implemented by PGCIL in accordance with standard inter-State transmission planning norms as part of the Northern Region System Strengthening Scheme (NRSS-XVIII), and not pursuant to any specific request or requirement of PTCUL. As per the minutes of the 23rd SCM, the six 220 kV bays at the 400 kV substation were not exclusively planned for PTCUL or for meeting State demand; two bays were envisaged for evacuation of power from NHPC’s Kotlibhel HEP, while PTCUL had only internally explored utilization of two bays for the proposed 220 kV double-circuit Mori-Dehradun line, which plan was never finalized or implemented.

88. It is submitted that Kotlibhel HEP did not materialise, and that the Mori- Dehradun proposal later evolved into an arrangement under which responsibilities were allocated to PTCUL pursuant to LTA intimation dated 20.12.2018 and tripartite LTA agreement dated 31.01.2020, which was itself revisited in the 3rd NRPC (Transmission Planning) meeting on 19.02.2021 contemplating Central Sector implementation subject to materialisation of generation projects in the Yamuna basin. Under these circumstances, the Appellant contends that the subject bays were planned as part of a broader regional and generation-evacuation framework, and that their cost ought to be borne by regional beneficiaries through the PoC mechanism rather than being exclusively saddled on PTCUL.

89. It is further submitted that ISTS assets developed under system-strengthening schemes are intended to serve the entire grid, and that

under the 2010 Sharing Regulations, as clarified by the Second Amendment to the Sharing Regulations, 2020, recovery of such charges is to be through pooled or component-based allocation, including from the relevant Drawee DIC (UPCL), rather than through unilateral billing upon PTCUL. The Appellant points out that PGCIL’s own subsequent conduct in ceasing billing upon PTCUL from December 2023 and seeking recovery through the PoC pool is consistent with this position and undermines any claim that the bays were always meant to be exclusively chargeable to PTCUL.

Submissions of PGCIL

90. PGCIL submits that Asset-III (the subject bays), conceptualised and approved as part of NRSS-XVIII in the 23rd SCM, is distinct and independent from the transmission network associated with the 60 MW Naitwar Mori HEP, which was planned much later. LTA intimation for Naitwar Mori was issued only on 20.12.2018, nearly a decade after planning of Asset-III, demonstrating, according to PGCIL, that the scheme associated with Naitwar Mori and the tripartite LTA agreement with PTCUL and SJVN are unrelated to the subject bays that form part of NRSS-XVIII.

91. PGCIL therefore contends that it was not required to furnish LTA-related details in the tariff proceedings for Asset-III, which were confined to determination of tariff for NRSS-XVIII assets and not governed by the subsequent LTA arrangement for Naitwar Mori. As regards cost allocation under the later regime, PGCIL points out that, pursuant to the Second Amendment to the Sharing Regulations, 2020, the subject assets have been classified under the “Transformer Component” for Uttarakhand, with transmission charges payable by UPCL from 01.11.2023.

92. Without prejudice, PGCIL submits that for the prior mismatch period, even if COD were notionally aligned with downstream readiness for PoC purposes, IDC and IEDC for the intervening period would require capitalization to ensure legitimate cost recovery through tariff from November 2023 onwards. PGCIL thus maintains that the Impugned Order’s allocation of liability on PTCUL for the mismatch period is consistent with the principle that the defaulting entity bears the financial burden of idle assets, while the subsequent PoC classification ensures socialisation of costs prospectively.

Analysis and Conclusion

93. While analysing the Issue 1 we had gone through the MOM of various meetings and also relevant correspondence, and we have already concluded that it cannot be established that the bays were constructed for use by PTCUL for connecting downstream transmission lines. The arguments of the PTCUL on the Issue 5 and response of PGCIL thereon do not add any significant value, and therefore our conclusion remains unchanged. In regard to specific submission of PGCIL that subsequent to the amendment to the Sharing Regulations the charges relatable to bays will be construed as transformer component and will be payable by UPCL (the distribution licensee in Uttarakhand), we would not like to consider the same in this judgement, as presently we are only dealing with the issue of application of transmission charges to PTCUL, which has filed this appeal.

Issue 6: Whether PGCIL’s own conduct, including delay in commissioning the bays, non-impleadment of PTCUL in initial tariff proceedings and later tripartite LTA arrangements, operates as estoppel against any allegation of prior binding obligation on PTCUL?

Submissions of PTCUL

94. The Appellant submits that PGCIL itself was responsible for an inordinate delay in commissioning the subject bays; although the completion target was indicated as November 2011 vide communication dated 11.06.2009, the bays were ultimately charged only on a no-load basis on 02.02.2017. PGCIL cannot, it is contended, be permitted to take advantage of its own delay to fasten liability upon PTCUL; reliance on communications issued from 2013 onwards is described as misleading and intended to wrongly attribute delay to PTCUL despite the admitted implementation delay being attributable to PGCIL. No timelines for execution of the substation, bays or downstream assets were ever agreed in the 23rd SCM or any subsequent meetings, and later letters cannot retrospectively create such obligations.

95. Furthermore, PTCUL was not impleaded in the initial tariff proceedings relating to the subject bays, which, according to the Appellant, demonstrates that PGCIL itself did not consider PTCUL as a responsible party for utilization of the bays at that stage. PGCIL independently commissioned the bays and only thereafter raised the issue of utilization, which evidences the absence of any prior concluded agreement binding PTCUL.

96. The Appellant also relies on PGCIL’s subsequent conduct, including entering into a fresh tripartite LTA agreement in January 2020 with PTCUL and SJVN for construction of new 220 kV bays for the Mori-Dehradun line, instead of insisting on utilization of the subject bays, as contradicting any alleged prior binding commitment and operating as estoppel. It is contended that had any earlier obligation existed, PGCIL would not have required new bays under a fresh contractual framework, and that the Impugned Order, by ignoring this conduct, effectively renders the later tripartite agreement otiose.

Submissions of PGCIL

97. PGCIL contests the allegation that its own conduct gives rise to any estoppel and instead attributes the mismatch and non-utilisation to PTCUL’s delay. PGCIL relies on the 34th SCM dated 08.08.2014, where PTCUL expressly indicated that its downstream 220 kV system from Dehradun would be ready by March 2015, to submit that the commitment regarding readiness of the downstream system came from PTCUL.

98. PGCIL further points to subsequent SCMs (36th, 37th and 38th) and NRPC meetings (41st and 42nd), in which the need for timely development of downstream infrastructure was repeatedly emphasized, PTCUL was called upon to provide status updates, and PTCUL itself identified concrete utilization plans for the bays, including Dehradun-Naugaon, Dehradun-Selaqui and Yamuna-basin related lines. PGCIL also relies on its letters from 2013-2017 seeking updates on downstream connectivity, which were received without protest, and on PTCUL’s internal correspondence acknowledging planned utilization.

99. On this basis, PGCIL submits that it consistently acted on the understanding that PTCUL would develop the downstream system in a matching timeframe and that PTCUL’s failure to do so, despite its own commitments and subsequent utilisation plans, renders PTCUL the defaulting party. PGCIL therefore denies that its conduct; whether in relation to the timing of petitions or later tripartite arrangements; creates any estoppel against enforcing PTCUL’s liability; rather, PGCIL contends that PTCUL’s conduct reinforces the existence of consensus and its responsibility for the non-utilisation period.

Analysis and Conclusions

100. In our opinion, PTCUL’s argument is founded largely on hindsight. With the benefit of subsequent events, PTCUL now finds fault with PGCIL, fully aware that the bays were ultimately commissioned by PGCIL after a considerable lapse of time. However, the matter must be examined from the perspective prevailing at the relevant point in time and not in light of facts that emerged subsequently.

101. Had the downstream transmission line (220 kV Dehradun-Jhajra line) constructed by PTCUL been ready much earlier and the delay thereafter been attributable to PGCIL, nothing would have prevented PTCUL from seeking appropriate compensation or other remedies available under law. Conversely, if PGCIL had commissioned the bays earlier, the assets would have remained unutilised for an even longer period. Thus, the mere fact that PGCIL subsequently delayed the commissioning of its bays cannot retrospectively alter the position that existed when the relevant decisions were taken.

102. In these circumstances, we are unable to accept the contention of PTCUL that PGCIL is seeking to take advantage of its own wrong. The argument is misconceived and does not withstand scrutiny in the facts of the present case. However, we find considerable weight in the contention of PTCUL that initially PGCIL itself did not consider PTCUL responsible for the delays, and hence not impleaded PTCUL as Respondent in the earlier petitions. In fact, in Petition No. 104/TT/2020, wherein the CERC passed the Impugned Order dated 31.03.2021, PTCUL was impleaded as Respondent later, on the advice of the CERC. Further, more urgency seems to have crept in with the order of CERC that in case of mismatch between commissioning of two contiguous transmission system by different licensees, the transmission charges will not be passed on to the beneficiaries. This order was brought in agenda item by PGCIL in the 38th SCM

meeting held on 30.05.2016, as has already been discussed in earlier part of this judgement under Issue 1.

103. PTCUL has further contended that PGCIL’s subsequent conduct is inconsistent with its present stand. It is argued that, had PGCIL considered the unused bays to be earmarked for use by PTCUL, it would not have entered into a fresh agreement with SJVN and PTCUL for the creation of new bays for termination of the Mori-Dehradun line. Rather, PGCIL would have insisted upon the utilization of the existing unused bays.

104. The contention is essentially founded on a presumption as to what PGCIL might have intended or believed at the relevant time. Such matters are inherently speculative, and the material on record does not permit any conclusive finding in that regard. More importantly, even assuming the contention to be correct, it would not alter the conclusions independently arrived at by us in the earlier part of this judgement. We, therefore, deem it unnecessary to delve further into this aspect.

105. In view of our analysis and conclusions so far, it is clear that the basis on which CERC had fastened liability of transmission charges on PTCUL was not correct. Therefore, as natural consequence of this conclusion, following issue will arise: Who shall bear transmission charges for the remaining four unused bays till, they get utilised?

106. We are remanding the matter to CERC for fresh consideration of the aforesaid issue. However, we would like to point out that during the course of our analysis, there is hint of some questions that would require consideration of CERC during remand exercise:

(i) Was it a systemic failure or inadvertence in planning exercise that there was no clear identification of agency that will create downstream network and there was no mention of target date in several meetings on regional transmission planning?

(ii) Was there failure on the part of PGCIL to wholeheartedly coordinate development of entire system, particularly as it was also wearing hat of CTU at that point of time?

(iii) Could PGCIL have deferred the work on bays for which there was no assured downstream system development in sight?

(iv) Whether the absence of a response from PTCUL to PGCIL’s communications also contributed to the breakdown in coordination efforts, inasmuch as a clarification from PTCUL might have dispelled the uncertainty much earlier?

(v) Whether the subsequent amendments to the regulatory framework have any impact on the incidence or determination of liability for transmission charges relating to the unused bays?

107. The list of questions in the preceding paragraph is only illustrative and CERC will be free to consider other relevant issues while deciding on the question as to who will bear transmission charges for the unused bays.

ORDER

For the foregoing reasons as stated above, we are of the considered view that the captioned Appeal No. 410 of 2022 has merit and is allowed. Accordingly, the findings and directions contained in the Order dated 31.03.2021 passed by the Central Electricity Regulatory Commission in Petition No.

104/TT/2020, insofar as they hold only PTCUL liable for payment of transmission charges for the unused bays are hereby set aside. However, since the question as to who should bear the transmission charges in respect of the four unutilized bays during the period they remained unused survives for consideration, the matter is remanded to the Central Electricity Regulatory Commission for fresh adjudication limited to the said issue, in accordance with law and in the light of the observations contained in this

Judgment.

While undertaking the remand exercise, the Central Commission shall be at liberty to examine all relevant facts and circumstances, including but not limited to the issues identified in paragraph 106 of this Judgment, and any other factors that may have a bearing on determination of the appropriate mechanism for recovery of transmission charges relating to the said bays. The Captioned Appeal and pending IAs, if any, are disposed of in the above terms. PRONOUNCED IN THE OPEN COURT ON THIS 2nd DAY OF JULY, 2026

(Ajay Talegaonkar) Technical Member (Virender Bhat) Judicial Member

REPORTABLE / NON-REPORTABLE kns/mg/mkj/kks